November 2014

Media Companies Strike Gold With Sponsored Content

Media companies say they've struck gold in the form of content marketing -- during the third quarter, at least.

Recent quarterly earnings reports show that the practice of disguising ads as non-commercial content -- whether that content is an article from a professional newsroom or a Facebook post from your aunt -- is driving revenue gains at a variety of media companies, from The New York Times to LinkedIn. Whether it's called native advertising or sponsored content, it appears this practice will stick around for a while, or at least through the next set of earnings reports.

The Lady Vanishes: Women Watch Less Traditional TV

While prime-time TV usage is in some ways relatively stable, with the proportion of people watching TV this season slipping just 5 percentage points from a year ago, women in advertisers' key age groups are disappearing at a disproportionate clip.

From Sept. 22 to Oct. 27, for example, the percentage of 18-to-49-year-old women watching TV in prime time fell 9 points from a year earlier, according to Nielsen stats. The declines reached double digits on Tuesday and Wednesday; Tuesday of late has been a tough night for marketers looking to reach women, as the most female-skewing shows -- "New Girl," "The Mindy Project," "Selfie," "Manhattan Love Story" and "Forever" -- are also the lowest-rated. That women in the most advertiser-friendly demo are vanishing is disconcerting enough; what's particularly unsettling is the rate at which younger female viewers are tuning out. Season-to-date, the percentage of women 18-to-34 watching TV is down 13 points, while women 18-to-24 are down 17 points. If not for the stabilizing influence of Sunday nights, when declines are in the single digits, the younger demo would be off by more than 20 percentage points.

Napster, Netflix founders top donors in California voter politics

Reed Hastings, the 54-year-old Netflix chief executive, and Sean Parker, the 34-year-old former co-founder of Napster, have donated a combined $1.6 million in support of California ballot measures before voters head to the Nov 4 election. For his part, Hastings gave $250,000 to Proposition 1 and another $246,664 to a voter ballot measure that would cut penalties for one in five criminals in the Golden State, campaign finance records show. Parker also gave $100,000 to support Proposition 47, according to data supplied by Maplight.

Attack Ad to Beat All Attack Ads

[Commentary] The Wesleyan Media Project conducts quantitative and qualitative research to understand more fully the role of spending in races across the country.

At its new website, AttackAds.Org, the group of faculty and student researchers puts it this way: "...a growing body of evidence suggests that ads work better if they are sponsored by unknown groups, which further encourages the growth of dark money. Not only is there no transparency that could help voters better filter the barrage of messages, but there is less accountability in elections. You cannot punish a group in the same way that you can a candidate or a party by not voting for them. This is a problem for democracy. It doesn't have to be this way, however. This site is intended to help educate Americans on the problems of dark money, who the dark money organizations are, and what you can do about it."

[Roth is the President of Wesleyan University]

Reasons for Video Cord Cutting May Be Different Than for “Cord-Nevers”

Millennials are significantly more likely than their older counterparts to not subscribe to cable or other pay TV services. In fact, 18-34 year olds are 77 percent more likely than average to be a “cord never” household and 67 percent more likely to be a “cord cutter” household.

But it actually is not clear whether the causation or correlation is with household size, parental status or income more so than with age. Some 60 percent of single-person households and 52 percent of households without children are “cord never” households. So single-person homes, and homes without children, are highly correlated with refusal to buy linear video service. But those types of households also correlate with lots of households other than “millennial” homes. Former parents whose children have moved out, retirees and those who have significant incomes but are not married can be found in the “single-person” category. So is it age -- younger consumers with different preferences–or parental status or household size that account for the differences in buying behavior? At the moment it is hard to separate the potential drivers of behavior.

USTelecom Wants FCC Special Access Price Data Collected to Include Two Years

USTelecom, the lobbying association representing telephone companies, is asking the Federal Communications Commission to collect more information about special access pricing. Although the request at first might seem off-the-wall (what telco wants to report more data?), there are some extenuating circumstances here.

At issue is the special access pricing data that the FCC required larger incumbent and competitive network operators to file by year-end. The goal is to gauge whether sufficient competition exists to give incumbents more pricing flexibility. USTelecom argues that one year of special access price data is not sufficient for the FCC to determine whether sufficient competition exists in that market.

The weird legal reason many of your favorite shows aren’t on DVD

As the physical media era comes to a close, the number of companies willing to pay the hefty fees necessary to close out music licensing deals has pretty much dwindled to two – StarVista and Shout! Factory. Not coincidentally, both companies have longstanding relationships with record companies that make closing deals for individual songs easier to accomplish. But music licensing is also vitally important to the new streaming era.

It's by far the biggest problem in getting old TV shows (and some old movies) into the hands of the public, and it all stems from US copyright law that were largely designed for a world where TV episodes would only be consumed a handful of times, copyright law that allows greedy rights holders to have an outsize impact on these sorts of negotiations. Indeed, if you're a fan of classic TV, then music licensing is one of the most important things you can understand, if you want to know why so many great shows seem to be disappearing down the cultural memory hole.

For Sen Franken, net neutrality remains key campaign issue

Headline-dominating issues such as Ebola and ISIL have commandeered most campaign conversations during the waning days of the race between Sen. Al Franken (D-MN) and his Republican challenger, Mike McFadden. All but forgotten? Franken’s crusade for continued free and open access to the Internet, more commonly known as net neutrality.

The Federal Communications Commission’s proposed new Internet access rules could include fast and slow broadband lanes, with Internet service providers being able to charge content providers for the “fast-lane” service. Sen Franken believes only deep-pocketed corporations could afford to pay for a fast lane, and he believes that would stunt the growth of innovative start-ups. Sen Franken points to YouTube, the ubiquitous video-sharing site begun by three programmers nearly a decade ago that later sold to Google for $1.6 billion. If net neutrality didn’t exist, neither would YouTube. McFadden has largely ignored net neutrality, saying he prefers to focus on pressing issues like national security and the economy. Sen Franken, who said he gets asked about net neutrality “all the time,” counters that those issues rely on an open Internet, as do many others.

Net Neutrality Has Become An Industrial Policy

[Commentary] The net neutrality movement has lost its way. Net neutrality used to be a principle to protect Internet users -- now it’s devolving into political messaging to hide an industrial policy that could harm users.

In opposing a two-sided Internet market, the movement is strongly protecting Silicon Valley’s economic interests by strongly opposing any payment for quality-of-service or specialized-network services for Silicon Valley’s bandwidth-dominating services like video streaming. Ironically, the new net neutrality slogan of “no fast lanes” runs counter to the net neutrality movement’s past focus that broadband has not been fast enough and that the U.S. was falling behind the rest of the world in broadband speeds. Does the net neutrality movement now want a faster Internet or not?

[Cleland is President of Precursor LLC, a research consultancy for Fortune 500 companies]

Section 10 Forbearance: Asking the Right Questions to Get the Right Answers

According to its preamble, the stated purpose of the Telecommunications Act of 1996 is to "provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans...." The key statutory tool to facilitate Congress's deregulatory mandate is contained in Section 10 of the Act, which provides the Federal Communications Commission with the express legal authority to forbear from enforcing various portions of the Communications Act once certain conditions are met.

However, the FCC's precedent in implementing Section 10 prevents the agency from using its forbearance authority as a way to establish some sort of "Title II Lite." Perhaps the most important lesson learned from the FCC’s Phoenix Forbearance Order is that when contemplating forbearance from any regulation or mandate, the first and most-important step is to ask the right question. That is: does removing the regulation make society worse off? This simple question points to a cost-benefit analysis in which the agency considers the purpose of the regulation, provides an honest assessment of the efficacy of it (including the compliance costs and unintended consequences of the regulations), and then decides how much competition, if any, is sufficient to accomplish the same goal. In its Phoenix Forbearance Order, the FCC focused instead on a comparison of the observed level of competition to some unobtainable competitive nirvana, leading the agency far astray from its assigned task. And, given the FCC's repeated finding that Broadband Service Providers are "terminating monopolists" as a justification for implementing Open Internet Rules, the Phoenix Forbearance Order -- by rejecting the use of forbearance under monopoly and duopolistic competition -- stands in the way of using forbearance to create a "Title II Lite" form of regulation.

Benton

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