Monday, December 8, 2008

Adapting to Massive Media Change Seminar UCLA Extension: Summary

An excellent cross section of industry professionals attended the annual one day Seminar on Adapting to Massive Media Change held at UCLA on 5 December 2008.

Keynotes, and other related materials, are available from my Executive Briefing Web Page.

Special thanks to our three outstanding guest speakers:
  • A Producer with MTV Networks, and an experienced film and video maker." (name withheld )
  • Hannah Bubis, Director of Business Development, The Search Agency. The Search Agency was recently named as one of the ten “Rising Stars” on Deloitte's 2008 Technology Fast 500.
  • Dominique Shelton, Partner, Wildman, Harrold, Allen & Dixon LLP
The class began with my view of the 10 major global trends in the media and entertainment sector:

  1. The Internet is becoming the dominant platform for media, entertainment, and communications worldwide.
  2. Wireless broadband is becoming a dominant distribution platform for the Internet, especially in the developing world.
  3. Convergence of industries and devices continues and consumption habits are changing. Gaming is a large factor. Blu-Ray will hang on as the last physical format.
  4. Everything is becoming available on-demand.
  5. YouTube, Internet video, social media and social networks are becoming important platforms for distribution, promotion and communication and are competing with search as ad platforms.
  6. Digital production, and digital distribution are increasingly important economic and business factors in the TV and movie industry.
  7. Advertising and branding are being transformed as budgets shift to contextual, hyper-targeted internet platforms and brand integration.
  8. The Music business has been transformed.
  9. Hollywood / Media Power is shifting and consolidating as the audience fragments and conglomerates grow.
  10. Digital Piracy, Cybercrime, organized crime, and the “Darknet” remain ominous clouds over the new media horizon.

    A recent case in point:
August 2008, Internet Business Law Services ( : The U.S. Department of Justice filed charges against 11 individuals who allegedly obtained identity information over wireless networks from nine major U.S. retailers, resulting in the theft and sale of more than 40 million credit and debit card numbers. The hackers apparently garnered tens of millions of dollars from a broad-based scheme that involved citizens of the United States, Estonia, Ukraine, China and Belarus. Attorney General Michael Mukasey said, "so far as we know, this is the single largest and most complex identity theft case ever charged in this country, which they then allegedly sold to others or used themselves. And in total, they caused widespread losses by banks, retailers, and consumers."

I delivered a lecture on the music business presenting a Cartesian grid model of digital music services with on a continuum on the x-axis from user in complete control as in an audio CD, to the programmer in control as in terrestrial radio, and a continuum on the Y-axis from Paid to free. Along the continuum have bloomed a variety of “interactive” music services including the likes of Pandora,, Ruckus, Slacker, and iMeem. These personalizable, interactive services confound the traditional boundaries between performance royalties paid by traditional radio and mechanical royalties paid for downloads and physical media. The Copyright Royalty Board sets the statutory rates for Internet Radio.

MTV’s digital evolution was discussed and how it evolved into one of the coolest brands in the world, became tired and less relevant and has reinvented itself through aggressive youth market research and by diversifying away from music videos.

Launched in 1981 as a VJ guided music video channel, it has grown into a global media empire and the crown jewel of Viacom’s media properties (NYSE:VIA). According to Viacom’s website, MTV Networks includes over 342 million households viewing 150 channels in 17 languages around the world and 300 interactive properties. Sometime in the late 90s and early 2000s MTV began to break its own first principle; “don’t let your marketing show”. The antithesis of cool is commercial and corporate.

We talked about the youth culture research MTV does and how the network evolved away from Music videos into original programming and sponsored, brand integration. From programmed for the audience to being more controlled by the audience as in the late great TOTAL REQUEST LIVE. We then discussed the evolution of MTV online including the ill-fated milestone 2004 re-design, and the launch of the “Overdrive” site, which worked well with the equally ill-fated Windows Media Center Edition. MTVs partnership with Microsoft and its Zune digital audio player has also met with demise in the face of the iPod/iTunes juggernaut. Despite MTVs best efforts, those initial “portal” sites fell flat. MTV’s online strategy has rapidly evolved into a plethora of blogs, podcasts and videocentric websites. Of particular note is the “Twilight Effect”. MTV deftly capitalized on access to the set of Summit Entertainment’s TWILIGHT and created an online sensation as well as a new line of business for MTV in movie blogs. MTV Networks is an example of media adaptation at its best.

Hannah Bubis dove right into the nitty gritty of Search Marketing, first making the important distinction between organic search and paid search. The former is driven by search engine optimization or SEO and determines what comes up, in what order on the search engine results page. The latter is where budgets are rising almost as fast as complexity. Otherwise known as “pay-per-click”, this form of advertising circumvents traditional media buying by creating algorithmically run hybrid auctions whereby advertisers bid on prime placement. Yet no matter what the high bid, relevancy as measured by click-through rates, comprises a significant factor in determining placement. Hannah described how The Search Agency works with clients on there online strategy and to navigate the complexities of this new world. She emphasized that the greatest benefits of pay-per-click are measurability and that the advertiser only pays for actual clicks and not impressions. Hannah touched on the advanced methods of contextual, hyper-targeted advertising whereby click-streams are captured and analyzed in order to put the right message in the right place at the right time. Some of the class noted that there is a backlash to hyper-targeting when consumers get the creepy feeling that they are being cyberstalked!

I contend that inevitably more overall dollars from the finite ad budget pie will find their way into Hannah’s domain. Many questions remain, especially how pay-per-click combines best with video / IPTV viewing.

Dominique Shelton provided an expert briefing on some key aspects of the Digital Millennium Copyright Act (DMCA) focusing on the four safe harbors. This corpus of law is what keeps many Internet companies in business by indemnifying them from a wide variety of Copyright in infringement and other crimes.
  1. Transitory communications
    ISPs are carriers and can’t be liable for the unexamined bits traversing their pipes.
  2. Caching
    At some point almost everything you have access to online must be stored or at least temporarily “downloaded”.
  3. Storing information at the request of users
    This covers UGC sites like Youtube. The users put the infringing content up not deep-pocketed Google.
  4. Information Location Tools (aka Search)
    Without this one Google could not make its billions by pointing users to copyrighted content.
Safe Harbor comes with caveats pointed out by Ms. Shelton. First, you have to respond quickly to takedown notices via a registered agent, and second, you are still responsible to the Communications Decency Act.

Dominique regaled us with some case law including the “Perfect Ten Trilogy” that has tested various aspects of Safe Harbor including:
  • If you show copyrighted images in a search is that infringement? No.
  • If you are Visa and enable billing for the purchase of unauthorized copyrighted material are you guilty? No.

We were also lucky to get one of the best explanations Fair Use I have ever heard.

Many questions will remain unanswered for years to come regarding grey areas such as interactive music services and the extent of UGC liability, such as in the cases of Warner Music Group Vs. Seeqpod, and Viacom Vs. Youtube. Many of these situations may be better left to creative business agreements than to the courts. Sphere: Related Content

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