Considering Music Streaming Royalties

A report in the New York Times this week considers what Spotify pays artists for streaming their songs. From the Times: 

"Spotify declined to comment on its rates, but according to a number of music executives who have negotiated with the company, it generally pays 0.5 to 0.7 cent a stream (or $5,000 to $7,000 per million plays) for its paid tier, and as much as 90 percent less for its free tier."

These payments may not be sustainable -- in the sense that it could be impossible to survive as a professional musician from such royalties alone -- but I think how the royalties are characterized above understates their value. After all, these are payments per play, which is a different measurement from payments per sale. In other words, how much are you paying per play when you buy a CD or download a $.99 song from iTunes?

As a very rough generalization, if I like something I'll listen to it at least ten times, and if I really like it, many, many more times. So instead of me buying a track for $.99, I might listen to it 30 times and thus send $.21 in royalties to an artist. Again, this doesn't mean that streaming royalties are sufficient, but they may not be much less than royalties from traditional sales.

All of this points toward new considerations of what makes for economically successful recordings. MP3s and iTunes have already broken the album, allowing for easy and inexpensive purchase of individual tracks. Streaming royalties can, on the one hand, reinforce this trend by rewarding tracks with mass appeal and high replay. On the other hand, when free to the listener (or as part of a subscription), listening to full albums may regain appeal. Artists and labels could benefit from this different economic orientation of listeners by stretching their attention across multiple tracks. 

America's Most Watched Network

CBS, which will enjoy a giant audience for next week's Super Bowl, already generally crushes its competition for TV viewers. In last week's prime-time ratings, CBS had 17 of the top 20 programs. That's crazy.

Even with the biggest audiences, though, revenue from advertising is shrinking. That can explain why CBS is expanding its licensing of shows for streaming and leaning more heavily on carriers and affiliates for revenue (from CNBC):

"Moonves boasted that CBS , which was once almost entirely reliant on advertising, is now diversifying: This past quarter, a record 44 percent of its revenue came from non-ad sources, namely compensation for its broadcast and cable networks."

Cable and Competition

Matt Yglesias and others are discussing the impact of cable bundling (which generally means charging people for channels they don't want) on cable prices. There are sounds reasons and basis, which Yglesisas discusses here, for government action to increase competition in the wired television market.

Regarding bundling and and its effects on pricing, Yglesias notes that subscribers only really want to watch a few channels yet pay their full bill anyway. This suggests that even unbundled sets of channels could still command high prices, especially in markets characterized by little competition, and that unbundling alone would not reduce prices.

But that analysis leaves out those for whom a $60 cable bill is not justified by a few channels and therefore don't subscribe at all (like me). Cheaper, unbundled channels could attract new customers and help retain those who are beginning to see Netflix, iTunes, etc. as attractive, less-expensive alternatives. In this way, competition from outside could eventually make lower-priced, unbundled channels a smart move for cable companies.

Netflix and Numbers

Netflix made some news this week with big stock gains that followed release of its fourth-quarter earnings report. Part of the story is an increase in streaming video subscribers, so I thought it would be a good idea to consider some numbers and context.

The news is that Netflix now claims 27.1 million U.S. streaming subscribers. I guess that sounds good to investors, but what does it say about the place of Netflix in our media ecosystem?

One relevant comparison would be to the number of paid subscribers to Hulu Plus, a similarly-priced competing service that offers streaming television shows and movies. On the company blog last December, Hulu claimed "more than 3 million paying Hulu Plus subscribers." Amazon Prime membership also includes streaming video, but Amazon doesn't seem interested in releasing subscriber numbers.

Another apt comparison might be between Netflix customers and cable network penetration. The top cable networks (including TBS, ESPN, and CNN) each had just over 100 million subscribers in 2011, according to the cable industry.

Netflix content can't replace the experience of cable networks that include live news or sports, so maybe a better comparison would be with HBO subscribers. HBO and Netflix might both serve as a premium add-on to cable. It happens that HBO has around 30 million subscribers, just ahead of Netflix's 27.1 million.

Meet the New Boss

Mark Zuckerberg is undertaking his first public, partisan political activity, and it is a fundraiser for Republican New Jersey Governor Chris Christie.

This might suggest that Zuckerberg is himself a Republican or a conservative, but Christie currently enjoys wide popularity and Zuckerberg has named Chirstie's education ideas specifically as the reason for his support. So who knows. The Huffington Post reports that support for charter school expansion "puts Zuckerberg well in the mainstream of billionaire tech executives like Bill Gates, who pump millions of dollars into efforts to encourage charter schools and put pressure on teachers' unions."

Zuckerberg's specific political preferences aside, this fundraiser is a reminder that he is a modern media mogul who is worth nearly $10 billion and is the head of a media giant that connects with one out of every seven people on the planet. 

The fact that he is a modern media mogul complicates what his political impact might be. He does have the money and public profile to pay for or promote political activities outside of Facebook, but what he can do with the content of Facebook is different from what, say, Murdoch can or Hearst could. The user-generated content of Facebook isn't shaped by hiring or editing decisions like at a cable network or newspaper. 

The kind of content allowed on Facebook and what happens to it are shaped by policy, though, and that policy can have either political motivations or social consequences. One frequently recurring example at Facebook is the company's eagerness to sell advertising based on access to its users' personal information. Another privacy-related concern is the prohibition of pseudonyms on Facebook, which might protect users from retribution by employers or violent governments. 

In any case, it is worth remembering that Zuckerberg has ideas about how the world should work (and how Facebook should make money), and he has a major role in how we communicate with each other. 

Democracy Progress Notes

The "advice and consent of the Senate," prescribed by the Constitution for presidential appointments, is a process that now includes advertisements against the nominee on cable news networks. (A conservative group is airing ads on CNN and Fox News attacking the ethics of Chuck Hagel.)

Political opposition to nominees is not new in our history, but it is worth considering the role of campaign-style ads aired by an independent group in a nomination fight. The mechanism for these ads to be effective is for the constituents of vulnerable Senators to contact them and express their dissatisfaction with Hagel. This may or may not have an impact on any Senator or the ultimate outcome in this case, but this case does illustrate the ability (and likelihood) of independent spending on ads to spill over from elections onto individual issues.

One impact can be greater public participation on issues, which you may or may not like. Another is the introduction of the familiar distorting effects of money and its tendency to be concentrated on one side of an issue. (The Hagel case is likely an exception to that dynamic, but issues like gun control and climate change are not.)

The Forms of Television, continued

Because Fox has entered a suicide pact with broadcast TV viewers, it is encouraging them to set their DVRs for its high-profile new series, The Following. Actually, it probably doesn't hurt to acknowledge, internally, that people don't like to watch ads. Also, if people record the show and watch it, they might like it.

Netflix, meanwhile, is pretending to be a DVR with its first original series, House of Cards, which will premiere its first season in its entirety in February. All 13 episodes will be available at once, allowing people to watch the series how they watch other series on Netflix -- all at once. A story in the New York Times quotes the show runner as saying that the release format allowed them to write the show in an unconventional way:

"“We approached this creatively as a 13-hour movie,” said Mr. Willimon, who eschewed cliffhangers at the ends of some episodes because, well, he could. “Knowing we had two full seasons in advance, I didn’t feel the pressure to sell the end of each episode with superficial cliffhangers or shock tactics in order to keep coming back, in order to jack up the ratings week to week,” he said. “I hope our version of a cliffhanger is compelling, sophisticated characters and complex storytelling.”"'


Contrast this experience with that of The Following creator Kevin Williamson, who reportedly struggled with “how to make something scary when you’re writing to a commercial break." 

As the differences between cable and broadcast allow for different approaches to content, full-season releases like that of House of Cards have the potential to further change the television series form.

It is also notable that, according to the Times, Netflix agreed to the series based on its subscribers' viewing habits (the popularity of other work by the show's creators, similar subject matter, and its original BBC version). This helps to explain why Netflix picked up the upcoming new season of Arrested Development, a series which I've cycled through a few times on Netflix myself.

CNN Not Teaching to the Test

Media Matters jabs CNN, which has some trouble explaining the causes of climate change itself, for reporting that Americans are confused about the causes of climate change.

There's an interesting dynamic here, where people get their information and understandings from media and then media poll and report on what people know. As if a teacher reported back to her math students that half the class doesn't believe in fractions and then just left it at that, moving on.

A question about the causes of climate change is different from one about attitudes, because it is assessing knowledge, not opinion. Granted, CNN doesn't give its viewers all of their information about climate change (and not all of the poll respondents were CNN viewers), but climate change reporting is systematically bad and news outlets generally are a primary source of information about the world. Poll results like this should be a sign to CNN that something is wrong, not just a story about the political environment.

What We Read and Where, pt. 2

The National Review's Media Blog shows newspaper front pages from conservative states with Democratic Senators, after President Obama's gun control proposals last week. The implication of this post is that the local news coverage both illustrates the political environment these Senators face and might influence the Senators' perceptions of their constituencies.

Of course, legislators can be influenced by public opinion to varying degrees on different issues, but such a look at local coverage of an issue offers some insight. Much as Washington journalism can reflect a conventional wisdom with boundaries and assumptions that politicians can fall into, politicians are likely also reading coverage from back home with a reinforcing or competing conventional wisdom. Just as with voters, it matters how elected officials learn about the world and public issues.

UnPublished Polls

Israel has parliamentary elections on Tuesday and today is the last day that public opinion polls can be published in that country. The idea, I think, is that polling results can reduce turnout, either of a confident majority or a dispirited minority.

Of course, the First Amendment prevents any such reporting ban in the United States. What we do have is agressive polling and poll reporting for presidential elections up until Election Day and then voluntary constraint among mainstream news outlets, which don't release exit polling for a state until voting there has stopped. Early exit polls, though, are leaked online.

Two interesting things happened within this environment during the 2012 presidential cycle. One is that Nate Slver was able to collect and analyze the profluence of political polling to correctly predict the outcome of the presidential race in all 50 states. So, quite unlike a public ban on poll reporting the weekend before an election, American voters knew the exact outcome if they chose to believe Silver's analysis.

The other interesting thing that happened in 2012 was that many refused to believe Silver's analysis. There was a widespread belief on the right that the polls were just wrong -- had to be -- and, as an example, a website called unskewedpolls.com popped up, offering adjusted poll results that showed Romney with a comfortable lead.

It's hard to know what motivated all this rejection of evidence -- it could have been real optimism or skepticism. It could have been cynicism too, and fear that too-accurate polling before Election Day would reduce turnout among a dispirited minority. With a ban on poll reporting impossible, one way to ally fears about turnout effects is to discredit the polls.

Some Content Can Be Free

The death of Aaron Swartz, who was being aggressively prosecuted for illegally downloading articles from JSTOR has brought some worthwhile attention to the costs of academic journals.

In general, I'm not too amenable to the "content is meant to be free" argument. A lot of people and businesses are motivated by financial incentives to produce and distribute content. Still more people just want to be paid for the work that they love to do. Protection of financial incentives for the purpose of encouraging technological and cultural innovation is the historical reason for intellectual property protection -- which is one of the few specific legislative responsibilities addressed in the U.S. Constitution. None of this is to suggest that patent and copyright laws are perfect as they are now (Yglesias shows here the impact of copyright laws on literary culture), but the bottom line is that if all content were free, we'd have dramatically less rich -- or at least wholly different -- cultural production in this country.

Having said all of that, academic research is one form that could do quite well under a different economic model. Scholars and researchers have motivations for publishing their work beyond immediate economic gains from issue sales, including requirements from their institutions to publish research or a personal interest in developing a profile in their field. This suggests that academic work would continue to be produced and distributed without high-price journals. The facts that much good could come from wider public distribution of research and that much of this research is publicly subsidized through grants or through university salaries suggest that moving beyond the current model would also be more equitable and provide greater public benefits.

The Quality of Cable Programming

The success of Girls and Homeland at last night's Golden Globe awards illustrated the continued dominance of cable over broadcast network programming quality. Quality is pretty subjective, of course, but one measure for it is awards and award nominations. Girls (HBO) and Homeland (Showtime) won for best TV comedy and drama, respectively, and cable accounted for four of the five nominees for best drama.

One interpretation/explanation of this success is that cable programs can get away with content, language, and themes that just aren't permissible under broadcast regulation. Regulation has something to do with it, but from what I've seen of Homeland so far, 24 had a lot more torture. Another major factor on premium cable is freedom from advertiser concerns (about audience demographics and program content) and the ability of cable networks to aim for a niche audience.

One simple, but perhaps very important, difference between broadcast and cable programming is the length and timing of seasons on cable. Whereas broadcast networks aim to fill 2-4 hours nearly every night with original programming, cable nets like HBO, Showtime, and AMC do not. For that reason, a broadcast network will be motivated to squeeze as much as it can out of a successful program as quickly as it can, instead of devoting its resources to developing, producing, and trying out ever more shows to fill its broadcast hours. Broadcast network seasons typically include over 20 episodes.

In contrast, cable series tend to have about a dozen episodes per season. This alone greatly improves the potential for TV programming quality. It's hard to imagine, for example, Breaking Bad being nearly as exciting with a season story arc stretched out or diluted over twice as many episodes.

Mocking the Platinum Coin

So Krugman doesn't like the way that The Daily Show mocked the platinum coin idea last week. I think this critique is -- believe it or not -- similar to those the makers of Zero Dark Thirty are facing. Even if your game is entertainment, if you set yourself up as an information source to people you have some responsibility to either disavow that reputation or live up to it, like it or not.

The Future of Leaks

Following the prosecution of Bradley Manning, accused of leaking classified information, Glenn Greenwald warns:

"The theory being used to prosecute Manning would convert almost every government source for newspapers into a traitor. Given that, it's extraordinary how relatively little interest, let alone opposition, large media outlets have expressed about this prosecution."

Selective prosecution of leakers is one thing, but the threat to journalism and public accountability that would come with government leakers being prosecuted as traitors is quite another. 

The New Deficit Reality

Krugman presents a chart from the Center on Budget and Policy Priorities showing that with the sequester and other recent budget cuts and tax increases, the country's debt to GDP ratio is set to stabilize over the next decade. He explains that, long term concerns about entitlements aside, "at this point reasonable projections do not, repeat do not, show anything resembling the runaway deficit crisis that is a staple of almost everything you hear, including supposedly objective news reporting."

So not heading down the road to Greece, then? Lets see if these effects of the fiscal cliff resolution make their way into reporting on deficits.  

Insights from Time Travel

I was listening to a lecture on iTunes U last night about the history of Christianity. In general, I'm impressed with the ability of anyone with an internet connection to sit in on college courses like this. I was reminded while listening, though, how much college courses themselves have changed in the past few decades.

The recording was from the late '80s -- and it included a warning at the beginning that it would stop when the tape needed to be turned over. I didn't make it that far, but I did hear the instructor telling his students which books to look for if they wanted more information on the subject.

And he meant it. Because in the 80s, you'd have to find these books for more info, unlike now when you might be able to download them, or find a journal article online, look at Wikipedia, or find an iTunes U course. The internet has dramatically transformed in a short amount of time what is possible in a college course and what can be expected from students.

Outside of classrooms, some basic resources and education are needed to access and exploit the vast information available now, but it has certainly made acquiring information less expensive and more universally possible.

Can PBS Compete?

PBS is not a TV ratings powerhouse, but last weekend's premiere of Downton Abbey drew 7.9 million viewers. This isn't a huge audience, but it is four times the primetime audience that PBS enjoys on average, and it is comparable with the major networks' audiences for the same night.

PBS isn't exactly lowering its standards or reaching for mass appeal with Downton -- on the contrary, superficially it's about exactly what you'd expect a public TV drama to look and sound like. On Sunday night, though, it was about as popular as what the major networks were offering.

With the fragmenting of audiences, we may reach a point where the audience for a PBS drama like Downton is only as niche as is the audience for network sitcoms. That could mean a higher profile for public broadcasting in this country, which could attract more funding and make it a more competitive force.

Brief Thoughts on Zero Dark Thirty

I'm not too upset by the depiction of torture in Zero Dark Thirty as a 24-esque dark necessity, but it's not a good thing. The filmmakers seem to have been a bit careless with the facts, at least according to Jane Mayer, who is an expert on the subject. Artistic license becomes constrained when you open your movie with a statement that the film is based on real events.

Moviemakers can generally do what they want, even if it's irresponsible, and that's fine. It is unfortunate that this movie, as a movie, is actually pretty good and it was made by a talented and popular director, so lots and lots of people will see its misrepresentation of some terrible events in our recent history. Many will be inoculated by their own knowledge and skepticism against taking its depiction as fact, but many will not.

Trouble with the Cost Curve

The Milwaukee Journal Sentiel reports on a new study that finds about a third of doctors will a prescribe a name brand drug over its generic equivalent if patients ask for the name brand drug.  Is this because their patients are also doctors? The story doesn't say, but probably not.

The study finds that doctors who meet more regularly with pharmaceutical reps or take more giveaways are more likely to prescribe the name brand drugs, which makes sense. An expert interviewed for the Journal Sentinel story argues, though, that the biggest factor in these unnecessarily costly prescriptions is consumer advertisements for prescription drugs:

"Deyo said it is easier and faster for doctors to acquiesce to patients' demands for an advertised drug than to spend time explaining the disadvantages of doing so. That's especially true among doctors who don't want to alienate their patients, he said."

So a consumer who doesn't understand that a name brand and generic drug are equivalent learns about a drug from TV and successfully requests it from his or her doctor, who doesn't have the time for or interest in educating the patient. This system doesn't work, which is likely why direct to consumer drug advertising is banned in all Western countries other than the U.S. and New Zealand. 

Almost

Media Matters notes that an hour-long CNN special about the effects of climate change did not mention its human causes (thus avoiding discussion of ways to limit human impact). Instead, "the program focused overwhelmingly on safeguard measures to protect against "inevitable" extreme weather, without mentioning the role of manmade greenhouse gas emissions."

The simplest explanation for this is that acknowledging the human role in climate change is a partisan issue and CNN wants to avoid accusations of bias. Republicans who deny science to the detriment of future humanity deserve blame, of course, but CNN is to blame for unwillingness to address reality -- in the name of politically balanced coverage. One way to inoculate yourself against accusations of bias would be to educate your audience on important issues of the day. This might require a 24-hour news network.

Ask Google

This has probably been obvious to Google for awhile, but an article in the New York Times today brought home the point to me that Google's search service isn't as much about returning web pages anymore as it is about answering questions.

The initial -- and important -- role of search engines was to make the tremendous bulk of web content findable. Without a link and without knowing an exact URL, a web page is invisible. Search engines still serve the purpose of returning web pages, of course, but over the past fifteen years, web users have grown accustomed to using search engines to find answers to questions.

For these cases, Google can skip the whole web search step and just answer the question. From the Times story: "Search for Barack Obama’s birthday or the local weather, for instance, and Google shows you the answer above search results." This process leaves other content providers out and keeps users on Google pages.

Predicting the Future of Media Retail

Matt Yglesias asks whether independent bookstores will outlast Barnes & Noble. He suggests that nostalgia and customer service benefit small booksellers, while the big box bookstore model is becoming outmoded in the digital book era.

It's a good point and the same logic applies to music stores. As Matt says of independent bookstores, this doesn't mean small local record stores are a growth industry, but when so much is available digitally, the advantage of having a physical retail presence has shifted from stocking everything to stocking interesting or hard-to-find things and knowing these products well enough to recommend and sell them.

Even still, the retail store model depends on customers wanting a physical copy of their music for some reason. This is pretty straightforward with vinyl, and much music remains unavailable in legitimate digital forms. Same with books.

Treating You Like an Adult for $19.99 Annually

Andrew Sullivan is taking The Daily Dish to a metered-use/subscription model. There are a few interesting things about this, one of which is that the new Dish will be ad-free. The New York Times online subscription content is ad supported, in contrast, as are print newspapers and magazines and cable TV.

In his post describing the transition, Sullivan writes that dependence on advertisers leads to prioritization of page views and requires extra staff time and energy to solicit big ad buyers. With regard to the second point, I can't imagine that Sullivan and his team would have much trouble attracting the attention of big advertisers or proving the site's commercial potential.

Regarding page views, this concern highlights the relationship between advertiser interests and content. Advertisers need not explicitly dictate the content of media in order to shape it. In the case of web advertising, the desire to maximize page views for the sake of advertising revenue can reshape content decisions in a range of ways: from click-heavy slideshows to misleading headlines and salacious stories. See, for example The Huffington Post, where a front page link today reads "Oh S*%@! Meredith Viera Slips Up".

Depending on subscriber revenue alone can allow the Dish to report on Meredith Viera swearing or not, depending on the writers' and audience's interests, instead of an endless need to have readers click on provocative links.

The big question, of course, is whether relying on subscribers alone will provide satisfactory revenue. Andrew Sullivan is a great candidate to try this model. I think his success though, would have greater implications for large media outlets than for bloggers generally.  

Conspiracies in the Time of Dial-Up

A piece at Media Matters called “The Return of The Clinton Crazies” reminded me that it used to be a lot harder to learn about the Clintons’ treachery and villainy. 

Eric Boehlert draws a connection between the suspicion and derision surrounding Hillary Clinton’s recent hospitalization and the frothing conspiracy theorizing of the 1990’s:

“The unhinged concussion response seemed to mark the unofficial return of the Clinton Crazies, that marauding mindset among conservatives who spent the 90's launching endless attacks against the Clintons; vicious and wildly personal attacks that went far beyond partisan debate. (i.e. Accusations of killings and mass murder.)”

The thing is, people who wanted to hear Clinton murder accusations in the 1990’s had to put some effort (and money) into it. “The Clinton Chronicles,” for example, was a conspiracy-theory-laden “documentary” videotape available by mail order.

Mail order!

There was, of course, Rush Limbaugh in the 1990’s, but in general this kind of politically motivated nonsense had to be sought out, or you’d need to put yourself in the right (wrong ) crowd. Even with the beginnings of the web at home in the 90’s you’d need to seek out a Clinton site at Geocities or sign into a chatroom, whereas today you might unintentionally read comments on Facebook or Twitter about Secretary Clinton faking a head injury to avoid congressional testimony. 

The modern media landscape thus makes it a lot easier to spread misinformation about a birth certificate or taxes or death panels or whatever. And just wait until Clinton 2016.

What We Read and Where

Others have observed, more coherently than I can, that the scourge of regular, daily gun deaths across the country deserves some of the same attention and outrage that has been (rightfully) paid to the terrible mass shootings of 2012.

A solid look at gun violence in Chicago – with 506 homicides in 2012 – in today’s New York Times made me consider the role of local media in any disparity of public outrage.  While national media may be scorned for giving less attention to chronic gun violence than to its random outbursts (the abovementioned NYT piece is an exception, obviously), perhaps people in the communities most affected by chronic gun violence are being well-served by their media.

Newspaper readers in Detroit and Chicago are much more likely to encounter stories about chronic gun violence in their local press than are readers in more affluent or rural areas. So even if big-city media is underreporting gun violence (by whatever standard) they are almost surely covering it more than in cities less affected by such violence.  That difference in coverage could explain why chronic gun violence simply isn’t on the public issue radar screen of Americans in many parts of the country.