The Big Question: Is a Network (blanket license) Worth Doing? from david touve on Vimeo.

In the wake of this announcement, Eliot VanBuskirk over at Wired.com suggested YouTube viewing now tops network prime time viewing—at least in the US.

Recently at the Telco 2.0 conference, I tried to put YouTube viewing in context and made some estimates and conversions so I could compare YouTube to the World of Television viewing.

Daily YouTube views = 2,000,000,000
Average length of YouTube video = 4.3 minutes
Average time US household watches TV each day = 5.4 hours
Household TV viewing hours converted to YouTube views = 75.4 YT views

US household daily TV viewing converted to YT views = 19,355,665,442
Global household daily TV viewing converted to YT views = 389,019,943,256 (high)
Global household daily TV viewing converted to YT views = 311,215,954,605

——————————–

YouTube views as a percentage of global TV viewing = 0.514% low estimate
YouTube views as a percentage of global TV viewing = 0.643% high estimate

For a video of these data as presented, just follow this YouTube link

Unfortunately, the methods for and outcomes of mimicry often get conflated.  The result of this conflation is something we might call Best Practice Bingo.  A few people are starting to be concerned about the nature of this bingo game (Billboard, more), and these concerns are warranted.  We are in danger of confusing consequences for causes, attributing success to what really are outcomes while overlooking the far more complicated How and Why that led to these outcomes.

The basic equation for this bingo game are as follows:

SO + IF + E³ = BPB

(Study Outliers) + (Ignore Failures) + (Exceptions Exceptions Exceptions)
= (Best Practice Bingo)

Study Outliers

The first stage of best practices bingo involves studying outliers—i.e., successful firms (or individuals)—and describing either  the basic process of what these winners do or the basic attributes of these winners.  The appeal of this first stage is so compelling, quite frankly, we cannot help ourselves.  Winners often seem to success despite the odds, and condition that should immediately suggest outlier status.

When presented within the best practice argument for success the SO stage usually takes the form of case studies—rich stories that present the behaviors/attributes of winners as truly novel and or unique.  Importantly, these stories are told backwards.  They describe what the winner did from the beginning with the end result of these actions being success.  In truth, the winner succeeded and this success led the researcher to notice the firm and then attribute a set of behaviors/attributes to this success.

Ignore Failures

The second yet obviously related stage of this bingo game involves ignoring failures through the outlier selection process.  Ignoring failures is built into the study outliers stage, yet the presence of failures should be key to any test in search of what separates the wheat from the chaff, the winners from the losers.  By way of ignoring failures we turn off the capacity to tell whether what we see winners doing happens to be something truly unique to winners.  And by explaining the behaviors and attributes of only the winning outliers in arrears, we lose the ability to distinguish prediction from description. Losers in Bingo games never stand up and scream “we lost!”

Exceptions Exceptions Excpetions

The final condition for the best practice bingo game is the ongoing introduction of exceptions, exceptions, exceptions.  In the event of any failing firm (or individual) that seems to otherwise display the attributes of winning firms we propose exceptions, usually based on some prototypical case or argument.  By prototypical I simply mean the process or attributes of winners are argued to stand as ideal examples of the process or attribute in question.  Failed firms may have something that looks like these processes/attributes, but they just didn’t do/have these things just right.  These firms are, therefore, excluded from the condition in arrears.  When you start hearing the word “but” all the time, be very worried that someone may be making as ass of you.

Best Practice Bingo

The result of this all-too-common three stage process is a situation we might call best practice bingo.  Upon learning about these behaviors and attributes of winning firms, other firms begin to mimic these features and the bingo game begins.  Some of these firms succeed, others fail.  The pundit excludes failures from the model for simply not doing/having it “just right .”  Successful outcomes are almost always accepted as de facto and are used to support the model.

Example #1: CWF + RTB = $$$

Circulating the network of pundits (examples here, here and here) these days is Techdirt’s recent proposition that the model for future business success can be phrased: (Connect with Fans) + (Reason to Buy) = $$$.  When presented in public (here and here), this proposition is pretty much always a function of case studies—Trent Reznor, Jill Sobule, etc.

Just about every presentation on the CWF+RTB premise involves studying outliers—winners who seemed to embody the ethos of this model.  These artists appear to be succeeding by way of this model, so what’s the problem?  IF + EEE.

First and foremost, failures are ignored.  Any number of artists, both now and in the past, have employed a method through which they aspire to connect with fans and give these fans a reason to buy.  In fact, just about every business on the planet is in the business of trying to connect with potential customers and give these customers are reason to open their wallets.  Some of these artists have succeeded while others have failed.

Finally, the exceptions are starting to roll in.  In order to workaround the bingo game, we are starting to hear about folks just not really connecting with fans, or just not given those fans are reason to buy.  And so, the big buts will begin.

Example #2: CWE + RTV = Election

Let’s be honest, a translation of the CWF model for politics would be: Connect with the electorate + Give them a reason to vote for you = Election to office.  CWE + RTV = Election

When translated to other markets, the model seems to offer less insight than description.  The winner of any election connected with the electorate and gave that electorate a reasons to vote.  However, these features were consequences not causes.

Here’s to a bingo-free lifestyle.

Click here to download: Structuring the Resolution.

The text version:

From a platform mindset, our approach to not only licensing but also providing music on networks might dramatically change.  In the following section I will briefly describe a simple three-tier structure for music licensing that could be considered.

Importantly, the structure described below does not involve a fundamental shift in how we approach and design music licenses.  Licensing music rights by way of collectives and blanket terms is a premise that is more than 100 years old.  The intent of the platform structure is to recognize music rights as a commons environment, rather than try to enact technical or legal measures that might somehow attempt to treat these rights as truly, privately controlled property.  The intent of the tiered structure is to make plausible the licensing of a range of consumer-facing services.  Essentially these services would operate “on top of” a licensed platform.  This three-stage structure is an intentional modification of what might otherwise be seen as a two-part tariff.  As the reader will see, I have broken up the enactment of the tiers so as to weaken the concerns for monopoly control.

Three-Tiered License

In an effort to resolve the music providers’ dilemma, I propose a three-tier license structure for establishing music as a platform underlying the infrastructure of internet service provision.  Tier One licenses would be granted directly to ISPs, while Tier Two licenses would be granted by ISPs to MSPs in exchange for the latter partys’ reliance upon the primary platform for the development of consumer-facing products, services and experiences.  Tier Three licenses involve the relationships between FANS, and their associated ISPs and/or MSPs.  This third tier involves the business models through which music is ultimately experienced by FANs.

Tier One

The Tier One license is provided directly to ISPs for the provision of music on their networks.  This primary tier of service license essentially establishes the music platform.  Music files are made available to ISPs, who then can resolve requests for these files on behalf of end users.  This licensed platform for music might even inherit its own informal URL space (e.g., music://  ), and a request made for some location within this space would be resolved by ISPs and fulfilled (i.e., served from some recognizable location) by the assigned representative of a music rights holder.

An immediate benefit of such a platform structure can be seen in the phenomena that are URL linking and bookmarking – the simple act of sharing the location of a web page (http://www.website.com/really_cool_webpage).  Given linking to a web page is so damn easy – merely a function of copy-paste – and generally reliable, the average web user does not choose to download and pass along the raw HTML file of interest with all of the associated media.  Instead, we simply copy a link, paste it into an email, and share with friends some experience we find compelling.

The objective of music:// as a URL space is to make acquiring and sharing licensed music files just plain easier and more reliable than transmitting these files through alternative venues.  Any end user wishing to share a file simply needs to share the music:// URL associated with that file.  This URL, when selected, transmits the file to the end user by the preferred method (e.g., streaming or download).  In the results as presented within the file sharing applications or search engines, these verified and reliable files would likely be granted higher priority given their greater likelihood of satisfying user requests.

Furthermore, by converting music to a URL space mediated by ISPs we can introduce not only the ability to gather data relevant to the distribution of royalties, but also the capacity to gather these data anonymously.  ISPs release to the rights representatives the usage of files that have been served, while user-specific data would be gathered separately and used independently.  These user-specific data would only be associated with usage upon the user’s permission.

Tier Two

A Tier Two license might be provided by ISPs to MSPs for the reliance of these commercial operators upon the hosted music platform in the development of consumer-facing products, services and experiences.  Essentially, copyright holders would invite ISPs to become relevant and relied upon actors in the music value chain, with the capacity to develop licenses and fee structures for downstream MSPs.  A portion of these downstream license fees might pass through to MRPs, the assigned representatives of music rights holders.  As a result, a sort of secondary marketplace forms for the provision of music to end users – this secondary market providing a means for informing the negotiated price for the Tier One license.

Quite truthfully, the availability of tens of millions of music files presents end consumers not only with a clear opportunity, but also with a very clear problem – navigating and organizing such a vast catalog of music. The purpose of the Tier Two license is to empower MSPs with not only the rights but also the infrastructure through which the problems of end consumers might be reasonably solved.

For example, search providers such as Google and even file sharing applications such as Limewire, rather than being populated by links to unqualified files and transitory IP addresses, would instead be populated by URLs resolving upon qualified and reliable music files.  Music services such as Rhapsody, iLike or Project Playlist would be supported by a platform of consistently available media.

Tier Three

A Tier Three license is the final bridge between FANs, ISPs and MSPs.  The third tier involves the innovations and associated business models, through which music is ultimately experienced by FANs.  By separating this tier from direct influence by MRPs, the goal is to empower innovation, while permitting the gains from these innovations to filter through the system to music rights holders.  The price paid by FANs and MSPs for the provision of music filters through to the license paid by ISPs for the right to provide such music openly.

A visual of the layers and tiers:

By Theory, I simply mean a statement of some causal relationship(s), and/or conditional process(es) that can be proven to be false.  Notice, I did not say that a theory is something that can be proven to be true.  This distinction – falsification – is fundamental to what it seems we call our scientific method.  Furthermore, as highlighted by the Oxford dictionary, a theory involves “general principles independent of the thing to be explained.”  The outcome and conditions are not the theory – the theory is in the spaces in between the cause and the consequent.

By Ideology, I simply mean “a system of ideas and ideals” that can be shown to be true.  Importantly, these principles may not be independent of the thing to be explained.  Instead, ideologies are alternatively explanations or interpretations.  The cause and the consequent are fused together, no longer independent.

For example, the various disciplines of the social sciences – economics, sociology, political science – are supported by various ideologies.  These disciplines are cornerstoned, and at times distinguished, by certain ideas and assumptions about the world such that explanations make sense. These ideologies then give birth to all sorts of theories about human behavior, at the level of individuals or the aggregation of individuals we call markets or societies.

The Long Tail may in fact be an Ideology – a system of ideas and ideals that once in place can be shown to be true.  I am coming to this conclusion given most challenges to the claims of the Long Tail are met with re-stated conditions and exceptions.  The objective of the Long Tail thesis appears to be to describe a set of conditions under which both the cause and the consequent would be shown to be true.

As such, the premise(s) of the Long Tail may not form a Theory to be tested, but an Ideology to be adopted and adapted.

Quite honestly, as an iPhone owner, I can say that this thing makes other phones just look like toys.  Not that toys are a bad thing.  But as more phones live and work like iPhones, social life will have to be impacted in unexpected ways.

The paper can be downloaded from the MCPS-PRS Alliance site for independent research. 

Right off the bat. An important quote: “The risk, in our opinion, is that as digital revenues increase, core revenues for entertainment companies decelerate more rapidly than we currently expect.”

Which is exactly the scenario that kicked the music industry in the ass.

Onward.

> UGC
Not a truly userful understanding of the scale and scope of user generated participation in online media. In fact, to assert this kind of fabricated “growth” they assert is dangerous.

They suggest that UGC (User Generated Content) accounts for 13% of internet page views, up from 0-1% in 2004. 1300% percent growth over three years for a sector. Their conception of UGC is completely flawed however, and this representation of the internet will lead to all sorts of similar, bogus conclusions. I have to be honest. It seems pretty naive to assert that less than 1% of internet page views, only three years ago, were the consequent of user generated media. What we have instead is simply a measure of the growth of the five sites/networks in their index. Online, UGC always has been big, always will be big.

UGC has been the heart of the WWW since the beginning. The big brands after this beginning were Tripod, GeoCities, and a host of others.. the “Homepage” phenomenon. Combined with every site of every other netizen that contains text, audio, video, etc. Similar pages have and will continue to comprise a larger proportion of views than estimated in this report. Simply put, do a web search. More than 13% of the results come from sources other than the search engine itself, or a major media company partner.

> Paradox of Choice
This cry for filters, editors, recommendation agents and such is old. It is neither new nor informative. You basically have to live under a rock to conclude anything else.

The paradox in this industry is that the value of the editor and the filter has not arrived consistently, and has often been collected by the aggregator alone, or not collected at all. Acquisitions in this area ebb and flow. From Firefly and others, to the fizzles in 2001 (you know who you are), to the big hits like Last.fm.

The “wealth of networks” is being earned by only a small section of the network. Even though the “wisdom of crowds” is being produced by an increasingly large crowd. Which Last.FM users got stock? This is where media companies, who usually played the editors as well, get screwed.

> Content and kingship
whatever. Since the beginning of media time media companies have developed content while owning “infrastructure.” From studios with theatres to labels with radio stations. The business has always been choppy. The challenge is when top-line industry revenue falls. Integration is simply a question of how you define the industry.

> Response to change
Three platitudes exist in this section, leading to doing nothing specific: (1) build organically (2) acquire (3) partner. The only other choice i can think of could be (4) do nothing, which the authors clearly just chose to leave out. The business book section of your local bookstore is fully stocked on platitudes. I know HBR has at least four leading off the july/august edition.

However, the warning against building organically seems all so reasonable, yet so painful for media companies to accept.

>Offsetting initiatives
Total advertising dollars have slowly climbed over the last five years. The percentages in the report play with you head. Core + Online = Total. Total is nothing other than Core + Online, and therefore, as long as total advertising dollars increase, newspapers (or whatever they will become) can always grow revenue.