Monday, December 29, 2014

The top posts of 2014: Pebble, Pornography & Piracy, Vice Media...and a few more

In a year of disappearing aircraft, hoax viral videos, and celebrity body parts allegedly ‘breaking the Internet’, it’s good to have a few things we can believe in. Like this blog. And in the absence of one of those auto-generated year in review things that Facebook has, I decided to handcraft one of my own. So here's to this blog's year that was, as reflected in click count. (Yes, some things are popularity contests.)

When I write a post I honestly have no idea which ones will get piles of clicks, which will get lightly retweeted or shared, and which will take on a life of their own and circulate well beyond my immediate group of friends, colleagues, and contacts. Case in point: the most popular post on the blog, still, every damn day, is almost two years old. It's the one in which I break down how much money Macklemore made. Yes, Macklemore the white rapper guy who went all the way to #1 in 2013 with his catchy jam Thrift Shop — now at more than 628 million views on YouTube, I might add —and showed the world that you could get to #1 without a label, buying in promotional and distribution services on a la carte basis. The Macklemore machine began its roll into the mainstream in late 2012 and if you asked me if I thought people would still be interested in the story in late 2014 I would have said not many. Yet, every day, people are googling his name and ending up on my blog. (btw Macklemore’s real name is Ben Haggerty, which explains that showing up as one of the search terms that brought people to this blog).

I mention this because, as I break out the most popular posts of the year I would be remiss not to include the oldie but goodie that is the Macklemore steamroller. The rest of the posts listed here were written in 2014, and here they are in reverse order of popularity.

Let's get started with this post from November 2014, on the challenges the pornography industry has had to deal with it in the digital environment. Like all other content industries it's rife with piracy but has the added feature of the ability of people to just set up a webcam at home and entirely bypass the industry. Remember when porn was the only thing people would pay for on the Internet? 

The 'good old days' of monetized online pornography

Well those days are over, and have been for some time now. If you missed this post, here it is again for your enjoyment. It’s a feature interview with intellectual property scholar Kate Darling, and I must say that one of the most interesting things I learned doing this interview is that a good number of the people in the industry got into it after their jewelry store at the mall failed.

The next most popular post was this one, inspired by the dispute between Amazon and the publisher Hachette, without just being more of the same about it...i.e. Amazon is the big bad guy, Hachette is the good guy, and therefore Goliath is bullying David. If only it were that easy.

The initial post turned into a series that used the dispute as a jumping off point for a look at the book publishing industry in a time of online book selling, eBooks, and self-publishing.

Coming in just above the Amazon vs Hachette post was this one, about how traditional news
Graphic courtesy @terraloire
organizations do their job in the environment of the social media circus. In this case around a scandal involving a prominent Canadian broadcaster...but you don’t have to be Canadian to care (though it helps). For this post I called on Andrew Lundy, Vice President, Digital, at The Canadian Press and he helped dissect the role of legacy media organizations at a time when the throngs are tweeting up a storm and no green lighting by editors or producers is necessary.

The next most popular post of the year was about, as one reader put it: “horseshit as the new journalism”. This was the year that sites like Buzzfeed, Upworthy, Gawker, and similar 'gotcha news' sites went full tilt with the clickbait. It didn’t matter if it was true or not, it only mattered that you clicked. And, wouldn’t you know it, people clicked quite vigorously on the blog post about this phenomenon, so it was quite a satisfying meta moment.

Not actually Egypt in the snow. But on the Internet, it was.

Okay, it’s getting exciting now, as we move on to the second most popular post of the year, and for this one we examined the triumph of the bro media empire Vice, now valued at several billion dollars. This post goes all the way back to Vice’s earliest days as a free, across-the-board offensive, alt-culture paper, and traces their journey to deals with Rupert Murdoch, HBO, and other powerful players in the media pantheon.


     And now… it’s time for this blog's most popular post of 2014...


....And it is this one, about the evolution of the Pebble smart watch. Not only was it the most popular post here, it also went all the way to #1 on Reddit in the discussion group about Pebble. (And yes, the two are related.)

What a tale the Pebble is. It went from a student project to the most successful Kickstarter campaign to date. And they beat the Apple iWatch to market too. It all started because the company founder wanted to be able to get email notifications on his watch when he was riding his bike.

The Pebble Smart Watch,
now with tens of thousands of apps
that make it go where no watch has gone before

And there you have it, the most popular posts from 2014 on the Demassed blog. In the new year you can look forward to posts about changes that are afoot in the worlds of podcasting and YouTube, and in March I’m scheduled to participate in a panel at SXSW Interactive  and hope to hit as many panels and keynotes as I can and report back here.

In the meantime, happy new year, and please accept this lovely calendar as my way of saying thanks for your clicks, comments, retweets, and shares. (You've been doing that, right?)

Thursday, December 25, 2014

Moving targets in the marketplace: learning lessons from Pong

“It’s easy to look back on Atari as a huge success, but we had no money. Ever. Investors looked at the video game business as being really specious.” These are the words of Nolan Bushnell, the co-founder of Atari, and regarded by many as one of the fathers of the video game industry. Bushnell spoke in Toronto recently, sharing with the audience his life of serial entrepreneurship, from some of the earliest video games like Pong, to the themed restaurant chain Chuck E. Cheese's, to more recent ventures such as anti-aging games and educational software. Oh, and he gave a college dropout named Steve Jobs his first job after ditching higher education, but more on that in a bit.

Though this blog has aimed to keep its focus on the effects of digital technologies and networks on the creative industries, today we’re going to stray from this theme, ever so slightly, and look at the earliest days of an industry that has become embedded in the devices on our desks, in our living rooms, and in our pockets. An industry that started out as a side interest of ham radio operators and electronics tinkerers and eventually became a global market worth over $100 billion.

From Pong to Breakout and meeting a young Steve Jobs along the way

According to Bushnell, his original plan upon founding Atari in 1972 was to be a research facility that then licensed games to manufacturers. “We had no money”, he reminded the crowd, so that was the option he saw that was open. Atari’s first game was based on a two dimensional tennis bat and ball (albeit square ball, which apparently was cheaper to render) and was called Pong. It became the first commercially successful video game.

But — there’s a but. Of the 150,000 Pong games released to the market, Atari did only 35,000 of them, as the patents weren't yet completed and knock-offs and copies started popping up in arcades, bars, and bowling alleys across America. 

Bushnell’s response: “We decided we were going to bankrupt the people who copied us.” And so they did. Nobody loves a good prank as much as a bunch of engineers. Bear in mind that the early video games, until about 1975 or so, had no program running in them. They were circuit boards that could play a game. From Atari’s HQ in Sunnyvale, California Bushnell was in the thick of that sector, with all the microprocessor plants just down the block. And so, Bushnell was able to have his competitors supplied with circuit boards which he stuffed with the wrong microprocessors. “And then we threw a champagne party to celebrate their demise.”

Steve Jobs, relegated to the night shift
A few years prior a recent dropout from Oregon’s Reed College decided that Atari was the coolest place to work. So he showed up at the office in the then nascent Silicon Valley and informed Bushnell that he wasn’t leaving until he was hired. Remembers Bushnell: “He didn’t shower, he smelled bad, and if he thought you were dumb he would tell you.” Not exactly a team player, so Jobs was put on the engineering night shift...which didn’t actually exist. “But I knew that his friend, Steve Wozniak aka Woz, who worked at HP, would start hanging around, which is exactly what happened.” 

Wozniak and Jobs worked on a 1-player game called Breakout, one of the three dozen or so arcade games that followed in the wake of Pong. Ultimately the duo saw bigger things on the horizon and decided to strike out on their own and start a hardware company. Nolan Bushnell was one of the people they approached to invest in their new venture. Woz and Jobs offered Bushnell one third of their company for $50,000. “I said no”, remembers Bushnell. He takes a breath, then shrugs. “I regret that.”

Jobs and Woz went on their way, and we all know what happened there. So now, back we go to the story of Pong. Bushnell recalls: “We realized we were selling coin-operated games, that would earn about 15 to 20 thousand in coin drops. It was a good business but it didn’t take a genius to figure out we were at the wrong end of the equation.” And that epiphany is what led Bushnell to two ideas: a play-at-home version of Pong, which he would release in 1975, and a foray into the restaurant business, which took place in 1977.
Play-at-home version of Pong,
retailed through Sears'
Sporting Goods department 

So Bushnell and his team created a play-at-home console version of the crazily popular arcade game Pong, and hit the road with it. First stop: the annual toy show in NYC. “We sold zero”, remembers Bushnell. Next he tried Radio Shack. Not interested. Then he approached department stores. Also not interested. Finally, he got a meeting with Sears’ sporting goods department. At the time home ping pong tables were a hot item and the buyer saw an opportunity with an electronic home version of Pong. “He asked me how many we could build. I said 25,000 — not having a clue if we could. He then came in with an order for 150,000, and we found out that we sucked down the complete world supply of knobs — so we used aluminum, wood, bakelite, plastic, whatever we could get our hands on. And that year we sold 240,000 Pong games.”

On the inspiration for Chuck E. Cheese's, where pizza collided with the fun palace

Hot on the heels of the success of the play-at-home version of Pong, Bushnell followed up on part two of his epiphany, the one about holding the wrong end of the stick by putting games into other people’s arcades. He would build his own venue. But this wasn’t just an arcade. This was a new category of eatery meets entertainment meets a warehouse-sized space filled with kids. And it would be called Chuck E. Cheese’s, where a combination of people inside mouse mascot costumes high-fived the miniature customers and giant animatronic animals performed the hits of the day. Where thousands of square feet of arcade games, rides, and jungle gyms were there for the playing, climbing, and jumping pleasure of groups of kids with dribs and drabs of tomato sauce and ice cream still fresh on their hands and shirts. It also seems to have become a popular place for adults to get into knock down, drag out fist fights.

But back to our story. So, was Chuck E. Cheese's a slam dunk for Bushnell? Again, the answer would be no.“We got the size totally wrong”, he admits. “We started with 5,000 square feet. Too small. We then went to 25,000 square feet. Too big. And it turned out 12,000 square feet was the right size. Another thing we got wrong was temperature control. We didn’t realize that with the heat load of games, people, and pizza ovens it was often 110F in there (40C). The problem of the hellfire level of temperature was eventually solved, but other problems weren’t as easy to address. Throughout the late 1970s and early 1980s the video game industry was growing rapidly, and people didn’t need to go to arcades or themed restaurants to play them. By 1984 Bushnell had no choice but to file for Chapter 11 bankruptcy and sell off the assets. Chuck E. Cheese's managed to survive under different management and ownership, but for Bushnell it ended up being a giant money pit.


But fret not. Bushnell is a serial enterpreneur, so the story didn’t end there. In fact it not only went on, it continues today, despite rollercoaster highs and lows, getting banned from companies he started, and making and losing several fortunes.

For the purposes of this blog, let's think about Pong in the context of changing economics and power structures and the evaporation of many of the traditional revenue streams for software-based products. In this way the story of Pong can be looked at as one in which the company stayed alert to not just new contexts for its products but also occupying new spaces in the value chain. Is it in licensing? Is it in software? Is it in hardware? Is it in the consumer/home market? Is it in the restaurant business? Of course the tricky part here is that a video game company knows a lot about electronics and software, and less about, say, operating a chain of 12,000 square foot themed restaurants. But, as it turned out, these were all necessary steps in getting us to today's gazillion dollar a year game industry...and in the entrepreneurial journey of Nolan Bushnell, who thought about the process as much as he did the product, and as a result remains in the game today.

And now I’ll leave you with this, the advice for today's youth Bushnell shared with the audience at the recent talk in Toronto. I don’t think any of these things are part of any curriculum (is typing still taught at high school?), but probably should be.

With thanks to Martin Goldberg for additional information & clarifications about the history of Atari. 

Monday, December 15, 2014

McLuhan's Understanding Media: 50 years later

Original 1964 edition of Understanding Media
With just two weeks left in the year, time is of the essence if we want to squeeze in any sort of celebration, or at least acknowledgement, of the 50th anniversary of the publication of Marshall McLuhan’s “Understanding Media: The Extensions of Man”.

I was able to do so recently, at a talk held at McLuhan’s old stomping ground at U of T in Toronto, where a group made up of his students from the 60s and 70s, current students of media & communications studies, and even a few of McLuhan’s sons convened to exchange stories about the quixotic professor who passed away in 1980. Some notes from that talk in a bit, but first a few musings of my own to provide some context as to why we we're still talking about this man with a talent for turning out buzzwords and catchphrases that many say were as inscrutable as they were pithy.

The year was 1964 when McLuhan put forward the idea that 'the medium is the message'. Since that time we’ve not only heard that phrase thousands of times but have also seen media and technology actually turn into extensions of man, whether by way of personalized micro-media like tweets and location-based services or more concretely through powerful, always-with-us gadgets like smartphones and wearable devices. And bear in mind that when McLuhan initially first made this point it was fairly abstract — the idea the structure of a medium, or communicative channel, has as much if not more meaning than the content of the message itself. Not a huge surprise, then, that when McLuhan made these pronouncements they were often thought of as  a trickster's riddles, as opposed to a visionary's axioms.

He also spoke of the effects of the electronic world, or the shift from ‘literary man’ of the era of the book to our (then) new electronic selves that came into being with the advent of television. Television, with its ability to broadcast to much larger swaths than its predecessor radio, enabled what McLuhan termed an “all-at-onceness” — a system in which a single piece of information could be experienced by millions around the world, all at the same moment.

One of the interests of this blog has been the impacts and affordances of digital, networked technologies on the creative industries. What gets easier when each individuals can communicate with each other, to people they both do and don’t know, and do so on a global scale? What becomes more difficult? What becomes possible that previously was not?

One of the answers is that with digital media leaving trails wherever it goes, diffusion has been made visible. Before, we knew people were exchanging ideas — and goods and services too — in all sorts of interesting ways, and creating all sorts of interesting patterns, but for the most part this was invisible. Yes, the world of loyalty programs and direct marketing databases held insights into such activities but their work was, and arguably still is, not well understood by the average person, whereas it isn’t difficult to grasp a concept like a particular song being Shazam’d more than most, or a particular phrase turning up on Twitter at a surprisingly high rate.

And what about the cultures of sampling and remixing? Or the blurring of the line between amateur and professional creators of media that is now commonplace? McLuhan foresaw these in his work, even though the realities of smartphones and universal uploading were still several decades away.

And with these little nuggets in our minds, I now present some notes from the recent 50th anniversary of McLuhan’s “Understanding Media”, held recently on the campus of the University of Toronto.

Son Michael McLuhan, a professional photographer. started things off with a series of reviews of Understanding Media he dug up from the time of its release in 1964.

From Time magazine: “Is it a fad or a parlour game? Is it intelligence, arrogance, or pseudoscience?”

From Arthur Schlesinger Jr. in BookWeek: “Bland assertions, hopeless nonsense, endless and random…an intelligent man masquerading as a charlatan.”

We then heard from Bruce Powe, novelist, English professor at York University, and former student of McLuhan’s. As Powe put it: “Some teachers convey information, some change your life, and some rearrange your DNA. For me McLuhan was the latter.”

McLuhan in a seminar at University of Toronto, circa early 1970s
Powe went on to describe “Understanding Media” as ana-logical, as declaring a war on logic, a war that was necessary so that an understanding of the associations and connections made possible in the electronic sphere of media could be put forward. We’re still talking about these connections fifty years later because they were so deeply prophetic, said Powe. But on his home campus at U of T, Powe says McLuhan was largely isolated in his own world of ideas. Power shared the story of keeping McLuhan’s name in the acknowledgements section of his thesis — something McLuhan warned Powe about doing. “Bruce, take my name out of there”, McLuhan insisted. But Powe didn’t listen, and once again McLuhan was prophetic. Powe ended up spending close to an hour of his thesis defence defending the presence of McLuhan’s name in the acknowledgements.

McLuhan’s vision was in understanding the great environmental forces at work in ‘the big bang that is technology', and that kind of understanding is a form of grace. McLuhan urged us to remove our value judgements about good and bad and simply perceive, Powe reminded us. And this was McLuhan's prophetic skill: that he could see the future in the present.

Related Post: When media is everywhere where are we?

Sunday, November 30, 2014

Some thoughts on old power vs new power

An article that caught my eye recently was this one, written by Jeremy Heimans and Henry Timms for the December 2014 issue of the Harvard Business Review (HBR). The title is “Understanding New Power" and it provides as good an overview as I’ve seen anywhere on the distinction between ‘old power’ and ‘new power’. This tension between the conventional wisdoms of ‘that’s how we’ve always done things', and the at first seemingly radical but also potentially hugely successful ‘we’ve never done it that way before', is a central feature of many facets of today’s economy.

This push and pull is what underlies the transformations we see brought on by digital networked technologies in fields ranging from the media to health care, manufacturing, retailing, technology, education, and beyond. And yet, given enough time, any type of power has a tendency to concentrate, and we are seeing this play out in the digital world too, where companies such as Amazon, Spotify, Facebook, and YouTube wield a disproportionate amount of power...just as physical world counterparts such as Walmart and broadcasting networks do.

So, you ask, is it just a case of same story, different players? This is a big part of what I’ve been working on in this blog, having spent coming up on 2 years and about 75,000 words looking at specific instances of old vs new power, looking for patterns and principles that can hopefully provide helpful ways of thinking about these changes. My focus here has been on the creative and media industries: radio,TV, film, music, publishing, and the like — even though many of these very words now have new meanings.

For example, what is “TV” in an environment of YouTube and on-demand programming? What is “radio” in a world of streaming music services and podcasts made in bedrooms and garages getting millions of downloads per month? So it’s not just the old ways of thinking about these things, but the terminology itself that doesn’t quite serve us the way it once did. 

Furthermore, what starts in the media industries often extends toward other sectors, and that’s why I think it’s worth our while to take more of a thematic approach here, with a closer look at these distinct types of power — the old and the new — and consider how and to what extent hierarchical, top down power is being taken to task by power that originates from the traditionally un-powerful places found downstream.

Some basic definitions to get us started:

Old Power 

It’s the power of established groups and companies, organized around top down authority, fairly rigid hierarchies, usually high barriers to entry, and an end consumer or user or audience member who generally receives but does not feed back, comment, or create. Think General Electric, Procter & Gamble, banks, the phone company.

New Power

The new locus of value found in no one particular place and not corralled by any one source or leader. Think Wikipedia, Craigslist, Twitter.

This type of new power is not actually new, but its mechanism is. Before the advent of widespread and affordable networked technologies such as mobile phones and personal computers this type of power found its expression in places such as grassroots organizing, community participation, or soft power.

Quoting philosopher Bertrand Russell in the HBR article: ‘Power is about the production of intended effects’. Old Power did this with power obtained from ownership and control. Collecting and protecting. New power gets its power from the powers of global distribution, networks that increase in value as user bases grow, and augmentation and reshaping by users. 

Platform businesses, built around a marketplace that increases in value as it grows, are a hallmark of this kind of new power. If you want a sense of how to quantify new power, look no further than businesses such as Uber.  It owns exactly zero vehicles, and as of Fall 2014 has a valuation in excess of $17 billion. Show me a cab company that can make a similar claim. Similarly, AirBnB owns no real estate yet has a valuation and/or revenues that approach if not exceed the old power titans of the lodging industry such as Hyatt and HIlton. And AirBnB got there in just a handful of years. What's more: both businesses seemed like crackpot ideas at first, if not borderline illegal. But that’s another characteristic of new power. It can redefine everything from categories to regulatory environments. New power is, then, about creating spaces where audiences and/or consumers can interact and transact, and often on their own terms. As the authors put it in the HBR article: new power “uploads power from a source that is diffuse but enormous.”

Old power was measured largely in fortress-like production on the company side and obedient consumption on the user side. Some companies went so far as trying to implement ‘consumer-centric’ approaches -- claiming to put the customer/user at the heart of the experience -- but comparing these efforts to the centrality of the consumer/audience member now is, well, almost laughable. 

Now the norm is on-demand products and services, at low to no cost to the user (via freemium or ad-supported models), the ability to ‘talk back’ to brands and companies in real time using tools like Twitter and sites like TripAdvisor, unbundling of products and services, and customization of products and services. 

Putting this into the context of media, consider, for example, the endless array of choices available on music services like Pandora, Rdio, and Spotify and compare them the you-eat-what-you-are-served approach of radio. In a phrase, from a few producers of mass media to millions of consumers of customized streams. What you are hearing is different from what anyone else is hearing at any given moment. You are an audience of one. Just as you are when you're viewing Netflix or watching videos on YouTube. Old power could never afford to serve an audience of one. New power is predicated on it.

Old power draws strength from obstacles: high barriers to entry, formats that are more or less carved in stone, and schedules that work first for them, and later for consumers. New power is characterized by and rewards elasticity and agility. When audiences or consumers make their preferences known, either in words or actions, new power knows it has no choice but to listen. 

For more on Old vs. New Power click here for the full article by Jeremy Heimans and Henry Timms, appearing in the December 2014 issue of the Harvard Business Review. 

Related Posts: The creative economy: Is the (3rd) party over?

Tuesday, November 11, 2014

Porn, the Internet, and Intellectual Property

After almost two years of writing posts about the reshaping of the media and entertainment industries in the digital environment -- from the rise of microstars on YouTube, to bloggers, podcasters, musicians, and filmmakers -- today on the blog we aim the lens at another industry sector that's been shaken up and reconfigured by the Internet: Pornography. Just as in other corners of the entertainment industry digital disintermediation is taking hold in the world of online porn: new avenues for indies, amateurs taking market share from professionals, the introduction of cryptocurrencies for micro-payments, and aggregators trying to create monopolies. In this way the porn industry isn't all that different from music, writing, book publishing, or any other industry where physical things have morphed into digital things and the value has been accruing to aggregators, not creators.

Burt Reynolds as Jack Horner in Boogie Nights (1997),
pondering the change in format to VHS
Moviegoers from the 1990s may remember Boogie Nights, the film whose backdrop was the the adult entertainment industry's transition from movies watched in sketchy cinemas to VHS tapes viewed at home. Seeing that we haven't yet had a Boogie Nights II: The Internet Years, this post will have to suffice as a way to think about the next round of technological challenges and consumer preferences faced by the industry: the advent of the Internet. The 24/7 all access Internet has meant everything from piracy to personalized services to the emergence of highly specialized content niches.

Kate Darling:
 Intellectual Property Scholar

For this esoteric undertaking I sat down with Kate Darling, a woman of many titles, among them robot researcher and intellectual property specialist. Kate is a freshly minted PhD and the author of a pioneering study on the economics of the online entertainment industry recently published in the Stanford Technology Law Review. Kate and I sat down for a talk on the topic at the G-rated Berkman Center for Internet & Society in Cambridge, Massachusetts. It went more or less like this:

LK: “What Drives IP without IP: A Study of the Online Adult Entertainment Industry” is the title of your paper. The first IP stands for Internet Pornography and the second one stands for Intellectual Property. And I have to admit I am more interested in the second IP than the first IP.

KD: That’s what everyone says!

LK: Is that what everyone says? And of course your interest would be in the Intellectual Property aspects of things as well, but how did you end up bringing that interest together with Internet Pornography?

KD: It’s actually a play on words, a description of a type of research that has become increasingly popular in legal scholarship, which is Information Production Without Intellectual Property. And there have been a number of studies looking at how industries deal with a lack of, or a reduced set of, Intellectual Property protections, particularly if they’re creative industries and they’re producing creative work. There have been studies on fashion, on standup comedy, on chef’s recipes, and all these communities kind of outside the boundaries of Intellectual Property.

I’ve been really interested in that stream of literature for a while and it occurred to me one day that these industries are really great to look at, as it’s a lot of communities with social norm enforcement. People have been looking at the music industry and the major motion picture industry but it just kind of occurred to me that the adult entertainment industry has always been on the forefront of innovation and driving technology adoption and they are basically operating without intellectual property protections. There’s so much piracy online and they don’t have the same kind of lobbying that the other industries have. So it just occurred to me that that maybe an interesting study for that space of “IP without IP”, but with more parallels to the industries that policymakers actually cared about, would be Internet Pornography. And he “IP” part also worked out, too. You can just substitute Internet Pornography for information production.

LK: To give us a sense of scale, I believe that it says in your paper that this is a billion dollar a year market.

KD: It’s very very hard to get accurate numbers on this industry, most of the firms are privately held and there’s also a question of how you define what pornography is. So there’s been a bunch of estimates, most numbers on the Internet I found to be inaccurate but, at a minimum, the online adult entertainment industry is a couple billion dollars, according to people in the industry and their estimates.

LK: In your paper you talked about information products and the old way of thinking about information products was copyright and then selling rights or licenses or physical goods. It’s easy to forget with what we’ve seen in the last ten or fifteen years that there was a point to copyright and the whole point of copyright was to incentivize economic actors to make products. This is something that you talked about a lot in the paper.

KD: Yes, exactly. So the theory, at least in the United States, or one of the main reasons or justifications for copyright law is you need to give people a monetary incentive to create, because otherwise, people will just be able to copy or replicate and the creators won’t be able to recoup their investment costs. It’s a very useful theory in some cases and it’s proven true to some extent but what this stream of literature has been showing is something that is intuitive to a lot of people -- except for economists -- which is that there are other ways to incentivize creation, and it’s sometimes a little bit over simplified to say that copyright needs to be the driver.

And what we also often forget is that copyright comes with cost, so there’s 'dead weight' costs of creating monopoly-like rights, and it also reduces access to creative works and raises prices of creative works. So it’s a very difficult balance, because both sides of the equation are very hard to measure. I just think it’s important to realize that it is a delicate balance and that we don’t have the answers. It's not as black and white as we often think, and that’s what these studies together are trying to show, and are also trying to establish the other factors that could play a role or could be incorporated into these very simple criteria that we’ve had so far.

Porn online: At first a growth industry

LK: To bring this now into the context of the work that you did, as far back as I can remember, and I don’t know exactly when it changed, pornography was about the only thing that people would pay for online. That was the one thing that people would always pay for, anybody could set up a webcam and be in business… and then, what happened?

KD: Well, what happened essentially is what happened in other industries but perhaps even more extreme. Piracy, unauthorized use of content, started getting more organized, so I guess the big change for pornography was when the same platform that YouTube uses was adopted for so called 'tube sites', where any user can upload short video clips of adult content and the platform themselves won’t be held liable for copyright infringement because under the DMCA (Digital Millennium Copyright Act) parties like YouTube are not responsible for what people upload to their platform. That created this massive amount of unauthorized content being put out there. Sometimes they insinuated it was even the tube site owners themselves doing it, to create traffic, because they can monetize it, through advertising. And this is why adult content, maybe even more than the music industry, has become a commodity to a lot of consumers. Meaning, if they can’t get a specific piece of content, they are okay watching a different piece of content.

LK: Next best is good enough.

KD: It’s not like a Radiohead album. It’s like, “okay I’ll just watch this other girl on girl thing”. So, except for the niche content market, that kind of really started straining the traditional model of creating and selling content.

LK: What was the methodology that you used? You mentioned that this is an under researched sector. I can’t imagine that there are a lot of academic researchers with a legal background -- as you’re a legal scholar as well -- looking at this industry.

KD: I wanted to do an empirical study where I actually go and talk to people in the industry and figure what are they doing, and how they are dealing with the situation, because I’ve been interested in it and there was just no information. I could find nothing, no one had ever actually gone and talked to these people about how they were still making money. So I had in depth conversations with some of the major producers in the industry and I think it was a good start into figuring out what’s going on. I wish that more people would look into it because it really is a fascinating and very innovative industry.

The AVN Awards, only sort of
 the Oscars of the adult entertainment industry
LK: Did you go to some of those conferences, trade, and award shows that we’ve seen clips of on TV?

KD: Yes.

LK: How were you received in that environment?

KD: Actually, I was terrified when I started this project. I had no connection to this industry. I had no idea what to do but I got my courage together and flew out to LA and Vegas and went to these conferences. And it turned out to be a really really great experience. When I explained to people I was interested in the economics of it,
they were so excited to have someone come in from a university who wanted to talk to them, and they were so forthcoming with information.

LK: And it sounds like from what I read in your paper that these are really business people, who are pretty oriented towards profit loss and cost and distribution, etc. Did you find that as well?

KD: I did, I’m not sure how the industry changed over the past years, and especially dealing with these piracy problems online, but I’m going to guess that a lot of the weaker industry players are people who are fooling around a little bit, and they kind of died out because you really need to be smart and professionals to weather this type of technology disruption. But yes, the people that I was dealing with, they were all business, they were very smart. It is amazing also to hear how much red tape they need to deal with because of the regulation, which makes sense to a certain extent. But their attitude towards dealing with not having support from the government, not having support from anyone, and taking red tape as a cost of business and moving on and pushing on and trying to think of new ways to monetize things was very impressive.

LK: Give me some examples of the new ways that this industry is monetizing, because what used to be the DVD or even photos, those turn out now to be commodities, as you said.

KD: From a bird’s eye perspective, that the main shift has been towards experience goods and convenience goods, as services. Really trying to offer an interactive experience to people that’s not based on content and that can’t be pirated. One example for that is the live camera market. It’s supposed to be very lucrative right now to set up live camera sites where consumers can interact with performers directly.

LK: One-on-one.

KD: One-on-one, or one-on-many. There are different formats and ways to do it but that’s something that people are so willing to shell out for because they can’t get that off of the tube sites. It’s an interactive experience. And then there’s the whole service aspect, if you’re offering people mobile services or cloud storage services for their libraries, or generally ways that make it easy to access content quickly, because the consumer tends to be impatient in this market. They want to be able to stream to every device and that seems to be working out as an extra luxury that people are still willing to pay for. And just generally I’ve seen producers are playing around with things like Google glass. You see them looking at all types of new technologies that will create a new more immersive or different experience for consumers to consume.

LK: And if anybody hasn’t yet seen the movie Boogie Nights that really is the story of one technology replacing another. Going from 35mm film to this thing called video, and private consumption, and packages in the mail. Now, when you talked about the webcam business, are the people who are doing that are they generally independent contractors because I’m interested in how things have changed with the star system and the studio system, which is how the adult industry used to work. Does it still work that way or to what extent?

KD: The feeling that I’ve gotten over the past year is that the industry is really changing massively and power is changing hands, money making is changing hands, so some of the people who are able to monetize this new technology have been in the business for a long time. They remain flexible enough to take over a completely new business model and reshape themselves. In other cases, it’s new market entrants coming in and making use of opportunity.

There was a company that came in and quickly purchased the most popular tube sites and started monetizing that and they’ve since begun to buy up some of the production companies or partner with them. So it’s really interesting how industry is becoming more consolidated and the players are different. This has happened before, just like in Boogie Nights. You see a turnover happen which, interestingly, is what a lot of the mainstream media has called the death of the industry, and I think that this turnover and this changing of hands is more survival that could actually work.

LK: In industries like the music industry, and as economist Joel Waldfogel in particular pointed out, it’s the only industry where as demand and willingness of consumers to pay went down, supply still went up. There are more bands than ever, and more people than ever making stuff, some are choosing to give it away for free, others know full well it’s going to get pirated…how has that played out in the adult entertainment industry, the volume of production?

KD: I’m going to guess that production of standard content has gone down with the problems that they’ve had as it’s been shifting to other business models, but the interesting thing for me was to see that copyright theory suggests that if we remove copyright protection, no one will produce any content. And yet, content is still being produced despite all these other business models, and it turns out that it can function as a loss leader. So people might give it away, producers will put short clips up on the tube sites, and use it to strengthen their brands.

In terms of demand, I think producers have also moved away from the long form movie format because, realistically and I think studies have shown that people do not watch one and a half hour of content.

LK: What, so, 8 minutes or…?

KD: I really can’t remember—I read an article once where the average of people watching in hotel rooms was 12 minutes, which even seems long to me.

LK: So the rest was just a complete waste of production funding?

KD: Yes, but if you do a shoot and cut things into different short clips that you can then sell on their own, it becomes cheaper to produce, and it’s also becomes cheaper and easier to distribute. In terms of producing content there’s still some incentive there. And you asked about the demand side. I don’t have numbers to measure this exactly but this industry is notorious for having very strong and also very stable demand. People have argued that they’re pretty much recession resistant because -- or more so than other entertainment goods because people will cut out movies, like mainstream movies, before they will cut out this type of consumption. I guess the challenge in the current industry is how you monetize that demand. But the demand doesn’t seem to be as much of a problem as for other industries.

LK: An interesting analogy there for the music industry is when the album became unbundled to singles, so now you’re suggesting that in the adult industry it’s the movie that’s kind of been sliced and diced into what, like, 8 minutes short something like that?

KD: Yes, or shorter, so that the tube sites will partner with producers and those producers will put up maybe three or four minutes, but there’s a length that’s set by the tubes sites that they partner with. For instance, maybe if you watch multiple clips, or maybe people purchase 8-minutes clips I think one of the problems that this industry is facing that, the music industry doesn’t face, is the issue of micro-payments.

In the United States it’s kind of difficult just selling individual clips for a couple of dollars because these companies are usually rated by credit card companies and they’re in a high risk category because they’re adult entertainment. So they have a minimum purchase amount that makes economic sense for them, which is not a couple of dollars. There are different models and ways to get around that but it’s like they face a lot more red tape than the other industries with this type of micro payment model.

LK: I think that’s probably why people are so much more business-minded in this industry, because they’re aware of all these challenges and obstacles, and I don’t know if this is a fair assumption to make, but I think people could be in it more for the money as opposed to, say, the music business, where there’s different types of artistic expression, or in the writing business, or film, or theatre. This one seems to be different in that way, is that fair to say?

KD: I would say—I don’t know—this wasn’t part of my interview study, I didn’t ask them why they were doing it or why they’re interested in. I did ask casually, how did you get into this, and for every single one of them, it was an accident or something like no one specifically tried to get into this industry. They just got into it by some side route, like, oh we found out this was making more money than our jewelry business.

When retail fails, there's always the adult entertainment industry

LK: Accidental entrepreneurs.

KD: Yes. Do you know there are a bunch of producers who at least claimed to enjoy what they’re doing artistically. They tend to be more niche markets and they tend to be in markets where they still are able to sell content to a certain extent because it’s so unique and hard to get that people will/might pay for the convenience of having a subscription. That would be a kind of service aspect.

LK: Fair enough. If you have to come up with a short list of bullet points of what you found in this particular industry, that is helpful in thinking about other low IP, Intellectual property industries, what would those be?

KD: I would say the thing that a lot of these studies have observed and that I also found in this industry was a shift towards selling experiences and services, and kind of secondary markets. I think this is something that’s neglected by traditional Intellectual Property theory and economics and that we’re seeing can be another model to finance production. I feel like we still need to be thinking a lot about the balance that our innovation policies strikes and that copyright strikes. It’s hard to say okay, well people can just make money with services and experiences and then, we can get rid of copyright all together. I don’t think that works for every industry. I think that there are a lot of questions left unanswered about what happens to the quality of content when you do that. And what happens to the amount of content.

For Kate Darling's full paper "IP Without IP? A Study of the Online Adult Entertainment Industry", click here.

For a podcast of this interview courtesy of Radio Berkman, click here.

For a Washington Post article about the 'Uberization' of porn, click here.

Saturday, November 1, 2014

When media scandals meet social media

This post is not about the scandal unfolding precipitously around former CBC radio host Jian Ghomeshi. I am not particularly interested in using this space to go through the sundry dirty details of the story, to debate whether or not Ghomeshi has been convicted in the court of public opinion without a trial, or whether or not the only place he’ll ever work again is France. There is no shortage of others filling the traditional and social media horns of plenty with all manner of opinions that pertain to those and other questions, and really, another voice added to those aspects of the discussion is not needed. Instead, I want to examine this story for the way it demonstrates how new forms of media have changed our experience of breaking news and events. That way we sidestep the circus, number one, and number two, even if you don't know who Jian Ghomeshi is, or care about the story one way or the other, there is food for thought contained within.

Now then...

Publishing and broadcasting used to be exalted, almost magical things, a privilege of the few, and therefore a source of enormous power. Now these tasks can be accomplished with the click of a mouse or the tap of an index finger on a smartphone screen. Granted, a single person ‘broadcasting’ a tweet or ‘publishing’ a blog post doesn’t have the same influence as the New York Times or CNN but, with a globally dispersed public as potential workforce, a single message sent out by an individual through the network can impact first hundreds, then thousands, and ultimately millions.

This table is not an exhaustive list but breaks out, I believe, the major distinctions between traditional and digital media in the context of news coverage.

This week many of us have had the experience of taking in the Ghomeshi scandal in a real time, participatory media environment. It has been everything from fascinating to overwhelming to repugnant to addictive. For many it was the first time in the middle of the maelstrom, watching and reacting to new pieces of information, conjecture, and even gossip as it flooded in on Facebook, Twitter, blogs, and then news sites. This wasn’t my first time in such a situation as I was living in Boston when the marathon bombings took place in Spring 2013. That was the first multi-modal, in real time, media news coverage I’d been a part of, and it completely reframed the experience for me. The city was on lockdown, which meant I was hunkered down in my tiny bachelor apartment, clock radio with local news going at one end of the room, the TV alternating between the local news station and CNN, and my laptop working overtime, checking Google news and Facebook, and scouring Tweetdeck for new information and hashtags moment by moment.

The stakes are different in the case of the Ghomeshi incident, but no less dramatic. We now know the experience of what Clay Shirky has referred to as the shock of inclusion. We watched as one piece of information dogpiled on top of another; as each lurid detail, wisecrack, or expression of support or protest flashed across our screens. We didn’t know what we should believe, and are unlikely to know the truth for some time.

And it all started because one guy with a podcast and a blog took it upon himself to independently investigate Ghomeshi, based on a tip he had received. It wasn’t the Globe & Mail, the National Post, or the CBC who broke the story, but independent, unembedded journalist Jesse Brown. And if not for his need for libel insurance he could have broken the story on his own, using his podcast and blog and a bunch of hashtags and @ posts on Twitter.

Because this blog is about digital disintermediation, aka the ability to bypass the usual intermediaries and power structures using digital, networked technologies, I decided that the story of this story belongs here. So I got in touch with Andrew Lundy, a journalist friend who has been in the business for 20+ years, and has worked in both old school newsrooms and in exclusively online environments. He’s now Vice President, Digital, at The Canadian Press.

Here are my questions and here are Andrew’s responses:

LK: How would you describe the role of the newsroom as a scandal or crisis unfolds in real time and the digital media avalanche gains momentum every fraction of a second?

AL: For traditional newsrooms, our role is three-pronged. First (and most important I think), we act as a filter, the Dolby noise reduction that assesses the stream of info and discards what's untrue, unlikely, and irrelevant, and amplifies what's true (or at least confirmed) and relevant.

Second, we bring our own resources to bear to advance the story, make it locally or contextually relevant for our audience, and tell it in distinctive ways. Beyond text there are photos, videos, maps, interactives, audio, animated gifs.

Third, we distribute that information on as many platforms as possible. While anyone can be a publisher or broadcaster today, traditional newsrooms still are the gatekeepers to newspapers, TV and radio, and most of the heavy-traffic news sites.

LK: How has your job changed, as things have moved traditional/analog to digital media?

AL: Timing, for one. Everything feels like hyperspeed today. A story can morph a dozen times in a single day now that we have instant publishing and direct access to sources and info, and no control over whom tells the story. So staying on top of a story today is much more demanding than it was 20 years ago.

Related to timing is the news cycle. There really isn't one anymore. There used to be a rhythm to the news day: agendas set in the morning, a lot of action during the day, finalizing stories in the afternoon and early evening, people consuming all that later in the day or the next morning. Hence morning and evening papers, TV news at 6 and 11. Weekends generally quiet and reserved for analysis and long-form storytelling. Sunday New York Times typified that sensibility.

Try following the Rob Ford or Jian Ghomeshi stories on that schedule and you miss everything. News conferences scheduled with minutes of lead time, stories breaking on Twitter at 10pm, the Saturday-night reaction to a social media post becomes a story in its own right. You just never know what to expect anymore, so you have to be ready for anything anytime. And with shrinking newsrooms, that's a real challenge. But there are positives. We can be much quicker to push out info today, and can reach more people digitally than ever before. Digital means everyone is a global publisher. And the range of storytelling options is absolutely exhilarating. In my former life as a print reporter I would have loved to have the range of tools available today to tell some of those stories. Back then all I had was text, maybe a photo or two, and if was very lucky, a flat infographic.  

A few seconds in the life of Tweetdeck this week

LK: I’ve been hooked on my screen for far too many hours watching information come in about this story and one of the many interesting things is that the institutions, the bigger players, seem to be getting many of the parts of the story last…for example, the Big Ears Teddy story appeared in the National Post online about 15 hours after I first saw it come up on Twitter. And before they got it it had been on the Huffington Post and Gawker. How do you keep up as all the information rushes in, non-stop like this?

The old school newsroom:
When accusatory teddy bears didn't have Twitter accounts
AL: Here's where I'll defend traditional media when it comes to speed. I'd hope the lag time pushing new stories is due to the verification process. I know it is where I work today. Being first is great, being right is greater still. Nobody wants to kill Gordon Lightfoot again. Remember the whopping errors mainstream media pushed when the Sandy Hook school shootings occurred?

If traditional media with professional journalists can't set themselves apart from the noisy crowd in terms of accuracy or fairness or consequences like libel, they just become part of the noise.

As far as keeping up, we're constantly monitoring. We always have but the wire and the police scanner have turned into Tweetdeck and targeted Google News alerts. Once something happens on those new platforms, we jump on it and start assessing and verifying.

LK: I’ve heard it said that with online news you can get it right or you can get it first. As part of a professional news organization is there any way you can do both? Or is that an unreasonable expectation?

AL: You can, but the 'get it first' part is tougher today because anyone can push anything anytime. When it comes to enterprise or investigative stories, you'd better do both. The Toronto Star has been very good at that in both their Ford and Ghomeshi coverage, for instance, because they've invested in their investigative resources and have a really strong pedigree in that area with journalists like Kevin Donovan.

And for a taste of the ways the accessibility of information and opinion related to news stories has changed in the age of digital, participatory media:

Here for journalist Jesse Brown's online allegation tracker, moved to the Huffington Post site
Here for the satirical Twitter account @early90sjian
Here for a candid snap of JG at a Hallowe'en party in 2009*
(*Note: this photo no longer available as  Ghomeshi disabled his Facebook account as of late November 2014, where the picture was posted)

...Or view the video below, an op-ed on the Ghomeshi scandal, done in the style of a YouTube makeup tutorial.

(Ed. Note, possibly to self: interesting that I"m using the traditional news term "op ed", which exists to distinguish opinion from balanced news reporting, while media forms like this video comprise a new category.)