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Capsule:  What gives new media celebrity power?  Is it novelty or perceived technological complexity?  Are algorithms sexier than fiber and antennas?  As new media forms emerge, we worship them until they're understood and fully exploited.  To ensure the healthiest balance between new media and the more traditional foundations on which they're built, the FCC may want to reaffirm its own transparency on the new media power exchange. 

Advertising Age


In New York this week amidst the UN meetings, President Obama's on-site presence, Letterman's coup and the balled-up NYC traffic (especially around the UN, the Waldorf and Convivio,) Advertising Week hosted a panel, moderated by editor Abbey Klaassen, on building an online advertising "bill of rights."

At the center of the discussion were Google's behaviors and policies as one of the world's most powerful international ad sales and serving platforms.  (This blog is written on Google's Blogspot/Blogger.com platform, so please let me know if the blog disappears from your screen in mid-sentence at any point from here on.)

Harvard Business School professor Benjamin Edelman--a commercially independent voice by definition, except for HBS's own commercial power--was elected to the job of describing the market concern.  Edelman summed up Google's indiscretions with an anecdote from Australia, where he recently read Google's Ad Sense terms and conditions for Australian advertisers and was alarmed to note that the advertisers' only complaint route was via certified letter to Google's Dublin, Ireland office from which Google would respond via e-mail with the authoritative complaint resolution.  While this seems ad-senseless, it isn't the strongest example of market power abuse. 

At the same time in the same week, President Obama's new FCC head Julius Genachowski described in a speech to the Brookings Institution his intention to strengthen the FCC's net neutrality principles by codifying them into rules.  Genachowski added two new principles to the government's net neutrality stance: one that would specifically forbid targeted content pre-emption by broadband and wireless distributors (what's not to like in concept?); and, one that would require distributors to provide "transparency" to their network management policies (okay....)

Genachowski's comments have been greeted so far by a large media sigh--not quite out of boredom, but media policy this week has been understandably upstaged by President and Mrs. Obama, David Letterman, Secretary of State Clinton, the new season of Curb Your Enthusiasm, many and various global Heads of State and NYC's restaurants (including Wall Street Village macher-haunt Il Mulino, where Presidents Obama and Clinton ate earlier this month.)  That's a shame because there's a lot to think about in the organic chemistry behind the FCC's regulatory desires.

WNYC-FM's Brian Lehrer responsibly covered Genachowski's remarks this week in a short piece, including a call-in from a University of Virginia professor who painstakingly laid out the content position, revering every content form from tiny websites and blogs to Google and Yahoo, and representing his distaste for distribution by making reference to how companies like Verizon, AT&T, Comcast and Time Warner would "extort as much money as possible from consumers if allowed."  Lehrer, liberal but usually sharp and often fair-minded, let the characterization go as common wisdom.

Is this media topic too hard for the media to understand?  Is the opacity of the screen around it intensified because the issue is a new media issue and the new news only kicks the tires on its older vehicles?  Is the media carelessly looking away from the complexity of what's at stake because this is what we all do and have done until we're at the cliff?  No one wanted to know from a collateralized debt obligation until these complex instruments were made as sexy as Enron's market timing by a major market collapse.

When grouping the media into content and distribution, one can't err seeing broadcasting and cable, satellite and the telcos as distribution.  And, of course, Google is distribution too--ingenious but endangered distribution that doesn't own its own distribution pipes but benefits economically for each capital upgrade that makes US broadband and wireless service better, wider, clearer, faster.  In American media, the largest businesses are distribution businesses, reaching customers with advertising and subscribers with services and often monthly bills.  Distribution brings in the money that forms the economic foundation for content.  It also provides the technological and capital barriers to entry that give media businesses room to grow before being overtaken by each other and the next big thing.

Content is a business because of distribution.  If it weren't for distribution, content would be an idea fairly early on in the media's evolutionary course.  We're all carrying books (content) around in our heads that can only come out on paper or a screen (distribution.) 

Content is the sexy sum of the distributed ideas inside of broadcasting and film, cable and satellite networks, phone conversations and texts, news and online games.  While distribution wouldn't have ideas or stories to distribute without content, distribution technology, exemplified by voice and e-mail, could still connect individuals in a personally powerful way.  Distribution is made into a vastly more powerful industry by content--it was imagined with content in mind--as individuals group their thoughts into content businesses based on distribution.

Google is a distribution business that promises to do no harm by editing or influencing our ideas--although by summarizing the news, as an important example of our ideas, it edits and influences our collective thinking.  Google's pure genius began in its brand promise to redistribute internet content according to how often people wanted to see that content.  Today, Google redistributes content in order to distribute advertising and this is how it can afford to redistribute and host other content and communication as effectively as it does.  The money-maker inside Google is the search business--by its own claims, a distribution business powered by the public and the advertisers who want to sell us ideas and things.

Google also sets and times advertising rates.  By providing a utility search distribution service that is better than the competition, Google dominates in audience numbers and now runs the tables on online advertising and, as media content businesses have been drawn to internet distribution, just about all advertising.  Google is king of the hill in the media world because of its technological innovation, building on the internet and the broadband networks that bring it to our homes as a distribution source.  Google redefines internet content by combining it with an ad serving mechanism better than the printing press, the broadcast tower or the cable network operations center.

According to the FCC, Google is one powerful example of a company that would be disadvantaged by media distributors if the FCC allowed it.  There is a quoted fear that AT&T, Verizon, Comcast and Time Warner in their collective network management policies might interfere with Google's efficiency.  This is hard to imagine given the enormous value Google provides as global navigation for broadband services.  Google has preferred search contracts with many of the major distributors, acknowledging an interdependence that is unlikely to be exploited.


The few examples that have been shared of the FCC's focused pre-emption concerns in real life have not involved cable or telcos messing with Google or any search engine.  They have involved concerns over packet-priority that might disadvantage free internet phone service Skype and low-cost voice competitor Vonage.   The concern builds on cable and telcos who give their voice-over-cable/fiber services dedicated routes, and therefore a quality advantage, on their networks to support their business. It's logical that distribution companies will pay to maintain the quality of their own vertically integrated media services on their own networks.  How much packet priorities disturb the development of new businesses must be examined according to each business case, without assuming that the distribution "extorters" are taking every advantage without giving many advantages back to the new products that bring both media players their business.


The FCC has also voiced concern over distributors' capacity shaping on live broadband traffic that can slow down peer-to-peer file sharing.  Aggressive file sharing can dominate a network's capacity and no cable or telco platform has the infinite capacity today to operate without rules and restrictions.  Peer-to-peer file sharing can be highly desirable for consumers; but it needs to feed and clothe itself as a commercial or institutional product if it's going to buy an adult ticket on the "information super-highway", as do we all.

Peer-to-peer products can be highly commercial--in the sense of a world-wide gaming application that serves a huge, addicted audience while challenging the capacities of the internet, the broadband networks that distribute it and the wallets of the players in the game; but the public benefits of these examples are hard to imagine in conflict with smoothly functioning US broadband and wireless networks continuing to appreciate in quality and capacity.


Is it possible that the concerns Google, eBay, Amazon and others have brought to the FCC are more about future products than the media world today?  Google search adds great value to cable and telco broadband services, as do the retail aggregations of eBay and Amazon.  Is the worry that each of these companies--part distribution and part content--wants to maintain ultimate flexibility to drive its business to the greatest profit and would like to have a government partner who can limit the power of big distribution to compete with them?  This was how AT&T overtook other message-carrying businesses in the last century; it struck a public/private partnership that brought phone lines to underpopulated markets and locked in payback levers on taxes and international tariffs (as well as government access to the phone systems and their calls as required) for the good of the country. 


What good will the FCC serve with its new transparency requirement? If the rule-making goes no farther than to say that major distribution companies must comply with general rules regarding how they manage network traffic and submit their policies and practices to regular review against these rules, the FCC may birth useful regulation that can achieve its good intention without falling off the other side of the horse in favor of more nebulous and future-oriented new media dreams.  


All around, it will be interesting to see what the government means when it speaks about commercial transparency in practice--in media, banking, car-making, environmental protection.  Will the burden be on the private sector to make sure regulatory agencies see all there is to see inside their business and technical considerations?  How practical will that be?  Or might the government lead with a vision of how it would like to see excess contained and institutional needs served without assaulting those businesses that have served the country well--well enough to have attained the adult status of paying their own way, nurturing new younger media forms and not requiring constant monitoring for fear of a balance shift away from dreams and toward a more concrete reality.