Quality Stimulus

Capsule:  The media should announce its own DIY economic stimulus program to begin in 2010. The impetus?  Curbed regulation and improved commercial prospects at a crucial economic stage.  The benefits: becoming a true partner in US job creation, environmental policy, broadband and wireless expansion; and, potentially, a second life. 

BroadbandUSA
On the Media


Hundreds of US companies and institutions, from start-ups to the majors, have applied for Federal stimulus funding on media projects.  The likelihood that tax dollars flowing in the media's direction in this way will create jobs on a meaningful scale, improve the environment, expand the US economy and lead to sustainable media innovation is slim.  At best, the Obama Administration will have signaled its desire for strong public/private partnerships in US media regulation and hoped-for expansion: a laudable and, let's hope, a good start.


Given that the Federal stimulus program is not yet fully funded--when one considers all of the other uses of taxpayer-sourced money in our new public/private blood flow--there may be a better way.  It's too late to change our stimulus course; but it could be meaningful if private media companies became true partners in achieving the best combined intentions of their businesses and their government.  


Why should the media take on its own transformation as a DIY-project?  Because most public and private leaders don't really understand the interplay between distribution and content.  Most of the media doesn't understand the media.  Why should the government?


On this week's On the Media WNYC-FM broadcast/podcast, Wired's Dan Roth was showcased for his thesis that the cable industry would soon be overtaken by new media forms like Netflix.  Dan Roth is a frequent OTM subject as he routinely yearns for media disruption in the form of the self-inflicted detonation of imaginatively-placed traditional distribution bombs--mainly inside cable and the telcos.


Netflix sent its chief product officer to On the Media to comment on its recent content deal with cable-and-satellite movie network Starz.  The Starz-Netflix deal blew a door through many of the movie rights management windows that make media money.  Netflix and Starz are new partners in an alternative distribution deal for Starz-licensed content through Netflix distribution. Netflix minimizes the potential impact of the deal; rightly so, given the many hurdles it will have to jump from idea to sustainable execution.  But the idea of the deal is brilliant, temporarily disrupting the master deal-makers of cable, satellite, broadcast, alternative retail and Hollywood and signaling a Netflix intention to grow.


The fact that Netflix is most constant as a distribution hybrid of the video rental business, online services, FedEx and a Playstation game controller, super-charged by the happy accident of a near-term non-exclusive appropriation of Starz' movie content, makes it seem more of a new-fangled Blockbuster online model than new media.  But a lot of media disruption is birthed through similar happy accidents.  Traditional telcos grumbled quietly about Vonage--if they really considered the Vonage potential, they would have worked to buy it or block it--until the Vonage concept morphed into cable broadband voice.  The lesson?  Don't minimize what you don't understand.


What do US media leaders need to understand now?  Federal tax dollars have gone begging for a sustainable structure that will push the economy by pushing money through their businesses.  If US media companies become partners in solving public sector woes--from sluggish media equity values to limited infrastructure support for consumers and small businesses--they can help build new versions of themselves to substantial selfish and selfless advantage.


Here are five ideas for a quality 2010 stimulus plan from the private media sector.


Fix the advertising business.  Really.  Fix the advertising business as if you were rethinking the US highway system, along with state and local bridges and roads.  


Advertising is your transportation infrastructure: it's how ideas, people and companies get around.  Media content businesses know this, but seem unwilling to take risks that will establish new media advertising values.  Content should take a leadership role in creating the rationale for viewers and users to opt-in to targeted advertising for the products they want and are willing to learn about.  Distribution should put its substantial data to intelligent use collaborating with content partners and advertisers.  Distribution should also invest substantially in its ad-serving infrastructure on everything from TV spots--which haven't moved progressively forward since the real Mad Men--to broadband video, VOD, display and search.  Interactive advertising looks primitive because few distributors want to invest in winning alternatives.  Real media visionaries should chart and invest in the infrastructure ROI of the new media world.


Build and sell better TV and online navigation.  Content and distribution can find the right cooperative economics to support cross-media navigation for TV, broadband and wireless services.  


If customers are willing to ask for the advertising and content they want to watch--which means opting into some level of interactive audience measurement, like Tivo, that facilitates content and ad serving based on actual behavior--the media business can build a new GPS for mass and personal media.  Online search already does this across hundreds of retail sites.  The technology exists to make this happen yesterday.  The controls on several potentially winning versions of new media GPS are coming from a content and distribution leadership unwilling to risk what it thinks it already owns even as media economics soften.


Make products that make the environment better.  Even though media invented the rerun, telco, cable and satellite companies commission, make and resell products that most often end up outside the recycling bin.  Given its pervasive place-based presence at home and at work, it's time for the media to make an environmental difference.


Wired and wireless phone systems, cable, broadcast and satellite hardware are the big infrastructure costs that insulate the media from competition; but they also contribute to environmental deterioration.  Cell phones, batteries, transmitters, computers, receivers, fiber integration hardware, modems, screens--virtually all of the B2B and B2C products making the media tick make the environment unsustainable.  Distribution runs trucks that install, disconnect and repair media plant.  It's time to think about media models in terms of what the combined content and distribution businesses can do to promote sustainability.  A good start: using home and business-based cable, telco and satellite systems for energy measurement and integration; home health care monitoring and synthesis with private and public health care systems; retail sales, order management and fulfillment; video-based teleconferencing as a supplement to travel; home and business monitoring while we're away. 


Be the bank.   You can't sign up for a media subscription service without connecting your entire home or business to the cable, telco or satellite infrastructure, making your personal economy into a distributed piece of the media economy.  New wireless and satellite subscriptions require Social Security numbers, driver's license copies and, only where mobile, credit cards.  They already know where you live; it's time for distribution companies to turn their considerable knowledge about collections economics into bankable media securities that we can all enjoy.


Distribution companies, led by the cable industry, manage their bad debt with an acumen banks sorely lacked in the economic collapse of the last two years.  While competition has strengthened and the economy weakened, distribution bad debt and collections management has traded off some standards for growth, but only slightly so.  The media communications industry has built a stronger economic relationship out of subscription businesses than even it needs.   If the media became the bank--like mobile technology is trying to invent a new credit/debit capability into its wireless applications--homes and businesses could buy and see home delivery of more than content.  Rather than trading off collection standards, distribution might trade investments in new retail partnerships for growth of the best kind: customer loyalty, product differentiation and real contributions to personal, local and national economic stability.


Invest in broadband.   Media investments in broadband are greatest amongst wired and wireless distribution, where extending plant and improving quality of service requires serious capital and intellectual investment.  Still, distribution media profit enormously from broadband subscriptions and should reinvest in service even more equitably.


This week, new FCC head Julius Genachowski announced the strengthening of Federal broadband regulatory principles into rules, the prohibition of focused pre-emption of broadband content, the inclusion of wireless in broadband regulation and new transparency requirements that will ask distribution businesses to share their network management policies in running US broadband networks.  Rather than seeing broadband as a business, Genachowski's remarks leaned towards the idealistic view that purity should be the only filtered result of broadband regulatory policy in this best of all possible worlds.  It's also possible that truly big distribution, content and retail businesses like Google, eBay, Amazon and others were the utopia and regulation builders behind-the-scenes.


What if cable and telco distribution companies asked for a regulatory standard that separated public benefits into two categories: growth in terms of plant capacity and expansion; and, competitive choice.  For those distributors who can demonstrate that they are continually reinvesting in capacity expansion as well as plant expansion to their aggregate subscriber base and to under-served consumers and institutions, network management policy review at the Federal level should be light.  It should be light because the larger public good has been met and it is a public and private cost and distraction to increase regulation outside of clear standards for the larger public good.


On the issue of promoting rather than pre-empting competitive choice, there's already a big US legal weapons chest to draw from for violations.  This issue is well-protected already and only a light, judicious hand wielding a potentially huge FCC regulatory stick is required.  Major distributors should agree not to limit the services or the content of competitors.  On the way to such an agreement, distribution should help define who the competition is and who it is not yet.  If the media fails to play an active partnership role in the formation of FCC rules, it risks nebulous definitions of potential competition that will tax consumers, businesses and governments at the worst of recent times.


Federal stimulus funds need a village stronger than what was hastily crafted in the early months of 2009.  Private industry has already forgotten the media lessons that the government has yet to learn.  The problem: we've got an expansive menu of stimulus funds without a core mission.  Happily, the media can supply a mission and a narrative if it's willing to draw its ambitions from within the context of broader public benefits as well as customer and business growth.