Louisiana Internet Software & Technology Association Blog : Louisiana Internet Software & Technology Association : LISTA Blog : LA Technology Law News & Updates

An excellent analysis of the likely inaccurate valuation of cable networks in recent times is found in the Wall Street Journal dated November 7-8, 2009 entitled, Media Eyes Are Still Blinded by Cable by Martin Peers. 

Recent years have seen increasing profit for cable television systems and the associated content that they generate. Whether the content is the Discovery Channel, Travel Channel or HBO, the fees that customers pay to watch this content has increased steadily. By contrast, the advertising fees paid to traditional television networks have not kept pace. This trend has led to higher and higher market values in recent years for cable content. Recent transactions such as The Scripps Networks Interactive purchase of the Travel Channel for a rich multiple on earnings suggests that the market believes that the income growth for cable television content will continue well into the future.

Is this market conclusion reasonable? As the television manufacturers begin building television systems that make accessing streamed video content over the internet easier and easier with the deployment of widget engines, the public is likely to find more and more of their television content on the web and on demand. This could be a challenging environment for the less known cable content as it competes with new content from the web that has never been available on the traditional cable systems. 

It seems very likely that the audience will fracture even further than it has as television viewers expanded their attention from the major networks to a host of lesser known cable channels. With video content available more easily over the web, the market will likely see a "Long Tail" effect leaving even smaller audiences for the traditional networks and for the cable channel content that has been available in recent years.

These changes are coming very quickly and yet the market value of cable television content does not seem to reflect this evolution.

As always, I want to leave you with a pitch for using the Louisiana digital interactive tax credit program. If businesses are developing web platforms to stream video over the internet, Louisiana is a great location to develop the platforms and the video content using Louisiana's video production and digital interactive media tax credit programs. An enormous opportunity exists in the next few years for the emergence of such web platforms and their video production partners. If you need to know more about these programs, I would be happy to speak with you.

Erich P Rapp. 

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I realize that I may be overly focused in this blog on e-publishing, but I think this technology is ground breaking in a number of ways. An e-book reader encompass a number of important trends in technology hardware and software.

The equipment, an e-reader, is highly specialized in contrast to a notebook computer which may perform many different functions. As various aspects of hardware such as memory chips, storage, display technology, etc... decline in cost and shrink in size, the economics of highly specialized hardware improves. Any e-book reader is an expression of that fact. The continuing evolution of highly specialized hardware and software is very important. It reduces the complexity of using the technology and broadens the potential user base.

An e-book reader generally also uses mobile phone technology instead of Wi-Fi or broadband internet access to the web. Mobile phone technology access to the web is an extraordinarily important aspect of web connection. As a result, the user of e-book reader technology can access and purchase e-books from nearly any location. This approach to product delivery is extraordinarily important to any one trying to a make an electronic consumer sale of published materials.

The main players in this arena are Amazon and Sony. Amazon's Kindle 2, the market leading e-book reader, is competing with Sony's new e-book reader which has just been announced as an open format e-book reader using the e-Pub format. The new Sony reader is called the "Daily Edition." The USA Today had a great article in its Tuesday August 26, 2009 internet edition as part of the technology section. This article described what Sony is trying to do with its new e-reader. The article is entitled, Sony's Reader Daily Edition takes on Amazon's Kindle. In a very exciting aspect of Sony's announcement, the new Daily Edition will be able to download content in the e-Pub format from many libraries around the country for free. The Sony e-book reader is using AT&T's 3G network while Amazon is using Sprint's mobile phone network.  

The e-book reader regardless of who creates it is a college student backpack size reducer and a business person brief case size reducer. Such e-book readers are having an evolutionary impact on the future of print media. Now that the technology is mobile and is contained in a compact and easy to us device, the growth of e-publishing is going to be explosive and game changing.

Erich P. Rapp.

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According to the New York Times article on August 12, 2009 entitled,  Sony Plans to Adopt Common Format for E-Books, Sony plans to adopt the open standard e-book format called "e-pub" used by large publishing houses including Random House and HarperCollins. The move should create considerable competition for the Amazon Kindle over time. Amazon is the market leader right now for e-publishing, but operates a closed standard system. You can only read e-books from Amazon on the Kindle.

With the arrival of new e-book readers and a common format, the number of books available in electronic format should increase considerably. The quality of the books will likely be much better as well. I recently read an e-book in the Kindle format that must have been published without anyone proofreading it. The copy was filled with typographical errors. These are, however, the problems that early adopters of anything face. The e-book product is well worth the bumps in the road as far as I am concerned.

I am a huge fan of the Amazon Kindle. My wife and I both have Kindles, carry them everywhere and use them frequently. Despite the cost, I have started following several newspapers, magazines and blogs on my Kindle because of the ease of carrying, using and turning the Kindle "on and off" as opposed to the cumbersome process of booting up a notebook computer. I, of course, also read books received on the Kindle. Instead of hauling around a knapsack full of books, magazines and newspapers as I once did, I can now just carry the Kindle instead.

The e-book reader is also more private. While I am reading it, I am not advertising what I am reading. Sorry porn lovers, I am not talking about anything genuinely embarrassing like pornography. The Kindle is really not a good platform for photos. LOL. The Kindle is really only useful for text and the very lowest grade photographs from a newspaper. Instead, I can read the New York Times without having my often more conservative colleagues and acquaintances around me scoffing or rolling their eyes.

The Kindle and the Sony e-Book Reader are only two of a wave of such devices coming onto the market. As time passes, I also anticipate that more interactive books will be published. The readers will eventually be able to communicate with the author and the publisher directly from the e-Book reader. I also suspect that some books will also begin supplementing themselves with additional information provided after the book's original publication. This additional content might include information about other things such as movies, subsequent books in a series, or other derivative products. Effectively having a contact list of everyone that buys a publisher's book is a pretty valuable tool for the publisher. While paying an author or editor to "blog" more content to those e-book readers is an added and new cost for the publisher, but such a blog entry or "extra" content could blur the line between entertainment or extra reader valued content and advertising. As advertising, the low cost of such targeted communications would be small compared with the cost of traditional media advertising.

The e-publishing arena is yet another piece of the digital interactive world. Now, what do we have to do to get the publishers building future platforms for distribution of this content in Louisiana. Call us at LISTA if you need help working in Louisiana.

Erich P Rapp.

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Just read an interesting item in the July 20, 2009 Fortune Magazine on page 60 entitled, "No Free Lunch" (not available online at the Fortune Magazine web site when this entry was written). It concerned the now famous Stewart Brand quote about the freedom of information.

In 1984 at the first "Hackers Conference," Stewart Brand, famous also for the Whole Earth Catalog, stated, "information wants to be free" which is widely quoted as a call for free distribution of all information. Brand's actual statement was, however, far more ambiguous. He actually said in fuller context, "On the one hand, information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free because the cost of getting it out is getting lower and lower all of the time. So you just have these two fighting against each other."

In response, Steve Wozniak, the not so good dancer on Dancing with the Stars and co-founder of Apple Computer, replied to Brand that "Information should be free, but your time should not."

It seems like Wozniak captured more of the notional reality than Stewart Brand. While laws that protect intellectual property continue to create value in certain types of information and creative content, the reality is that this capture is less complete and shorter in duration than ever because of various technological tools.

As the value of information and creative content has itself declined, the value of interacting with the actual creator of the content seems to have gone up. For example, musicians are getting less and less value from their recorded music and more and more value from their live performances. The same trend also seems to impact on book authors and speaking engagements.

This dovetails nicely with Wozniak's comment that information should be free, but not ones time. While we may see a pull back in the years ahead from "free information" as we know it on the web today, the long term trend is pretty clear. Information and creative content are going to remain in a protected form that can be directly monetized for a shorter and shorter period of time.

The business and social cycle that turns most manufactured goods and most services into a commodity over time and which also tends to move most creative content over time into the public domain of free things is growing shorter and shorter. In contrast, the value of human input and attention measured as the time a person invests in a productive activity continues to exist at some level in the economic system and is likely to endure. In some sense, this reality is almost medieval and speaks to a time when the value of a guildsman or craftsman was at its highest. Of course, we have a completely different kind of guildsman today. All of the vocations that were performed by guildsman in medieval times are now performed by mechanical devices and a new type of guildsman is emerging with a different set of skills such as the design and development of software and web platforms.

As businessmen, we will over the long run have to adapt to this "retro-" reality. 

Erich P. Rapp.

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