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

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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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The State of Louisiana's economic development department has been trying to persuade Electronic Arts to relocate to or open a new game design studio in Louisiana. EA has already located a game testing center at Louisiana State University, and the state would like to expand EA's presence. Louisiana's digital media tax incentives program was originally focused on attracting game development companies to Louisiana like EA.

Unfortunately, the slow down of the national economy has worked against Louisiana's efforts as EA has seen its own business difficulties during the past year. 

Nevertheless if the State of Louisiana wants to remain attuned to EA's vision of the future of video game development, the State should note that EA has just announced its intention to purchase Playfish, a social game company. See the San Francisco Chronicle article on November 10, 2009 entitled, EA buying Playfish in $300 million deal.

If you are not familiar with social games that have grown out of platforms like Facebook, I found a pretty good definition of social games and also a good list of social game developers on The Social Times Blog in an entry entitled, "What are social games?". 

The various economic development arms of Louisiana and its cities should consider efforts to attract social game developers to Louisiana. If they are successful, they might find that EA is not far behind.

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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 The 36th International Conference and Exhibition on Computer Graphics and Interactive Techniques is ongoing in New Orleans from August 3 to 7, 2009.  The Siggraph Conference is being held at the New Orleans Convention Center and details about the program can be found on the web at the conference web site. For more information on Louisiana's digital interactive media tax credit program, please go visit the exhibits presented by the Louisiana Department of Economic Development, Greater New Orleans, Inc. and the Baton Rouge Digital Industries Consortium. 

Erich P Rapp.

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The Wall Street Journal on Monday July 6, 2009 had a Page C-1 story entitled, Venture-Backed Start-Ups Seek Stimulus. The gist of the story was that venture funds like Novak Biddle Venture Partners, RockPort Capital Partners and Flywheel Ventures were directing the start-ups they are investing in to explore the federal stimulus package as a means of finding additional capital.

This story suggests to me that venture capital funds and angel investors would find Louisiana's new digital interactive media tax credit incentive program very attractive. Marketable tax credits are not much different in economic terms than stimulus program grants. A start-up developing a web platform, mobile application or software package can get marketable tax credits equal to 35% of the funds they spend in Louisiana on labor residing in the state and 25% of all other expenditures.

If, for example, a start-up used labor residing in Louisiana to develop a new web platform and in the process spent $1,000,000 in Louisiana. The State of Louisiana would issue tax credits for $350,000 and the start-up could sell the tax credits for $0.85 to $0.90 on the dollar realizing perhaps a little more than $300,000 in extra funds. Thus, a venture capital fund investment of $1,000,000 spent on labor residing in Louisiana becomes an investment of $1,300,000.  That seems like stimulus that a venture capital fund or an angel investor would like to see.

Erich P Rapp.

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As Louisiana becomes a hub in the next few years for the development of software, mobile applications and web platforms, I am wondering what value can Louisiana digital interactive media developers bring to the industry. One area that desperately needs to be addressed is the news media and journalism.

It is no secret to anyone that is conscious that the industry that delivers news to the public is struggling to find a profitable business model in the digital media age. Where is this industry heading and can developers in Louisiana add value to the evolution.

Perhaps, the Politico.com web site and the story behind it present a glimpse of the business techniques that will govern the future of journalism and news delivery.

The first and foremost Politico.com business concept that stands out to me is volume of content and extreme detail about a relatively narrow (at least for a newspaper) subject. It's hard to imagine any traditional media source providing as much detailed and essentially real time data about politics in Washington DC. While the Federal Register provides a great deal of detail about federal action, its not anything close to "real time" and it is completely devoid of the human component. Politico is the federal register of politics using a Twitter model without the 140 character limit and a huge mix of gossipy human stuff. No one but a reporter at Politico could possibly want to know this much about politics in Washington DC. 

And yet, I am told that Politico is profitable and widely read. That is more than the New York Times can say at least as to the profitable part. All of this suggests that no matter how much detail one provides about politics in Washington DC, there is at least some audience for it. It also suggests that if you can place an enormous amount of entertaining (at least to someone) political information in a digital setting at a low enough cost , the business can pay for itself with advertising. The delivery of news has a "long tail" component. 

The August 2009 issue of Vanity Fair magazine contains an article entitled, Politico's Washington Coup which describes the Politico story in some detail. If you want a sense of the future of journalism, this article is a good read.

This may hold some promise for local newspapers. The key to the future for local newspapers may be more information. Adding more stories in a digital format does not cost as much as adding more pages for more stories in a printed newspaper. The specialty for the local paper is local news. Local news is as to your local newspaper as Washington politics is as to Politico. It seems like the local newspapers need to go more local with everything, e.g., more local business news, more local society and social event news, and more local entertainment news. Change the emphasis from the AP news feed to everything local with the names of as many local people printed in the newspaper as possible.

Digital interactive media developers in Louisiana need to partner with traditional media organizations to build a better news delivery device using Louisiana's digital media tax credits incentive program.

Erich P Rapp.

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I am very concerned about the market for transferable Louisiana Tax Credits after reading about the problems that members of the New Orleans Saints have had. See Ex-Saint Kevin Houser says tax credit fiasco not his fault. 

Louisiana needs a "Tax Credit Exchange." I will propose to the membership of LISTA that they advocate the creation of a non profit corporation (need to check with my tax attorney friends on this concept) to operate a Tax  Credit Exchange that would make a market for certified tax credits and various grades of contracts to deliver tax credits at a future date.

The paper work and related contracts would be uniform and the status of the contracts would be verified with the appropriate arm of Louisiana government.  If the contract involves little more than a "hope and a prayer" that the person entering into the contract will apply for credits and undertake a creditable business venture in the future, those credits will be deeply discounted and the purchaser will understand that he is purchasing a very speculative contract.

Alternatively if the purchaser decides to buy an existing tax credit that is certified by the state, the value of that credit will be much less significantly discounted. The customers in the market will be better educated about what they are buying, and the process of selling the credits into the market will be orderly and uniform.

I will be reaching out to people with expertise useful in the creation of such a market in the weeks ahead. If you have such expertise and want to help create an orderly market for tax credits in Louisiana, I am looking for your help.

If you think I am making a mistake with this recommendation, I would also like your input. I think we need a more orderly market that discourages the type of problems the New Orleans Saints players have had (but for the grace of god go I), but I want to know what y'all think. I want to start a discussion of the problem. Please write comments on this blog entry and send me email correspondence with your thoughts on this subject.

I am very open to discussion about this subject. Please comment.

Erich P Rapp.

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The Louisiana Senate has concurred on the amendments to Senate Bill 277 from the House of Representatives. The formal legislative process is complete.  SB 277 now goes to the Louisiana Governor for his signature. Please send messages and make phone calls to the Louisiana Governor's office urging the Governor to sign SB 277.

Assuming that Governor Jindal signs SB 277, the new digital media program is a game changing event in the history of the Louisiana economy. I suggest to you that the impact of this event on the Louisiana economy over the next ten years will rival the impact of sugar and cotton agriculture in the early 1800's and the discovery of oil in Louisiana in the early 1900's.

Louisiana is about to enter the digital media revolution in a dramatic way.

Erich P Rapp.

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The Louisiana House of Representatives passed Senate Bill 277 re digital interactive media tax credits today. The bill must now return to the Senate for a concurrence vote on the House amendments. If the Senate concurs on the House amendments, the bill will be sent to the Governor for his signature.  Thankfully, Senate Bill 277 received a favorable vote in the morning.

The successful passage of SB 277 will allow a wide array of software and web platform development projects to earn 25-35% marketable/transferable tax credits on the cost of production of such software and web platforms. This program will likely result in a material increase in the value of software and web platform development in Louisiana. SB 277 is authored by Senator Ann Duplessis and supported by the Louisiana Internet Software and Technology Association (LISTA), Greater New Orleans, Inc. (GNO, Inc.) and Baton Rouge Area Chamber of Commerce (BRAC).

In the mid-afternoon after SB 277 had successfully passed the House, a small group of House members unhappy with the governor's proposed budget cuts began an effort to slow consideration of other bills on the agenda. This effort successfully prevented about 20 bills scheduled for debate from being considered and many more bills on the agenda subject to call from being considered. 

At 6 PM today, the legislature reached a Constitutionally mandated deadline for considering bills that have not yet been voted on favorably by both houses. Thus, the bills remaining on the docket at 6 PM will die unless both houses simultaneously vote to allow consideration of any given bill. Some effort to get a two-third vote on some of the remaining bills will be taken tomorrow morning. It remains unknown how successful this effort will be.

One victim of this work slowdown and the hard 6 PM deadline was an amendment to the digital interactive media bill allowing the program users to choose between tax credits and a discounted tax rebate in cash. The successful passage of this bill contemplated for SB 199 would have been to put a minimum value on the tax credits in the market. LISTA, GNO, Inc. and BRAC all supported this amendment which was contemplated to be amended into SB 199. SB 277 in the form passed by the House and the Senate only provides for the issuance of marketable/transferable tax credits. It is also unknown if this bill will ultimately be considered in this session by suspension of the rules by two-thirds vote. The effectiveness of the effort to suspend the rules and allow further bills to be considered will likely be known by  the middle of the day on Tuesday.

A further report will follow tomorrow.

Erich P Rapp.

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The Louisiana House of Representatives has scheduled Senate Bill 277 for a vote in the House of Representatives on Monday June 22, 2009. Senate Bill 277 is, of course, the renewal and extension of the digital interactive media business/tax incentive program. Between now and then, please call your Representatives and voice  your support for SB 277.

Senate Bill 277 is authored by Senator Ann Duplessis of New Orleans and now being managed in the House of Representatives by Representative Cameron Henry. The bill is supported by the Louisiana Internet Software & Technology Association (LISTA), Greater New Orleans, Inc. (GNO, Inc which is the business development arm of metropolitan New Orleans), BRAC (Baton Rouge Area Chamber of Commerce), and the Jindal administration. The bill will provide marketable/transferable tax credits and cash rebates to businesses spending funds in Louisiana to create a broad array of software and web platform design and development projects.

By encouraging the operation of these types of  businesses, Louisiana will likely draw many new high paying jobs into the state on a long term basis. LISTA is very optimistic that this legislation will have a transformative impact on the Louisiana economy if adopted.

Between now and Monday June 22, 2009, please call your Representatives and voice your support for SB 277 and then Louisiana can join the digital media revolution.

Erich P. Rapp.

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The Louisiana Governor's office declared its support today for Senate Bill 277 concerning digital interactive media business incentives in Louisiana. After several weeks of negotiations and discussions with the leadership at the Louisiana Department of Economic Development about the exact language to be contained in Senate Bill 277, Senator Duplessis, LISTA, the Department of Economic Development and the Governor's office have reached an agreement on the terms of Senate Bill 277.

The Ways and Means Committee of the Louisiana House of Representatives will hold a hearing on Senate Bill 277 on Monday June 15, 2009 at 9 AM. If you are involved in this business and interested in supporting Senate Bill 277, please come to the committee hearing to show the committee members the business community support for the bill. If we as a digital interactive media industry in Louisiana fail to show our interest, we may find the committee members find it hard to care about our bill. Let's show our support.

The most exciting part of the bill is the definition of "digital interactive media." Under the new program, the digital interactive media incentives would be available for the development of many different types of software and web platform development as well as the development of video games and interactive animation. Under the existing law, the incentives have largely been limited to video game development. We are very excited about the potential for new businesses in the broader community of digital interactive media moving into Louisiana. In the years ahead, we anticipate new developer/programmer and new design jobs coming to Louisiana in material numbers.

The next most exciting thing about Senate Bill 277 is the proposed incentive parity with the film and television production incentives program. Under the existing digital interactive media program, the benefit was 20% transferable tax credits on in-state expenditures and the percentage declined over time. The new program would allow 25% transferable tax credits on all in-state expenditures and a 10% bonus for expenditures on labor residing in Louisiana for 35% transferable tax credits on expenditures on labor residing in Louisiana without any declining  benefit over time. As a practical matter, this combination of benefits effectively reduces the cost of developing many types of software and web platforms in Louisiana by over 30%.

It will take time to educate the digital interactive media industry about the benefits of this new program, but the program will eventually be a significant draw for new software and web platform development business in Louisiana.

Once this legislation becomes law, we must begin thinking about qualified workforce development by education and by transfer of qualified labor into Louisiana and we must work to change the perceptions about the workforce potential in Louisiana. Louisiana, however, can overcome these problems and build a digital interactive future.

I offer a prediction. With the proposed digital interactive media program enacted, Louisiana will be transformed from a digital interactive media backwater to a top five state player within ten years. Louisiana will be a leader in software and web platform development.

Erich P Rapp.

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The Louisiana Senate passed Senate Bill 277 on Thursday June 4, 2009. The bill will now be considered by the Ways and Means Committee of the Louisiana House of Representatives. The hearing has not yet been scheduled. An update will be provided on this blog when the meeting is scheduled.

We need everyone to send emails and make phone calls to their Representatives in the House expressing their support for Senate Bill 277 authored by Senator Duplessis and also expressing their opposition to Senate Bill 199 authored by Neil Riser.

SB 277 concerns tax credit incentives for businesses operating in the digital interactive media arena. The bill would provide tax credits for many types of software and web platform development. The objective of the bill is to increase the amount of such business being done in Louisiana and to increase the number of  software and web development and design jobs in the state.

The bill is a renewal of a program that has been in place for the past four years, but has been little used because it was previously limited to video games. The renewal of the program would include a modernization of the definition of digital interactive media and would place the level of tax credits granted on parity with the existing film tax credit program.

Senator Riser's Senate Bill 199 would not change the definition of digital interactive media to include software and web platform development and design generally. It would instead limit the coverage to video game development. LISTA is opposed to Senate Bill 199 by Senator Riser.

We need you to express your support for SB 277 and your opposition to SB 199 to all of your Representatives in the Louisiana House of Representatives. Every call and every email is important. A message to a Representative from a constituent voter will have a big influence on the legislator. The message can be limited to a sentence or two expressing your wishes. You can get the email address and phone number of  your representative at  http://www.legis.state.la.us/

For more information, the Saturday June 6, 2009 edition of the New Orleans Times Picayune includes an article describing SB 277 and its progress through the legislative process. The article was written by Times Picayune Capital Bureau Chief, Robert Travis Scott, and is entitled, Growth is sought in digital media. 

Erich P Rapp.

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The Louisiana Senate Revenue and Fiscal Affairs Committee voted a favorable referral of Senate Bill 277 out of committee to the full Senate on Tuesday May 26th. The current form of the bill is not yet available on the Louisiana legislature web site, but should be posted very soon. 

Representatives of LISTA have worked with representatives of the Louisiana Department of Economic Development on language for the legislation that would provide material support for the growth of operations of Louisiana web platform and software development businesses in Louisiana. Despite concerns of some for the potential cost to Louisiana state government of the legislation, the bill has so far been favorably received by the legislators.

The current legislation would provide transferable tax credits in the amount of 25% of web platform and software development costs and 35% of certain related labor costs to firms developing such projects in Louisiana. These tax credits could then be sold in the secondary market for as much as $0.90 on the dollar.  The passage of this legislation would seem likely to make Louisiana a national hub for web platform and software development in the years ahead.

The full Louisiana Senate may vote on this legislation on Thursday May 28th or Monday June 1st. If you are interested in web platform and software development businesses in Louisiana, please email and call your Senators and Representatives asking them to support Senate Bill 277.

If you do not know who your Senator and Representative are, you can find out by typing your home and business addresses into the appropriate place at  http://www.legis.state.la.us. It only takes a few minutes to find out and send your representative and senator an email. Please take the time to do this. It is really a big deal for the growth of this important industry in Louisiana.

For media coverage on Senate Bill 277 and the Louisiana Internet Software and Technology Association, please see the New Orleans Times Picayune article on Wednesday May 27th entitled, Movie, software tax benefits OK'd.

Erich P Rapp.

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The Senate Revenue and Fiscal Affairs Committee of the Louisiana legislature has scheduled the hearing on Senate Bill 277 regarding tax and business incentives for digital interactive media for 10 AM on Monday May 18, 2009 at the Louisiana State Capitol in Baton Rouge.

All those who own, work for, or are interested in digital interactive media businesses and the future of those businesses should plan to attend and speak in support of Louisiana Senate Bill 277. This bill would provide for transferable tax credits for businesses undertaking Louisiana based production of products and platforms in the digital interactive media arena.

The businesses undertaking those productions would receive a transferable tax credit equal to 25% of the production cost expended in Louisiana plus a 10% bonus or a total of 35% of the production cost for labor incurred in Louisiana. These tax credits can then be sold in the secondary market for cash (currently $0.80 to $0.90+ on the $1.00 of credit in realized cash) which substantially reduces the cost of building digital interactive media productions in Louisiana. 

For those involved in this industry, I cannot overstate how important this hearing is.

Erich P Rapp. 

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The Louisiana Senate Committee on Revenue and Fiscal Affairs will likely hold a hearing on Senate Bill 277 concerning tax and business incentives for digital interactive media businesses on Monday May 18th. The time of the meeting will be announced soon. We will post an entry with the time and place of the hearing as soon as the information is available.

Stay tuned to new entries in our blog to learn the time and place of the committee meeting. We need your help to encourage the Louisiana legislature to support digital interactive media business incentives.

Erich P Rapp.

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The first order of business for the Louisiana Internet Software & Technology Association ("LISTA") is the passage of legislation renewing the Louisiana Digital Interactive Media Business Incentives Program. The current law expires at the end of 2009.

LISTA has worked with a Louisiana legislators to submit to the legislature a new bill on digital interactive media business incentives. The bill has several goals. Those goals include removing the sunset or expiration provision in the tax incentives program; updating the definition of "digital interactive media" to reflect the current status of the industry; and giving the tax credit program parity with the film tax credit program.

LISTA believes that the adoption of this bill will make business conditions in Louisiana very favorable for the development of new businesses in the digital interactive media arena. A copy of the tax of the bill and more detailed information about the bill will follow on this blog shortly.

Erich P Rapp.

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