As you're probably aware, Gartner recently launched a new blog network, and most of the recent posts to this blog have been cross-posted there. We remain committed to continuing the Media blog, so we're working on a solution to be able to have all of our posts appear in both places, without having to hold two separate conversations. In the meantime, we're temporarily suspending the policy of duplicate posts to keep the conversations in one place. You can follow our latest posts here:
http://blogs.gartner.com/allen_weiner
http://blogs.gartner.com/andrew_frank
http://blogs.gartner.com/michael_mcguire

We hope you'l stay tuned to this spot for our announcement, coming soon, of the availability of all of our media-related posts in one location.

Thanks for your patience,
The Gartner Media IAS team

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Yesterday's experimental call-out to social media monitors produced an eye-opening result: 27 responses in just over 24 hours from social media monitor companies who proved they were listening.

Of the 34 companies I mentioned, 16 responded (some more than once). In addition, 4 responded that I hadn't mentioned.

The ones I mentioned who responded as of this posting were:

Converseon, Radian6 (two responses), Scout Labs, RelevantNoise, New Media Strategies, Trackur, Nielsen (2 responses), Visible Technologies (3 responses), Market Sentinel, Buzzlogic, Custom Scoop, PopularMedia, Techrigy (three responses), Biz360, MotiveQuest, Onalytica, and Umbria (JD Power)

and the ones that I didn't mention who picked it up anyway were:

Cision, Enterprise RSS, VibeMetrix, CyberAlert

I'm still hoping to hear from the rest.

Although this was in no way meant to be a scientific poll, it does strongly support the thesis that these technologies are for real, and agencies and marketers must take notice or risk being left behind. If you really want to know what's happening to your brands in social media, you need to find the right tools and the right partners.

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As a native Philadelphian, it is always fun to poke fun at everything "New Jersey," but I find nothing funny about the possibility of the Newark Star Ledger (yes, the paper Tony Sorpano would pick up at the bottom of his driveway) going out of business. Despite a huge number of buyouts (200 to be exact) and the renegotiation of two major union contracts (the drivers have yet to ratify a new agreement), the paper is not out of the woods and faces projected losses of between $30 million and $40 million for 2008.

Major metro newspapers teetering on the edge is not a problem limited to the Garden State. The Newspaper Association of America reports that overall ad revenue for 2008 is expected to decline 11.5%, which comes in the wake of recent reports that online ad revenue - the future life raft many newspapers cling to - was down 2.4% in Q2 of 2008. Layoffs, downsizing, fewer print pages, combining or eliminating sections and other cost-cutting measures have been a matter of course for the past few years, but the added dimension of a credit crunch means that chains that have newspapers for sale - and the list includes Cox, Copley, Journal Register and McClatchy - are going to have a tough time finding buyers with enough cash in hand who are willing to make the long shot bet that daily newspapers will make a comeback. The net result is that a number of major daily newspapers will close in domino fashion, with the only question being who will fall first.

One candidate is the Minneapolis Star Tribune, which recently missed a $9 million debt payment. If you are placing bets, also consider the Spokane Spokesman Review, which recently slashed 21 of 104 newsroom employees and the Harrisburg Patriot-Review, which aims to cut 25 percent of its staff. Others are in the same boat, but the list is too long and too depressing to name. If you are looking for the gory details, one popular blog, Newspaper Death Watch, is the official biographer of this sad trend.

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I, for one, try to practice what I preach by keeping up with how my output reverberates in the blogosphere. So I noticed this recent post by Blake Cahill at Visible Technologies referencing a note I recently released called Social Media Delivers Marketing Intelligence (subscription required) that examined the burgeoning world of social media monitors. If you're a marketer or an agency, this is a topic you should know about.

This made me wonder whether social media monitoring vendors in general are mining the social net for references to their own products. So here's simple - and, yes, self-serving - test: check in below if you are monitoring the net for blog posts (however obscure) that mention your social media monitoring service. Or, if let me know if I've missed you.

How many can say "we’re listening?"

1st2c, Biz360, BrandIntel, BuzzLogic, Nielsen Buzzmetrics, CIC, Clarabridge, Collective Intellect, Converseon, CoreX Technologies, Crawdad Technologies, CSC NameProtect, CustomScoop, TNS Cymfony, Echo Research, Envisional, Factiva, Kaava, Market Sentinel, MotiveQuest, Networked Insights, New Media Strategies, Onalytica, Opinmind, Popularmedia, Radian6 Technologies, RelevantNoise, ScoutLabs, SentiMetrix, Techrigy, Trackur, Umbria, Unbound Technologies, Visible Technologies, Waggener Edstrom Narrative Network

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What an interesting confluence of events this week. If anyone ever needed proof of the notion that lawyers are the only stakeholders making money on the analog-to-digital/physical-media-to-digital transitions for the media, the last couple of days should be confirmation.

First, RealNetworks releases its DVD-copying software, RealDVD, today. The software download lets a user "rip" a secure copy of a DVD so the user can watch the movie on a notebook PC (which also has to have a copy of the RealDVD software). The software, by the way, is being sold as a download from Real that will be priced at $30 for a limited time but will carry a $50 price tag. (Users have to pay another $20 for every copy of the software they want to put on up to five additional computers.)

Apparently sensing some hostility in their pre-launch visits with Hollywood studios, Real Networks filed a pre-emptive lawsuit today a asking a court to rule that the software is legal. The defendants? The major Hollywood studios and the DVD Copy Control Association which maintains the standards for copy protection schemes such as the Content Scramble System (CSS) used to (more or less) protect commercial DVDs. (Here’s a copy of Real's press release in which they paint themselves as the victim of Hollywood and the champions of technology innovation.) The labels are arguing that Real's software will allow people to copy rented DVDs onto their hard-drives to build permanent libraries. Real's press release cited a recent court decision in favor of Kaleidescape, which notes that the actual disc did not have to be in the computer during playback.

OK, that's one case that will soak up some billable hours as all parties fight it out.

The second one doesn't directly involve any media companies, but does involve the Norwegian government's consumer protection group, the Consumer Market Council, and Apple. On Monday, the Consumer Ombudsman accused Apple of failing to unlock the iTunes store and allow consumers with other devices to purchase content. This case started two years ago and, according to press reports, Apple argued it was working to get the music labels to provide DRM-free versions for sale. Apparently, the ombudsman has ruled that Apple has until November to rectify the situation or will face penalties which may include fines.

Assuming Apple can't get the rest of the major labels and independents to provide DRM-free versions of content, as EMI currently does, the Norwegian iTunes store might be shuttered.

Eight years into the 21st century and the battles between technology companies, content companies and legislators continue and just seem to be treading the same old ground: technological measures demanded by rights holders, implemented by technology companies and either pushed or scorned by legislators, depending on the country.

Does anybody see a logical end? I do, but I wonder what others think.

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MySpace launched its online music service named, not surprisingly, MySpace Music on Thursday. The News Corporation-owned social network pulled back the curtain on a portal that will allow MySpace users to build an infinite number of playlists of major- and independent-label songs of ad-supported streams while also enabling direct purchases of songs from Amazon's MP3 store.

My initial verdict: It's a start but for something they've been allegedly working for many months, the performance is not terribly consistent.

As users have been able to do on sites like Last.FM, iMeem, iLike for a year or longer, MySpace music users will be able to stream complete songs from the Universal Music, EMI, SonyBMG and Warner Music catalogs, as well as those from independent music distributors such as the Orchard, ADA and Fontana. Like the other sites, MySpace Music's business model will be a hybrid ad-supported and affiliate-fee model. (Affiliate fee meaning just as iMeem gets a small percentage of the sale for every buyer they drive to the iTunes store; MySpace Music will get something from Amazon. MySpace Music personnel declined to go into any detail about the licensing agreement is has with Amazon.) For Amazon, this could be a very nice customer acquisition agreement assuming a significant, or at least meaningful number of MySpace users are willing to actually pay for content.

I played around with it on Thursday. The browser-based player, generally speaking, looks very nice. There's a slot for banner ads in the player and during the demo it didn't appear to be too intrusive. Creating playlists seemed relatively straightforward. For most songs, there will be a "buy" button next to any version cleared for sale. Users are redirected to the Amazon MP3 song where, if they already have an account, they can go straight to the download. For those without an account, they'll be asked to create one. Users younger than 18 or without a credit card simply have to go buy one of Amazon's prepaid cards.

While they've created a nice, average user interface, and the player works reliably well the overall experience of song searches was, and I'm being blunt now, really "old school." Like early versions of pressplay or the Sony Connect store, and not in a fondly nostalgic way. It seems that in a rush to get a bunch of content, a lot of chaff got through. Some examples:

- When I did an artist search for Stevie Ray Vaughn, I got the requisite number of SRV songs but also a ton of terrible remixes of SRV songs; poorly encoded copies of SRV material and just plain dead files. (Meaning when I hit play, I got a "Cannot play this song" error message. If it can't be played, why is it showing up in any search result?) To me, using search/discovery/recommendation tools doesn't mean I want to play hide and seek.

- Consistency: if one can search for a song and the song shows up in results and includes the original album art (to me indicating maybe it's legit) and one can add it to a playlist, shouldn't it play? (Grateful Dead, some Mogwai, number of other examples were found.)

- There were too many dupes – multiple entries for the same artists/song/album – on multiple searches. The results for "Eric Clapton" were particularly egregious.

- I'm sorry, when I punch in "Jerry Garcia" in search, I shouldn't get "Gurls Wit da' Boom" by some guy named "Proof" in the search results. That's just wrong. Funny, but still wrong.

- While I agree humor has a place in music, am I supposed to be laughing at the search results?

But here's what I can't argue with: MySpace has tremendous reach as a portal – millions and millions and millions of users. It is important that MySpace was able to secure the deal with the labels to get licensed content into the service that users can play for free. What matters now is how they plan to evolve the service, to differentiate it from the many other sites providing free (ad-supported) streams.

How do we measure the impact on the online music market? For the moment, I think it's going to be what kind of sales it can drive to Amazon.

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Watching AT&T, Time Warner Cable, and Verizon representatives testify at the U.S. Senate Commerce Committee hearing on broadband providers and consumer privacy made me wonder how long we can talk in generalities about online privacy and advertising without rolling out some storyboards.

Behavioral targeting veteran Dave Morgan offers a nice summary on MediaPost of the background and arguments for industry self-regulation, and both the House and Senate have made it pretty clear that they would like to avoid any legislation that might damage the online advertising economy. Plus, some of them seem a bit distracted at the moment. But there's a catch-phrase here that everyone appears to be lining up behind which makes me wince. It's "advance affirmative informed consent" – or some variant – which begs to be acronymed: AAIC.

Of course, AAIC sounds good: give consumers the information they need to make an informed decision about things like deep packet inspection and third-party tracking cookies and make them decide what they're willing to tolerate. I imagine my ISP presenting some kind of long EULA-like consent form the next time I open my browser, probably two minutes before I have to get on the phone with a client, blocking my access until I click a radio button indicating whether I agree or not.

As it happens, there's a much better way. I saw it demonstrated at Microsoft over a year ago, but I haven't seen it since. It's a small standard semi-transparent icon (call it a "disclosure bug") that appears in the corner of any display ad. When rolled over, it opens an overlay that explains why you're being shown this ad, which ad network or publisher is responsible, what your profile looks like to them and what method was used to obtain it, and gives you the opportunity to either immediately opt-out of the network (and wipe your profile), or adjust your interest categories if they've got it wrong. This puts the focus where it should be: on full transparency and granular control in the relevant context, rather than an AAIC that's likely to seem more like annoyance than empowerment.

I discussed disclosure bugs with many leading ad network executives at OMMA last week, and for the most part they thought it was a great idea. There are several reasons why behavioral targeting networks should like this, not the least of which is that consumers will soon learn that targeted ads actually are more relevant to them than non-targeted ads, which tend toward the "you have just won $1,000,000!!" sensibility. It would also allow consumers to improve the accuracy of their profiles and manage privacy pro-actively, and provide law-makers and privacy advocates with evidence of tangible progress in self-regulation. Last but not least, it would expose the networks who believe full transparency is a bad idea.

Unfortunately the IAB, whose privacy principles are still at the level of generalities, is probably not up to the challenge of pursuing such aggressive standards. Congress, for its part, is even more unlikely to get involved at such a level of detail. ISPs are arguably in the best position to take the lead on the concept of active disclosure for targeted ads. Although few of them practice behavioral targeting today, and DPI in the U.S. seems for the moment to have followed NebuAd into hiding, their long-term interest in advertising is likely to grow along with their triple-play aspirations. But they also have the distinction, unlike online ad networks, of having to answer directly to consumers.

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According to a story in The New York Times, General Electric is getting back into the TV manufacturing business, partnering with Tatung, a Taiwanese electronic company, creating a series of new sets that have Internet capability. The plan is to start with Internet access via a separate box migrating to in-set Internet access next year. This is hardly first-mover advantage as a number of manufacturers, including Sony, already produce or have announced production of TVs with similar capabilities. The twist here is that GE, who owns NBC-U, plans on pre-loading content from the Peacock Network (and its subsidiaries) on the sets so you can watch "The Office" or recaps of Notre Dame football by clicking your remote on an on-screen widget. Yes, it's like turning on your PC to find myriad cheery icons offering free trials of AOL (sorry, couldn't resist), Microsoft Office or Quicken. Increasingly, hardware OEMs are looking with greater circumspection at third-party pre-loads believing that the valuable real estate on a PC screen could be something they mine with their own branded software and services.

So now we face a future where the next valuable virtual real estate could be on your plasma screen. And while the GEs of the world will naturally want to differentiate their widgets from others, IP-delivered content icons that pop up on your TV, this scheme will only work in open delivery platforms such as the one Yahoo! has planned for its TV widget plan announced at the recent Intel Developer Forum. If TV widgets beget more widgets then this could be just the fuel the electronic program guide businesses need to move forward with greater speed and add order to on-screen chaos.

Of even greater consideration is what impact IP-delivered TV content directly to the consumer could have on cable and satellite providers as well as telco’s hope for IPTV. For all consumers except those served by fiber optic networks such as Fios or U-Verse, bandwidth to the home will fall short of delivering a continuous reliable TV experience that comes close to today’s HD programming. With bandwidth caps and tiered pricing under consideration by leading ISPs, a likely outcome could be a premium service bundle that gives consumers the IP juice they need to fully deploy their TV widgets. This could provide an alternative revenue stream for cable company ISPs who may be threatened by cable service exodus. Such a move does puts IPTV in the form of telco TV in peril, replicating the business issue facing telco service providers on a number of fronts: what’s our future beyond the plumbing business? As of yet, no good answer has emerged.

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In hopes of giving the physical-format-upgrade cycle one last spin - not to mention maybe increasing the standard unit price that the majority of consumers pay for prerecorded music to anything more than $0.99/song - all four major music labels have banded together with SanDisk to announce "slotMusic," an effort to build consumer interest in the distribution of DRM-free, high-bit-rate-encoded songs on 1GB microSD memory cards.

But wait a minute, we're about six years into the legitimate online music market, and the labels want to take us back to the days of physical media?

Apparently, they do want to focus on physical. For SanDisk, the motivations are easy to understand: another way to ship more packaged flash memory. For the labels, however, the reasoning is a bit more elusive. I believe what we're seeing is the last gasp of the bundle for music. By throwing more "stuff" onto the microSD "album," the industry is looking to make the package as attractive and profitable as possible. I say that because my guess is that the unit pricing for a slotMusic card will be more than a CD. Retail pricing for a slotMusic card has not been released, and no availability date was announced today. SanDisk executives said they expect the slotMusic cards to be in the channel by the holiday buying season. (Wal-Mart and Best Buy are the two retailers on board first. Interestingly, both have been mentioned in news reports as reducing the amount of square footage they dedicate to CDs.)

SanDisk and the labels are touting the slotMusic effort as the answer for what they claim is a significant number of music consumers who desire not just ownership of music bits on a hard drive but also the packaging and everything else - liner notes, etc. (SanDisk said the parties had done market research to support this claim but did not have the methodology, sample size, etc. available when we spoke last week.) Some key benefits cited by the SanDisk executives:

• The growing number of mobile phones with microSD slots.

• Instant gratification: The SanDisk argument is that "buying" a song online involves finding it, downloading it and syncing it to a portable device. The "time to play" can be hours. With the slotMusic cards, one can buy them at retail and pop them in a device's slot and play immediately.

• As previously mentioned, no DRM and minimum encode rates will be 256 Kbps, with many planned to be released at 300 Kbps or higher. (By comparison, most of the songs in Apple's iTunes store are encoded at 128 Kbps.)

To me, it remains an open question whether a significant number of consumers will actually respond to the notion of extending the old concept of the "bundle," even though the bundle can now include not only songs but also video, lyrics and any number of items. It's the songs consumers are after, and today's digital natives seem to be quite comfortable going out and acquiring that other information as needed.

It will be interesting to see whether the slotMusic cards can become the '08 holiday season's must-have stocking stuffer or the latest example of a technology that misses a market shift.

Then again, "green" consumers might be crossing it off their lists, since it appears the retail packaging for the fingernail-sized microSD cards is about the same size as that of a CD.

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The Online Media, Marketing and Advertising annual conference in NYC is on and, as has been the custom for the last few years, Geoff Ramsey, CEO of eMarketer, gave his trademark opening keynote, "Warp Speed." This year, however, the pitch felt more like it was running on impulse power. (Sorry, no more Trek jokes, I promise.) The theme was supposed to be "Platform Wars," but this quickly gave way to current economic conditions. Early on, Ramsey cited a recent ANA (Association of National Advertisers) survey that revealed "53% of [U.S.] marketers expect a reduction in their ad budgets in the next six months," and also revealed eMarketer's latest reduction in overall U.S. ad spending forecast: 1.9% growth, despite the Olympics and the election. That's pretty grim.

Of course, online advertising remains a relative bright spot, if somewhat dimmer than in recent years: eMarketer forecasts for growth in U.S. online ad spending have been reduced from 27% to 17.4% for '08, although online media companies can take solace in the notion that, at $24.9B in U.S. '08 spending, online media is poised to overtake consumer magazine spending this year, having bested radio last year and outdoor the year before. In other good news, comScore revealed that, for the first time, social media has eclipsed porn as the No. 1 destination category on the Web.

Hulu CEO Jason Kilar offered more positive news: Hulu is now serving 11.4 billion video streams a month according to comScore - which is a lot - and it's rolling out some exciting new video advertising formats.

But the main story here seems to be the complex relationship among Wall Street, Madison Avenue and the global Internet. I think there's an unspoken fear that advertising - digital advertising in particular - has some very unnerving similarities with the financial services industry. They've both become swamped with data. They've both become dominated by increasingly complex and fragmented webs of intermediaries transacting around complex information products that often seem to lose contact with tangible assets. And they're both proponents of self-regulation and the hypothetical stability of self-organizing systems, which can collapse very quickly.

One important difference is marketing's clarifying relationship with sales, which are of tangible value. Google endures because it's connected fairly closely to sales, and it creates, rather than obscures, efficiency. Of course, Google is not Madison Avenue, and from Madison Avenue's viewpoint as expressed by panelists at OMMA, Google seems to be looking more like friend than enemy at this juncture. Under duress, agencies tend to revert to extolling branding as a religion and creative (always a noun) as revelation, even as these concepts are challenged by what Nigel Morris, CEO of advertising firm Isobar, summarized as the idea of "brand as service." But the tension is on the media side, where ad networks and Google are indeed pushing into territory formerly controlled by agencies and media companies with efficiency and disintermediation. If there is another collapse in store for advertising, it seems this time the industry's most venerable institutions are at greater risk than its young Turks.

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The second installment of Microsoft's new campaign, "New Family", seems to be creating even more discord than its first. In fact, it seems designed to provoke discord.

It's at least as difficult to parse, and even more bizarre, than "Shoe Circus," and, at 4 minutes and 30 seconds, it defines an unexplored new format for video advertising as compressed situation comedy.

First, the spot reinforces the casting of Bill and Jerry as a comedy team duo, two strangers in a strange land. This strange land is inhabited by "real people," and Jerry reveals that they're on a quest: "We need to connect with real people." It quickly becomes clear that these "real people" and our anti-heroes are fundamentally ill-equipped to deal with each other. This incompatibility is revealed through a series of vignettes that paint both the duo and their hosts as tragicomically devoid of empathy. Again, the spot's feel for human nature is reminiscent of Larry David's "Curb Your Enthusiasm," while the landscape seems conjured out of David Lynch's vision of small-town America.

Again, the spot is pure brand (no mention of the company or product), and again, it seems almost intentionally designed to illicit a "WTF" response from its audience.

What struck me as most unexpected is the self-deprecating positioning of the two anti-heroes. There are some indications that they are a metaphor for today's personal computing experience, but this formula hardly seems to burnish Windows or Microsoft. The final scene echoes the conclusion of the previous spot, but takes its futurist theme in an ironic direction. Walking away from their adventure, Jerry gratuitously remarks, "Bill, you've connected over a billion people," to which Bill echoes his earlier answer, "I have." Then Jerry recapitulates his speculations on some ridiculous future innovations and pushes Bill's butt wag acknowledgement embarrassingly beyond the audience comfort zone, as Jerry directs him to dance like a robot and then urges him to catch up, which he submissively does. Not exactly a positive characterization of innovation.

As best I can tell, the main aim seems to be to hook the audience in the mystery of where this is going and create buzz, which I suspect it's already done. The fact that the buzz ranges from perplexed to hostile can't be unintentional, which leads to a new theory of what's going on.

First, we must give up on the idea that Bill and Jerry are meant to represent Microsoft, Windows or Apple - they're something else. This story, still in its early chapters, has to be about transforming perceptions, as Microsoft intends to do with Vista and perhaps its leadership role in general. So the spot deliberately starts out establishing and reinforcing the perception that our team has a problem: Despite their vast resources and accomplishments, they're disconnected from the needs of real people. Look for the introduction of Windows as the agency of this connection. As our protagonists are humorously cut down to size, Microsoft must enter the picture as the tool of their rehabilitation.

At least, that's my best guess as to what's going on here. Any other thoughts?

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With the two product launches by Apple and Microsoft this week, we got one of those nice snapshots of the online music and portable media players. It also left me with the thought that we have the online music market of established technology companies adding elements associated with social media - algorithmic and social recommendations - in an effort to grow their businesses, while the media-focused social networking sites have crowds, but reliable revenue remains elusive.

The two most distinct elements of the announcements were the two different takes on implementing search/discovery/recommendation capabilities into paid music services. Apple's new Genius feature, built into the new iTunes software and into the new iPod firmware, generates recommendations based on the user's library, as well as inputs from the store's editorial content, the iMix lists and the like. Genius will be particularly useful for users with large libraries, but for Apple, it could be even more useful as a transaction driver. The Zune's approach, which builds on the incorporation of an FM radio tuner, allows users to purchase songs directly from a broadcast or tag them for download later. This is accomplished by stations broadcasting metadata along with the song that can be read by the Zune's FM receiver.

So, we have two different ecosystems and two different approaches to search/discovery. iTunes is well established and evolving in a fairly logical manner based on the need to continually show consumers the value of keeping their accounts on iTunes and buying or using their iPods. For iTunes/iPod/iPhone users, the device/software/service integration is the key. In this one, the evolutionary rhythm is relatively steady. Rapid, orthogonal transitions aren't required; in fact, they're probably not even desirable. So the addition of the Genius recommendation system that ties a user's library to inputs from the iTunes Store cloud - most popular downloads, user reviews, iTunes' editorial information and song metadata - is a logical extension.

With Zune, this is a new ecosystem, relatively speaking, with a similar construction - devices, online service, desktop software - but one that started with a slightly different differentiator: social sharing among Zune users. Zune customers who opt for the subscription service can share songs and playlists; they can tag songs and track their plays on their Zune profiles, etc. The challenge for the Zune team is getting enough people into the social swing of things, so to speak.

What I took away from the first half of the week was that Zune's latest updates are starting to show that Microsoft is beginning to offer a more fully realized competitor to Apple's juggernaut. What will be interesting to watch is how effective the different approaches to recommendation and discovery will be in helping Apple maintain its lead or in giving Microsoft a boost.

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The switch-off of U.S. analog broadcast TV signals for all high-power television stations took place this week in the town of Wilmington, North Carolina, at noon on Monday, 8 September, and many stakeholders will be watching and waiting to see how this test case might highlight any future potential problems for the rest of the country come midnight on 17 February 2009 - the official date of the digital TV transition for the U.S. Currently, each U.S. TV station has assigned capacity for two channels - one for analog TV signals and one for digital TV signals. As of the switch-over date, all analog TV spectrum (in the 700MHz spectrum) will be returned to the Federal Communications Commission (FCC) and repurposed for other uses. The FCC has already auctioned off a good portion of this spectrum - mostly for wireless broadband communications and for public safety/first responders - netting so far approximately US$19 billion in spectrum licensing fees.

Statistics from the FCC, Nielsen and others estimate that as many as 13 million to 17 million households could be analog-only over the air (OTA). The immediate net effect of the digital TV (DTV) transition is that television viewers with analog TV sets not connected to cable, satellite or telco-based pay-TV service will need to take action before 17 February 2009 to ensure their TV sets continue to work.

This means getting a digital TV that has a digital tuner, getting connected to a pay-TV service, or connecting the analog TV to an OTA converter. The U.S. Congress-sponsored "TV Converter Box Coupon Program" allows U.S. households to obtain up to two coupons, each worth $40. These coupons can be applied toward the cost of eligible converter boxes. As of August 2008, about 150 converter boxes had been approved for the program, which is administered by the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA - see http://www.ntia.doc.gov).

Wilmington is the 135th largest television market in the U.S., with about 180,000 television households, according to Nielsen. It is located on the seacoast in the southern part of the state, and it is estimated that less than 10% of its viewers rely on OTA broadcasts to get their television programs. FCC officials reported receiving several hundred calls from local residents, many of whom did not know that the switch had taken place, while others reported trouble hooking up converters. Local news reported brisk sales of converter boxes and digital antennas at consumer electronics and big-box retailers. A bevy of officials from local, state and national organizations and media from all over the world were also on hand to witness and support the event, including:

• The FCC, the chief telecom regulator, which set up a call center
• The NTIA, an agency of the U.S. Department of Commerce that oversees the government program responsible for issuing coupons to buy digital-to-analog converters for OTA TVs
• The National Association of Broadcasters (NAB), a broadcast industry trade association that has been funding and conducting consumer workshops throughout the area to heighten the awareness of the early transition
• The Consumer Electronics Association (CEA), which represents the CE manufacturers and which sent hundreds of converter boxes to nursing homes throughout Wilmington

The switch to digital broadcasting is a phenomenon occurring worldwide; however, each country is approaching it differently. Japan is switching to all-digital in 2011, while many European countries are either already there or in the midst of planning their transition. In the U.K., for example, the transition is taking place over three years and on a regional basis, whereas in the U.S., the DTV transition happens en masse nationwide on 17 February 2009 - in part due to the way the initiative is being funded.
The NTIA is administering the government-sponsored program for digital-to-analog (DTA) converter boxes. It has allocated almost US$2 billion of the auction fees to fund the public awareness and converter program for households that get their programming OTA. Those consumers with digital TV, those with TVs connected to cable and those with digital satellite pay-TV service won't need the OTA converters.

It is expected that there will be at least some technical or operational issues associated with the DTV transition, however. Not the least of these is consumer confusion, despite massive public service campaigns by broadcasters, cable and satellite TV providers on TV, radio and other media. There is the potential for problems related to changes in digital signal strength and contour vs. analog, as well as the ability of older indoor and outdoor antennas that won't handle digital signal, even with a digital converter - among other issues. In addition, due to the way the program for converters has been set up by the NTIA, nursing home residents will not be able to apply for government-sponsored coupons for DTA converters. While the policy is under review, it could mean that nursing home residents, depending on how they obtain their TV service, could have trouble receiving the digital broadcast signals on their TV sets.

While Wilmington is the first market to go digital, some markets have FCC permission to make the transition earlier than the February deadline (as early as November), especially those in northern climates where icy roads, snow and freezing temperatures might make the technical transition too difficult in the winter, especially the repositioning of TV transmitter equipment for digital transmissions.

Wilmington, however, is the only market that volunteered for the early test transition, so it will be interesting to see what the potential technical issues and challenges will be. It was selected in part due to its location, with terrain that is relatively flat and free of aerial obstructions that could compromise signals. Some are criticizing the timing, however -right in the middle of hurricane season - as this could compromise some residents' ability to get emergency alerts, evacuation orders and news bulletins. The statewide public broadcasting station that will continue to broadcast the analog signals which should get local residents through until after hurricane season ends, which is usually the first week of November. As there are very often power outages due to hurricanes, the converter boxes approved for this market have battery backup built in.

Digital TV transition is expected to be a boon for consumer electronics manufacturers of flat-panel LCD or plasma TV sets, in addition to spurring increased uptake of pay-TV subscriptions for the cable, satellite and telco TV offerings. There were about 112 million TV households in the U.S. in 2007, with about three TVs per household on average. While shipments of DTVs are strong according to the CEA (more than 32 million are expected to sell this year alone) there are still many legacy analog TV sets relegated to spare rooms, not connected to a digital set-top box and only using either indoor or outdoor aerial antenna. So the opportunity is quite substantial for a number of stakeholders.

There are a host of issues related to the DTV transition. Look for an upcoming report that outlines in more detail the implications of this technical milestone for cable operators in particular.

Recommended reading: Digital TV technology profile in "Network Service Provider Infrastructure Hype Cycle 2008."

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Warning: this post has nothing to do with technology.

So, there I was watching the Giants beat the Redskins, a-twitter with the rumor that Microsoft's new TV campaign was going to debut at any moment. Could Jerry Seinfeld and Bill Gates match the kind of comic chemistry that John Hodgman and Justin Long display in Apple's long-running "Get a Mac" campaign? How would Crispen Porter + Bogusky (the famously hip ad agency that Microsoft hired) answer the irreverent attack strategy of TBWA, Apple’s long-standing brand stewards, which painted Microsoft as a neurotic nerd? What new brand positioning was in store for Microsoft? What would they say?

Finally, the spot, dubbed "Shoe Circus," came on. I suspect it left most of the audience baffled. I had to watch it a few times before I felt like I got it. Then, I felt like it provided a fascinating window into the game as Microsoft sees it.



As suspected, the ad is pure brand: there’s no mention of product, and almost no mention of Microsoft. The first part of the ad is devoted to establishing the screen presence and rapport of the two stars, Jerry and Bill, who play themselves meeting by chance at a discount shoe store in a mall. Bill pulls off a very decent straight man to Jerry’s classic cloying funny man, and the scene unfolds Larry David style, riffing on theme of the discount-loyalty-card-carrying billionaire. It's not until the second part of the ad that we get any clue as to the real theme. Walking away together in the parking lot, Jerry quips, "…I imagine that over the years you’ve mind-melded your magnum Jupiter brain with those other Saturn ring brains at Microsoft." Bill thoughtfully replies, "I have." The conversation then turns to Microsoft's secret future plans for edible computers, closing with the tag cards, "the future," "delicious" and a Windows logo.

So, what is this? First, a key new roll for Bill Gates: he’s now front and center as Microsoft's low-key wizard/father, a normal, practical man on the outside with the vast knowledge of time and space on the inside. Jerry, the inquisitive man-child, is an aspiring student, drawing out glimpses of Microsoft's vast, beneficent vision for the future of technology and mankind. It's not about Microsoft vs. Apple (or Microsoft vs. Google): Microsoft transcends today’s politics. It's a company with long-range goals and magical projects at the edge of innovation that have been unfolding for years, where today's products and competition are barely relevant.

This kind of thing is certainly likely confuse and possibly infuriate today's IT professionals who, for the most part, are probably more concerned with the stability of Vista than such Madison Avenue malarkey. It may even confuse and infuriate some folks at Microsoft. But these are not the audiences for this message. Here's something I picked up a long time ago at an ad agency that worked for another large technology company: high-tech branding is not about end users or IT decision-makers, it's about the shareholders. And it's not about changing their minds about Microsoft's products, it's about changing their hearts and their instincts about what kind of company Microsoft is and where they're headed (and hence what kind of investment they are).

To wit, Microsoft's price/earning ratio, which is a pretty good measure of the value of its brand in the mind of the market, is 14.09. Google's is 29.59. Apple's? 31.53. (Even IBM edges them out on this metric.) Clearly, the market thinks other high-tech companies are much more likely to produce strong growth in the future. I suspect when the agency researchers explored these attitudes with focus groups, they discovered that a big part of the reason was Microsoft's perceived lack of leadership in the wake of Bill Gates' departure. Hence the first perception they set out to establish is, while Gates may have retired his post, his spirit and vision live on in the soul of Microsoft.

What will it take to succeed? First, changing the focus to the vision thing has to make the Apple campaign seem petty and narrow by comparison. That will be difficult, given the entertaining nature of Apple's spots, but the gag is starting to age. Second, the campaign has to avoid a major hazard of many future-oriented tech brand campaigns, which can backfire when they highlight the gap with the present and fuel suspicions that the company is spending too much time dreaming and not enough fixing bugs. The classic example of this was the AT&T "You Will" campaign, which featured futuristic vignettes with voice-overs by Tom Selleck, including shots of the ill-fated EO pen-based tablet computer that continued to air even after AT&T had shut down the project. And third, the campaign must be entertaining enough to disarm critics in the IT world, who are already starting to howl. Apple did this famously in "1984." More relevant, however, was the IBM "Subtitles" campaign (the one that opened with the Czech-speaking nuns, and the tagline "Solutions for a Small Planet"). Say what you will about the branding mindset and the hundreds of millions of dollars they spend, but check what IBM's stock did after that campaign launched in 1995.

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Word comes of Microsoft's bid to acquire Greenfield Online, the owner of Ciao.com, a popular European comparison shopping site, for US$486 million, cash. (Some may associate Greenfield with its Internet survey business, but the announcement made it clear that Greenfield will sell those assets to an unnamed buyer, as Microsoft is interested only in the shopping site.) Microsoft's commentary included an interesting comment from Tami Reller, Corporate Vice President & CFO for Windows and Online Services: "The team at Ciao has built a passionate consumer community based on intuitive technology and extensive merchant relationships that we believe will deliver incremental benefit to the Microsoft Live Search platform." Puzzled about the connection between comparison shopping and Microsoft's Live Search aspirations? Then you probably haven't been following Microsoft's Live Search cashback promotion. Launched in the U.S. in May, the program seeks to attract more visitors to Microsoft's search pages with the promise of rebates on transactions initiated from Live Search results pages.

TechCrunch, which was initially fairly bullish on the concept, now notes that the program has "failed to move the market share needle" according to comScore U.S. search data. Non-U.S. market figures are no more encouraging: According to comScore, Google has held a 75% share of non-U.S. search traffic since last year, while Yahoo's non-U.S. share dropped from 33% to 25% and Microsoft's from 31% to 20%. Moreover, of the three, only Microsoft's non-U.S. search traffic numbers actually declined, by about 17%. (Where did all the traffic go? Check out Baidu.com, whose traffic more than doubled and whose share went from 12% to 19% over the same period - jolted, of course, by a pre-Olympic spike in July.

In addition to comparison shopping, Microsoft announced its intention to shore up certain vertical search categories, such as travel and healthcare, in an overall attempt to focus on the most monetizable areas of search. We can infer that its strategy in these areas is also likely to include tangible incentives to try to attract searchers and advertisers with economic benefits. The big question remains, will it work?

This question is clouded a bit by ambiguity around objectives. If the only measure of success is to "move the needle" on search traffic in a compelling, long-term way, the answer is "probably not": The track record for sales promotion indicates it can be highly effective at increasing short-term sales volume, but rarely at changing longer-term market share. What's more, the problem with the approach has been its tendency to erode long-term margins by undercutting value perceptions, often for not just a single brand but an entire category as competitors respond to pressure to match discounts and price wars result. But here's where Microsoft may have a subtler objective. Eroding the value perception and margins of the search advertising and e-commerce ecosystem by challenging its competition to match its price incentives could change the game to one in which search dominance is less of a decisive economic advantage. This kind of thinking would not be new to Microsoft, but its application to an established market the size of search from such a trailing position is - to use a popular term - audacious.

In the meantime, some consumers will surely benefit from bargain hunting in their choice of search engines, and some vertical online retailers will surely benefit from Microsoft's largess.

Disclaimer:
Greenfield Online is a portfolio company of various venture capital funds in which S.I. Venture Associates, LLC, which is owned by Gartner, has an investment. Gartner does not have any influence over the business or operation of the portfolio companies, or the investment decisions made by these venture capital funds. Gartner research is produced independently by the Company's analysts, without the influence, review or approval of our investors, shareholders or directors. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity" on our website, http://www.gartner.com/it/about/omb_guide.jsp.

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For many folks, college is a time when they extend their education and occasionally "experiment" with lifestyle choices, fields of knowledge and the like. So it makes sense for Fox to pick the college milieu for its own experiment: streaming online broadcast TV shows at the same time as they debut on the regular broadcast schedule.

To paraphrase one of the Fox execs quoted in the story, this is a no-brainer. Fox execs noticed ".edu" domains were among the most frequent visitors to the media giant's site. Why not see how the kids like getting TV on their PC at roughly the same time as it airs on the old medium?

Seems like a smart move. Wonder what took so long?

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A federal judge ruled that copyright holders must consider whether pieces of content posted by individuals on sites such as YouTube are examples of "fair use" before demanding the content be pulled from the Web.

While the ruling isn't a sweeping endorsement of all forms of consumer creativity involving the use of copyrighted works, it's a substantial check on rights holders' carpet-bombing of sites with takedown notices. For that reason, the judge's ruling is significant.

Over the course of the past 10 years, copyright holders have deployed technology (DRM) and law (the Digital Millennium Copyright Act, the Recording Industry Association of America's flood of lawsuits against alleged file traders) to protect their ability to control the flow of their content online. As YouTube and other UGC sites grew in popularity, rights holders were filing numerous takedown notices at any sign of copyrighted material.

There are a couple of important products of this decision. First, it underscores the imperative for rights holders to get a grip on reality and acknowledge the way the online media ecosystem is developing. The Lenz case for which the ruling was issued was a particularly egregious example of overreaching by the rights holders. The content involved a Prince song that was playing in the background - it wasn't really a video soundtrack - while a mother filmed her toddler dancing along to the song. How is that harmful to Universal's attempt to make money off the Prince song? (Besides getting a grip, I would also suggest that Universal Music, the plaintiff in the case, hire some different PR executives. I believe an astute PR pro would hear "mother" and "adorable child" and very likely caution against pursuing the case.) The video in question was ultimately reposted.

The second important product of the ruling is that it shows how little progress has been made recently in the deployment of technologies that can automate the process of checking for copyright violations, the filtering technologies that Google claimed would be developed to identify copyrighted material. While we might hail the judge's ruling, and we do, rights holders need to start serious collaboration with technology providers to create a set of licensing and content-tagging schemes that free consumers - who play by the rules - from concerns about being sued while also giving rights holders methods to track their content as it's flung around the Internet. Google and YouTube haven't really said whether the detection system they were going to have in place by the end of last year is actually in place.

At the moment, most sites such as YouTube claim to have some form of algorithmic filtering but also depend on humans to review content. Rights holders have to pay folks to scan these sites continuously looking for their material. (I guess that's a reasonable use of resources.) And the rush to do all this scanning for the usurpation of copyrighted material results in collateral damage, like this case.

This struggle between rights holders, online UGC providers and all other portals that enable consumers to upload their creations (and what they happen to collect online in the form of video and audio files) is never going to end. And it really shouldn't. However, what needs to happen is that an equilibrium needs to form that balances the needs and wants of consumers who want to create and put their stamp on the culture, no matter how silly it might seem to others, and the needs of rights holders and artists to be compensated or at least have some say in how their works are used by others.

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The news is out that Google is going to launch an online music service for the domestic market in China, according to this item in The Wall Street Journal (subscription required). But don't bother looking on Google's press release page or even on Google's "official" blog. There are no mentions of this service. This seems odd to me. Announcing a free, ad-supported online music service, allegedly distributing DRM-free files to the most populous nation in the world - a market oft-cited as one of the largest markets for pirated content of all types - isn't "market-affecting" enough to warrant a press release? Or even a mention in the official company blog?

As the kids say, "whatever."

But, let's for the moment assume that WSJ got the story right and Google has launched such a service. It's got all the elements of being truly important. It's got the "cloud" (content service in the cloud delivering music files without DRM and no direct consumer payment). And it's a huge market for content, albeit one apparently awash in pirated content - online P2P usage as well as physical piracy in the form of bootlegged DVDs, etc.

A couple things jump out at me:

• Content: The WSJ story notes Google is talking to many labels, but none of the majors or their China-based arms are mentioned. While it is Google we're talking about, it'll face the same challenges Amazon or Apple or Rhapsody faces: getting the content that music fans want. Never an easy task. On the other hand, I think Google has some free cash lying around. So money is not a problem.

• Revenue: The WSJ story claims Google's going to keep a cut of the advertising revenue; however, one reporter has contacted me and claims a Google person said the company wasn't going to keep any revenue but would instead give it all to the rights holders and artists. If true, let's not go drawing up the Nobel nominating papers just yet. My guess is Google's more than happy to get three things out of this: traffic data, usage data and perhaps some data indicating that providing a free, legal, convenient and reliable alternative to copyrighted music will shift the market away from illicit P2P-based options.

So now one has to wonder if the U.S.-based record label execs aren't hoping this thing is a rumor. Because if they were worried about a single player like Apple calling the tune, what would it be like if Google really took the online music market seriously? Given the decreasing margins of the prerecorded music market, maybe only Google can make it work.

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IMMI, the innovative media measurement company, has just released some data about viewing of primetime TV shows, focusing on consumers' use of DVRs and online to supplement or replace live TV viewing. Some of the findings are unsurprising; for example, online viewers are typically "affluent, well-educated, 25- to 44-year-old working professionals ... who don't have time to be tied down to live television-viewing schedules." But buried in the report is one really interesting finding: namely, that of those who use either a DVR or online to time-shift primetime TV, 80% use online, while only 25% use a DVR. Personally, I find that pretty striking, since ceteris paribus, most people still prefer to watch long-form TV shows on a TV set. So, what are the advantages of online, compared to a DVR, that drive people to watch TV shows on a PC? Two important ones must be:

• It's portable, allowing both time and place shifting: you can watch at work or in the den or in a hotel room, so it's more flexible and you're not competing with other family members for access to the main TV set (where the DVR is likely to be).
• It requires less time management: it's available on demand whenever you want to watch it, and you don't need to remember to program the DVR in advance.

This second point is reminiscent of the iPlayer data released by the BBC in the U.K., stating that streaming is more popular than downloading by a factor of about 8 to 1. It seems that, yet again, people want instant gratification without forward planning, and they're prepared to sacrifice quality for that convenience.

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A U.S. Federal Court of Appeals ruled this week that top U.S. cable operator Cablevision Systems, of Bethpage, New York, would not directly infringe the copyrights of program content owners if it allowed its subscribers to use network-based digital video recording (DVR) technology. The ruling reverses a lower court ruling in March 2007 that prevented the cable operator from implementing the network-based DVR technology - called remote storage digital video recorder (RS-DVR) - that would enable customers to record and store TV programs using the cable operator's own network servers across its 4.6-million-home footprint in the greater New York, northern New Jersey and Connecticut service areas.

The ruling lifts an injunction that prevented the MSO from implementing its RS-DVR without obtaining a separate license from content owners. Various network programmers and movie studios, including Time Warner, 20th Century Fox, Universal Studios, Paramount Pictures, Walt Disney, as well as broadcast networks ABC, CBS and NBC, sued Cablevision in May 2006, when the MSO announced its intention to roll out the technology to consumers. The content owners argued that, because the RS-DVR service involved recording and storing of programs at Cablevision's facilities, Cablevision, and not its subscribers, would be making the copies when a consumer recorded a program with RS-DVR, and a consumer's replaying of programs recorded with RS-DVR would be a "public performance." Both of which would require a separate license from the content owners.

This case made for some strange bedfellows. Last year, a number of industry associations and lobbying groups, including the Consumer Electronics Association (CEA), USTelecom (USTA - which represents telephone companies such as AT&T and Verizon, the latter being a key rival to Cablevision with its FiOS Internet and TV service offerings), as well as the Electronic Frontier Foundation, joined together to file a court brief in support of Cablevision's appeal.

The ruling now frees Cablevision to use the network-based hardware and software solutions that will enable cable customers with existing digital set-top boxes (STBs) to time-shift their favorite programs, instead of using more expensive locally based storage solutions. DVRs are highly popular with U.S. pay-TV households of all distribution modalities - satellite, telco/IPTV and cable -and are now increasingly being incorporated into cable advanced digital STBs.

Although this is positive for both consumers and cable operators, the long-term implications may be less positive for set-top box manufacturers such as Motorola, Cisco, Pace, Thomson and others that are shipping large quantities of advanced STBs that incorporate storage capacity for time-shifted TV, and that are also a source of higher margins than generic digital set-top devices. The news could be good for video server vendors, as well as suppliers such as BigBand Networks that provided some of the initial RS-DVR equipment the company used at the time of the proposed trial before it was shut down.

Cablevision's subscriber base of digital customers was almost 90% at the end of 1H08, so the ruling comes at a good time for the MSO because DVRs are an increasingly important competitive service element for pay-TV service providers. Although network DVR is a less costly solution, especially because it enables a whole-home DVR solution in every room, it does nothing to enable a comprehensive solution for "whole-house video" or "networked video," especially one that incorporates video originating from sources other than the operator's network, such as from PCs or other storage devices/home servers.

It is unclear when Cablevision might start rolling out the network-based DVR service, but the path is now cleared for all cable operators to move forward with this technology option for time-shifted television.

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