Mr. EBT and the Death of the Welfare State

One of the most fascinating things about the internet is how it collapses different cultures, events, and people into an "endless now" entirely outside the mainstream media's attempt to edit and control the news that people receive. The video on Youtube linked by Drudge today ("My EBT" by "Mr. EBT") promises an incendiary repudiation of not just Obama, but every Democratic policy since LBJ.




Clive Crook at the Financial Times believes only a "move to the middle" can save Obama's Presidency, but Obama encapsulates much of what the Democratic Party has become: the Anti-White Guy/anti-White Middle Class party.

Democrats rely on gerrymandered districts, with Black and Hispanic voters, and state and nationwide, on Black votes around 95%+, and Hispanic votes around 65-70%+, to win. With a about 30% of the White vote, this is often enough. And the coalition of the anti-White votes and the White elite (Steve Sailer's "hi-lo" team-up) is based on transferring money from middle class voters to Black/Hispanic patronage politicians, and folks like Mr. EBT.

At a time when unemployment is at record highs, families are stressed by ever rising food and energy and clothing costs, Clive Crook does not get it, nor do most of the establishment. Voters among the White middle and working class have rejected the Welfare State because the Welfare State does not exist for them. The Welfare State exists for Mr. EBT. A man incapable of earning a living or doing much of anything, other than "keeping it real, dog." The Bismarckian Welfare State, giving ordinary workers a direct stake in the State, by getting various checks and benefits, regularly, is gone. Taken up by race-based Welfare and a permanent Jihad against the White working and middle class.

It is Mr. EBT on the lower end, making life miserable for pretty much everyone, and various enthusiasms of the White Elite Upper Classes, such as "green" lunacy, hideously expensive electricity rates, banning private autos (but not limousines), flights for the average person (but not private jets) and the like.

There is no more money to be gotten out of the White middle and working class, without a French Revolution style fight over taxation. There is no legitimacy or trust or desire to fund a Welfare State oriented around Mr. EBT. This video, a trivial affair, may yet be the opening start of the widespread repudiation of the Welfare State. Drudge has linked to it from the top of his page. The NYT obviously does not want anyone to see it, nor does the rest of the media. But the very act of the Drudge Report alone (which dwarfs the page views of say, the NYT or CNN) linking it and millions of voters and taxpayers seeing it, is revolutionary.

There is no going back to the Welfare State. The Tea Party exists because ordinary White working people, of some money or struggling means, just don't believe the government exists for any other purpose other than to take money from them and give it to Mr. EBT. Barack Obama and his policies just to borrow a Marxist phrase, sharpen the contradictions and class warfare (with overt racial underpinnings) between the hi-lo team up and the White majority. White guilt and shame are poor foundations for that sort of coalition, and the "swipe, swipe" of Mr. EBT may just start the beginning of the end of the Welfare State. You cannot ask the majority of the nation to make themselves patsies forever.
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When Will the Middle Class Opt-Out of Education (and Public Life)?

Hippies made a film in 1970 called Suppose They Gave a War and Nobody Came, a naïve but interesting idea, nevertheless. But what if people had a way … of opting out of all sorts of things they find awful? What if you never had to leave your house, almost? That was the subplot of 1995's The Net with Sandra Bullock and Dennis Miller. But in real life Middle Class (White) Americans are now poised to do just that, with Education and almost everything else.


The Orange County Register reports that Hispanics still lag far behind White students in K-12 education.

The U.S. Department of Education report, released June 23, shows the achievement gap between white and Hispanic students has not closed at all since the early 1990s, with the overall difference between the groups remaining above 20 points, or roughly two grade levels, on a scale of 0 to 500.

"With everything that the state of California is trying to do, it's frustrating that the achievement gap really hasn't moved," said Alicia Berhow, administrator for the Latino Educational Attainment Initiative, an outreach project of the Orange County Business Council.
…
The report shows a 21-point gap in math between fourth-grade Hispanic and white students in 2009. At grade eight, the gap rises to 26 points.

The gap is similarly wide in reading – 25 points in fourth grade and 24 in eighth.
California fares even worse than the U.S. average, trailing the nation by 4 to 7 points in fourth- and eight-grade reading and math.

The full report is here. Boiled down to its essentials, despite twenty years of sustained federal and state efforts, Hispanic (that means mostly Mexican) kids are about two grade levels behind White kids. This makes public schools a sink-hole for public resources, as well as being hell for any White kids unlucky enough to be lumped with significant amounts of Hispanic and Black kids. Despite all efforts, considerable sums of money, and the best educational minds spending 20 years on the matter, learning has not caught up to White kids. It remains, fairly abysmal.

This has significant impact on public culture, taxing, spending, and voting.

Education, in K-12, simply does not work for Hispanic and Black kids, save as a fairly obvious patronage operation. The dismal performance of DC public schools led voters to … toss out Mayor Adrian Fenty and Superintendent Michelle Rhee, in favor of the old-style, Marion Barry patronage. Black voters in DC don't expect their kids to learn (and the elite like the Obamas and Clintons before them certainly don't send their kids there). They expect the school district to provide jobs. Same as the Atlanta Public Schools, with Steve Sailer repeating the Atlanta Journal-Constitution story, about cheating parties, erased test forms, and the like done by Assistant Superintendents, to Principals, to teachers, on down the line, all Black which is not surprising given the patronage demands in the majority Black school district. The Black staff that ran the schools knew well, their kids could not meet aggregate test score goals in No Child Left Behind mandates. Nor earlier, Georgia State goals, mandated by the Legislature. So they cheated. Hispanic kids just fail at a lower rate.

No one has been able to make either group, Black or Hispanic, consistently match Whites. For whatever reason, it cannot be done. Meanwhile, as Sailer reports a new federal study shows unsurprisingly, Blacks and Hispanics get disproportionate amounts of disciplinary referrals and suspensions and expulsions, compared to Whites (and Asians). This is not shocking. Nor is the obvious conclusion that when Education Secretary Arne Duncan says he will team up with Attorney General Eric ("My People") Holder to "go after" school districts with a pattern of racial disparities in disciplinary action, what he means is more zero tolerance to expel some hapless White kid who brought a paring knife to school to eat an apple along with a Black kid who beat another kid's head in, during a fight.

Zero Tolerance is just a way to expel White kids to make the numbers look good, race-wise. For the feds, for various grievance groups like the ACLU, NAACP, LULAC, etc.

With all that, why send your kid to public school? Why aren't there busing fights? With parents "stuck" in houses they cannot sell, and job markets frozen? Because either they already sent them to private school, or they are looking at things like the the Khan Academy. Nope, its not the training ground for Captain Kirk's arch-enemy, it is an online, free site providing lots of lessons on almost anything a high schooler could want.

Eventually private school at home will be even more affordable, just have an internet connection, a computer, and watch videos of lectures, do downloaded problem sets/practice, and use online tools for help, tutoring, corrections, and test-taking to measure progress. Drilling for AP tests has never been easier, let alone SAT/ACT. Princeton Review, Kaplan, the Great Courses, are all likely to expand into this space with the money of course being in reduced expenses (no bricks/mortar spaces with heavy staff costs) and piecework test correction, assistance, tutoring, etc. Go at your own pace, avoid ugly peer interaction, learn anything, from Latin to Greek to French, regardless of what the school down the street offers. Avoid Black/Hispanic acting out and learning-lagging, let alone racial harassment, for White and Asian kids.

Indeed, the whole "rating" thing allows kids and parents to pick tutors with high ratings/results, like the Amazon rating system in the Marketplace, or Ebay's rating system, or Yelp!. Wouldn't you like to pick your kids French tutor than just "go along" with whatever is out there at the public school? Yes of course younger kids have to be watched, but work at home schedules can accomplish this. It is more pleasant than sending them off to school every day. Itself quite expensive in public schools if any Extra-curricular activities are included:

Budget shortfalls have prompted Medina Senior High to impose fees on students who enroll in many academic classes and extracurricular activities. The Dombis had to pay to register their children for basic courses such as Spanish I and Earth Sciences, to get them into graded electives such as band, and to allow them to run cross-country and track. The family's total tab for a year of public education: $4,446.50.

"I'm wondering, am I going to be paying for my parking spot at the school? Because you're making me pay for just about everything else," says Ms. Dombi, a parent in this middle-class community in northern Ohio.

With that sort of charges, kids can participate in athletics, music, and other things on a per-sport basis just as easily, in private clubs, the way kids in Europe often do. A plus, as Steve Sailer notes, it keeps daughters healthy, active, and away from bad boys like Levi Johnson, no Bristol Palin pregnant at 16 risks, by filtering out by income levels those kids with single moms, but a bad boy attitude with athletic ability picked up by victory hungry coaches/athletic departments (did I mention, no Levi Johnsons?) That sort of thing keeps boys from getting into fights too much, or becoming overly aggressive or too fearful, or picking up bad habits (smoking weed, not studying) found among say, greatly gifted but poor students on the Football, or Track, or Basketball teams.

It is not just limited to K-12 either. Michael Barone thinks higher ed will burst as a bubble as well. California's UC system is "broke" but is doubling down on diversity, hiring more diversity bureaucrats during the budget crisis. Meanwhile as noted, Jerry Brown signed into law mandating K-12 educators teach "This Day in Gay" about Gay culture and contributions to history. Not only is the law stupid, it takes up valuable and limited time for gay propagandizing at the expense of math and science.

The Great Opt Out has begun. Sooner or later (and it might come sooner due to cash-strapped parents looking to save money on education), various private groups will offer a complete package, and exam-certified results. Your kid can study at home, at his own time, on his own pace, knowing exactly where he stands, in passing various exams to get his diploma, and certification/college credit for Advanced Placement, as well as pushing up his SAT/ACT scores by drilling without enduring acting-out, or simply time constraints of being one of 45 kids in a class.

The internet allows easy delivery, at far lower cost, of the best lecturers on a subject. The internet allows easy, interactive, and very low cost (compared to the public or private bricks and mortar school) delivery of tutoring, exam-correction, drilling, and the like. Mavis Beacon can teach you to type by computer a lot easier than say, a bored Mrs. Diffle struggling to control thirty sugar zonked 12 year olds. Boring drills with the computer can be spiced up a bit by game play, or what have you, motivating kids who struggle. Unlike a teacher with a class full of kids, the computer can slow down or speed up to give a student just the right amount of drill, in Latin, biology, or Calculus he or she needs.

It has not happened yet, because people still think of education as something that happens because of "Miracle Teachers" who look like Mr. Hand, or Edward James Olmos, or Robin Williams. Interspersed with "magical" things like football games, or Quidditch, homecoming, and all the rest. In a word, nostalgia. From the High School settings of the start of "Smallville" and "Buffy" to Harry Potter, that model of delivering education has a lot of power and romance. But …

A wise band once said, "Give me convenience or give me death." The Dead Kennedys were right, too. Vinyl, film pictures, the cassette tape and Walkman, all had their charm, defenders (the film "High Fidelity" with the tiresome John Cusack) and some technical advantages (for vinyl/tape, a more accurate if hissy capturing of the analog sound waves). But like everything else in life, convenience won out. It was cheaper and easier to take digital pictures and store them on your computer. Cheaper and easier to buy first CDs, then MP3 downloads, and put them on your Ipod. It is cheaper and easier to use Netflix than Blockbuster. It is cheaper and easier to use e-books than trot out to Borders and buy a physical book. And it is cheaper and easier, and also more effective, to have your kid educated at home by "the best" online company offering a comprehensive catalog of the "best lectures" by the best teachers, all rated and reviewed. Than hauling them off to be babysat every day by bored and under-trained and often patronage-chosen-only teachers.

This means, of course, that a White middle or even working class taxpayer base is not going to spring for heavy school taxes. White guilt save a few SWPL yuppies is played out. The White Middle Class is not staging a revolution, they already walked out on life. They walked out on Borders, and the shopping malls. Too many hassles, of living among non-White majorities with basically little enforcement of laws regarding harassment or worse, among those favored with the "correct" ethnicity/race. Whites opted out of the book offerings, opting for e-books that have little PC barriers, one way or another. It could be women's porn, the romance novels, easily read without shame on a Kindle. Or something else, a ripping tale of adventure offered cheap. White middle and working class men opted out of television, save televised sports, long ago. There's been nothing but opting out.

The great untold story is the simple writing off of most post-War American institutions by White Middle/Working class people. Marriage, the nuclear family, monogamy, Party Identification, mass media consumption, century old technologies, television, all of it written off largely by a population opting out, and using the internet to move around old ways of doing things. Some of this is pretty awful -- Ashley Madison, the various other "cheating" sites and raising kids in what amounts to a parade of guys through Mom's bedroom. Some of this is sad, the death of network TV, newspapers, film photography, vinyl, cassette tapes, the VCR. And some of this is revolutionary -- the process of abandoning public schools for private online education. [Including, inevitably, a cry for credential by examination instead of by purchasing a degree in Chicano Studies from Yale.] Glenn Reynolds noted that poor bar pass rates by Blacks and Hispanics will create a huge amount of pressure to make sure they pass by lowering the exam standards.

But on the reverse, the mass of White middle and working class kids educated online will want a true meritocracy, grading by tough standards that makes their exam pass rates the equal or better of a degree in Chicano Studies from Yale. If you have a degree, say online from Texas Tech in Petroleum Engineering (one of the top ten schools) and pass the federal certification, with top honors, it ought to make you (and everyone doing that will want this) the equal of a guy from Yale who barely passed. This is more the Chinese model, except that the twist is delivery online of studying and lectures. Indeed the delivery could be global, with results and reputations built hour-by-hour the way Amazon rankings, or Ebay rankings, or Yelp reviews do for various merchants or professionals.

Needless to say, the White middle and working class will do their very best to kill alternatives, like Public Education and particularly K-12, and University education, since their kids won't go there. And desire to take down tony private schools, from Philips Exeter to Yale, by taking federal money away from the latter and larding on taxes on brick and mortar schools. Call it the reverse Amazon tax.

In a sense, public education is already dead, it just doesn't know it yet. It has become a dumping ground for Black and Hispanic permanent underachievers, mostly. [Yes it is true there will be a few exceptionally talented Black and Hispanic kids. In terms of numbers however, their impact will be akin to the Sturmgewehr 44 and the Me 262 Jet for the Germans on either front -- too little and too late. Or one can compare it to the total failure of US White basketball players to compete much in the NBA, despite their numerical advantage.]

A K-12 system that produces only patronage for non-Whites, and poor results, and pushes White middle and working class families towards internet opt-out, will get no votes for taxes. Yes the Hispanic voting juggernaut will come, real soon now. Or not. In the meantime, voting is done by those who show up. People whose kids don't and won't ever go to the local public schools don't tax themselves to school their demographic replacements.

And by the same token, Yale and Harvard are riding for a fall. Yes they are old, established brands, with lots of rich alumni. But they have powerful enemies, who wish to see them broken upon the wheel. Federal funding is probably going to be yanked at some point. And all sorts of penalties for credentials based on school rep, instead of standardized, merit-based tests cooked up. Its easy populism, and while the Ivies may run Wall Street and Hollywood, no one actually likes them. Voting is a popularity contest. They'll still be around, so is the University of Milan. Or the University of Paris. Even Oxford and Cambridge and Humboldt Universities are around. But while they still have cachet, they are not what they once were. Universities are more than just a place for rich kids to hang out before they work at Greenpeace in Paris for a year, and then settle on a fake "respectable" career playing at work. Much of that will move online too, because its cheaper, free-er, and easier.

Give Me Convenience or Give Me Death indeed.
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Asians In The Library: UCLA's Diversity Comes Home

The standard view of "diversity" is everyone holding hands dancing around rainbows and unicorns denouncing how awful White Beta Males are. Great for everyone but White beta males. But even smoking hot Alpha White girls don't like diversity. Because it brings stress, conflict, and turf battles into everyday life, which is already stressed out from a non-stop acceleration due to technology creating a 24/7 connection to the world. UCLA coed and model Alexandra Wallace (that's her above) put a Youtube video (since removed, below is a copy) about how Asians in the Library annoy her (with rude behavior):




While certainly not a deep thinker, the young lady's main points are: 1. Asian students at UCLA are coddled, and kept immature by uber-helicopter parents, with negative fallout for Whites (who are left to fend on their own), and 2. Asian students at UCLA are rude and don't follow the rules (keep quiet in the Library) that White students do. [Presumably the very few Black and Hispanic students who actually do visit the library, follow the rules.]


Wallace has since "apologized" and no doubt UCLA will punish her. The UC Chancellor said he was appalled and University officials are "evaluating whether there have been any violations of the student code of conduct and what sanctions, if any, are appropriate."

Youtube is great. People cannot stop posting to it. Nor Twitter or other social media. Recently Gilbert Gottfried was fired from Aflac, as the voice of the Duck after Twitter "tweets" such as:

"I just split up with my girlfriend, but like the Japanese say, "They'll be another one floating by any minute now."

"I was talking to my Japanese real estate agent. I said 'is there a school in this area.' She said 'not now, but just wait.'"

As the proprietor of Dlisted notes, "You know, we've really come a long way as a society, because we don't even need to change out of our stained sweats or leave our houses to get fired. Just spew out some offensive fuckery on Twitter and wait by the mailbox for your final check to show up."

The Internet is really an outlet for people to post unfiltered by politeness and social repression, what they really think. For Charlie Sheen, it was mainlining crazy. Social media, and video, allowed him to exhibit his full on crazy, taking him from rebel Alpha male that women dream of taming, that bad boy magic, to just plain crazy and sick. Spelled U-N-A-T-T-R-A-C-T-I-V-E.


More and more comments, tweets, Youtube videos, and the like are pushing back on diversity. Which makes even those most socially powerful (attractive young UCLA coeds who have probably most of the straight male population panting after them) annoyed. Ms. Wallace may be the top of the social heap, but even she needs to get work done at the library, and not be distracted by rude cell phone behavior. Nor be stepping over expat Asian kids relatives doing laundry, cooking, shopping, and other things. [No doubt fighting for washers and dryers in the laundry room is not particularly fun with elderly Asian relatives ruthlessly cutting in front of "nice, polite," White kids.] You can see the frustration build, even poorly articulated, with her description of being raised to be "nice, polite" and have her cautions ignored. And focus interrupted by loud talking on cell phones. Because rules are just for White kids, not the rest.

And that's Ms. Wallace's main beef. She has to follow the rules, the others don't. Even the hottest girl on campus finds that annoying. She still has to get work done.

Diversity creates a thousand and one petty annoyances, and with California being ground zero for White ethnic cleansing, the annoyances build up heavily. The internet, with social media a draw for 24/7 rants/soap-boxing statements, is almost irresistible. I have no doubt whatsoever that Ms. Wallace's social circle said much the same thing, over and over again. No doubt it is enraging to be a numerical minority, and the only one held to the rules, while everyone else flouts it.

Ms. Wallace should not have apologized. She should have stood her ground, and demanded the University enforce rules equally, not just for White students. No doubt an "example will be made" of Ms. Wallace, but it will not change White students minds, nor that of the average White person. Who will see merely another PC jihad, by the usual suspects, while those of more privileged races skate.

Ultimately, the internet by giving voice for those who speak out about the cost of diversity (second or third class status for Whites, with no payoff for the social friction, daily) will erode the elite's ability to enforce orthodoxy. Efforts will be made to contain the damage, but the internet is too big, and the lure of saying what you really think too strong, particularly for young women who seem more than young men focused on self-expression, to be walled off by a PC firewall. Huffington Post may have a five minutes of hate, but most Whites are likely to find themselves in broad agreement that diversity imposes a constant social friction with no benefit for them.

And the strongest argument of all is "What's in it for me?" [The motto of one John Dortmunder.] For most Whites, the answer is, a daily kick in the face. That's not a winning proposition, any more.
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Media's Collapsing Advertising Rates Everywhere (but the Internet)

Recently, the Wall Street Journal ran a story on the collapsing advertising rates for radio networks prompting the highly leveraged radio nets to ask lenders for renegotiated covenants (since the radio networks are unable to maintain cash levels). Clear Channel, for example, is expected to barely squeak by in meeting its debt covenants.

But buried in the story is an interesting graphic showing how advertising is decisively moving to where audiences and readers are: the internet:


[Click Image to Enlarge]


Radio is down 27% from 2007 numbers, television down 11%, and newspapers down a massive 42% but the internet has seen an increase in 83%.

Part of this shift is cost-based: per viewer, the internet is cheaper than almost any other means of advertising. Part of the shift is based on the advantages internet advertising has: there is no question as to how many viewers/readers the advertising reaches, and often additional information can be gleaned (from IP address information and "User Agent" information). Geographic location, browser and operating system, allow at least rough guesses about demographic information. But much of it is based on the growth of people using the internet to get information.

Radio, other than conservative talk radio, has been hit hard by consumers using Ipods to create their own customized playlist of music versus whatever commercial ridden vanilla offerings commercial radio stations offer. Even Spanish language stations find fewer listeners (with illegal aliens unable to find work returning home) and those that remain economically stressed.

Compared with other slumps, "this decline has been so much greater," says Jeff Smulyan, chief executive of Emmis Communications Corp., an Indianapolis-based company with 22 radio stations. "In a normal recession, if you re down 5%-6%, that's a lot." Emmis recently had to renegotiate agreements with lenders because of declining revenue.

Television, clearly, is under stress from sites such as Hulu.com and other online offerings of time-shifted TV series that draws viewers from the traditional live viewing pattern. Clearly, just as with music/radio, consumers wish to view scripted entertainment on their own terms, on their laptops and computers, on DVDs, and on Ipods and mobile phones.

Newspapers are in free-fall, with respect to advertising revenue. As Ed Driscoll writes, the media and particularly newspapers are in the business of news suppression and propaganda, not actual news reporting. With alternative viewpoints and links to video and text of actual speeches and more of public figures just a click away at Drudge Report or Instapundit, newspapers have dug their own grave.

Of all the media, television, having the least amount of advertising revenue erosion, is best placed to find its own destiny in new media, as I wrote in The Shift in Entertainment. However, all evidence suggests that television executives have no more ideas on this than newspaper executives.

It is quite likely that the economic pressures of a sustained (and perhaps double dipping) recession will force the shift in advertising dollars to the internet at a faster pace. If this does happen, it's likely that all the traditional media will largely collapse, as the bankruptcy filing by Orange County Register Parent Corporation Freedom Communications presages. Expect the Tribune Company, parent to the LA Times and Chicago Tribune, as well as part-owner of KTLA-Los Angeles and WGN-Chicago, to follow suit eventually, along with most of the major newspapers. Clear Channel, one of the largest Radio network with 800 stations, has $20 billion in debt, how long it can keep out of bankruptcy is an open question.

In many ways, the future in entertainment belongs to those who can seize the opportunities inherent in new media, i.e. the internet. Not to provide specialized and limited content, replicating the old "Brandon Tartikoff model" of a few high income yuppies generating premium ad-rates, broken by the recession, but broad based content appealing to men, women, old and young. Such a "re-massification" of culture would be a positive first step in arresting the cultural decay found in the West, a good deal of it caused by a culture built on fragmented and fractured elites who despise the people.
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The Future of TV is on the Internet

One of the interesting things about watching the big four networks (ABC, CBS, Fox, and NBC) fall into oblivion is how reminiscent they are of GM, Chrysler, and Ford falling into irrelevance (though to be fair, Ford Motor Company’s new CEO, Allan Mulally, seems to have a clue and has guided Ford Motor to a net profit in Q2 of 2009 and a predicted yearly operating profit in 2011.

Nevertheless, the same errors that Detroit made in the 1970s through the 2000’s, are occurring again in the Broadcast Networks. Detroit offered it’s customers little reliability, bad quality, expensive cars to own and operate, and cars with poor gas mileage. The latter generated a lot of attention, but as the appetite for large SUVs, Trucks, and muscle cars in good times and cheap gas indicated, Detroit’s problem was not primarily the failure to make a Toyota Yari. Rather, it was taking their customers for granted and shoveling out shoddy merchandise on the theory that no one could compete with them globally or locally.

Just as Japan’s automotive companies, particularly Toyota and Honda, hungry for sales, and backed by an aggressive engineering team, took on and largely defeated Detroit, so too will Hollywood’s Broadcast Networks fall, to lean and hungry outsiders. The key to this will be the internet. It won’t be, as Glen Reynolds suggests, an army of Davids, but rather State-sponsored alternatives to Hollywood producing low-cost, more mainstream entertainment, delivered over the internet.

In short, the internet allows players besides broadcast networks to deliver serial entertainment just like the Big Four Networks, to more people, cheaper, and with a broader appeal.


First, it's important to recall what the networks were all about. NBC and CBS were originally founded as radio broadcast networks, providing news, entertainment, sports, and other broadcasts during the late twenties and the Depression. During tough times, the radio broadcasters found advertisers flocked to them, as people could almost always afford listening to the radio, even over the movies. ABC was created in 1943 from the NBC Blue Network. Fox was famously created by Rupert Murdoch's News Corporation in 1986.

But all the networks run on the old radio network model. News, sports, and special programming are the icing on the cake, the real money came from advertisers, who either ran ads nationally or had sponsored "product placement" shows aimed at all sorts of people: men, women, children, and of course, housewives. Situation Comedies (Fibber McGee, Jack Benny), soap operas, and hour long dramas like Gunsmoke. Yes, "Jake and the Fatman" star William Conrad was the original Matt Dillion, not James Arness.

The model was very simple, create entertainment for as cheap as possible, that had a wide a following as possible, and sell ads on the broadcasts for as much as possible.

Or, as the Wall Street Journal reported, in a story about Ben Silverman's departure from NBC:

For decades, broadcast networks spent huge sums to create shows that would be watched by millions of Americans tuning in after dinnertime.

But the advent of cable television and the VCR in the 1980s and the subsequent rise of the Internet, videogames and digital video recorders have fractured the TV audience and undermined the broadcast business.

We'll see shortly how ridiculous that statement really is. But the business model is pretty simple. Create cheap content, that appeals to as many people as possible, and sell ads running at breaks in the content.

The serial nature of course, of first radio and then television, allows more creative stories, more character-driven drama (and comedy), and most importantly for a broadcast, keeps audiences tuning in week after week to see what happens next to characters they love.

This is a simple, though difficult to execute model, that other people can copy. Now that the internet has flattened the capital requirements needed to reach millions of people.

Prior to the internet, creating a network required big bucks and the ability to sustain a decade long billion dollar loss. Which is what Fox sustained from 1986-1996 in it's first ten years. Neither WB nor UPN, in their ten year run, were able to sustain these kinds of losses and both had to be merged into the CW. The huge barriers into serialized content (i.e. broadcast networks, with heavy costs for affiliates, promotions, management, licensing, etc.) kept competitors at bay. Even upstart syndicators like the folks behind "Babylon 5," the PTEN or Prime Time Entertainment Network, could not compete, even with Warner Brothers and Chris-Craft behind them. Independently syndicated shows like Pamela Anderson's "VIP" did little better, often airing at odd hours such as 1 am Monday mornings.

However, time shifting habits created by the VCR and DVR, and helped along by Hulu and networks own streaming videos of shows, have created the ability to bypass these expensive requirements.

Now, anyone with the capital to pay for streaming bandwidth, can have in effect, their own TV network. They need only have content and agreements to sell ads within the content, as Hulu does. Advertisers love online advertising, since they know exactly how many people watch (no more guesstimation by Nielsen) and their geographic location. They also get immediate feedback on any click-through ads. It's also, of course, cheaper.

It's quite likely that some place, either Wellington or Auckland New Zealand, or Sydney Australia, or Vancouver British Columbia, or Toronto Canada, will start to compete with Hollywood. Making hour long drama series significantly cheaper, at least half the cost of the current $3-$4 million per episode cost in the Los Angeles area. At this cost, say $1.5 million per episode, it's far cheaper to put together a three episode "pilot-plus" for say, $4.5 million, less than the cost of most independent films, and sell both ads against a streaming internet feed (for free) and downloads from Itunes, or websites (likely the content creators). The only expense that is major therefore is marketing and publicity. Late night talk shows constantly need guests and content, so much of that marketing can be done for the cost of hotel rooms and air fare for content stars.

The advantage is even greater if regional or national governments, seeking to promote job base, provide low or no-interest loans, tax breaks and the like to further reduce costs, and critically, alternative centers to Hollywood break both the pilot model and the deficit financing model.

In the pilot model, broadcast networks order up many (expensive) pilots, and typically pick only a small fraction, something on the order of 25%, for production, generally between 9 and 13 episodes. Depending on ratings, a series will be picked up for a full season, of 22 hour long episodes, or canceled. Even pilots that never even make it to the filming process can be quite pricey, costing upwards of a million dollars for scripts, consultants, market research and the like. Pilot costs have been the bane of network TV from the beginning, and so an alternative that quickly and cheaply makes content, say three episodes, and recoups most of the cost by selling advertising on the web and downloads, has a big economic advantage as far as cost, particularly as networks order more and more series from their own in-house production studios.

The deficit financing, of course, refers to the ugly truth that network license fees, even for their own, in-house productions, cover only part of the actual cost of producing a show. Say a show runs only 9 episodes, and costs $4 million per episode. With the network license fees covering only $2 million per episode. That's a net loss of $18 million for the production company. Some of that loss can be recouped by DVD sales, but not much. DVD sales are down, in every segment. In the alternative model, content creators would only create small batches, say three episodes, and depending on response would either abandon the project or move forward with assurance that the project will make money. Currently, content creators (the studios) have to bet that the series will make it to five seasons, the magic 100 episode mark, for syndication in the US and foreign markets, where the real money is (or was). The Syndication market is under stress, as many of the cable outlets run (as noted Hollywood business blogger Furious D observes) their own parent corporation studio outlet, the most famous being the Law and Orderen running all over TNT, USA, Sleuth, etc. Moreover there is a window on that market, you don't see 1980's shows such as Miami Vice or Hunter running in syndication, and even the ubiquitous "Monk" has likely a limited time to run in syndication.

The new model, in short, would not require huge capital to run deficits in the uncertain hope of profits five years later, or require costly pilots most of which are unsuccessful and net drains on income.

But just as important in producing lower cost content, is producing more broadly appealing content. Consumers don't seem to be very willing to pay premiums for entertainment, for example, Video Game sales are expected to decline nearly 20% from last year. HBO famously has only a third of TV households, despite being available for nearly all of them. In order to succeed in serial entertainment (or blockbuster movies for that matter), it's far better to have more viewers than less. Particularly since the number of young (White) people is declining. This is particularly true in a recession/depression. When consumer dollars are tight, and free (i.e. advertiser supported) beats pay. The HBO model of hip-edgy female oriented programming seems doomed in the recession.

The model for the successful Hollywood beating alternative looks something like this:

The alternative produces content that is about half the cost to produce by the Broadcast networks in LA or NYC.
The alternative has far less overhead, and thus no affiliate costs, licensing/regulatory costs, no pricey executive talent. It's Administrative costs are a fraction of the Broadcast networks.
The alternative has far less clueless, "next-job" execs like Ben Silverman, who are looking for their next job and don't care about being #1.
The alternative is open to new ideas as long as the ideas help them capture a lot of viewers of streaming content and a high percentage of those purchasing downloads (or DVDs).
The alternative does not rely on fragile, open to economic vulnerability models such as upscale ad viewers or cable subscriber revenues (as likely, subscribers cancel cable as the recession wears on and expenses are cut to the bone).

Which brings us to the current state of broadcast television. First, ad revenues are down. CBS, Fox, and ABC have done deals of about 3% less for ad rates than a year ago. NBC has done about 6-7% less than a year ago. Commenter on the WSJ story "Jeff Switzer" noted:

It seems to me that the value of an exposure to a viewer would decline faster than the decline in viewers. It seems that advertisers would want enough viewers to generate a "buzz", that is, to have viewers talking with each other about shows and perhaps the ads. As the number of viewers drop the number of these buzz encounters will drop even faster. Because of this effect, as well as the continuing basic decline in the number of viewers, the networks appear to be in a business "death spiral."

Jeff Switzer is correct. The broadcast networks are in a death spiral. Click on the "comments" tab in the link to see his comment. WSJ has the nasty habit of cutting off content after a day or so, trust me on this, the dead tree edition (Marketplace, July 27, 2009, P1) contains these numbers, i.e the declines in ad rates.

Here's (from the Dead Tree WSJ Edition) the commitments that the Big Four Networks got from the "upfronts" in May:


[Click to Enlarge, courtesy of the WSJ]

It takes magnificent incompetence, idiocy, and sheer stupidity to lose viewers during a recession in free, over the air broadcasting, at a time when consumers are pinching every penny and canceling pricey cable service. Yet the broadcast networks continue to show a slide in viewers. That's what comes from having execs who boast, that they don't need to be #1, in terms of viewers.

Fortunately, the broadcast networks don't lack in people able to produce just such incompetent results:


[Click to enlarge, courtesy of the WSJ]

If you'll notice, the only network to produce an uptick in viewers, prior to last (2007-2008) season was CBS, which had slightly more viewers in the recessionary 2008-2009 season. All other networks posted declines from the prior season. NBC and ABC posted particularly sharp declines, from the baseline of 2005.

This is largely because CBS has decided, "what the hell, they're older viewers, but they count too." CBS famously skews older in viewers age, link here, with DVR 7 days viewing being 53, ABC at 49, NBC at 48, Fox at 43, and the CW netlet at 34 years of age. However, beggars can't be choosers, and with the recession, pinched consumers, much of the wisdom (i.e. male and older viewers don't count) is so much idiocy). Particularly given the paucity of younger Whites, covered ad nauseum on this blog and elsewhere, and the need for advertisers to reach every possible consumer with their advertising dollar, in a likely decades long recession.

To see just how badly the networks perform, against the total (male and female potential audience, consider the data at the Census Bureau here. Taking the White Alone and Black Alone, and adding them together (Nielsen provides the top ten for "everyone" and Blacks, and Hispanics segregated, Blacks and Whites watch basically the same shows, Hispanics watch Spanish Language shows, go ahead, check it yourself) you get the following chart, compiled against the 18-48 viewership above (that is, adding White Alone, both sexes, and Black Alone, both sexes, from 20-49, since the Census Bureau does a four year age-bracket):


[Click to Enlarge]

That is of course, a pathetic performance. Against a total population of 117 million, 18-49, Black and White together with both sexes, the Big Four networks can manage only 12.6% total of the potential audience. Pathetic.

For too long, Broadcast TV execs have justified declining audiences on the VCR, the DVR, cable fragmentation, the internet, and video games. All undoubtedly eroded the dominant position of Broadcast Networks. But to 12.6% aggregate? That stretches the boundary of credibility. More likely, TV became a gay and female ghetto.

For example, GLAAD is out with it's new scorecard on TV networks. A full 42% of all characters on HBO's entertainment shows are gay or lesbian. About ABC, GLAAD had this to say:

Also singled out in the report is ABC's drama "Brothers & Sisters," which features three regular gay characters, as well as the network's "Grey's Anatomy," which has a bisexual woman among the leads.
Overall, "GLAAD analysts found that ABC consistently offers the most fair, accurate and inclusive representations of the five broadcast networks," the survey said.

ABC also boasts two of the most prominent gay characters on a new fall series with comedy "Modern Family."

The CW, as expected, was rated #2 among broadcast networks, Fox increased it's gay characters to 11% with gay characters on "House" and "Bones." CBS (not surprising for an older-viewer friendly network) was the least gay of all the networks.

TV execs, and content creators, were happy to chase GLAAD awards, and upscale, yuppie viewers, sacrificing total number of viewers for wealthier ones. The Brandon Tartikoff strategy again. Which works as long as the economy marches ever upwards, and there is an increasing amount of young, wealthy viewers that advertisers will spend premiums on.

As we can see, that's not the case. Networks were forced to reduce ad rates between 3 and 7 percent this year. Next year might see even further declines. Networks have huge fixed costs and stupidity at the executive level, leading to things like 24% declines at the NBC-Universal second Quarter earnings, excluding one-time items, despite income growth in cable operations. [If the link goes away, it's on Marketplace, July 28, P1] NBC in the article calls itself a cable-broadcaster, but it's cable business is vulnerable to pressed consumers canceling cable service. Therefore, no fees transmitted from consumer to cable operator to cable service.

Not even investment in cable properties like SyFy (rebranded to appeal to women), and USA, Bravo, etc. can save NBC from the need (as Jeff Zucker agreed) for hit shows.

But a big organization like NBC, or even CBS (the least badly managed of the networks) cannot turn around very quickly, it's like steering a container ship. More nimble competitors, probably with tax breaks and even loans from friendly governments looking to stimulate employment and export earnings, can produce entertainment serial content for half the price. The internet allows distribution via streaming, advertiser supported video, for sampling, and perhaps downloads or DVDs or both, with "extras" via payment, likely for less than traditional TV series downloads or DVD box sets.

But likely the biggest advantage is the ability to make content without worrying about how many gay characters each show has, to make GLAAD happy or win an award. [Tru Blood drew 3.7 million viewers, in contrast to it's debut of 1.4 million in it's first season. The highest for any HBO show since the Sopranos (which had it's finale at 11 million), but compared to American Idol with a high of 37 million viewers nothing to shout about.]

Since the new way to profitability in a prolonged recession or depression is not how cool a series is to a few well heeled taste-makers, but how well advertisers can sell the basics: soap, beer, food, and clothes. It's a Wal-Mart, instead of a Neiman-Marcus world.
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