Saturday, August 8, 2009

The Pittsburgh Shootings and the Question of Violence

The Pittsburgh area shootings at an LA Fitness center by gunman George Soldini has left 5 dead and 15 wounded. While getting a lot of attention, for a variety of reasons, including the killer's diary, his resentment towards women, loner behavior, and failed attempt to become a Pick-Up Artist (PUA), the killings and shootings by George Soldini are troubling for a number of reasons beyond the personal tragedy.

First, there were no warning signs that the individual was a danger to others. Unlike the Columbine killers, Klebold and Harris, who gave ample warning of impending danger, or the Virginia Tech shooter, Seung-Hui Cho, who was demonstrably a danger to himself and others, or the neo-Nazi James Van Brunn (the Holocaust museum shooter), George Soldini was a quiet, middle aged, middle class professional who never by all accounts, came to the attention of law enforcement or mental health authorities. Short of an unconstitutional psych screening dragnet for every male 15-65, there was no way to know of the danger posed by Soldini.

Second, while violence by various lone men or small groups of men is not uncommon in America, the recent trend towards targeting large groups of innocent people is very new, and disturbing.

Third, the actions of men during many of these shootings in the United States and in Canada, are troubling, and a big reversal of what was previously the case. Which in and of itself points to a troubling new reality.

Fourth, and finally, the danger posed by lone men or small groups of loner-type men like Soldini is far overshadowed by the larger danger: men simply abandoning any investment in society and failing to preserve and protect society.


Soldini left a detailed online diary which can be seen at Half Sigma in its entirety. His principal aim in the shootings seems to have been to kill an ex-girlfriend of many years (a goal oddly not mentioned in his diary) and humiliate and destroy his mother and brother, whom he hated. His brother, by all accounts, was a successful businessman and is married.

At no time was Soldini ever identified as a man who was likely to enter an LA Fitness aerobics class and shoot up the place, targeting mostly women in their thirties and forties. He was by all accounts a fit and trim man in his late forties. He survived rounds of layoffs at the law firm where he worked as an IT professional. His net worth was over $250,000. Neighbors did not know any odd behavior, and his lack of intimate friends allowed his growing mental illness (of which he was well aware of) to proceed to its deadly conclusion. By all accounts he was able to get dates (though they went nowhere) and was invited to at least one Christmas party. He was able to function socially and conceal his intentions enough that no one had any idea he was intending to kill people.

This is different than most of the other killers of his nature in modern America. When McVeigh was arrested for the Oklahoma City bombings, none who knew him were surprised, and Klebold, Harris, and Cho all left a trail of warnings and signs that clearly indicated they were dangerous. If there are other men like Soldini, planning the same type of thing, they will be impossible to stop, since no one will know their intentions until too late. It seems that Soldini's web diary, simply sat online, unread, until the shootings. His postings on YouTube of his video tour of his apartment was unremarkable.

Mental illness is not something new. Nor is the combination of mental illness and firearms. The Walker Colt dates back to the 1840's. The Henry Rifle from the late 1850's had a 16 round magazine. The Smith and Wesson Schofield revolver introduced in the 1870's had a top break action with metallic cartridge feed. Firearms had been put to use for killing, or trying to kill, political leaders in America, particularly the President, since 1835 when a deranged ex house painter named Richard Lawrence tried to shoot Andrew Jackson with two pistols (both single-shot pistols, which misfired). Legend has it that Jackson tried to kill his assailant with his cane, and aides had to restrain him, while Davy Crockett and others restrained Lawrence (who was later institutionalized). John Wilkes Booth, Charles Guiteau, Leon Czolgosz, Giuseppe Zangara, would all appear to be at least partly motivated in their killings by mental illness. Nor indeed is mass violence using bombs new either, considering the Gunpowder Plot of 1605.

Yet all of these are understandable in a way. The Gunpowder plot was a far-fetched but not totally implausible desire to install King James daughter, Princess Elizabeth as a Spanish pawn to restore Catholic England. Booth hoped killing Lincoln would inspire continued Southern guerrilla warfare. The others were mentally ill men who hoped by killing a prominent man, their mental troubles would cease, not unlike Mark David Chapman or John Hinckley Jr. Even before reliable, repeating firearms, men like Henry IV fell to assassin's blades. Henry's assassin, Ravaillac, being quite similar to Czolgosz or Zangara or Lawrence. Mental illness and violence have been part of the human condition since the beginning, though the combination is usually rare, in a big enough population it will make itself known.

What is disturbing, and new, is mentally ill people targeting large groups of innocent victims whose death can in no way achieve much of anything for the killer, not even the satisfaction of killing an important man. Disturbing though it is, the actions of a Chapman or a Hinckley or a Ravaillac or a Lawrence make a kind of sense — the lunatics wanted to be famous. What is new is the desire not for fame, but for killing people the killer does not even know. Tim McVeigh targeting the Murrah building including the ground floor day-care center, or the Columbine shootings, or the Virginia Tech shootings, or the Pittsburgh LA Fitness shootings, makes no sense in terms of killing an important man and thus achieving fame (at least part of the famous man's fame would now belong to the killer). Even crazy people can have a sense of belonging.

The conspiracists of the Gunpowder plot, did not plan to blow up average Londoners. Booth and company did not plan to massacre the theater goers at Ford's Theater. None of the lone gunmen above targeted innocent people they did not know. What's changed is the lack of belonging. Of investment so wide and deep in a society, even the Ravaillacs, the Zangaras, or the Czolgoszs, unknowingly, take part in it.

The inflection point, at which society stopped having such a deep, and wide investment that even lunatics intent on killing someone would confine their attentions to individual famous people, seems to have been the 1966 University of Texas Bell Tower shootings by Charles Whitman. Whitman, who may have been insane as a result of a brain tumor, shot and killed 14 people, most of them random targets, in addition to killing his wife and mother, at the University of Texas at Austin Bell Tower (and around it). What was reassuring in that case was that professors and students spontaneously grabbed their hunting rifles and shot back at Whitman in the Bell Tower.

These were not, as Mark Steyn put it, "men who ran away." Steyn, in his article in MacLean's Magazine, excoriates the new film "Polytechnique" (about the 1989 Montreal Polytechnique Massacre by Algerian immigrant Gamil Gharbi, aka Mark Lepine who shot and killed 14 women at the Ecole Polytechnique in Montreal) with these words:

“The defining image of contemporary Canadian maleness is not M Lépine/Gharbi but the professors and the men in that classroom, who, ordered to leave by the lone gunman, meekly did so, and abandoned their female classmates to their fate—an act of abdication that would have been unthinkable in almost any other culture throughout human history. The ‘men’ stood outside in the corridor and, even as they heard the first shots, they did nothing. And, when it was over and Gharbi walked out of the room and past them, they still did nothing. Whatever its other defects, Canadian manhood does not suffer from an excess of testosterone.”


Steyn notes that nearly all the male passengers on the Titanic died, nearly all the female passengers were saved. To put it in more graphic terms, while only 31% of the people on board the Titanic survived, a full 72% of women survived, and only 19% of men survived. Women did go first. The men did not run away.

What disturbed me the most, about the accounts of the Virginia Tech shootings, was the total passivity of the young men, in protecting their female classmates. The only men who did anything at all, active, were Professor Liviu Librescu, an elderly Holocaust survivor, and and Professor Kevin Granata, a mid forties Army Reservist. None of the young men attempted to fight Cho, the shooter, particularly as he was reloading, wrestle the gun away from him, or do anything active in confronting and stopping the shooter. It was a passive response of men profoundly disinterested and uninvested in their society. One deeply at odds with the response at the sinking of the Titanic or the UT Bell Tower shootings.

Which leads to the most disturbing thing about our society today. Even with the rash of shootings, America is so big (303 million people and counting) that the shootings have only a minor affect on society, outside the tragedy for the victims and survivors. But the shootings point to a larger issue: the loss of investment of men in society. An investment that keeps even crazy people from targeting society itself, particularly innocent people, and makes men respond to a threat by risking or giving up their lives to save it's foundation: women and children.

The real risk is not mentally ill men like Soldini (it's usually, but not always, men who do the shooting). It is the massive under-investment in society, particularly civil society, that is the real risk. I am on the board of a local, Southern California charity. I am the youngest man there, all others being considerably older, in their late sixties or older. The only female member is also of that age. The North Santa Ana Kiwanis, in Orange County, dating back to the 1950's, has disbanded due to lack of members (most existing members were in their late sixties or seventies). In the Black community, it's even worse — Little Leagues and general volunteer coaching, still alive in suburban White America, (with Latino America somewhere in-between) are almost non-existent in Black America. The plague of single motherhood, and lack of investment and involvement of older, family men who form generally the backbone of volunteer coaching for Little League, Pop Warner Football, and other organized team sports activities that teach boys how to cooperate with each other and be aggressive within the rules, has destroyed Black baseball. Look at any Major League Baseball and notice what you don't see: the large presence of US Black players, who were a force in Major League Baseball since Jackie Robinson. In their place, Caribbean players from places where volunteer coaching still exists.

A general rule of thumb is that the health of a society is indicated by the existence of middle-class volunteer organizations that offer both fellowship and a sense of belonging to society, in the process of maintaining society. This can be volunteer run sports-leagues, that teach boys the importance of teamwork and aggression within strict rules (or in other words, sportsmanship) or charitable organizations like Kiwanis or Shriners or Lions Club that provide civic involvement in cooperation with local governments, and also an important alternative and check to overweening power by abusive local officials.

The generally poor state of traditional volunteer organizations, with many long-time Kiwanis, Lions, and Shriners chapters closing as their members age and no replacements are found, indicate that many younger men, particularly the generation that should be succeeding these older men, which is men in their fifties, forties, and thirties, have no interest or investment in society and traditional volunteering. Most other volunteer organizations, such as the Sierra Club, or Humane Society, or Habitat for Humanity, have long since changed into big, professional fundraising and political activist groups. Leaving little for the would-be volunteer to both socialize and contribute to society.

While gang-related murders are down, in Los Angeles, compared to times past, not very many involve an arrest, much less conviction (about 42% in 2007, according to the LA Times). From the LA Times blog:

Community attitudes and behaviors and prosecutors’ thresholds for filing homicide charges may have more to do with whether murderers end up behind bars than any particular law-enforcement model.


It's vital to have a wide and deep investment in society by men. Men being invested in society are husbands and fathers, who maintain ownership in society, provide critical community attitudes, particularly guidance and control of young boys, and create social attitudes that control and channel violence.

The Black community is America's canary in the coalmine. Being more fragile, with far greater propensity for single motherhood, Black America's fall into (at least as far as the urban core is concerned) chaotic gang violence characterized by a total absence of any adult male investment in society, is both rapid and chilling. As Barack Obama relates in "Dreams from My Father: A Story of Race and Inheritance," older residents in a Chicago housing project fondly recalled the days of Segregation, for the relative security that was found: children could play in the streets and doors were generally unlocked. This was not a society without it's problems, illegitimacy may have run as high as 24%. But it worked, to produce even under Segregation, a generation of mostly law-abiding, useful and productive citizens who maintained a sense of ownership in their society. Even a discriminated against Black man could and did marry, have his own family, and thus be invested in at least his own community. Segregated New Orleans, the center then of Black America, was famous for its many, many benevolent societies that offered everything from life insurance to health plans for dental and medical care. Theodore Dalrymple, in his "Life at the Bottom" noted much the same, how deprived, ration-impoverished East London in the 1950's was a place where children played unsupervised and doors were often left unlocked. Neither thinkable now.

Tellingly, both Britain and Black America suffered the decline of the nuclear family and traditional marriage worst and first, with single motherhood and consequent non-investment by men producing a Dante-esque hell.

The problem of violence is not men like George Soldini, who though they may occur more and more frequently, targeting innocents in a sexual rage, unable to find intimacy and a sense of belonging to society (and thus the need to protect it), are still not fundamental threats to society's well being. America being a very big nation.

No, the problem of violence is more akin to that of gang-ridden inner cities, and their stormy petrels of what is to come to other communities, including the White community. Gang violence is never "senseless." It makes perfect sense — gang members wish to be known as killers because it gives them prestige and power, and thus, women, who in the changed environment of single motherhood norms, prefer such men and boys. Average Bro has his own take on things, and like many other Black bloggers believes that women like actress Lauren London, who opined that she liked thugs, is not unrepresentative of at least some Black women. Any time a gang member engages in a "senseless" killing, it is wise to remember that the killing, from the gang member's perspective, makes perfect sense, it's designed to gain him sex.

This then, is the real danger of male uninvestment in society. Not only do men do the bare minimum to get by, but lacking families and a reproductive interest in society, they don't volunteer and engage in community "ownership" which prevents a thug-gangsta mentality from taking over. The experience of "chav" Britain suggests that this model can be rapidly reproduced. Few in Britain in 1948 would have predicted a 50% illegitimacy rate, and rampant crime. Yet in sixty years, that was precisely what happened to Britain. Instead, men compete to be the biggest gangsta and chav they can be, with varying degrees of violence. Or remain, passive and uninvolved in the face of danger to the community.

Either is a disaster, and that is the true horror of George Soldini.
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Tuesday, August 4, 2009

NBC Continues the Idiocy: Steve Carrell's Production Company to Remake Rockford Files

File this under stupidity. NBC will remake the Rockford Files. Set to run the show is "House" co-creator David Shore ("Law and Order," "Family Law"). NBC has no clue. A remake, destined to fail, of one of the all-time great TV shows, when NBC cancelled an existing show that had great promise ("Life") as well as one of the most engaging and tough characters on TV (Damien Lewis's "Charlie Crews")


Failed attempts to revive "Knight Rider," and "the Bionic Woman" have not taught NBC a thing. Both shows were light-hearted male-oriented science-fiction oriented (though not strictly science fiction) action romps that depended on being light and bright and untaxing to gain an audience. A talking, intelligent car helps a cop with a new face, backed by a billionaire, bust crime. A woman gets bionic implants and gains superpowers to ... fight crime. Lesbian one night stands and random threesomes do not a boy's show make, nor do complex and indecipherable "government conspiracies." Which is exactly what both "Knight Rider" and "Bionic Woman" were. If anything, the overly edgy/dark/violent remake of "Bionic Woman" was even worse. Both failed. Miserably.

This is because today's Hollywood creative teams cannot replicate what those thirty years ago could, which is make light, fun shows that attract young men and boys. From Glen A. Larson (the original Knight Rider and Battlestar Galactica) to Kenneth Johnson (Six Million Dollar Man and Bionic Woman, the Bill Bixby "Incredible Hulk") the creation of light-hearted male oriented shows was something done as a matter of course, and executed well.

The Rockford Files remake is doomed to failure. There's no actor who can even come close to matching what James Garner did, arguably at the peak of his career. None with his charisma, masculine presence, wry humor, and patiently honed acting ability. Not even ("Life," "Band of Brothers") Damien Lewis can pull that off. Certainly not the "updated" (read, man-boy pretty face) actor certain to be casted. Nor can the supporting actors of Joe Santos, Noah Beery, and Stuart Margolin be equaled. Certainly not when Hulu has the real deal available for free, online.

What's interesting of course, is that the "Rockford Files" itself was a remake — but of a failed TV show. The 1968 "Outsiders" created by Roy Huggins ("Maverick") starred Darren McGavin as an orphaned ex-con Private Eye who lived in a trailer, and had to hustle to solve the case and collect from his clients. Sound familiar? It lasted one season. Huggins teamed with Stephen J. Cannell ("the A-Team," and "Greatest American Hero") to retool the concept, make it lighter, give the character a family and friends and connections, and make the character and show more optimistic, with the character mostly winning rather than losing. Even the end of the opening credit photos transitions from Rockford being arrested to fishing with his father at the end of a pier. A triumph all it's own.

What made the Rockford Files great (and you can see for yourself at the link above at Hulu.com) was the cheerful cynicism of the lead character. Forever convinced that a con was in the works (it always was) and the venality, rashness, and stupidity of the bad guys leading to their undoing (which was generally the case). Both Huggins and Cannell studied the failure of "the Outsider" (and McGavin was no mean actor himself, as his continued cult popularity in both "the Night Stalker" and "Christmas Story" prove) carefully to avoid the same fate with Rockford Files. Even the different (and humorous) messages left on Rockford's answering machine in each opening credits was there to grab viewer's attention.

And while the show itself had no lack of female fans who appreciated the matinee idol quality of Garner's leading man looks and sheer presence, the show itself was absolutely male. The character was not the female fantasy of the powerful, brooding bad boy ("Angel," "Forever Knight," "Dexter," "Moonlight") nor that of the uber-Alpha guy ("Mr. Big" in "Sex and the City," "the Mentalist," and "Gossip Girl"). The character lived in a trailer, never had much money, while the person he loved the most and trusted the most was his father, who was constantly wanting him to quit being a Private Eye and become a trucker. While women were in and out of his life (Rockford was a good looking guy) they were mostly out, and the character was resigned to a lack of any real romance or love in his life. The character still mostly won over the bad guys, even if he himself didn't profit and took a beating doing it.

The Rockford Files was very, very male. Something NBC and the current crop of creative people simply cannot understand, much less replicate.

Far better for NBC to copy failed but interesting shows, with obvious but fixable flaws. "Tenspeed and Brown Shoe" (from 1980) with an upright, straight-laced accountant teaming with a con man (Jeff Goldblum, Ben Vereen respectively) to become Private Investigators. Or "JJ Starbuck" (from 1988), with an older billionaire (Dale Robertson) traveling the country seeking to help the helpless after his wife and son die. Both were light-hearted, both had obvious but fixable flaws, neither are remembered, and both are different enough from what's on today to stand out in the clutter. Both have the ability to appeal to older as well as younger viewers, an important feature in today's declining youth cohort that is switching to online, streaming media anyway.

For "Tenspeed and Brown Shoe" (it doesn't matter what the remake would be called), the relationship between the two friends needs to progress, with the account better at improvising cons, and the con-man better at being a straight-laced diligent fact-checker. For JJ Starbuck, less folksy sermonizing, and more scenes like the one where Starbuck, after a low-level worker is fired for helping him right a wrong, gets on his phone and buys the entire company, forcing the manager to re-hire the worker. At a higher pay.

But the creative teams in Hollywood, from executives to writer-producers, are incapable of seeing the obvious and learning from past successes. Instead, we'll probably get John Cusack (in full mope mode) as a sexually ambiguous Private Eye with a sado-masochistic streak uncovering a season long conspiracy by oil company executives to "warm the planet" or some-such nonsense. That's about all Hollywood can do these days.

If NBC really wanted to revive it's fortunes, it would bring back "Life" to the schedule. A show with an existing following and the potential for strong male appeal, if properly and patiently promoted.
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NBC bets on Cable: Hollywood's Detroit Rock City

The Wall Street Journal reports that NBC has elevated Jeff Glaspin to chair it's entertainment television business. Glaspin's background is in cable TV, being most noted for running NBC's cable channels including USA and Bravo. Glaspin is associated with "Queer Eye for the Straight Guy" and in the 1990's, "Behind the Music" at VH1. Glaspin's promotion shows how NBC is still focused on reducing costs, as a measure of profitability, and the undue fascination with cable revenue as a "savior" for NBC.

This is a move doomed to failure, and the parallels with Detroit's fixing on the SUV as a "savior" for it's inability to produce reliable profits and the collapse of the Music Industry are downright eerie. NBC's average number of prime-time viewers has fallen 11% in the past two years. It trails ABC, CBS, and Fox in average viewership/ratings. The only bright spot has been NBC cable networks, which have seen operating profits increase. Second Quarter operating profits at NBC Universal cable networks was up 7% from the prior year. But cable networks and operating NBC like a cable network won't save NBC Universal. Anymore than the Chevy Suburban saved GM.


The problem is, that even with Cable revenues, NBC's cash flow has been terrible since 2004:


[Click Image to Enlarge]

NBC's cash from it's networks have declined by nearly a factor of five over the past five years, with 2009 showing a horrific drop-off of nearly 200 million dollars. All the cheap reality and cost-cutting in the world will not save NBC, any more than fat margins on the SUVs were able to save Detroit.

NBC's problem, is that it has accepted and embraced decline. Jeff Zucker, NBC Universal's CEO and Glaspin's boss, is quoted by the WSJ as saying viewer declines at NBC will continue in the next five years. This is acceptance of failure.

Cable revenue growth is capped. There aren't hordes of consumers who lack cable signing up for the service, thus providing new fees (channels like Bravo receive payments from cable and satellite operators for every subscriber who receives the channel as part of a package). Indeed, cable channels face a number of vulnerabilities to operating profits. Chief among them, push-back from cable and satellite operators to reduce payments, or even eliminate them, as cable and satellite operators themselves need to cut costs in a tough consumer environment. Given the make-up of Congress and the White House, it's entirely possible the cable and satellite operators could make a "deal" that is "consumer-friendly" (i.e. lower rates for consumers for cable/satellite) at the expense of cable channels like Bravo and Oxygen (which have few viewers and make most of their money from fees not advertising). Advertising dollars at Bravo or Oxygen can not make up for lost revenue from cable/satellite operators, let alone losses at NBC.

This risk is as entirely foreseeable as new, increased mileage standards targeting SUVs and Trucks in a Democratic Congress and White House, or consumers abandoning low-gas mileage vehicles for more fuel-friendly ones (from Japanese and Korean competitors) during high gas prices. Cable revenues are at best a mature and non-growing source, they certainly are not growing any more than CD sales did in 2004.

NBC reaps increased revenues from cable operations, but not enough obviously to stem the losses at NBC itself. But even these revenues are at risk if Congress and the White House mandate lower or no fees to cable channels, or consumers simply drop cable altogether.

Ford's return to long-term profitability rests on it's ability to sell a broad range of cars and trucks that consumers want at decent profit margins supporting Ford's relatively high fixed costs. Producing vehicles that have high quality (good fit and finish), high reliability (they don't break down), good gas mileage (they are cheap to operate) and competitive pricing (they are competitive in pricing with Japanese and Korean models). This is not particularly complicated, indeed it's simple. But the simplest things are often the hardest to execute well, consistently, year in and out.

NBC plans to run Jay Leno's talk show from Monday through Friday at 10 pm as a cost-cutting measure. Because his show is radically cheaper to produce than even an hour of reality programming. But no amount of cheapness will substitute for hit shows. NBC like Detroit has a high fixed cost, including corporate overhead, an analogue to the dealer network (affiliates) and various regulatory burdens. This is not a problem if either Detroit or NBC operates in high-volume with satisfied customers. For Detroit, that means selling a lot of vehicles, at decent profit margins, that consumers actually want. In Southern California, for example, it's quite common to see Ford Mustangs driven, even though California has relatively fewer US car makes and models sold compared to other parts of the country. Even among a population averse to American cars, Ford has not had problems selling it's most distinct car in Southern California.

NBC (and most of Hollywood, in television and in movie studios) are ignoring the competitive threats. DVD price erosion, at home and abroad, from piracy to the alternative of simply re-watching already purchased DVDs, present large threats to revenues for Hollywood as a whole. Since most movies lose money at the box office, and only recoup it in DVD, pay-per-view, video on demand, TV, and foreign movie rights, piracy or consumers simply not spending money presents a mortal threat to the movie studios, and to TV networks and studios who hope to recoup revenue on even canceled series from DVD box sets. Why spend money for a box set when you can watch it for free on Hulu, or purchase for a fraction of the price from a street vendor making pirated copies?

But the threat is larger than mere piracy. Increasingly, Hollywood seems sliding to the irrelevancy of the music industry.

A recent New York Times article on the deathwatch of the Music Industry shows just how quickly an industry can collapse. According to the RIAA, music sales since their peak in 1999, have collapsed by half in inflation adjusted dollars. According to the study by the NPD Group, teens purchased fewer CDs, fewer online downloads, fewer Peer-to-Peer downloads (pirating), and borrowed fewer copies of music, in 2008 compared to 2007. Teens cited (this was before the global recession) overall cutbacks in entertainment spending, but lack of excitement over current music was also a factor (given the declines of 6% in Peer to Peer downloads and "borrowing" music by 28%). A full 23% of teens purchasing less music cited an already established collection of music that satisfied them, and 32% of teens purchasing less music expressed dissatisfaction over current offerings. This among the most disposable income, entertainment oriented group, before the recession.

Among key factors in the change of behavior was the growth in online and satellite radio, and free music from MySpace Music, Pandora, imeem, and other sites, making music nearly always accessible, and with social networking built in (recommendations, etc. based on music listeners like). Even pirates cannot beat "free."

A similar study of British teens found streaming music replacing file-sharing. The reason? Both are "free" but streaming music, by offering recommendations and novelty (the social networking component) is more attractive than searching around for pirated content on the internet.

Or, as the New York Times article put it:

This is part of a much broader shift in media consumption by young people. They’re moving from an acquisition model to an access model.


This applies to video as well as music.

A study last year conducted by members of PRS for Music, a nonprofit royalty collection agency, found that of the 13 million songs for sale online last year, 10 million never got a single buyer and 80 percent of all revenue came from about 52,000 songs. That’s less than one percent of the songs.


Again, this applies to video as well as music.

Even more revealing is the New York Times graphic (link here) reproduced below:


[Click Image to Enlarge]

CD sales revenue have not been replaced by digital downloads, either albums or singles or "mobile" (i.e. ringtones). Fat profit margins, with consumers forced to pay full CD prices to get the few songs they wanted, are gone. The same is happening to Video, for both Hollywood movie studios, and for TV networks. Old models are eroding, consumers are adopting online "free" content (such as Hulu.com or SouthparkStudios.com) that is advertiser supported. Note the comment at TV By The Numbers that Hulu has problems selling most of it's inventory, i.e. old obscure shows such as "New Dragnet" (an obscure 1989 version of the classic "Dragnet" with Jack Webb, different from "LA Dragnet" with Ed O'Neill and Ethan Embry). "The Long Tail" is fairly useless if you can't make money on it, and the trend seen in music sales, with 80% of revenue coming from less than 1% of songs, is the same at Hulu. Hulu lists their most all-time popular TV shows as variously, "Burn Notice," "Bones," "House," and "Family Guy" among others. All shows with sizeable audiences, unlike say those recalling "the New Dragnet."

It's clear that in music, and online, the ability as in years past to milk the "Brandon Tartikoff model" and charge advertisers premium prices for ever-declining amounts of "desirable" demographics is not sustainable. Not only are young (White) people a declining group, due to the birth dearth, but their behavior is changing as well, moving to streaming content that is "free" and has social-networking "extras." Young people are shifting towards it even over piracy or "borrowing." [Hispanic youth watch and listen to, of course, Spanish-language media.]

It's also clear that five years of declining revenues at NBC, before the recession, show this shift taking place to the point where there is nearly $300 million less operating revenue than in 2004, mirrored eerily by declines at GM, Ford, and Chrysler, and the music industry. Specialization won't help, since it leaves producers at the mercy of regulatory or consumer shifts.

Instead, what NBC needs, is not cable-specialization, or more "Queer Eye for the Straight Guy" shows, but rather broadly accessible and popular shows. Shows that appeal to men and women alike, along with young and old. Shows that can draw viewers back to NBC, and be streamed on sites like Hulu with full sales of "inventory" (i.e. ad spots on the streaming video).

This won't be easy. Men have largely abandoned TV, and need persuading to come back. Broadcast TV is of course the "ultimate" in streaming video, and free, over the air broadcasts beat the cost of even cable or satellite. Storylines, characters, actors, and the like need at a minimum to be "friendly" to men, and dump the various elitist and politically correct moralizing that characterizes much of TV. Which includes male-bashing. Attracting men of course must be done in ways that do not alienate female viewers, with characters that appeal to women but don't offend men being part of the creative solution. In other words, independent and intelligent leading ladies, but no "Twilight" derived male fantasy figures or junior "Sex and the City" "Mr. Big" knock-offs as leading men. Older audiences too, must be part of the mix, which means care not to needlessly offend those who hold traditional values at a minimum and stopping the tired trope of relying on shock in place of well thought out plots.

All of these creative efforts will require years not months to accomplish, and public communication to viewers, creative people, advertisers, and the public as to what the network wants to accomplish, how it intends to do it, and progress along the way. This requires patience and the ability to sustain losses as the network battles its (rightfully so) perception that NBC is hostile to male viewers.

But the alternative is simply to collapse into a GM or Music publishing slump, from which there is little escape (even with government bailouts). Clearly the views of pundits galore that "de-massification" of culture would proceed indefinitely has been proven wrong. Technology, with the ability to stream "free" content (likely to migrate to video phones soon) has helped make this change.
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Sunday, August 2, 2009

Twilight at Comic-Con: The Feminization of Fantasy

I half expect a South Park Episode to come out any day now, based on the tween girl explosions over vampires and fantasy: "Reading is Gay." Fantasy, a realm formerly associated with nerdy males and authors like Robert E. Howard ("Conan the Cimmerian") or H Rider Haggard (King Solomon's Mines, Allan Quatermain), or Edgar Rice Burroughs (Tarzan, John Carter of Mars), is now thoroughly the province of tween girls. Not only did the Twilight fans (including Twilight Moms) take over Comic-Con, but even lesser works such as "the Vampire Diaries" far overshadow conventional fantasy in sales and attention.

This marks another, mostly male sphere, that is now switched to a mostly female sphere. However, the problem for publishers, writers, and the entertainment industry at large is that males will simply withdraw from something so absolutely, and irrevocably female. Making fantasy a tough sell once the tween fad runs out (as mega-stars Leif Erickson and Scott Baio). Which means in an extended recession/depression, the regular income streams that male readers used to give fantasy publishers simply won't be there any more. As males consider fantasy just another female-gay ghetto, and tween girls inevitably grow up, and move on to the next fad. The cultural damage, both to girls views about men and male behavior, and the erosion of the male-heroic fantasy, are far worse than the commercial impact, of course.


Part of the problem is structural. Female editors, agents, and publishing executives only want female writers, catering to female readers, writing female subjects because that is all they know (female editors, agents, and publishing execs are of course clueless about what men and boys want to read). Because the market for tween girl fantasy, for now, is lucrative. Catering to fantasies about powerful, "sexy" girls and women who have several super-powered, supernatural male beings competing for their favors. A look at the audiences for say, the Harry Potter premiere, can tell a careful observer why these themes are so remunerative: see here, or here, or here.

Even Disney does not get it. "the Kid Whisperer" as focus group guru Kelly Pena styles herself, is not the person I'd bet on to discover what sort of entertainment boys like. The quote from the article says it all:

While Disney XD is aimed at boys and their fathers, it is also intended to include girls. “The days of the Honeycomb Hideout, where girls can’t come in, have long passed,” said Rich Ross, president of Disney Channels Worldwide.


Of course boys need their separate spheres of entertainment. Anything intended to include girls will have boys abandoning it in haste. As you get inevitably, entertainment and attitudes that are far too "girly" for boys to enjoy. Boys have different needs when it comes to stories and entertainment, simply making "Lizzy McGuire" a guy won't cut it, note Disney's increases have come mainly from girls attracted by the marketing push to Disney XD.

There's no denying that girls and women have disposable income. That it's wise to target them. But relying almost exclusively on women and girls for entertainment customers means that men and boys are driven out of the marketplace by "girly" emphasis on emotions, masculine behavior men and boys find distasteful, particularly competition over women and girls, and men and their expected behavior and status no male could ever approach, or want to approach.

TV, over the decades, starting in the 1970's, most likely, has become a female (and gay) wasteland. So too, most movies excluding big action-adventure comic book and similar type movies. Men don't watch TV, for the most part, and have abandoned everything but the Michael Bay extravaganza at the multiplex. This means increased reliance on "hits" instead of steady, money-making films that can be produced by formula, as Hollywood did in it's Golden Age: Gangster pictures, Westerns, Romances, Family films, broad comedies, and the like.

Then of course, there is the impact the Twilight fans had at traditionally male, nerdy, Comic-con. Negative reaction here (there were also complaints about how the Twilight fans disrupted the other events staged at the same time). Video below:



The website Dlisted had an account of the Twilight Moms showing up at Comic-Con here. Below are the Twilight Fans at Comic-Con:


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General reaction by long-time male fans attending Comic-Con was not positive. Though some did not feel it was all that bad. Check the link for the sign saying Twilight ruined Comic-Con. That was not uncommon reportedly at the site.

You can see this in the marketplace. For example, "Vampire Diaries: the Awakening and the Struggle" by L. J. Smith had a ranking of #277 in books (overall), and #1 in Books > Teens > Series, #11 in Books > Teens > Literature & Fiction > Love & Romance, and #15 in Books > Children's Books > Literature > Science Fiction, Fantasy, Mystery & Horror > Spine-Chilling Horror.

The Editorial Review is:

Elena: the golden girl, the leader, the one who can have any boy she wants.

Stefan: brooding and mysterious, he seems to be the only one who can resist Elena, even as he struggles to protect her from the horrors that haunt his past.

Damon: sexy, dangerous, and driven by an urge for revenge against Stefan, the brother who betrayed him. Determined to have Elena, he'd kill to possess her.

Collected here in one volume for the first time, volumes one and two of The Vampire Diaries, the tale of two vampire brothers and the beautiful girl torn between them.

L. J. Smith has written more than two dozen books for children and young adults. She lives in the Bay Area of California, but is happiest in a little cabin near Point Reyes National Park, which has lots of trees, lots of animals, lots of beaches to walk on, and lots of places to hike.


Meanwhile, fantasy writer Glen Cook, who is at least a prolific a writer as Smith, has one of his latest novels, at #56,323 in Books.

The editorial review for "Cruel Zinc Melodies" is:

"Garrett's newest visitors are a pack of lovelies led by his main squeeze Tinnie Tate and her friend, Alyx Weider, the spoiled daughter of the largest brewer in town. Her father needs Garrett's help-his workers are being attacked by everything from giant insects to ghosts. Garrett takes the case. After all, working for the Weiders means free beer. But it also means serious danger."


Clearly, if you are a publisher, you'd rather have the Vampire Diaries than Cruel Zinc Melodies. But there is a catch. Smith's older books do not sell very well, Witchlight is ranked #2,913,969 in Books, while Sweet Silver Blues by Cook, an older title, is ranked #232,307 in Books, an order of magnitude better than Smith.

Vampires are a fad. The very fact that all those tween girls are screaming their lungs out at Comic-Con, means that six years from now the whole concept will be as dead as Lonely Werewolf Girl (sales rank #315,308 in Books) and Hanson.

In the meantime, however, publishers and entertainment houses will have convinced men and boys that "reading is gay" and moreover, fantasy is a place where tween girls and their moms scream over tween girl idols. Not anything for them. The cost of all that tween girl money today is no male money in years to come in the fantasy genre.

The result will be even more young girls with rather skewed and unhealthy ideas about men, male behavior, and greater contempt for "beta males" who don't measure up to the standards of fantasy. Many but not all the type that would not generate much male attention on their own (clearly some attractive girls like the stories):


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We will see more ordinary men and boys, as a result further alienated and disconnected from ordinary women and girls. Religion in decline, particularly church attendance, and harried single mothers, amplify the effect that popular culture has in teaching girls and boys how "correct" relationships are formed, and what the image of the opposite sex should look like in behavior and dynamics. Twilight is perhaps the most single hideous conception yet perpetrated on the American public.

For boys, Twilight paints a deeply offensive model of masculinity, one that almost none of them can reach, and one that runs counter to every tale of masculine heroics from the Odyssey to Beowulf, to say Indiana Jones. The traditional values of protection, self-sacrifice, honor, duty, loyalty, and so on which are rewarded, are inverted into a bleak and bitter parody that boys (and men) know that they can never reach. Captain America and Superman may be beyond copying as far as actual abilities, but men acting like those characters in terms of basic behavior in daily life is a net plus, and in fact Western Society has depended on it (which is why it's told those stories, over and over again, from 1200 BC or so with the Odyssey). This male behavior, which is deeply Western, pre-dates Christianity (see Beowulf) though it is compatible with it, unsurprising considering how Greek-humanist Christianity really is, and is unique to the West. No other culture tells these stories of male self-sacrifice that in the end wins the girl, over and over and over again. Men don't act like Edward Cullen in the West, at least that is not many Middle Class White Men. Most don't want to. Still.

Edward Cullen wins the girl in Twilight by being the most dominant and controlling male in Bella's life. Superman wins Lois Lane by being ... mostly Clark Kent, the mild mannered reporter. Lois herself is independent, and while lacking powers has opinions and a mind to match her beauty. This is the male heroic model that worked, that built Western Civilization, and males resent it's overthrow by the female-tween fantasies of Twilight and other vampire-fantasy fads. Lois is desirable because she's winnable, and winnable by more than just superpowers and wealth and power, otherwise Lex Luthor would have married her. Her very independence and intelligence make her winnable, by Clark Kent not Superman, and it means she stays won. Clark does not have to constantly mate-guard her like Cullen does Bella.

For girls, Twilight teaches them to be passive, eschew education and a career, forget a traditional family with a traditional husband who while not "sexy and dangerous" is faithful and loving, and sacrifice warm, loving, and emotionally intimate relations based on the mind as well as raw sexual desire, for pure adrenaline based excitement. Twilight explicitly teaches girls to abandon their minds and intellect for their emotions and lusts. In short, a how-to for girls to enter into inevitably abusive and emotionally destructive bad-boy relationships, in the desire to "change" and control a powerful, dangerous man.

But even more destructive is the myth that a girl can be seventeen forever. That age will not take it's toll on beauty and male attention, that a woman can be free of adult responsibility and duty, including that of family and career and earnings and compromises that human beings must always make, in favor of an adolescence that never ends.

That is the true horror story of the feminization of fantasy. A more horrible story than H.P. Lovecrafts Cthulhu could possibly imagine.
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Thursday, July 30, 2009

Game Changer

Two items in the Wall Street Journal on Wednesday, July 29, 2009 together portend a big change in the way entertainment, both movies and "serial entertainment" aka series, are produced, distributed, and watched by US and global consumers. Together they have the potential to shake up Hollywood the way Toyota and Honda did in the late 1970's and early 1980's.

First, the article in Marketplace, B3, "Price War Dividing Grocers into Winners and Losers" has big changes in consumer behavior providing ripple effects in supermarket retail. Now, 1 in 3 consumers (that's one third) buy exclusively items on sale, twice as many as 18 months ago, according to market researcher Information Resources Inc. Or, in other words, from 16.5% 18 months ago to 33% of all shoppers today are buying items only on sale. Safeway, which sought to lure shoppers with upscale stores and high-quality fresh produce, reports same-store sales declined 2%. Result? The stores have lowered prices on thousands of items and run heavy discount price promotions. Retailers with low price reputations (paging Wal-Mart) are posting strong same-store sales increases [same-store sales are sales for stores open at least a year] while others are posting losses. The change in consumer behavior is best summed up by a quote from the article:

At Supervalu, the percentage of items purchased on sale rose four percentage points in the past year and items-per-transaction declined, as cash-strapped shoppers sought out the best deals across a variety of retailers. "If the item is not on sale in our stores, it is far more likely to remain on the shelves," Mr. Herkert said.


This is an earthquake in consumer behavior, and has profound implications for the entertainment industry.


Amazon posted weaker than expected second quarter results due to a decline in sales of books, music, dvds, games, and consoles. Analysts expect a 20% decline in video game sales from June 2009 compared to June 2008. Consumers are cutting back on groceries, and on entertainment even further. People have to eat. They can play the same video game another year longer.

The entertainment industry has long ridden a wave of profitability, based on nearly fifty years of almost uninterrupted economic expansion. When recessions have come, they have been limited in duration and scope. This recession promises to be different. More wide-ranging, and longer lasting. Some economists talk of a "lost decade" as with Japan in the 1990's.

A lot of analysts have described the fractured and niche status entertainment as a function of technology. And doubtless the new technologies: FM radio, the Walkman, the VCR, cable and satellite channels, and the Ipod have contributed to fragmented entertainment and the death of mass culture. But just as important is the ability of wealthy consumers to pay premiums for niche entertainment. For example, to receive Logo, the gay channel from Direct TV, costs $55 a month as part of their package sign-up. That's $660 per year. Even if not many sign up for the package, and it's sliced up many ways per each channel in the package, that's still a considerable sum of money. But the business model rests on enough consumers having both enough cash and economic security to spend the money. Just as the Long Tail hypothesis, which states that there is a lot of money to be made selling lots of "non-hits" such as hard to find CDs or mp3 tracks, books, dvds, and so on, rests on the assumption that there will be enough consumers with both willingness to buy non-hit massively popular items, and the money to purchase them. There have been criticisms here on just how accurate the Long Tail model is (i.e. niche content makes aggregators like e-Bay or Amazon money, and perhaps content creators), but the underlying economic model of "Laissez les bons temps rouler" requires, well, good times rolling.

The fundamental attribute of consumer behavior for every good or service purchased during long-lasting recessions is scarcity. Scarcity of consumer dollars, meaning that purchasing a dvd means forgoing purchase of another. This behavior drives consumers towards known "bang for the buck" entertainment, and of course "free" or advertiser supported (or already purchased DVDs) movies and serials are better than paid ones, within acceptable quality bounds. We already see that behavior in supermarket purchasing.

The second item in the Wall Street Journal was the July 29, Personal Journal, D1 story "Video on Cellphones: the Uncut Version". The story concerns bleeding edge cellphone users with expensive setups (using the Sling Media Slingbox and software for select phones) to view satellite or cable tv on their phones. The hardware alone costs between $200 and $300, plus a monthly service charge. Sling Media claims nearly a million people have signed up for the service for the Iphone. Problems remain with this service, besides the price, including battery drain, and jitter due to network latency (best performance is seen in WiFi hotspots using Wifi instead of the cellular network). Sling Media's Iphone service is limited to WiFi hotspots for just that reason. Still, Nielsen estimates 13 million people this year and last watched video from their mobile phones.

Nielsen estimates only 18% of the nations 270 million cell phones, or 48.6 million, are capable of receiving or playing video. That's still a sizeable number. Apple's basic Iphone 3G is $100 (with a year service plan that has it's own monthly fees). Apple has shown flexibility on the low end of its Ipod and Iphone devices. Their Ipod Shuffle is $80, with 4GB. Other manufacturers like Palm and Nokia are capable of producing low cost video phones as well.

It's highly likely that some manufacturer will produce cheap, sub $100 video-capable phones. It might be Apple, it might be Nokia, it might be someone else. Perhaps even Sony. But suddenly, the phone becomes a way to play not just music, which many phones can now do, but video. Which will change the way video is viewed and distributed the way the Ipod and Itunes changed the music business.

Of course convenience will matter too. Many consumers will purchase from Amazon's mp3 downloads since they lack Digital Rights Management, making use over multiple computers and Ipods easier, but Itunes still predominates as a means to manage Ipods and media. Some estimates place Amazon at around 8% of all music downloads in 2008 while Amazon claims to be #2 behind Itunes in downloads.

Of course, video Ipods have been around since 2005, and the Archos and other players had video before that. But then the Diamond Rio and Saehan (Korea) devices came out in 1998, but did not really catch on until the first Ipod in October 2001. A lag of nearly three years, and in boom times as well. It's certain that during a recession, most of the 270 million phones will be replaced only as needed. But it's certainly probable that a basic phone with adequate video capacity could be marketed at prices even cash strapped consumers will pay, and at screen sizes that make video viewing comfortable enough. After all, CD and records and even cassette tapes have superior audio quality compared to mp3s (which samples only part of the digital audio file), and consumers like listening to mp3s on Ipods just fine over expensive stereo systems.

What cheap video phones will do, particularly coupled with a convenient service or software for transferring video to phones, is allow people to watch video entertainment whenever and wherever they want. Much like the MP3, Ipod, and Itunes did that for music. This will not happen all at once, in a "big bang" any more than the changes in the music industry happened all at once in 1998 or 2001. But it will happen.

What this means, if most people consume video entertainment, apart from live sports and other band-width hogging video streams, from a stored file on their video phone, is that distribution will no longer require huge sums of capital. To get movies into theaters, apart from major marketing efforts costing between $30-40 million, prints (or pirating friendly digital copies) must be sent to theaters. Even with digital files, this is a major pain and can require expensive courier services or leased fiber optic lines for high-speed transfer. To get a tv series into a cable or broadcast network also implies a lot of capital, not just for the series to be made but the overhead for the network.

The new Itunes-like distribution model also changes consumer behavior. One study of an un-named UK music service claimed that 80% of all music tracks sold no copies over a one year period. Most of Amazon's sales in music downloads comes from popular acts, and then just a few popular songs. The same holds true for Itunes.

Which means, given scarce consumer dollars, it's winner take all. A sale of an episode of a serial, or movie, means no sale for a competitor as consumers have to choose. The way around this of course, given quite likely the difficulty of streaming video content over even the most advanced 3G cell phone network, and the clumsiness of using WiFi hotspots, is to make content "free" but advertiser supported.

With the ads "unstrippable."

Many, many consumers have stopped listening to radio, and use their Ipods to play music. The music changed from being played over the radio, for free, to downloaded at modest prices. Particularly with compressed video files, low cost or no-cost video entertainment is probably the wave of the future. With "ads" consisting of massive product placement. Not just products or services, but companies playing a major role. Such as Federal Express in "Cast Away."

In the near future, it's not at all implausible, that consumers could download free adventures in a serial format of an investigator working for Farmer's Insurance, or a Doctor for a hospital group, or an airline pilot flying for United. The ad being part of the plot itself. Obviously in that case, the more artful and entertaining efforts will crowd out the blatantly bad ones. But nothing beats "free." Which leads to another effect, long term. Price cuts for DVDs and other forms of video entertainment (downloads). Hollywood has long tried to keep price floors on DVD and other ways of viewing movies and tv series, and it's likely that advertisers seeking to create more potent ads can undercut not just Television broadcasting (both cable and over the air) but also studio movies.

None of this will happen overnight, but it will happen. If I had to bet, I'd bet on Apple delivering a "recession beater" Iphone with a price point of around $50, with decent video capabilities, and content creators rushing to provide first cheap content for such a phone, and then "free" content with product placement as described above. Because the market for an always-around video phone plus existing Video Ipods will be irresistible.

That in turn will mean lower margins for everyone in Hollywood. Stars will still make obscene amounts of money, but the margins will be thinner, and the ability to bank on a few mega-profit movies like the Transformers series will be impacted. Since a lower margin means less vanity projects that will lose money (such as "Milk" which probably lost money with a marketing budget of around $30 million and only partial revenue from both foreign box office -- rule of thumb is half the gross revenue goes to the studio -- and similar numbers domestically outside the seventy-five percent kept by the studio in the opening weekend) can be effectively carried by the big budget films that make money. Even Hollywood, it seems, will run out of other people's money eventually.
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Wednesday, July 29, 2009

NBC and SyFy: GLAAD to Meet You!

Two recent items show how desperate, and clueless, the broadcast and cable networks have become. First, the painfully bad "Heroes" on NBC will have star Hayden Panettiere taking on a lesbian role, capitalizing on the acclaim and popularity of Lindsay Lohan. To be fair, the comic book version of "Buffy the Vampire Slayer" did that as well, and the stunt seems to have resulted in ... no appreciable jump in sales. Cliches such as lesbian kisses and storylines don't work (shows that have tried it such "the OC" and "Buffy" and "Ally McBeal" found no ratings jump). This will, however, make NBC more "GLAAD" friendly as the Gay and Lesbian Alliance Against Defamation will increase it's score-card next season for NBC. Lesbian stunts have a history in broadcast TV going back to the 1990's. The evidence is in: the stunts don't pull in viewers.

Next, SyFy Network, in a continuing effort to repel any remaining male viewers, has announced that they are adding three new gay characters.



When the Gay & Lesbian Alliance Against Defamation released its annual Network Responsibility Index, Syfy was among the networks receiving "Failing" grades for their depiction of lesbian, gay, bisexual and transgender (LGBT) characters.

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Looking ahead, however, Syfy's Stern touts two new series and the diversity depicted within.

"On Stargate Universe, one of the main female characters, we discover, is a lesbian and has a wife at home. It's a pretty important facet of who that character is," he says. ER alum Ming-Na plays intergalactic diplomat Camille Wray, while 24's Reiko Aylesworth recurs as her wife.

Similarly the Galactica prequel spin-off Caprica has at least two main characters depicted as being in gay relationships. "[One] is a 'goodfella'-type, and we discover in a nonchalant way that he is gay, with a husband," Stern says. "It was very interesting to me to take what is traditionally a very heterosexual role in an organization that we think of as being extremely homophobic, and put a gay character in that world in a very normalized way."

The other aformentioned Caprica character is part of a communal marriage featuring "heterosexual as well as homosexual couplings."


Syfy is not even trying to maintain male viewers. Straight men don't seem to find entertaining, gay mafiosas and even less, "communal marriages." Ratings are less important obviously, to Cable and Broadcast execs, than the good graces of groups like GLAAD. This is because, network execs are not concerned with ratings, as much as their next job, which will be producing somewhere. Pressure groups such as GLAAD can create enormous stinks, and negative publicity, limiting an exec's future employment as a producer at various production companies, and his ability to find partnerships. Particularly with Gays having a disproportionate influence, compared to their numbers in the population at large, in producing film and television.

Thus, TV and films are increasingly produced not to create an audience or make money, but create jobs for executives who will be joining production companies afterwards.

This is a characteristic of a "bubble economy" with most energy being spent on managers and executives and middle men looking for their next job or money-making assignment, and not actually making money on the current job. Like all bubbles, this too will come to an end, and there are signs coming that the traditional way people see Television and watch movies, i.e. TV sets at home and movie screens at the cinema or cinema-plex, will change radically. This in addition to piracy, at home and abroad, eroding DVD sales volume and prices, and pressed, budget wary consumers, has the potential for winnowing out networks like Syfy or NBC.

Currently, NBC (which unsurprisingly owns SyFy) doesn't care about ratings as much as cable operator fees. Cable and satellite operators must pay SyFy a fee for every subscriber who watches SyFy.* [*I goofed on this one, thanks to poster "Pro Male" for pointing this out, rather cable operators must pay for any household that purchases a package that has the cable channel on it. Naturally this makes being part of the limited basic package a bonus since everyone subscribing will get it. Examples being Discovery Network, USA, etc. It's not a pay-per-viewer, but rather per household that subscribes to the channel, and SyFy is as far as I know, a basic package in most cable and satellite operators offerings. Thanks again to poster "Pro Male." ] This income stream has been remarkably robust and growing, but all good things come to an end. Technology threatens to drop a load of bricks on the delicate model that Hollywood depends on, leaving aside basic economic issues such as keeping cable in a recession for many consumers.

And no, it won't be the "Long Tail" either. More on that soon.
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Tuesday, July 28, 2009

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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