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On newspapers – Time (Inc.) for a shift in strategy

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It’s no secret that the publishing industry is struggling mightily as customers shift from paying for physical newspapers and magazines to reading information online, often for free. The shift has caused ruptures among other places at that bastion of French journalism, Le Monde, with the recent exit of the editor as staff rued the switch to online. So-called ‘lad’s mags’, the FHMs and Loaded magazines of the world, have been hit particularly hard, as the family PC and dial-up internet gave way to personal, portable devices and broadband connections, which provided easier access to more salacious content than the likes of Nuts could ever hope to provide. FHM’s monthly circulation is down almost 90% from a 1998 peak, according to the Financial Times. Condé Nast have pushed bravely into the new digital era, launching a comprehensive list of digital editions of its wares when the iPad launched in 2010. More recently, the company launched a new venture, La Maison. In association with Publicis and Google, the idea is to provide luxury goods companies with customer insights as well as content and technology solutions. We’ve often written about the need for more rigorous customer insights in the world of luxury, so it’s refreshing to see Condé Nast innovating and continuing to look beyond newsstand sales. We’ve written about other ways publishers are monetising their content here and here.

Time Warner is not alone then in its struggles for new ways of making money from previously flourishing revenue streams. According to The New York Times, Time Warner will be spinning off its publishing arm, Time Inc., with 90 magazines, 45 websites and $1.3bn in debt. In 2006, the article reports, Time Inc. produced $1bn in earnings, which has now receded to $370m. Revenue has declined in 22 of the last 24 quarters. This kind of move is not new. Rupert Murdoch acted in similar fashion recently when he split up News Corporation, creating 21st Century Fox. But with the publishing side of the business there were some diamonds in the rough for investors to take interest in; a couple of TV companies, as well as of course Dow Jones’ Wall Street Journal, which has been invested in heavily. Conversely, the feeling of the Time Inc spin-off was more one of being put out to pasture, particularly as the company will not have enough money to make any significant acquisitions. Like the turmoil at Le Monde, there have been managerial controversies, as those seeking to shake things up have tried to overcome historical divisions between the sales and editorial teams – something other large business journalism companies are reportedly struggling with – only to be met with frustration.

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Setting that aside, Time Warner moved swiftly. A day later, the FT reported that the company was “finalising an investment” in Vice Media. We have written extensively about Vice previously, here. The company certainly seems to know how to reach fickle millennials, through a combination of interesting, off-beat journalism, content designed to create its own news, as well as compelling video documentaries that take an unusual look at topical subjects. Such an outlook however does not preclude it from partnering with corporations. As a millennial myself, it seems what people look for from those like Vice is authenticity, rather than the vanilla mediocrity arguably offered by others. We don’t mind commercialism as long as it’s transparent. It does not jar then when Intel is a major investor in its ‘content verticals’, or when last year 21st Century Fox invested $70m in the company. This bore fruit for the movie studio most recently in a tie-up promoting the upcoming Dawn of the Planet of the Apes. The sequel takes place 10 years after the 2011 film, and Fox briefed Vice to create three short films that would fill in the gaps. A great ploy, and the result is some compelling content to keep fans engaged in the run-up to the film’s release, particularly in territories where the film opens after the US market. Such activity is far beyond the purview of the traditional newspaper. But this is not necessarily a bad thing. Publishers must face up to the reality that newspapers alone will not deliver enough revenue to be sustainable. Seeking other content revenue streams while engaging in strategic partnerships with other companies looks, for now, to be a winning formula.

UPDATE 08/07/14: When it comes to engaging with millennials, mobile is most definitely the medium of choice. The FT reported today on Cosmopolitan magazine’s 200% surge in web visitors, year on year in May. Fully 69% of page views were from mobile devices (compared to a 25% average for the rest of the web). The publication has also wised up to the type of content this group likes to consume, as well as create. Troy Young, Hearst’s president of digital media, said the new site is “designed for fast creation of content of all types… Posts aren’t just text and pictures. They’re gifs, Tweets, Instagrams.” Mobile will only get the company so far though. PwC thinks US mobile advertising spending will account for only 4.6% of total media and entertainment advertising outlays this year. Cosmo is looking beyond mobile though to “exclusive events or experiences”, perhaps along the same lines as those other businesses are practicing who are looking for additional revenue streams. The article suggests users might “pay to see the first pictures of an occasion like Kanye West’s and Kim Kardashian’s recent wedding”. Beggars can’t be choosers.

UPDATE 10/07/14: Have all these corporate manoeuvres on the part of Time Warner been in the service of making itself appear an attractive acquisition? As the famous and clandestine Sun Valley conference takes place this week, rumours abounded that Google or 21st Century Fox were both interested in buying TW. This according to entertainment industry trade mag Variety, which commented, “Time Warner could be an attractive target. Moreover, unlike Fox or Liberty Media, it is not controlled by a founder or a founder’s family and with a market cap of $63.9 billion it is a relative bargain compared to the Walt Disney Co. and its $151 billion market cap”.

Regulating in the face of digital disruption

April 30, 2014 1 comment

peter-c-vey--these-new-regulations-will-fundamentally-change-the-way-we-get-around-the…-new-yorker-cartoon_i-G-65-6596-IDO2100ZHaving studied policy and regulation at university, Zeitgeist is often compelled to look at many issues facing companies today through a regulatory lens. But even the most dispassionate fan of rules and laws would have to concede that as digital innovation disrupts multiple sectors around the world, the way these new innovations and businesses are governed is an important consideration. In this piece we’ll be looking at regulatory concerns for disruptors like Uber and Netflix, as well as how regulation effects legacy companies like Microsoft and Comcast. As with many of our articles on this blog, we’ll be taking a particular look at the TMT sector. (Bitcoin will have to wait for another article).

Regulators often find themselves caught between a rock and a hard place. Should the emphasis be placed ex-ante, to ensure compliance, or ex-post to apply punitive measures and fix problems once they have become apparent? The former seems wise as it sets initial goals for companies. But it also risks opening loopholes, as well as being overly prescriptive and thus failing to adapt. It can also lead to the development of overly-familiar relations between regulator and industry, leading to what is known as ‘capture’. Currently, the US favours an ex-ante approach, but as Edward Luce detailed recently in the Financial Times, this has led to a “creeping impulse to micro-regulate“. The FDA’s recent announcement that they would regulate e-cigarettes, despite no proof it encourages the take-up of smoking tobacco, is such an example. Ex-post – regulating after an event – seems just as bad, mostly because the damage has already been done at that point. While it means that all problems addressed are real-world and practical, they can also be applied with too much emphasis. Above all, regulation ultimately risks stifling innovation; Edison moved to the West coast because he was fed up of the stringent regulations in the East. A recent lead article in The Economist asserted that, far from too little regulation, the global recession was caused by too much state involvement in the wrong places. Too little oversight though, and companies can be allowed to run wild.

Earlier this month, The New York Times featured an op-ed on regulating the online world. It is written by New York State attorney general Eric Schneiderman. As might be expected, he quickly attacks online start-ups saying it is “amazing” that they think just because their business is online, that “somehow makes them immune from regulation”. This is all well and good, but it masks the fact that clear regulations have not been established. Schneiderman is right to point out that just because a business now has an app instead of a high street store doesn’t mean its responsibilities to the law have changed. It is an apt analogy. But in practice the story is different. As with most innovations, from film to Napster and Airbnb, regulators must constantly be playing catch-up. The complaints of new businesses are not that they should be subject to regulation, rather that those rules are onerous or outdated, applying to a different time. The sharing economy works because it has found cheaper, more efficient ways of offering services that hitherto were more restricted; regulations need to be appropriately dispensed. Sadly, many cities in the US have simply blocked allowing such services to operate. Uber – a car pickup service – is probably not wholly repulsed by the thought of regulation, but they are resistant to rules put in place by entrenched interests and unions. Airbnb might violate the letter of the law, but not the spirit surely. People have always let out their living space to others. The only thing that has changed is scale. Why does scale suddenly make something legally problematic? Schneiderman points out that some lettings are so large, with multiple rooms let at once, that they are essentially hotels. True enough, perhaps, but Zeitgeist has certainly never come across such a property, and they are certainly small in number, and no more represent Airbnb’s ethos than any hotel violating its own (regulated) terms. A recent article in The Economist argued for “adaptation, not prohibition“. Schneiderman’s sentiment is that these start-ups need to work more closely and proactively with regulators, but this fails to recognise that regulators need to also fundamentally change their approach.

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East and West shook up a regulatory framework with the recent release of “300: Rise of an Empire” via China’s Tencent website

Regulation in China has been a hot topic for a while now. This is principally because the region has a low tolerance of free speech. But it extends to cultural concerns as well; the Google Play store, Twitter, and most of Hollywood’s annual product do not make it onto Chinese shores (legally, anyway). What this creates is a secondary tier of companies who take Western business models and run with it. That’s why there are multiple Chinese Android app stores, why Sina Weibo is a fantastically successful service, and why many poor remakes of US films flood the Chinese market. It has been pleasing then to see two recent developments in the way China regulates the TMT sector that should be good news for consumers and Western companies. Today saw the announcement that Microsoft’s Xbox One is to be sold in China. It will be the first foreign games console to go on sale in the country, lifting a fourteen year ban. This would open up the company to the half billion active gamers in China. Additionally, as Michael Pachter, analyst at Wedbush Securities pointed out,

“The middle class in China is pretty large, and positioning the box as an over-the-top TV receiver gives it a lot of appeal to wealthier Chinese.”

Earlier this week, Warner Bros was the latest film studio to partner with Chinese site Tencent. The film 300: Rise of an Empire, is available to rent through the site, while it is still in cinemas in territories like the US. The points of the deal were very interesting. Zeitgeist has for a number of years now advocated an increased flexibility to film platform release windows. Such a rigid structure as the industry has in the US is not as apparent in China. This could help alleviate piracy in the country and separately could pave the way for a relaxing of the quota of US films that are let into the Chinese market every year. Hopefully this will be a precursor to more such moves in Western markets. As someone commented on the news when it was published on the Financial Times website,

“Maybe they can do the same in the rest of the world as well?
Or I could wait 2 months for something to come out on Bluray in the UK compared to the US. Or just pirate it when the US version is available since they won’t let me buy it in my country, but will let other people buy it in other countries.”

While China is taking steps forward, the US seems to be faltering in its regulatory approach. We mentioned the impending restrictions on e-cigarettes earlier, and let’s not even go into then-mayor Michael Bloomberg’s crusade against sugar. We’ve written about net neutrality before. The issue has been of interest to Zeitgeist since university days. It was thrust into the spotlight this year when a US court ruled that the FCC had “overstepped its authority” after a legal challenge from Verizon. Last week, new rules were proposed that will undermine the original purpose of the policy of treating all traffic the same, allowing ISPs to charge companies like Netflix more in order to reach consumer with greater quantity or quality, but only on “commercially reasonable” terms. These terms have yet to be defined. These moves touch on a related matter that has also been greeted with consternation by those who favour fairness. This is Comcast‘s proposed merger with Time Warner Cable. Netflix recently publicly came out against the move. It is easy to see why. As The Economist recently elaborated, such a deal would limit competition and reduce any incentive to innovate. It is also one more example of the assumption companies have that their problems can be solved with size. Comcast have admitted they will raise prices for the end user, while as much as conceding there will no be no discernible benefit to them. One might argue there is little more for such companies to do, but average internet speeds in Tokyo and Singapore are ten times as fast on average as in the US. Even the Financial Times, which can often be counted on to be a bastion of support for capitalists, compared Comcast to the Railway Barons of the past.

The sharing economy is creating difficulty for many sectors, and regulatory agencies have not escaped this. Such forces have been to slow to adapt to fundamental changes in the TMT sector, particularly in print, music and film industries. There certainly seems to be a tendency for over-regulation today, particularly in the US. Returning to an article we mentioned at the beginning of our piece, Edward Luce laments that America “no longer feels unusually free”. Perhaps this is part of a cyclical trend. Like the causes of the recession, perhaps the problem is a stifling caused by over-regulation in the wrong places, coupled with a lack of innovation in areas where sensible rules that do not cater to the established are in dire need. It is good to see rules and regulations around consoles and release windows are being relaxed in China, but the furore around regulating the sharing economy needs a similar dose of innovative thinking.

Tech’s impact on business and culture in 2014

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It would be impossible to capture the disruptive influence the latest digital technologies are currently having on the world in a single blog post. But what Zeitgeist has collated here are some thoughts and happenings showing the different ways technology is changing our lives – from the way we do business to the way we interact with others.

Last night saw a highly enjoyable occurrence. No, not the Academy Awards in general, which as ever moved at a glacial pace as it ticked off a list of predicted favourites. Rather, it was a specific moment in the ceremony itself, when host Ellen DeGeneres took a (seemingly) impromptu picture of herself with a cornucopia of stars, tweeting it instantly. The host declared she wanted the picture (above) to be the most retweeted post ever. The previous holder was none other than the President of the United States, Barack Obama, whose re-election message saw over 500k retweets. It took Zeitgeist but a few minutes to realise that Ellen’s post would skyrocket past this. Right now it has been retweeted 2.7m times. Corporate tactic on the part of Samsung though it may have been, Zeitgeist felt himself feeling much closer to the action – being able to see on his phone a photo the host had taken moments ago several thousand miles away – and the incident helped inject a brief air of spontaneity into the show’s proceedings. Super fun, and easy to get definitive results in this case on how many people were really engaging with the content. But can we quantify how much Samsung and Twitter really benefited from the move, beyond fuzzy marketing metrics? Talking heads on CNBC saw room for improvement (see below).

Former WSJ.com Managing Editor Kevin Delaney leads discussions on Samsung and Twitter's presence at the Oscars last night

Former WSJ.com Managing Editor Kevin Delaney leads discussions on Samsung and Twitter’s presence at the Oscars last night (click to watch)

The big news of late in tech circles of course has been Facebook’s $19bn acquisition of messaging application Whatsapp. Many, many lines of editorial have been spilled on this deal already. In the mainstream media, many commentators have found the price of the deal staggering. So it’s worth reading more considered views such as Benedict Evans’, whose post on the deal Zeitgeist highly encourages you to read. Despite the seemingly large amount of money the company has been acquired for – especially considering Facebook’s purchase of Instagram for a ‘mere’ $1bn – Evans sagely points out that per user the deal is about the same as Google made in its valuation when it purchased YouTube. So perhaps not that crazy after all. The other key point that Evans makes is on Facebook’s dedicated pursuit to be the ‘next’ Facebook, or conversely to stop anyone else from becoming the next Facebook. With a meteoric rise in members (see image below, as it outstrips growth by both Facebook and Twitter), Whatsapp was certainly looking a little threatening.

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Whatsapp’s number of active users skyrocketed to 450m in no time, outpacing both Facebook and Twitter (Source: The Economist)

The worry for investors is how Facebook will monetise this platform, when the founders have professed an aversion to advertising. Is merely ensuring that Facebook is the ‘next’ Facebook a good enough reason for such acquisitions? Barriers to entry and sustainable advantages will be few and far between going down this route. The Financial Times, in its analysis of the acquisition, points out that innovation is quickly nipping at the heels of Whatsapp. CalPal, for example, is one example of a mobile application that lets users message each other from within an app. In the markets, there has been a relatively sanguine response to the purchase, but only because of broader trends. As the FT points out,

“External forces have also helped to push the headline prices of deals such as WhatsApp into the stratosphere. A global excess of cheap money, along with a scarcity of alternatives for growth-hungry investors, has boosted the stock prices of companies such as Facebook and Google.”

One of the most visibly exciting developments in technology in recent years is the explosion of the wearable tech sector. But it is Google’s flagship product, Glass, that has met with much ire and distress. An excellent piece of analysis appearing in MIT Technology Review last month hit the nail on the head when it identified why Glass was having trouble winning people over. The article rightly identifies the significant shift in external appearance inherent in making the switch from a device that needs to be taken out of a pocket as makes it clear when it is being interacted with (you need to cover half your face with the product to talk to someone, for example). The article also details the savvy approach Google have taken to the distribution of their product. It’s always sensible to try and mobilise the part of your base likely to be evangelists anyway, so as to build advance buzz before a full-blown release. But to get them to pay for the privilege, as Google are doing with their excitable fans, dubbed Explorers, is a stroke of genius for them. However, the key issue, and what the article states is an “insurmountable problem”, is that “Google’s challenge in making the device a successful consumer product will be convincing the people around you to ignore it”. It is this fundamental aspect of social interaction that is worrying many, and now Google is worried too. As detailed in the FT, the company has acknowledged that the product can look “pretty weird”. Recognising it has a “long journey” to mainstream adoption, it published a list of Dos and Don’ts. Highlights include,

“Ask for permission. Standing alone in the corner of a room staring at people while recording them through Glass is not going to win you any friends… If you find yourself staring off into the prism for long periods of time you’re probably looking pretty weird to the people around you.”

It indicates that Google may have a significant ‘Glasshole‘ problem it needs to attend to. The case may be overstated though. One of the problems may just be that potential customers have yet to see any practical uses for it. This is beginning to change. Last week, Virgin Atlantic announced a six-week trial of both Glass and Sony smartwatches. The idea will be for check-in attendants to use the devices to scan limousine number plates so that passengers can be greeted by name and be instantly updated on their flight status.

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In the arts, digital technology has inspired much innovative work, as well as helped broaden its audience. David Hockney, one of England’s greatest living artists, recently exhibited a series of works produced entirely on his iPad at London’s Royal Academy of Arts. He is far from alone. Last week’s anniversary issue of The New Yorker featured work from Jorge Colombo on its front cover, again produced entirely on an iPad. Such digital innovation allows for increased productivity as well as new aesthetics. When done well, art can also involve the viewer, encouraging interaction. Digital technology helps with this too. Earlier in the year The New York Times covered how the New York City Ballet redesigned part of their floor in a new scheme to attract new visitors to the ballet. The result, roughly life-size pictures of dancers arranged on the floor, has seen great success, and an explosion of content on social media platforms like Instagram, where users have taken to posing on the floor as if interacting with the images (see above). It’s a simple tactic that now reaches a far greater audience thanks to new digital technologies.

A recently published book, ‘Now I know who my comrades are: Voices from the Internet Undergound’, by Emily Parker, seeks to demonstrate the ways in which digital technology has made helped to coalesce and support important activism in regions such as China and Latin America. But, as The Economist points out in its review, the disappointing situation in Egypt puts pay to some of the author’s claims; there are limits to how productive and transformative technology can be. In business, these hurdles are plain to see.  A poll taken by McKinsey published last month shows that “45% of companies admit they have limited to no understanding on how their customers interact with them digitally“. This is staggering. For all executives’ talk of the power of Big Data, such technology is useless without the proper structures in place to successfully analyse it. We also perhaps need to think more about repercussions of increased technological advances and how they influence our social interactions. In the recently opened film Her (starring Joaquin Phoenix, pictured below), set in the very near future, a new operating system is so pervasive and seamless that it leads to fraught, thought-provoking questions on the nature and productivity of relationships. When does conversation – and more – with a simulacrum detract from interactions with the physical world? These considerations may seem lofty, but as we illustrated earlier, the germination of such thoughts are being echoed in discussions over Google Glass.

So technology in 2014 heralds some promise for the future. Wearable tech as a trend is merely the initial stage of a journey where our interaction with computing systems becomes seamless. It is on this journey though that we need to make sure that businesses are making the most of every opportunity to streamline costs and enhance customer service, and that individual early adopters do not leave the rest of us behind to deal with a bewildering and alarming new way of living. One of our favourite quotations, from the author William Gibson, is apt to end on: “The future’s already here, it’s just not very evenly distributed“.

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TV’s bloody disruptions

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Last night, Zeitgeist eagerly devoured the first episode of the new season of Netflix‘s House of Cards, a series that has received lavish praise  – not least from us – both for its content and its position as vanguard of a new wave of television distribution, production and consumption. The series lead, Frank Underwood, takes on his competition with a ruthless lack of morality that is unlikely to jar with those in the cutthroat television industry. The New York Times recently featured an excellent piece on the series, focusing on the showrunner Beau Willimon, the unique nature of doing such a show with Netflix, which among other things guaranteed 26 shows upfront, and the new mood of “post-hope” politics. Is traditional linear TV entering its own post-hope state?

Such talk of impending doom makes for nice editorial (which Zeitgeist is not averse to), but how true is it? To some extent, such new forms of consumption are being hampered by externalities as the platforms make the switch from early adopters to the everyday consumer. Indeed, Netflix’s sheer popularity is proving to be a thorn in its side. In November last year, Sandvine reported that the content Netflix provides now accounts for almost a third of internet traffic in the US. This staggering figure no doubt accounts for at least part of why internet speeds take such a distinct hit during primetime viewing hours (see chart below). As Quartz has the insight to point out, such issues are less to do with intentional throttling and more to do with peering agreements between ISPs and content providers.

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Download speeds happen to take a significant hit right around the time people are looking to kick back with some Netflix

Such issues are likely to be ever more prevalent as the notion of net neutrality continues to come under attack. At the end of last month, a federal appeals court overturned the Federal Communication Commission’s Open Internet Order, which had stipulated that ISPs could not prejudice one type of internet traffic over another. The fear of any such policy being overturned has always been one of the creation of a two-tier internet, where people who can afford faster internet get preferential access, and companies are free to charge distributors differing amounts based on the type or amount of content they are delivering. Such consternation was also felt in government, where five US senators called on the FCC chairman to “act with expediency” to preserve the open internet. The news immediately caused concern for Netflix, as shareholders fretted that ISPs might start to charge the company for the traffic it takes up. CEO Reed Hastings responded categorically,

“Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.”

Consolidation and the narrowing of choice took a further hit on Wednesday this week when Comcast announced it would buy all of Time Warner Cable for $44.2bn. The choice on cable landscape is already limited for the US, so it will be interesting to see what regulators make the deal. Chad Gutstein, former COO of Ovation, an independent arts-focused cable channel, penned an article in Variety saying that any concerns over the deal should be restricted to the possibility of abuse of a dominant position, rather than simply market share.Columbia Law School professor Tim Wu, writing in The New Yorker, rightly points out that the FCC should be approving such mergers only if they serve the public interest. He sees no such possibility in this instance, where the most pressing need for cable customers is lower prices. Last year, he writes, Comcast collected about $156 a month on average, per customer. For cable. Professor Wu contends that the merger would put Comcast in a position that would make it easier to raise prices further. This, despite the fact that conditions created via the merger would technically put the company in a position where it could create savings, both through economies of scale and more advantageous negotiating positions with programmers like ESPN and Viacom. Of course, Comcast is probably keen on preserving if not extending margins as it faces increasing competition from players like Netflix and Amazon. Cord cutting may be in vogue now, but Comcast will try to combat this by creating what is called ‘lock-in’. Craig Aaron, president of Free Press, a consumer advocacy group, is quoted in the New York Times; “Comcast and the new, giant Comcast are going to do as much as they can to stop you from unbundling. In order for you to get content you like, you’re going to be pushed to pay the cable bill, too”. Such tactics will test the limits of customer inertia, but only if they have somewhere else to go as a viable alternative.

The switch to online viewing is also raising issues of policy change in the UK. Public service broadcaster the BBC has long left it unclear as to at what point requiring a TV licence is mandatory, leaving citizens to infer that simply owning a television set is reason enough. Recently though, the broadcaster finally clarified that owners can use their TV, with no fee, to play games, watch DVDs, basically do anything that doesn’t involve watching live television. For the moment, this also includes their IPTV offering, iPlayer. In an article earlier this month, The Economist said the fee was “becoming ever harder to justify”. Antonella Mei-Pochtler of the Boston Consulting Group, quoted in the article, believes the increasing trend of young people to timeshift their viewing is likely to become ingrained. Coupled with the growth of internet-connected TVs, this is bound to accelerate a shift away from traditional linear consumption. The BBC is soon to begin developing premium content for its iPlayer service in order to seek additional revenue streams that may offset a decline in fees paid. But as The Economist points out,

“[T]hat would suggest, dangerously, that the BBC is like any other optional subscription service. Folding on-demand services into the licence fee could also amplify calls for the BBC to share its cash with other broadcasters, not least because such consumption may be precisely measured.”

When we look at the market for television sets and set top boxes, the news isn’t that superb either. The curved TVs debuted at CES in January are surely little more than a distraction. Last week, Business Insider reported that Sony is to finally spin off its TV operations into a separate unit, amongst news of $1.1bn in losses and 5,000 job cuts. But while we’ve talked of consolidation and narrowing choice, we also need to recognise this is also a period of unprecedented choice for consumers. As a recent article on GigaOm points out, there are millions of channels on YouTube alone. There are growing pains. As consumption of such content moves “to the living room”, the article details various sub rosa negotiationsby retailers like Walmart with their own video market, or players like Netflix willing to pay top dollar to put branded buttons on remote controls. What is clear, with all the issues described in this post, is that consumer choice needs to be preserved in an open market with plenty of competition. Such an environment will always foster innovation. This may breed disruption, but that doesn’t have to mean devastation. The age of linear TV viewing may be at the beginning of its end, but that doesn’t mean there’s still a lot to fight for, even if it’s a scrap. Frank Underwood wouldn’t have it any other way.

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Netflix has similar revenues but lower earnings than HBO, for now.

UPDATE (22/02/14): The New York Times published an interesting article comparing Netflix and HBO recently, showing how the two companies are faring financially (see image above), as well as their approaches to developing content, which started off as opposing ideologies but are slowly starting to meet in the middle as they borrow from each other’s playbook. The article quotes Ted Sarandos, Netflix’s chief content officer: “The goal is to become HBO faster than HBO can become us.”

UPDATE (22/02/14): Of course, commercial network television in general is also going through a period of consternation, slowly building since the day TiVo started shipping. At the end of last year, the Financial Times reported that share of advertising spend on television is set to end after three decades. This is partly due to a proliferation of new devices and platforms – not least of which is Netflix – but also partly due to the amount of people time-shifting their viewing and skipping through the ads along the way. Thinkbox, a lobbying arm for the television industry, recently published a blog article with accompanying chart. It illustrated how many people time-shifted a particular programme depending on the genre. For example, fewer people time-shifted the news than drama shows. But one of the key points made in the article is “that there is no significant difference in the amount of commercial TV which is recorded and played back compared with BBC equivalents. To put it another way: TV is not time-shifted in an attempt to avoid ads”. This is specious reasoning at best. While it may be true that, yes, people do not discriminate between whether they time-shift a BBC show or an ITV show, it would be totally wrong to infer that those viewers are not avoiding ads when they do appear. The article’s author is guilty of confirmation bias, not to mention grasping at straws.

Threats and Opportunities for the Entertainment Industry in 2014

January 11, 2014 1 comment

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At the start of a new year, what to make of the entertainment sector? It depends where you look. One thing is for certain though; at the close of 2013 that old laggard the music industry upstaged its media cousins. For sheer daring and innovative nous, few initiatives could claim to beat Sony in its launch of Beyoncé’s new album. In the face of increasingly ailing streaming services, the album was released as a fixed bundle on iTunes, with no marketing behind it. The news of the release thus came as a last-minute surprise to the industry and consumers alike, creating a short but extreme burst of anticipation. The artist posted a message on Facebook saying she wanted to recreate the “immersive experience” she used to have listening to music. The album sold 80,000 copies in three hours. It is difficult to envision Sony’s film division at Columbia Pictures doing anything similar.

Near the end of last year, Zeitgeist was fortunate enough to be able to attend the 5th Annual GlobeScreen Conference at London’s May Fair Hotel. Eve Gabereau, the co-founder and MD of Soda Pictures lamented “nurturing a film is not possible any more… there is less opportunity for a film to find its audience”. Word of mouth, she said, had to be very good, and happen very quickly, in order for it to have an effect. Simon Crowe, founder and MD of SC Films International, disagreed with another speaker, who asserted that filmmakers were being hampered by a lack of data, in that they did not know who they were making films for. He dismissed the need for data, and, most worryingly, stated the primary focus should not be on the bottom line. This is dangerous thinking. Films may be art, but if the medium is to continue then it needs to be profitable. So the primary focus has to be ‘How will this product turn a profit?’. Zeitgeist asked him afterward about the viability of VOD (video-on-demand) as a channel; Crowe was not optimisitic about its future as a significant revenue producer, calling films that have found success on such platforms – such as Arbitrage and Margin Call – outliers. Zeitgeist offered that Netflix had not been considered a significant distribution channel for a while, until suddenly it was. Did he foresee a similar situation with VOD? “Don’t know”, was his retort. It was well worth staying late to receive such gems as answers. The whole conference spoke of an ignorance of the insight data can provide, a shunning of profit-focused management, and a general yearning for bygone times when the industry – not to mention the champagne and other substances – was flowing more freely.16-old-hollywood-is-dead-and-old-tv-is-dyingSuch anecdotal frustrations found company in the form of hard data. To cap off 2013, Business Insider published an article entitled ‘The US 20: Twenty huge trends that will dominate America’s future’. Number 16 was ‘Old Hollywood is dead…’. It noted that inflation-adjusted box office receipts were down around 8% from their 2004 high (see chart). Industry trade mag Variety reported recently that UK box office fell 1% in 2013, which was the first drop in ten years and the biggest in more than twenty. Of course, part of the reason for this was because 2012 had a rather suave helping hand from James Bond, in the form of Skyfall. When Zeitgeist prodded Cameron Saunders, Managing Director of 20th Century Fox UK, about the news over Twitter, he was quick to leap to into the fray, noting that it was “still the second biggest box office year on record”. He also went on to concede though that “UK admissions however have flatlined, despite lots more films = fewer people seeing each movie”. The same scenario is happening in the US. China is one of the few bright spots in the world of film, and has seen an explosion in the number of physical screens installed in the country over recent years. But even the Chinese film industry has medium to long term challenges it will need to overcome, if, as some predict, it is to become the world’s largest film market – overtaking the US – by 2019. It is still at the mercy of a government with strict controls and vague whimsical notions about what makes for permissible content; the state is involved at almost every level of production and distribution. Moreover, though the quota on foreign releases in the market has been relaxed slightly, it is by no means open season for Hollywood. In much the same way as the banning in China of Google’s app service and videogames consoles led to poor knock-offs, so with film. The restrictions have spawned poor remakes of American films that didn’t see a release on China’s shores, which inspires little creativity or excitement.

It was not all doom and gloom in the cinema of late of course. Gravity continues to light up screens across the world, and seems poised to do well come Oscar night. Its only obstacles come in the form of other films that critics and audiences have been similarly impressed with this season, including 12 Years a Slave and Captain Phillips. But such artistic achievements can hardly make us forget what was a poor summer for the film industry. We have written before about how films in development are increasingly either mega-blockbusters or niche arthouse films. Producer Kevin Misher, talking to The Economist last month, echoed our thoughts; “Hollywood is like America: the middle class has been squeezed”. The article went on to lament the unique situation the film industry finds itself in, relying on outsiders for both ideas (“imagine if Apple or Toyota did this”) and funding.

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Will more content producers partner up with those infringing intellectual property?

The challenges extend further. Though Kodak suffered from other problems too, one of the things that prevented it from ever laying down a long-term strategy to embrace digital photography was the revolving door of executives at the top. Hollywood is similarly afflicted. In the past 18 months, according to The Economist, four of the six main studios have seen change at the top. Perhaps some longevity in senior roles would have encouraged these companies to embrace new ways of delivering films to eager customers. Instead, most films, particularly the ones glutting the summer schedule, still cling to an outdated distribution strategy of staggering releases across platforms. Studios resist doing this – save for the odd arthouse release – because it risks the ire of exhibitors. We’ve written before about the antiquated nature of such thinking. Every delay in getting to a consumer increases the chances that customer will resort to piracy. Companies like Netflix are reporting that intellectual property rights infringement dips once legal alternatives are made available to people; there are signs of hope.

Piracy is of course playing a role in television, too. In Poland, consumers have to wait months after the US broadcast for their dose of Homeland. It is thus one of the more popular shows to be pirated. Making the most of this trend, a publishing company responsible for a new book detailing Carrie’s life before the start of the series has been inserting adverts into the subtitles for the show. The MD of the publishing company told TorrentFreak, “We decided to advertise via subtitles because we wanted to show the book to all the fans of the Homeland series in Poland, no matter where they watch the show”. You can’t argue with placing a promotion for where you know your likely customers are. It will be interesting to see if any other unlikely coupling between pirates and content producers emerge. For, as amusing as this news is, it does point to a fragmentation in audiences, and thus in places for advertisers to reach them. It should have come as little surprise then when, last month, the Financial Times reported that TV’s share of advertising spend will slip this year, after three decades of uninterrupted growth. Jonathan Barnard, ZenithOptimedia’s head of forecasting, warned, “After television ad spending has grown pretty consistently for at least the last 35 years… there will be quite a lot of disruption to come over the next 10 years.”

Of course, disruption will come to other sectors of the entertainment industry, too. This was apparent at the recent Consumer Electronics Show in Las Vegas, where Samsung and Sony, among others, held court. It wasn’t the best of showings for Samsung, where famed producer / director Michael Bay walked out seconds into a presentation on curved televisions after the autocue failed. Sony had its disruptor product to tout, a cloud TV service. Beyond the glitz and glam of such new product releases, a big question remains: Can Sony use what assets they have and combine them effectively? A great article in the FT probed deeper, asking whether all these new products and services – we would be remiss were we not to mention the PS4, currently outstripping the Xbox One in sales – can be successfully integrated into an ecosystem that Sony is desperately trying to create. The corporation dabbles in film distribution, film production, smartphones, music as well as videogames and is slowly trying to tie them all together. All this while seemingly trying to disrupt itself, with cloud gaming doing away with the need for a console and image projectors doing away with the need for physical screens (Sony loses about $80 on every set it sells currently). As the article concludes,

“[CEO] Mr Hirai is trying to pick up the pace as Sony searches for its digital destiny. But the familiar questions remain: can it execute on the plan, how fast can it move – and how much pain is it prepared to take along the way?”

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Where next for Sony?

Certainly if companies like Samsung and Sony wish to succeed in the coming years, they will have to do away with the obsession of focusing on hardware. It is plain now that, in consumer’s eyes, technology has reached a tipping point where the specifications of an object are no longer a unique selling point; they are a redundancy. This became clear at the Mobile World Congress in 2012, when PC Magazine published its event wrap-up under the headline “The End of Specs?”.

There are some companies that are embracing disruption, or at least, trying to hire those who started it in the first place. Disney, which often seems to have a strong strategic head on its shoulders, recently made the eminently sensible move of hiring the chairman of Twitter Jack Dorsey to join the Walt Disney board. This was no isolated occurrence for Disney, who had previously had Steve Jobs on the board and who have also hired Facebook COO Sheryl Sandberg. Elsewhere, the canny Weinstein brothers, who rarely miss an opportunity to make impressive artistic works that turn a decent profit, reteamed with their old company Miramax to develop further iterations of their film library. Seeing the opportunity for increased creativity in television, as well as new channels like Netflix and Amazon, they will also be developing new television series. And while online takes away advertising spend from other channels under the promise of reaching the right people at the right time, new local television development in the UK promises to do similar as it targets localised areas. Still, the film industry as a whole seems to be outright resisting any changes to the calendar; schlock in the summer sun, followed by arty pretense come Oscar time. Repeat. A writer in the New York Times elaborates,

“And then, after the Oscars, the machine picks up speed and starts excreting ghastly product like Oz the Great and Powerful, one of the worst movies of 2013 and the eighth highest domestic grosser of the year. Then the fall hits, and we cling to movies like Gravity and insist that, really, it isn’t all bad. And it isn’t, of course, even if creating a Top 10 list is finally an exercise in exceptionalism.”

The worry is that any shift in the schizophrenic nature of film scheduling and creation will probably involve at least a short-term hit to the bottom line. And a recent dismissal hints that no such shift is underway at the moment. In October, the great James Schamus of Focus Features was let go by Universal. Schamus was instrumental in bringing director Ang Lee to the US, distributing his Crouching Tiger, Hidden Dragon before going on to make The Pianist, Far From Heaven and Brokeback Mountain, among many other extraordinary films. Doug Creutz, senior media and entertainment analyst for Cowen & Company, told the New York Times in December,

“The major media companies are so big that nothing but a blockbuster really makes sense. Say you make a low-budget comedy and it brings in $150 million. So what? That doesn’t move the needle. You make a blockbuster… You can do the sequel and the consumer products and a theme park attraction. The movie itself is almost beside the point. All Disney is going to be doing is Marvel, Star Wars and animation.”

That would be a great shame for those who like artistic diversity, as well as sensible financial returns, in their film studio output. Current business models seem to be producing diminishing returns. This is true for videogames, movies and music. Experimentation, such as that by Sony’s music division mentioned at the beginning of the article, must be more widespread to engage with new consumer habits and to rekindle jaded minds. Consumer engagement and feedback as a whole is largely missing from much of the strategy with which the entertainment industry steers itself. Shareholder returns and operational logistics occupy most of their time. A far more rigourous approach to data – collecting and analysing it – and a more open ear to one’s customer base, might prove beneficial.

“Lots and lots of files” – Privacy, data and a new currency

December 28, 2013 1 comment

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One of the seminal television shows of the 1990s, The X-Files played on myths, legends and government paranoia to worldwide critical and popular acclaim. One of the key episodes of the series found the lead characters, FBI agents Mulder and Scully, happening upon an abandoned mining facility. Contained inside were row upon row of filing cabinets. Inside, thousands of names spilled forth. The sheer number of file drawers is a visual feast for the viewer. But there is more; one of the agent’s names is in those files. Personal data on her (in the form of a tissue sample) has been taken without consent. Down the rabbit hole we go…

We have always operated under the assumption that governments must surveil in order to protect its citizens. The difference today, as Edward Snowden has so plainly shown, is firstly that you are the one being watched, and secondly that the sheer extent of the surveillance and the pervasive nature of its collection is staggering. The pervasiveness of all this is a key point. Not much in the way of policy has changed really in the past fifty years, it’s just that spying on swathes of the world’s population has become increasingly easier and cheaper. Back in 2006, the UK’s Information Commissioner’s Office warned that the country was moving “towards pervasive surveillance”. Such a prophecy seems to have turned into reality. It creates an uncomfortable feeling that those in charge do not have our best interests at heart, or at least that the ends do not justify the means.

Some of the finest publications in the world have been struggling to make sense of what all this means; Zeitgeist is using this post to highlight some of those key thoughts and issues covered. Back in September, The New York Times reported, paradoxically,

“Even agency programs ostensibly intended to guard American communications are sometimes used to weaken protections. The N.S.A.’s Commercial Solutions Center, for instance, invites the makers of encryption technologies to present their products to the agency with the goal of improving American cybersecurity. But a top-secret N.S.A. document suggests that the agency’s hacking division uses that same program to develop and ‘leverage sensitive, cooperative relationships with specific industry partners’ to insert vulnerabilities into Internet security products.”

Zeitgeist remembers dining alone in New York in September poring over the news. The NSA tried to ask for permission to legally insert a ‘backdoor’ into all digital encryption, but were denied. So they went ahead and did it anyway. They influenced government policy that led to fundamental weaknesses in encryption software. Last week, a federal judge considered the constitutionality of the US’s surveillance programmes. He called the technology used by the NSA “almost Orwellian” and ordered it to stop collecting the telephone records of two plaintiffs. It is one of several cases currently underway.

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Click to see The New Yorker’s infographic on what personal data is made available to social networks and their advertisers

Of course, such spying would have not have been possible without the consent – tacit or otherwise – of companies in the private sector. There is clamor in the US, UK, Brazil and other countries for more restrictive regulation that makes it harder to collect consumer data. Such policy could make data analysis and collection onerous and might have a significant impact for those businesses that make a living out of using such data. As The Economist puts it,

“Should all this make it harder and costlier for companies to gather information, that would hurt the likes of Facebook and Google, which depend on knowing enough about their customers to ping them with ads that match their tastes.”

The New Yorker recently featured a fascinating article complete with unnerving infographic (excerpted image above) showing just how much information we display on our various social networks is then shared with the platform and its advertisers. This month, a new film, Her, arrives in cinemas, from the director of Being John Malkovich. The heroine is a disembodied voice – acted by Scarlett Johansson – who serves as operating system. The line between her servitude and rapid consumption of all her user’s data quickly becomes blurred. As the reviewer Anthony Lane puts it, also for The New Yorker,

“Who would have guessed, after a year of headlines about the N.S.A. and about the porousness of life online, that our worries on that score—not so much the political unease as a basic ontological fear that our inmost self is possibly up for grabs—would be best enshrined in a weird little [film]?”

Unsurprisingly, the results of a recent YouGov poll in the UK showed consumers were now far less willing to part with their own data. Almost half would be less willing to share their personal data with companies in the next five years. A mere 2% said they would be more willing to do so. Part of the problem lies in a lack of transparency: who is using my data, which piece of information exactly, and how does it benefit them? More importantly, what am I getting in return for surrendering my data? Steve Wilkinson of Ernst & Young offered little in the way of cheering news, “Many customers have recognised that businesses are using their personal information to help increase revenues, and are starting to withdraw access to their private data… In spite of this, there is a reluctance to adopt incentives that encourage consumers to part with personal data”.

Writing in the FT yesterday, Evgeny Morozov penned an excellent article claiming the media was spending far too much time on the intricacies of government involvement rather than how the whole cocktail mixes together. The overreach, according to the author, is being treated as an aberration, that will disappear in the face of tighter controls and the harsh light of day. It should instead, Morozov argues, be treated as part of a worrying trend in which “personal information – rather than money – becomes the chief way in which we pay for services – and soon, perhaps, everyday objects”. The article continues,

“Now that every piece of data, no matter how trivial, is also an asset in disguise, they just need to find the right buyer. Or the buyer might find them, offering to create a convenient service paid for by their data – which seems to be Google’s model with Gmail, its email service… [W]e might be living through a transformation in how capitalism works, with personal data emerging as an alternative payment regime. The benefits to consumers are already obvious; the potential costs to citizens are not. As markets in personal information proliferate, so do the externalities – with democracy the main victim. This ongoing transition from money to data is unlikely to weaken the clout of the NSA; on the contrary, it might create more and stronger intermediaries that can indulge its data obsession.”
Morozov also questions the meaning behind such data, as Zeitgeist has done in a previous article. Such information risks becoming seen as an objective answer without providing a solution or insight.
“Should we not be more critical of the rationale, advanced by the NSA and other agencies, that they need this data to engage in pre-emptive problem-solving? We should not allow the falling costs of pre-emption to crowd out more systemic attempts to pinpoint the origins of the problems that we are trying to solve. Just because US intelligence agencies hope to one day rank all Yemeni kids based on their propensity to blow up aircraft does not obviate the need to address the sources of their discontent – one of which might be the excessive use of drones to target their fathers. Unfortunately, these issues are not on today’s agenda, in part because many of us have bought into the simplistic narrative – convenient to both Washington and Silicon Valley – that we just need more laws, more tools, more transparency.”
Touching on similar points and themes, the most enjoyable recent article on the subject was written by famed author Margaret Atwood for The New York Times earlier this month. It had recently emerged that intelligence agencies had been using MMO games like World of Warcraft in an attempt to discover terrorists and other less enjoyable parts of the internet. Atwood has predicted just such a thing in her books, written some twelve years ago. Atwood struggles to make sense of her thoughts coming to life, wondering whether to treat it as comedy or tragedy. She elaborates, crystallising all our fears about the empty truth behind data,

“I hope for the comedy… I suspect the horror. Possibly in the future you’ll no longer be permitted to be who you think you are, or even who you’re pretending to be: You will be who they say you are, based on your data-mined, snooped-upon online presence. You’ll be stuck with that definition of yourself. You won’t be able to take off the mask.”

Such disconcerting thoughts on having your own personality dictated to you might once have been the stuff of science-fiction, apt for an episode of The X-Files. Besides adages of truth being stranger than fiction, the clarion call of these publications appears to be that people should be sitting up and taking notice of what has been going on over the last ten years with extensive policy / data / consumerism creep. It is not just the NSA, but the way society intertwines information for monetisation that must be scrutinised if we are to avoid having to worry about trivial things like playing videogames in peace.

Ski-chic Strategy – Moncler, North Face & Canada Goose

Interesting video from the FT on Moncler, above. London’s more tony neighbourhoods of Chelsea and Belgravia have seen an explosion of thick down jackets over the past three years, mostly colourful, all with the same logo on them. They are worn as much by macho Eurotrash as Yummy Mummies. The brand is seemingly reaching a tipping point, where exclusivity leads to a bling reputation, where mass acceptance is quickly followed by mass exodus. La Martina has done a good job of steering clear of such waters, as we reported on in a state of retail article. While Moncler considers its IPO and a strategy for selling hot coats in Hawaii, North Face takes a completely different tack, embracing its mass appeal while still communicating an aspirational feel by showcasing the demanding professionals who use their apparel. Canada Goose, another recent entrant into the winter sportswear / city chic market, has also seemed to have had a burst of popularity recently. Zeitgeist saw no fewer than a dozen such coats around Soho and Chelsea this past weekend. An interview with the CEO of the company earlier this year described the strategy thus: “By focusing on the made-in-Canada, used-in-Canada story behind the coats, people would clamour for them.”

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Twitter activity already points to Moncler having a ‘bling’ reputation. Investors will be hoping this can this be nipped in the bud before it is too late.

It will be interesting to see what happens to Canada Goose as it develops; whether it will try to emulate the more ritzy path of Moncler or the performance-related one of North Face. Zeitgeist doesn’t see many people in Europe on the ski slopes wearing Moncler, and doesn’t see many players on the polo field wearing La Martina (unless they are a sponsor). North Face, on the other hand, seems to have a deeply-seated place among hikers and skiiers, particularly in North America. Time – and a sound strategy – will tell whether Moncler retains its exclusive airs.

Monetising the Arts – Fundraising and cultural collisions

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A promotional still for The Met Opera’s season opener, ‘Eugene Onegin’, which debuted to a blizzard of protest and outrage.

Damien Hirst divides the art world. No one thinks him a good artist, of course. But there are those who despise him for his commercialism, and those who recognise the ingenuity of the man and his innate sense of self-promotion and salesmanship. The apotheosis of this was undoubtedly Beautiful Inside My Head Forever, the infamous Sotheby’s auction held on the eve of the global recession. The diamond skull that was the centrepiece of the auction was described as a “vulgar publicity stunt” by The Economist. In the auction’s aftermath, the market for his works “bottomed out”; sales performed poorly versus the contemporary art market as a whole (see chart below). Despite such schadenfreunde, it was satisfying to read a positive review for the artist’s new retrospective, “Relics”, which opened last month in Doha. The exhibition is part of a major push by Qatar to make itself culturally relevant abroad. Indeed, the physical context in which the pieces are set do apparently allow the viewer to judge them anew, without all the tabloid baggage the artist’s works usually bring with them. But concessions have had to be made too:

“In a country where Muslim clerics hold sway, the titles of these works, many of which feature the word “God”, have not been translated into Arabic. Mr Hirst sees the sense in this, admitting that he wants his art to be “provocative in the right way”. Nudes are also virtually banned from public view.”

In an increasingly homogenised culture – by which we simply mean one where content from one nation is easily accessible and ultimately transferable to another – what does being “provocative in the right way” mean?

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In New York, such questions were similarly asked in recent months, in particular at the city’s two opera houses. One, the New York City Opera, recently filed for bankruptcy. The house has long been suffering from financial difficulties, and despite a last-minute Kickstarter campaign that raised $300,000+ in a short space of time, the curtain will fall on this institution. Its strategy seemed sound – to not be, rather than to beat, the competition, in this case the Metropolitan Opera. In pursuing this end, they often used American singers and often produced avant-garde works, the most recent and famous of which was undoubtedly Anna Nicole, about a Playboy model who captured the hearts of America’s flyover states before meeting her tragic end. Such courage should be commended, and in a just world, rewarded, but sadly it was not to be. Indeed, the City Opera lost its biggest donor entirely because of this production.

The other of New York’s opera houses, The Metropolitan Opera, a stalwart of tradition, is battling with political ramifications that are happening thousands of miles away. In June this year, in another blow to any sense of fledgling democracy in Russia, President Putin signed into law an act that restricted discussion or promotion of homosexual acts, labelling such things “propaganda”. The New York Times cites one Anton Krasovsky, “a television anchor who was immediately fired from his job at the government-controlled KontrTV network in January after he announced during a live broadcast that he is gay, saying he was fed up with lying about his life and offended by the legislation”. Such news quickly became internationally relevant when mixed messages came from the Kremlin as to whether openly gay athletes would be welcomed at the Sochi Olympic Games next year. Boycotts are being considered. Just as there are openly gay people in sports, so in the arts. The controversy settled on the Metropolitan Opera as it prepared to launch its new season with Tchaikovsky’s Eugene Onegin. The new law, the almost universally acknowledged fact that the composer was homosexual, as well as the presence of talent (soprano Anna Netrebko and conductor Valery Gergiev) that were known Putin sympathisers, served to create a perfect storm. It was not long before opera fans were pleading with the Met to dedicate its opening night performance in support of homosexuals. Gergiev, an indisputably great conductor, as well as being a “close Putin ally”, according to the Financial Times, has long been dogged by rumours of political favours from the President, and protesters are becoming increasingly vocal. His claim on his Facebook page that the law targeted pedophiles, not homosexuals, pleased few. The stubbornness was mirrored by the Met. Writing an article for Bloomberg, Peter Gelb, General Manager of the Met, attempted to clarify why the house wouldn’t “bow to protest”. Gelb conceded he personally deplored the new law, as much as he deplored the 76 countries that go even further than Russia currently by completely outlawing homosexuality. He went on,

“But as an arts institution, the Met is not the appropriate vehicle for waging nightly battles against the social injustices of the world.”

Clearly, Gelb is declaring that such a mention before the performance would not have been – to return to Hirst’s words – “provocative in the right way”. But just as we have called it a perfect storm of political and cultural affiliations, was this not also the perfect opportunity for such a tremendously important institution to take a stand for those people who do not have such a prominent pulpit? Gelb asserts that the house has never dedicated a single performance to a political or social cause. Progressive thinking and innovation rarely develops from such thinking. Moreover, the Met has stood up for the rights of the marginalised in the past when it refused to play in front of black/white segregated audiences. So a precedent exists, which arguably is not being lived up to.

It would be naive to avoid acknowledging the pitfalls in the knee-jerk use of the arts to constantly promote change and stand against discrimination. In some cases, such calls to action can fall on deaf ears, or worse, provoke outrage that costs the institution and earns it an unfortunate reputation. Such damage to a reputation can be financially devastating (the New York City Opera is to an extent an example of this), which apart from anything else rules out any future opportunities to make such important statements. These organisations are, whether for profit or no, ultimately businesses that cannot afford to support every cause, no matter how relevant. Arts organisations have the rare distinction of often being at the intersection of culture, politics and money (which can often make for a murky combination). Perhaps what is needed is an entirely new fundraising model. Monied interests will usually be conservative in their tastes (why would someone want to change the status quo that allowed them to get where they are?). Increased use of crowdfunding, such as the City Opera briefly used with Kickstarter, will surely play a far greater role in the years to come. Such efforts could go some way to negating the worry of avoiding a few vested interests. What an organisation should or should not publicly speak out on must always rest with the individual situation, as well as how any statement is phrased, which does not necessarily need to condemn a party. As Andrew Rudin, the composer who started the petition to ask the Met to make a statement, implored, “I’m not asking them to be against anybody. I’m asking them to be for somebody”.

Cost-cutting consoles

September 13, 2013 2 comments

Zeitgeist finally got around to seeing “Elysium” last night. Typical of the current climate in film distribution, it was disappearing from all of Zeitgeist’s local screens in central London, after a mere 3-4 weeks of release. The above trailer screened before the film. Videogames have been trying to sell themselves as films for years, since the likes of “Metal Gear” and “Max Payne”. (The picture becomes even more blurred as more videogames attempt to make the transition to feature franchises). This tactic was nothing new, moreover it was somewhat underwhelming. The graphics looked pixellated, the movement clunky, and any sense of verisimilitude was lacking. It is difficult to put a finger on what exactly the problem was, but patching polygons together is not the same as making all the parts interact with one another. It was surprising, given that the game is to be made available on the as-yet unreleased Playstation 4, a console which, going from the launch event months ago, is capable of some stunning graphic simulation. The market has gone for longer than usual without a new stream of console launches, so it seemed puzzling that not all that much seems to have changed.

It was somewhat reassuring then to read today The Economist’s Technology Quarterly supplement, which featured as its lead article an overview of the videogames industry, and how high costs have produced diminishing technical returns in the latest bout of releases from Sony, Microsoft and Nintendo. The article states the newest consoles look “surprisingly underpowered”:

“At previous console launches, executives have boasted about their boxes’ whizzy technological innards. Sony in particular was a dab hand at this sort of thing, coming up with names like “Emotion Engine” and “Reality Synthesiser” for the chips that powered its previous consoles. But this time neither Microsoft nor Sony seems very keen to talk up the technical prowess of their new boxes… new consoles will be merely catching up with the current state of the art, rather than defining it. Both consoles… are, for all intents and purposes, ordinary PCs in fancy boxes.”

The market hasn’t found a way to substantially raise prices on games, while at the same time the cost of developing them has “ballooned”. Moreover, due to rising costs of customised chips and increasing competition from those with lower fixed costs (think videogame mobile app developers, and Ouya), Sony and Microsoft are now using standardised chips in their consoles.  The article was also keen to note that graphics are no longer the be-all-and-end-all of a console’s power and reputation (as it was in the days of 32 and 64-bit machines). Indeed gaming itself is argubaly no longer front and centre of console strategy, as manufacturers seek to diversify into other areas of entertainment. Just in time as well, as a recent report from Accenture predicts the end of single-use devices.

UPDATE (15/9/13): The New York Times points out that often the best games take a while to appear on new consoles, with Nintendo devices tending to be the exception.

The New Normal of the Internet of Things

August 30, 2013 1 comment
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The subtle alternative to the tin foil hat

In the wake of PRISM, New York Times takedowns and spying London rubbish bins, people on the Internet don’t feel that secure any more… at all. Business Insider published an article recently saying the days of truly private email conversations are over. A new trend in “countersurveillance fashion” has sprung up (see above image), and New York’s New Museum is opening a ‘privacy gift shop’ for September.

One of the clients Zeitgeist works for is about to get heavily involved in Machine to Machine (M2M) communication, otherwise known as the Internet of Things (IoT). Intel were making themselves heard last month at an event in London’s Spitalfields Market on the subject. And earlier this month, the exemplary blog GigaOm published an article entitled “How can we design an internet of things for everyone (not just alpha geeks)?”. This new development, which includes self-driving cars, fridges ordering milk for you when you run out without being asked, potentially brings with it ideas of a utopian world of interconnected devices that do your bidding.

But such potential is now seen in a different light, post-PRISM. The first two user comments, screengrabbed below, were a grim reminder of the new normal, where such a utopian future has already been tarnished by abuses before it even arrives.

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The likes of PRISM and xKeystroke have arguably completely reversed the libertarian premise of the Internet

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