Content and services

Digital magazine subscriptions: going up or going down?

Submitted by acohill on Tue, 01/04/2011 - 09:22

Here is a report that tablet devices like the iPad are not delivering the predicted online magazine subscriptions. I have been saying for some time that these new devices have the potential to save the ailing magazine and newspaper industries. But I think it is too soon to say that data from essentially just one or two publishers is a trend.

Note that I used the word "potential" when talking about this. The publishers could easily screw up this opportunity to save themselves. The article talks about the big drop in online sales of Wired magazine. But here is the problem. A lot of magazines have decided that declining attention spans means that a magazine should look like a Web site--filled with short, fluffy news items. You have to plow through dozens of pages of trivia before getting to two or three mildly interesting articles. Why pay for that?

A second problem is the cost of subscriptions. Publishers are still struggling with how to wean their operations off the relatively high revenue of ads plus subscriptions to a much lower revenue stream online (but note that distribution costs approach zero). So many digital magazine and newspaper subscriptions cost nearly as much as the paper version, which makes no sense at all.

I suspect the successful digital publishers of tomorrow will be start-ups--firms that start with a business model tailored for tablet devices. Many of the old line publishing firms are going to go the way of buggy whip manufacturers.

iPad killing and saving the newspaper

Submitted by acohill on Fri, 12/10/2010 - 16:44

Two stories in one: The iPad is cutting into traditional newspaper and magazine subscriptions while simultaneously increasing readership for the online versions of newspapers and magazines. The challenge for publishers of newspapers and magazines is to set the online subscription prices at the right price point. If they are greedy and try to keep the online price high, they will never achieve the economies of scale possible when distribution costs are nearly equal to zero. But don't count on this; many editors and their bean counter bosses are going to keep online subscription prices high "so we don't cannibalize our print version." Uh huh. Whether we like it or not, a lot of stuff is never going to be printed on dead trees again. Go with it, you guys, and get over the hand wringing.

I'm too lazy to do a search for it, but I've seen a diatribe by some early Greek bemoaning the newfangled business of writing things down on paper. He was citing the imminent ruination of the youth, who were going to lose the really important ability to memorize everything worth knowing. Uh huh. Nothing ever changes. Ever.

Skype busy destroying the phone company, melting down cable networks

Submitted by acohill on Tue, 11/30/2010 - 16:57

Skype has announced a new record of 25 million concurrent users, meaning 25 million voice and video calls simultaneously. It also means that all those Skype users are NOT using their cellphones or land lines to make voice calls. Skype video works extremely well if you have a good Web camera (good means you ought to spend at least $50-$75) and a decent Internet connection; if you have tried Skype video and found it fuzzy or blurry, it's probably your camera. The tiny cameras that come in laptop lids tend to have very poor quality compared to a good USB camera. But I digress. Those video calls that Skype users are making are stressing out the "entertainment" networks provided by the cable and phone companies. I put "entertainment" in quotes because years ago, when I was working out of the home and suffered a cable modem network outage, I was told that the cable modem service I was subscribed to was an "entertainment" service, not a business service, and it might take up to two weeks to repair the outage.

Today's cable and DSL networks were not designed to support symmetric bandwidth, which is what you need if you are going to do voice and video calls--especially if you are trying to do video calls.

But wait, I've saved the best for last. Think just a few geeks are using the Skype video service? You'd be wrong, because Skype says 40% of their calls in the first half of 2010 were video, not voice. Ruh-roh, as Scooby Doo would say, or perhaps the cable companies and phone companies are saying..."Ruh-roh...our networks are glowing cherry red, we can't supply the bandwidth, we have an antiquated network and a 1950s business model." This is going to become a national disaster before it is over, because the economic development plans of many communities are going to be disrupted over lack of decent bandwidth to run a business.

The communities that are building their own open access networks will have complete control of their economic future. If your community's essential infrastructure for attracting and retaining businesses depends on the cable and phone companies, you might want to practice saying, "Ruh-roh."

The beginning of the end for cable TV

Submitted by acohill on Tue, 11/30/2010 - 14:07

Comcast and Level 3 are having a public fight. Level 3 is a long haul network provider; the company owns thousands of miles of inter-city fiber and hauls all kinds of data traffic, including Internet traffic, for a wide variety of customers. But Comcast is groaning under the weight of Netflix and other video traffic, and the cable company wants Level 3 to pay more to drop traffic onto the Comcast network for delivery.

Comcast execs must be scared out of their wits. Cable TV subscribers are canceling their subscriptions, and its not just because of the poor economy. Cable TV and its fabled "500 channels" does not deliver much value any more. Worse, video on demand ventures like Netflix are hugely popular and are using enormous amounts of bandwidth--Netflix customers are using 20% of the total U.S. bandwidth in the evening. And Comcast, which has been making a nice profit on their broadband service for years, is all of sudden facing a flood of demand for their data service which is killing their old-fashioned HFC (Hybrid Fiber Coax) networks. The cable companies guessed wrong ten years ago. They guessed that this Internet thing would never really catch on, and that they could do some tinkering with their existing copper-based network to deliver both TV and Internet, and they went off and borrowed billions to be able to deliver digital content over a fifty year old network design.

They have not paid that money back yet, not entirely, but the billions in upgrades have already run out of steam. The only answer is to build fiber all the way to the home, but they don't have the money to do that. And worse, their customers have decided that they don't really need the TV service if the Internet works okay. Except all of a sudden, the Internet is slowing down for cable TV subscribers, just when everyone wants more--a lot more.

If you are even slightly tempted to feel sorry for the cable companies, the big incumbent phone companies are in worse shape, as they thought they could string their customers along with 100 year old copper twisted pair networks, and the DSL services are running out of steam even faster than the cable networks.

Short story: Telecom in the U.S. is a horrible mess and will be getting much much worse very quickly. Unless you live in a community where there is a community-owned fiber network (think Chattanooga; Powell, Wyoming; Jackson, Mississippi; much of Utah; parts of Virginia, and a few other places).

Netflix raises prices, adds more streaming content

Submitted by acohill on Tue, 11/23/2010 - 09:51

Netflix has announced an increase in the price of monthly subscriptions, which is no surprise, given the popularity of the firm's video on demand service. With Netflix subscribers using 20% of the nation's bandwidth every evening, Netflix needs some way to pay for all that bandwidth. The company has also added a $7.99/month streaming only subscriptions--you can't get any DVDs.

That might be fine with some folks. Since we started using the streaming service, the number of DVDs we watch has fallen dramatically. Watch next for big changes from the content owners, who have been making a fortune on DVDs for the last fifteen years, but the DVD era is just about over. There will be wailing and gnashing of teeth by the TV and movie studios, but in the end, they will make a lot more money by aggressively licensing everything they own for streaming. The truly awful new copyright law is a last ditch attempt by the RIAA and other big copyright advocates to prevent intellectual property theft (e.g. illegal file sharing). But the new law gives the Federal government the ability to shut down ANY Web site arbitrarily simply if an accusation of copyright infringement is made--in other words, without due process. This will inevitably lead to abuse.

I've maintained for many years that the supposed cost of pirated material is overblown by the industry. People that steal music and video recordings, for the most part, would never have actually paid for them in the first place, so the inflated loss of revenue reports are just that--inflated. It's easy to find someone bragging about all the music they have acquired illegally, but they never would have bought it all. And most people are honest; if a product or service is fairly priced, most people prefer to pay for it. The idea of an entire industry starting from the premise that "all are customers, every single one of them, is a crook" has struck me as a bit strange. It's much like the current approach to airport screening: the TSA starts from the assumption that everyone, including the elderly, the infirm, and three year olds, are terrorists. Surely we can do better. And in fact, the huge success of online digital media services like the iTunes store proves that a lot of people are happy to pay fair prices for digital media.

I'm in the living room reading the newspad

Submitted by acohill on Sun, 11/21/2010 - 11:41

If you have not yet heard about "The Daily," you will shortly. The new digital "newspaper" is a collaboration between Apple and News Corp., and it is designed expressly for tablet devices like the iPad. There will be no Web or paper edition. Hence, we need a new term for this, and I think "newspad" is just right, as it is derived directly from its predecessor, the "newspaper."

Hulu: Watch all the TV you want for $8/month

Submitted by acohill on Wed, 11/17/2010 - 17:25

In what has to scare the heck out of the cable companies, Hulu has released an upgraded version of its premium subscription service and software while dropping the monthly cost from $9.99 to $7.99. Hulu Plus gives subscribers access to many of the most popular current season "TV" shows. I am going to start putting "TV" in quotes because broadband services like Hulu and Netflix are not the old analog TV, but they sure deliver the same content. The math on getting your "TV" over your broadband connection is pretty compelling. Hulu Plus for $8/month gives the popular current shows, and Netflix for $10/month gives you access to a huge back catalog of American and British shows, as well as lots of movies. Total cost? $18/month, compared to the average cable bill of $60.

What's missing? The news channels, but you can get an awful lots of news off the Web, with the exception of the live news and commentary programs. Expect them along any time. Own shares of cable TV companies? You might want to evaluate the long term potential of that stock.

Facebook takes aim at Gmail

Submitted by acohill on Tue, 11/16/2010 - 09:34

Facebook has announced a "modern" messaging system that will integrate email, text messaging, and Facebook messaging. Google's dominance, all of a sudden, is being challenged simultaneously on multiple fronts. And behind the scenes, it is often Microsoft that is leading the charge. Facebook's email service will draw some users away from Gmail, and Facebook has already announced a partnership with Microsoft to use Microsoft's Bing search engine for social search. And Yahoo! recently announced a plan to move to using Bing to power Yahoo!'s search services. Meanwhile, Apple is not standing still, with it's Ping music-oriented social network pushing both Google and Facebook. And Apple has some big plans that are still largely under wraps to challenge Google's Gdoc services.

If Apple and Facebook can provide better and more believable privacy policies than Google, which basically has the attitude that all your personal data belongs to them (check the EULA for Gdocs, which gives them a license for everything you create using Gdocs), the two firms will slowly chip away at Google's dominance.

Appitalism combines social media and shopping

Submitted by acohill on Thu, 11/04/2010 - 10:32

Appitalism.com is an interesting new site that combines elements of the iTunes store, Amazon customer reviews, and tight links with social media. This might actually turn out to be a winner, as many of the "shopping" sites tend to lack enough traffic to produce reliable reviews, and in my experience, many listed products on those sites have no reviews. Finally, a lot of those shopping sites are basically just link farms for advertisers. Appitalism puts the control in the hands of users, rather than advertisers, and so I think it is likely the site will get more and better reviews overall.

Facebook security problems

Submitted by acohill on Tue, 10/19/2010 - 15:55

The Wall Street Journal has an article about issues with the way third party Facebook apps (e.g. FarmVille, HoldEm Poker, others) are grabbing personal information even though they are not supposed to be doing so. Facebook officials said they are clamping down to ensure that the 500 million Facebook users are protected.

New York Times available on the iPad

Submitted by acohill on Fri, 10/15/2010 - 10:48

The New York Times can now be read on the iPad via an upgraded NY Times app. The full edition of the paper is available for free until sometime next year, when a subscription fee will be charged. If I was the owner of a struggling newspaper with declining circulation, I'd be not only going the app route for distribution, I'd put together some kind of deal to bundle in an iPad with something like a twelve month easy payment plan for the iPad. Like it or not, this is the future of newspapers and magazines.

Facebook: The Movie

Submitted by acohill on Fri, 09/24/2010 - 08:14

Every programmer knows it: the dreaded infinite loop. You have a little piece of code that gets the wrong input and starts repeating, over and over again. Computers being kind of fast, an innocuous few lines of code can execute millions of times an hour, sending the system of the network into "conniptions," which is the technical term used by all good programmers.

Such was the fate of Facebook for a few hours yesterday, which had a rogue piece of code bring down the entire system. While there is a movie already out about the start of the Facebook empire, it occurred to me what we need is a Facebook disaster movie. The script would be easy to pound out--start with a line up of aging, past their prime movie stars of the sort that were trotted out for classic disaster movies like Airplane, add in the pathos and horror of not being able to post that you just brushed your teeth or had a Hot Pockets burrito for breakfast, and do a lot of fast cuts to people whose entire lives were ruined because they could not post comments like "You go, girl" to Britney Spears' Facebook page, and you have some real movie magic. I predict it will go straight to DVD--but there would still be a one month delay before you watch it instantly on Netflix.

Blockbuster, Netflix, and Apple

Submitted by acohill on Fri, 09/24/2010 - 06:43

I still remember a conversation I had about a year ago when I told an business acquaintance that Blockbuster was toast, and that it was only going to be a year or two before the company would be gone. My acquaintance argued politely that that was not going to happen, we agreed to disagree, and we finished up our meeting. But for some reason, that particular conversation stuck with me, even though I have talked about this to hundreds of people.

What amazes me is how stuck some people get in a belief that business models never change, and that companies and markets can grow forever. Blockbuster was in the right place and the right time to enjoy dramatic growth, crush its business enemies, and become one of the most hated brands in America. The company's insistence on ridiculously punitive late fees was the first clue that the company's leaders were out of touch with customers and the market. How anyone thought that enhancing profits by punishing customers was a good idea still perplexes me, but a lot of people at Blockbuster thought so.

Netflix was really a response to that. The Netflix folks had two key ideas: one was that people tend to take a few days to get around to returning movies. The second was that some day, DVDs would be history and everyone would watch on demand via a broadband connection. Even though the company started out mailing DVDs back and forth, you will notice they did not call the company "PostalFlix."

I saw something the other day that made me think I might finally want an iPad--someone near me on an airplane was watching a movie on their iPad. The big screen was easy to see, and the iPad has enough battery life to watch a long movie without running out of power, which is a problem with many laptops. Air travel has become so unpleasant that being able to watch a movie of my own choice has some appeal. The seats are now so close together that on most flights, even on bigger planes, it is nearly impossible to work comfortably on a laptop. I was on a 757 the other day, and there was only 12 inches of space between the front edge of my seat and the back of the seat in front of me. When you dropped down the tray table, the edge was jutting into my chest--impossible to comfortably use a laptop keyboard or to get the screen at a comfortable angle. But my iPad seatmate was able to prop the iPad up easily and enjoy a movie.

As video has moved from the Blockbuster store to the Netflix postal model (which is also toast, but Netflix knows this) and is now rapidly moving to the on demand model, the iPad and similar tablets are going to take it the final step--true portability--watch whatever you want, whenever you want, pretty much wherever you are.

Crooks using location information to rob homes

Submitted by acohill on Mon, 09/13/2010 - 10:45

All these location-aware devices we have now with GPS capabilities are turning out to be a boon for crooks. Here is how it works: people go on vacation, take pictures with their location-aware iPhone or Android phone, and upload the picture to Facebook with the exact location conveniently added in. Crooks browse Facebook pages, find someone on vacation a long way from home, and then head over to your house for a leisurely romp through your belongings.

Other problems with indiscriminate use of location-aware information? Law enforcement officials can use that information to build a case against you in a criminal trial--it's a form of self-incrimination that you voluntarily offer to law enforcement and to trial lawyers in civil proceedings.

Voluntarily giving up your location in real time has more benign but still problematic privacy issues, as it allows Web sites and the ad/search engines behind them to add to your dossier--they know everywhere you go, and thus build ever more sophisticated targeted marketing. It's not that the ads are so bad in and of themselves, but once that location information is collected, it can be sold and re-sold to other parties for years.

I wish the iPhone had an opt-in or opt-out preference; many iPhone apps constantly ask if they can use location information, and I have to constantly answer, "No." It's a pain in the neck, and none of their business.

Many free apps for Android and the iPhone are free because they collect lots of information about you; that information is sold to third parties, and that's what keeps the app "free." Sometimes it might be better just to pay a few dollars to preserve a few shreds of your privacy.

The death of TV: Part XXIII

Submitted by acohill on Wed, 09/01/2010 - 13:45

Apple has announced a new version of Apple TV. Apple has cut both the price and size of the device; it's now tiny compared to the old version, and costs only $99. The old version of the product was able to store movies and TV shows, but the new version only streams movies and TV, either from online sources or from content stored on a nearby Mac computer.

TV shows are going to typically rent for ninety-nine cents, and HD movies will go for $5. At a buck a TV show, a typical household could watch a lot of "must see" TV before you would spend more than the average $65/month cost of cable TV. And you can watch Netflix movies on demand for free if you are already a Netflix customer. The new device also retains the ability to stream and play music from a nearby iTunes music library; ditto with photos from a local iPhoto picture album. And Apple TV can be controlled with an iPhone or an iPod Touch. Apple has pretty much completed the transition to an all-digital, fully integrated music/TV/movies/pictures system.

It's always about the bandwidth (or lack of it)

Submitted by acohill on Fri, 08/13/2010 - 17:06

In this article that speculates about an Apple TV upgrade, there is an interesting tidbit that validates what I and others have been saying for a long time: HD content chews up bandwidth:

"...In turn, consumers would see a similar increase in streaming requirements. Xbox Live can stream 1080p video, but it requires 8-10meg broadband, which leaves an awful lot of people out in the cold. It has the option of downloading instead, but if you're out in the sticks on a 2meg stream you're looking at more than eight hours to download your film at 1080p. You'd best plan your Friday night viewing before leaving for work on Friday morning."

The discussion about the Apple TV is whether or not Apple will include the ability to show movies in HD 1080p format. The short answer is, "Not likely," because streaming 1080p movies and TV shows over the Internet requires a massive chunk of bandwidth--8-10 megabits. And that's REAL bandwidth, not the marketing happy-talk that always begins with "....up to..."

Notice that if you wanted to download that movie over your average 2 megabit connection, it would take more than 8 hours! And if you are on a cable modem connection with a few of your neighbors also trying to do the same, it would take a little longer, like never (ditto with a wireless connection).

The answer is simple: we need to switch to open fiber.

Why Bing is winning

Submitted by acohill on Fri, 07/16/2010 - 14:27

Bing has grabbed almost 13% of the search engine market share in the past year, and the Microsoft search engine appears to steadily getting more users. There are two or three reasons, I think. In my own experience, Bing returns fewer and better results, with less link farm clutter. The interface is better, and Bing is willing to send you other search engines, which suggests a certain confidence in their own results and/or a focus on helping you complete your search rather than stick as many ads as possible in your face.

Recent upgrades to two popular browsers, FireFox and Safari, also allow you to set the default search engine to Bing instead of Google. This simple one time change for users makes it much easier to hit Bing every time when you do a search.

Link farming: The perniciousness of Web ads

Submitted by acohill on Tue, 07/13/2010 - 08:54

I just spent a few minutes clicking around trying to find the Web site of a particular business. After four or five attempts to click through on links that I *thought* would go to the actual Web site of the business, I gave up. Every link took me to another link farm or worse, actually just clicked back through to the same page I left. Of course, each time I clicked, another list of Web ads got loaded into the page I landed on, and that's what much of the Web has become--just a snarled mess of link farms. The link farm sites don't have to be well-designed or particularly useful, because it costs almost nothing to build these sites, and even if only one person out of a hundred clicks on an ad, you can make money with it.

All those ads you hear on the radio and see on TV about making money on the Internet--there are really only two scams. One scam makes you a dealer for cheap, over-priced junk that you try to get friends and relatives to buy, and the other is building link farms.

And it is not just "I hope I get rich on the Internet" link farms that are part of the problem. There are a lot of well-financed commercial ventures that engage in this circular linking as well.

It had to happen: Facebook newbie phase is over

Submitted by acohill on Mon, 07/12/2010 - 12:42

Like all popular Internet services, Facebook has enjoyed rapid growth over the past three or four years, as the service added many hundreds of thousands of users a week (or more--millions in some past months). But that growth has finally stalled out, as everyone who wants to be on Facebook already is. Geometric growth is a wonderful thing, but there was always a finite limit to that growth. Even more telling, the amount of activity by registered users has also dropped.

Facebook is a handy tool for staying in contact with friends and family and for organizing groups for things as mundane as a family reunion or scout troop. The service also gets wide use for causes (Friends of Calico Cats, Save Lindsay Lohan from Herself, etc.). But I have observed this growth phenomena repeatedly with other services, dating back to the early nineties and the first "killer app," email. Eventually everyone that wanted one got an email account, and that was the end of the email boom.

Facebook is vulnerable to competitors and perhaps the biggest danger is not managing internal costs; the company must now trim costs and manage budgets closely, and this does not always happen in time following a rapid and prolonged growth phase.

Death of TV, Part XXII: Hulu Plus

Submitted by acohill on Tue, 06/29/2010 - 13:58

Hulu has announced a new subscription and ad-based service called Hulu Plus for $9.99 per month that will provide access to the full season of many "TV" shows. That's a heck of a lot less than the Apple iTunes Store, which sells shows for one or two dollars. Think of Hulu Plus as an alternative to paying for a cable or satellite subscription.

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