The New York Times reports on the sharp decline in profits at CBS.  This is despite the fact that their TV Network has the highest ratings of the big 4 (CBS, NBC, ABC, and Fox).  But here's what's interesting...

For decades, the big three, now big four, networks all had the same game plan: spend many millions to develop and produce scripted shows aimed at a mass audience and national advertisers, with a shelf life of years or decades as reruns in syndication.

But that model, based on attracting enough ad dollars to cover the costs of shows like “Lost” and “ER,” no longer appears viable. Network dramas now cost about $3 million an hour.

While keeping that in mind (particularly the cost) I'd like to draw your attention to a Business Week article from last year...

Then again, luring viewers is an increasingly expensive proposition. Cable executives are loath to talk dollars. But industry insiders estimate that production costs are rising at about 10% a year, pushing the per-episode cost of a scripted drama to more than $1 million at basic cable networks and as much as $3 million at pay TV channels. Everything from catering to editing is going up.

Now there are two questions I want you to consider before I make my point...

1.  Why does a Basic Cable drama only cost $1 million while a Network TV drama costs $3 million?  Is there a quality difference between an episode of "The Closer" or "Burn Notice" and an episode of "Law and Order" or "CSI:Miami"?  I don't see it

2.  In an era where the technology costs in making a scripted TV show have plummeted why are shows costing more to produce? 

The answer here is that the Entertainment industry is out of control in what they pay each other.  Charlie Sheen makes $800,000 per episode to film Two and a Half Men while Kyra Sedgwick only makes $275,000 per episode to film "The Closer."  Those salary differences go across the board and that is why there's a difference between cable dramas and network TV.  It's all in the people

But is Charlie Sheen really worth $800,000 an episode?

The market clearly doesn't think so because his salary is causing the CBS network to lose money.  That loss is how we get to the technology angle here.  What people in the TV industry have to realize is the same thing that web entrepreneurs are realizing now.  Advertising as a business model is becoming less and less viable. 

I mean, really look at TV.  Other than DVD sales (a fairly recent addition) TV is identical to the Web 2.0 business model.  They sold ads on the first airings and then sold the shows in syndication to stations who were in turn making ad money off the re-runs.  So the entire industry was run on Ads.

But with a generation that just ignores ads that profit channel is drying up. 

So now it's time for those in TV to start making the same big cuts that web companies have been making for months.  You can easily make quality TV for $1 million an episode.  Cable's proven that and in doing so demonstrated Network TV is spending 3 times more than they should be.  That's a lot of waste.

Especially for an industry running on a dying business model.

I think I’ve said everything I’m going to say on Steve Jobs’ health but I wanted to point out this article from David Coursey of PC World because I think it says a lot about marketing and the hero worship it can produce.  Most of Mr. Coursey’s claims are simply inaccurate and the fact that he’s making them shows he (a) knows very little about Apple and (b) has deified Steve Jobs to an unrealistic level. 

My point, just to put it out there, is not that Steve Jobs isn’t great.  He is.  But he’s not as irreplaceable as people make him out to be and the only people who seem to think he is are ones that have no clue what they are talking about.  With that said, off we go…

It is unfair to expect anyone to be a suitable successor to Steve Jobs. I was following Apple after Jobs was forced out in 1985 and replaced first by John Sculley and, later, Gil Amelio. Both made the mistake, I think, of believing they were running a computer company.

I saw a few John Sculley (1st CEO after Jobs) speeches when I was a kid and his vision for the Newton really wasn’t computer centric at all.  In fact, it was a lot like Apple’s vision for the iPhone now.  It also doesn’t explain all the meetings that Apple had with Hollywood regarding Quicktime during both John Sculley and Michael Spindler’s (2nd CEO after Jobs) tenure. 

True, smart business decisions have helped. Sculley and Amelio could never get the OS issue solved. Jobs did it in a way seemed almost graceful. Building a new operating system using Unix under the Apple user interface has been a huge win.

Two things here. 

First, I hate people who say this because they are normally the same people who praised the various MacOS versions when they were new.  The truth is, and I say this as a Windows user, the MacOS was always ahead of the PC in the user friendly arena.  Even without Jobs. 

Second, Jobs did not build “a new operating system using Unix under the Apple user interface” as the author puts it.  Jobs was brought back into Apple because Gil Amelio (3rd Apple CEO after Jobs) needed a new OS.  So really it was Amelio’s decision to go with OS X (which was the NeXT OS at the time).  Beyond that, as someone who has used both of them I can say OS X is still closer to NeXT than it is to the old MacOS

Apple also, wisely, reversed its traditional course of “our way or the highway” and embraced both Windows and Intel. It was not until the iPod came to Windows that the music player really took off. I think I called it a three-year-old “overnight sensation” when iTunes for Windows hit it big.

John Sculley was actually the first to have that idea.  In fact, he commissioned a special project team (called “Star Trek”) which got the MacOS running on Intel hardware.  His only problem was he got fired by the board before he could do anything with it.

Outsiders are not privy to how decisions are made at Apple. People who know are afraid of getting fired if they tell, which probably says quite enough. Still, I’d like to get a handle on the extent to which other people have ideas that Jobs accepts vs. only Steve has the great ideas.

Really?  Because I’ve read tons of insider stories.  Like this one about the iPod. 

Anyway, I could go on but my point is made.  This is someone who claims to be an expert on Apple yet he clearly has never read a book on Apple (which would have mentioned all of the above facts) and doesn’t watch Apple news very closely (the iPod story quoted above was pretty widely distributed). 

His sole source of information seems to be Apple Hype and that’s led him to believe that Steve Jobs is the be-all-end-all.  But he’s not.  Apple’s been successful under other leaders and it could be again if it needed to. 

Though honestly, I still don’t see anything in the news about Jobs’ health that makes me think it will need to anytime soon.

Seeqpod is a web site that pulls together music from a lot of different music sources and streams that music to users.  Which of course means they’re being sued.  First by Warner Music and now by EMI.  But the EMI suit, which is making news today, has an interesting wrinkle to it (the bolding below is mine)… 

It’s no secret that the record industry hates Seeqpod, a music site that lets users stream songs for free. Last year the company was sued by Warner Music Group (the outcome of the suit is still pending). Now, the company has just been slapped with a complaint from EMI. But the new complaint goes one step further, personally naming some of the Seeqpod executives, and in a move that may well raise the ire of countless developers, a developer named Ryan Sit who happened to tap into the Seeqpod API.

On Seeqpod I don’t have much to say.  They seem like a small fish in the big pond of piracy so I don’t know why the labels are going to so much trouble but it is their right.  The real issue though is Favtape (the API user).  Again from TechCrunch…

If EMI does win, it would set a precedent that the usage of an API puts the developer at risk of a lawsuit should the service they’re tapping into ever get sued. Such a decision would have huge ramifications for developers, who could become weary of using any service that could conceivably be considered illegal. It would stifle innovation. And frankly, it’s ridiculous.

This is one of the most important points I’ve seen in a long time (and one I really hadn’t thought of until now).  As someone using another website’s API you become responsible for the legality of that information. 

That’s black letter law.  If whatever is being distributed is illegal and you are part of that distribution chain than you are legally as liable as any other part of the distribution chain. 

So if the label’s legal argument against Seeqpod is valid than the API user (Ryan Sit of Favtape) is also liable.  Which in turn means that same legal argument would apply to any API using developer.

The reason this is important to point out is because, to me, it’s an easy fix.  Companies that offer APIs simply need to indemnify their users against legal threats.  There needs to be a clause in each company’s user agreement that says they believe their data to be legal. 

At that point the API users can claim to have a good faith belief that the data is legal.  A claim that can’t realistically be disproven.  Because even if a site was offering illegal material the API user would have no way to know it hadn’t been legally licensed. 

This deserves more attention and I hope more developers take note of it and start demanding protection from the companies providing this data.

There are a couple netbook stories out there today and I wanted to address a point from each of them.  The first is a Wired article by Clive Thompson that claims the XO-1 PC from OLPC inspired the netbook craze we are now seeing.  This claim was made earlier this year by OLPC founder Nicholas Negroponte and now seems to be the party line. 

But here’s the thing: It’s not true.  What we call a netbook has been available since AT LEAST 2002 because I owned one (the HP Jornada pictured here).  So this is not a new concept by any stretch of the imagination.

Beyond that, the Asus Eee netbook (considered the device that spurred the current fad) doesn’t resemble to XO-1 at all.  It’s got a smaller keyboard and screen, a different processor, a more traditional power system, etc…   Quite frankly, I’m hard pressed to find a resemblance between the two devices. 

Anyway, enough about that. 

The second article is by Brad of liliputing.com and he asks why are netbooks becoming so popular?

The way I see it there are a few reasons…

1. Processing power has come to the point where you can now run a full OS on a netbook sized computer (as opposed to one specially built for a mobile device)
2. Flash memory has dropped in price and increased in capacity to the point that it can house a full blown OS and still have room to spare
3. A lot of people are starting to realize they use their PC as a glorified typewriter and don’t need all the bells and whistles of a full blown system
4. Portability is becoming more commonplace thanks to high speed cellular networks and tethering
5. Most consumers want notebooks but end up with PCs because they don’t want to pay the premium.  The netbook creates the mirage of a notebook without the premium price and most consumers aren’t savvy enough to know the difference between it and a normal notebook.

Honestly, I have to say I’m getting really excited about the netbook market.  The fatal flaw in early netbooks was that the keyboard was too small but with devices like the HP Mini 1000 and Dell Inspiron Mini 9 we’re starting to see keyboards that are almost full sized. 

In my agency, like in any company, there are a lot of people who need computers to do very minimal tasks.  It doesn’t make sense to buy these people full on computers but up until now there had been no choice.  The netbook provides a nice alternative in these situations and it’s portability makes it enticing to users as well.

Friday, at 5pm pst, FreeFM died.  FreeFM was CBS radio’s attempt to appeal to the “Howard Stern” demographic with an all-talk FM format.  At its peak it comprised of 11 stations.  But one by one those stations fell and yesterday afternoon Talk 97.1 in Los Angeles (the original and last FreeFM station) switched to an all music format.  As you might imagine all the syndicated radio hosts were fired.

This got me thinking about an LA radio show that was cancelled a while back called Jaime, Jack and Stench (there’s a connection to FreeFM but it’s long and convoluted so I’ll spare you).  What’s interesting about that show is the hosts, after finding themselves job-less, came up with a way to use their fan base

Their solution was a daily podcast at www.jackandstench.com and a $5 per month fee to gain access to it.  They claim to have a little over a 1,000 subscribers which certainly isn't enough to pay anyone's bills but is still a nice take for a half an hour of talking.

More importantly, I can't help but think a more popular talk radio team could garner a much larger audience (in the end Jaime, Jack and Stench were fired because the station they worked for was losing money).

That, along with the increasingly steep decline of the radio industry in general, raises some interesting issues.  Despite what some people might think the average radio hosts setup is no more advanced than that of your average podcaster.  Below is a picture showing the average setup for a talk radio host doing afternoon drive time in a major metropolitan city.

(Shown is Joe Crummy who at the time was hosting a local show in Phoenix, AZ while actually living in Los Angeles, CA.  When that fact was revealed in the New York Times he was fired under public pressure)

Just 2 PCs, a Microphone and a reliable Internet connection is all that is really needed. 

Which brings me to another former Los Angeles radio host named Marc Germain.   Marc Germain has been on just about every Talk Radio station going by various names depending on the station he was on (starting with Mr. KFI, then Mr. KABC, then just Mr. K and finally by his actual name). 

After splitting from the last station he founded www.talkradioone.com which, in addition to allowing podcast downloads, is actually broadcast live from 8pm to 10pm.  AND he takes live calls!

He can actually queue as many as 10 calls via regular voice line and even more via Skype which exceeds the ability of major radio stations in the area. 

Right now Mr. Germain only broadcasts his own show but his about page says his goal is to broadcast 24 hours a day very soon with live shows for half the day and repeats for the rest. 

I don't think radio is going anywhere but I do think its in decline which means a lot of people who were gainfully employed in that industry are finding themselves out in the cold.  I think the examples above give a template for how those people can essentially maintain their chosen career in an era where the traditional opportunities are dwindling.

Addendum: Joe Crummey (pictured above) has since been hired by KTAR in Arizona (his original station's competition).  He still broadcasts from Los Angeles.

I wrote about this before but as it has bumped around in my subconscious my thinking has become clearer on it and I wanted to make another post that reflected that change. 

This was inspired by a CNN story entitled "Meghan McCain tells the GOP to get tech savy"  The article says...

In a column on the Daily Beast Web site, the daughter of Sen. John McCain says the GOP is likely to continue its decline in power unless members vastly improve their tech fluency.

"This has been a source of personal frustration for me for a very long time," said McCain of the party's seeming disconnect with technology. "Unless the GOP evolves as the party that can successfully utilize the Web, we'll continue to lose influence"

I think where my thinking has changed on this issue is that I fell into the trap that many strategists do and allowed myself to see the Internet as "just another media source." 

But that's not how the Internet works.

The web is a social beast.  It's about people making connections to each other without filters.  So a strategy that says "embrace the Internet" is largely pointless because an Internet effort can't exist without a passionate user base.  More importantly, once you have that passionate user base they will largely take care of things themselves.

The key isn't "embracing the Internet" it's making people excited enough to want to  make a connection with others.  So what the GOP needs is a strong leader and a message that appeals to the voters they've turned away.  Once they get that the Internet following will come. 

If you need an example look at Ron Paul.  Ron Paul is a 73 year old man.  He did not set out to run an online campaign.  What he did was excite people and those people created an online effort on his behalf.  The same would be true of any GOP candidate that people felt passionate about.

Addendum: For the record, you shouldn't take this as me disagreeing with Meghan McCain.  She clearly felt passionately about her father's candidacy so her putting up a blog just proves my point.  But the GOP needs a candidate that gets everyone as excited as she was.

Sadly, this article was several minutes of my life that I don't think I'm getting back.  It's 8 pages long so it's hard to come up with a quote.  Instead I'm going to substitute in a very snarky summary...

Web 2.0 is great and if you just embrace all these buzz word laden approaches bottom up management techniques it will revolutionize your company.  Just look at all these people trying to make themselves look good people we interviewed who have embraced it and made it look like they accomplished something in their year end review had great success.  So empower your employees and switch to a more bottom up approach and all will be good and right in the world as you bask in the glorious glow that is Web 2.0

As you can probably tell from the above summary I don't think the conclusions here hold any weight whatsoever because they are based on evidence that is almost certainly false. 

The content of this article is based on interviews with corporate officials and as anyone who has participated in these types of interviews will tell you they are almost always full of lies.  Of course the CIO who endorsed blogging because he read about it in Fortune is going to say it succeeded in his corporation.  What else would he say?  Of course the CEO is going to say he's constantly looking for ways to engage his staff.  Have you ever met a boss that said "I don't value the opinion of those under me"? 

But here's the thing, there's "what we say in an interview" and then there's reality.  Everyone says they value the opinions of their employees but very few executives actually do. 

This is something that anyone who has ever worked in corporate America or read a Dilbert comic for that matter knows.

I worked as a consultant, I know what ACTUALLY goes on in these companies and the stuff they say in interviews isn't even close. So now lets look at the reality of 99% of corporate environments and why it works against adoption of Web 2.0 principles.

Upper Level Management gets paid a lot.  They justify that large paycheck by doing everything in their power to make themselves look indispensable.  Being indispensable means making it look as if all or most of the good ideas are coming from you. 

That, right there, is why Web 2.0 doesn't work in the corporation.    You can't embrace a collaborative process AND make yourself look like the indispensable oracle of all good ideas.

If you want to implement these technologies you have to approach it by finding ways to get around that limitation.  You have to look honestly at the social structures that already exist and work within those social structures to achieve results.  Here's an example:

Open Wikis in corporate environments don't work.  Because the Senior VP of Marketing doesn't want the CEO to know the company's next big marketing push came from the guy three levels below him.  You see he's afraid the CEO might give his job to that lower level guy and that's not really acceptable in his eyes. 

So you have to accept that limitation and implement what you can.  Maybe have a private Wiki in each department that can't be viewed from the outside or an anonymous Wiki that prevents anyone from seeing where the good ideas come from.  Or any of a thousand other solutions. 

The above quoted article contains absolutely no pragmatic solutions to get around these various issues and that is exactly why it's next to useless. 

As with anytime I try to take a blogging break something really gets under my skin and it draws me back in. 

I'm not even going to quote the moronic foolishness that inspired this post.  But to summarize: a Microsoft product manager named Gavriella Schuster clearly thinks her customers are so stupid that they won't recognize a painfully tactless ploy to sell an Operating  System that no one is interested in.

Or, in other words, she's suggesting Corporate customers who want to skip Vista deploy it anyway because the time it would take for Windows 7 is too long.  So she suggests corporations spend the money on two rollouts instead.

In making her argument she passes off misleading statements to make her case.  Such as...

Talk to your application vendors to find out how long they intend to provide support for their application running in Windows XP and when they plan to support their application running in Windows 7.

Newsflash: Right now there is not one vendor I've spoken to, not one, that has any plans to stop supporting XP.  They'd have to be fools to even consider it. 

She goes on to make this argument...

We expect deployment and application migration from Windows XP to Windows 7 to be similar in effort to going from Windows XP to Windows Vista. As I mentioned above, there is a great deal of compatibility between both Windows Vista and Windows 7, as we are not introducing any major architectural changes. Our customers who focus efforts in getting their applications to work on Windows Vista will ease future migration to Windows 7 and help accelerate their Windows 7 deployment

Newsflash: Problems that come up in migrations are always from UNEXPECTED ISSUES!  Every vendor I've ever spoken to has promised a smooth migration so the above paragraph holds about as much weight as someone trying to sell me the Brooklyn bridge.

Honestly the whole post was offensive.  Beyond the fact that she's speaking to IT people as if they were 5 year olds she's giving advice that is clearly in her company's own best interest while pretending to have altruistic motives (the underlying message being "our customers are too stupid to realize I'm trying to trick them")

It's one the the truest examples I've ever seen of Microsoft being completely out of touch with it's customers.

I've let my experiments with Linux fall to the wayside in recent months because of other time constraints.  But Ms. Schuster has encouraged me to kick them back into high gear. 

Maybe with a little extra effort I can just not use Windows at all anymore.

Addendum: This might seem like a mindless rant but I assure you it's not.  The point I'm trying to make is how deeply offensive customers find it when their vendors try to trick and/or bully them into doing something they don't want to do.  Vista is a lost cause and has been since its release.  They aren't going to sell me on it this late in the game.  But by not accepting the loss and choosing to push it harder they are souring me on Windows 7 and their corporate brand in general which is the last thing they want to do. 

I'll be honest, I have a massively complicated weekend planned and it's taking a lot of my time pulling it off.  As you might expect I'm not exactly the most romantically inclined person in the world but I really think I knocked it out of the park on this one. 

If I can pull everything off.

But the "pulling everything off" is really eating into the blogging time.  So this will probably be my last post for the week.  So I hope everyone has a great Long Weekend (in the  U.S.) and a happy Valentine's day (which I think is celebrated everywhere). 

Oh, and wish me luck.  As I said, I think I have a great plan here but this isn't my strong point so I might need all the luck I can get.

One of the items I wanted to post on a couple weeks back but never got a chance to was this news from CBS about their rising ratings...

"The CBS audience was up in the first half of the season. It is certainly not an easy time. It is a time when viewers have many options, but it can be done," Nina Tassler, president of entertainment at CBS, said at the network's midseason presentation for TV critics.

...

CBS had nine of the top 20 top prime-time shows last week, including detective series "CSI: Crime Scene Investigation," the sitcom "Two and a Half Men" and the most popular new drama, "The Mentalist," according to Nielsen Media Research.

Now for those who don't know CBS is already the #1 television network in ratings (at least in total viewers) so this means their percentage got that much bigger. 

The problem I have with that is CBS has drastically cut it's Internet presence in the last year and a half.  The idea is basically this (taken from profy.com)...

In what seems like a step backward, CBS has now launched EyeLab, a service with a collection of short clips from several hit shows that air on the network. The videos will appear to be more along the lines of the user-generated content on YouTube, which CBS is hoping will keep viewers entertained and serve marketing purposes.

So what they are doing is putting up "clips" and "recaps" instead of full episodes.  I had known about this trend for a while but I didn't realize just how far they'd gone with it.  As of right now most of their shows aren't available online anymore.  Not on their site, not on Hulu, not on iTunes, nowhere.

Now, I really want to say this is an awful idea and there's some evidence to support that.  To give one example , I enjoy CBS' new show called "The Mentalist".  A couple Sundays ago they aired an episode which ran after a football game and the game went way short.  Which meant I only got half the episode on my DVR.  I went online to view the episode only to find it was no where to be found. 

To me this seems counterproductive.  You want viewers to be invested in your show which means you don't want them to miss an episode.   Which to me makes the case for putting your content online.

But if you've read this blog for any amount of time you know I judge by results and I can't deny the fact that CBS' results are positive.  Their ratings are up, I'd assume their expenses are down (since they are saving on bandwidth) and after almost 2 years it seems the strategy of ignoring online audiences seems to be working for them.

There is one golden caveat here and that's the fact that CBS is not #1 in the 18-49 demographic.  So you could argue they're audience is less inclined to use online sources because it skews older.  But CBS IS the #2 network in that demo so I'm not sure how much weight the theory holds.

All in all it's not a great news for people trying to get networks to put their stuff online.  Which is bad news for all of us.

Addendum: On a related note these types of articles aren't good either.  I've seen several "money saving" experts advising people to cancel their cable all together and just watch shows on the Internet.  If that starts happening en masse cable providers will be forced to pull their shows from the web.