We always appreciate when media industry leaders, such as Viacom’s Philippe Dauman, reveal how the business really operates. From Broadcasting & Cable, reporting on today’s tony Bear Stearns media conference held in Palm Beach: “While Viacom’s U.S. margins are close to 50%, Dauman said he hoped to maintain them even having to invest in more original programming and getting its digital sales operation up to speed. To help in that effort, he has cut jobs and salaries and restructured, saying there were redundancies and people who were, frankly, overpaid.”

It’s also revealing when key executives explain their vision for the U.S. and global digital media future. It’s not plastics, as it was decades ago in “The Graduate.” It’s “immersive.” Here’s Mr. Dauman view, written by B&C: “In a fragmented world, he said, the ability to reach key demos in an immersive, branded way becomes more and more valuable…. “Our business is to reach consumers through our content everywhere they are, and sell to advertisers that consumer relationship.”

This is real life, Mr. Dauman, not the virtual branded broadband reality you are creating at Viacom. There are consequences to squeezing out such fat profit margins–including the cost to peoples lives as you lay them off. B&C has reported two rounds of cuts. Advocates should press Viacom to spend some of its cable monopoly gain on public interest programming.
Source:”Viacom’s Dauman: YouTube Wasn’t Best Environment for Content.” John Eggerton. B&C [sub may be required]

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Backing Further U.S. Media Consolidation: State Pension Funds, Foundations and Universities Help Providence Equity Partners New $12b Shopping Spree

Compounding problems with media consolidation is the role that private equity firms are playing buying major media, telecom and advertising properties. We are not only ending up with fewer owners of key newspapers, stations, networks, channels, and digital portals—but these private firms are even more unaccountable to the public. That’s why its disturbing to learn that what has been described as one of the largest funds to buy up media properties—the new Providence Equity Partners VI fund–is financially backed in part by groups which should know better. Investors of the new media merger fund include state pension funds, university endowments and private foundations (in addition to contributions from other pension funds, “high-net-worth” individuals and “funds of funds”). These investors are partnering with Providence’s plan to see more media properties are swallowed up. But likely missing from such buy-outs is any commitment to the public interest, let alone serious support for journalism. Ironically, foundations, unions, and a few university leaders have been part of the “media reform” effort combating further consolidation of “old media” and also working to restore “network neutrality” for U.S. broadband.

Former FCC Chair Michael K. Powell is a senior advisor at Providence, another irony (especially if any of the pension or foundation investment comes from groups backing the public interest media effort). Providence, as we’ve noted previously, has sought to acquire Clear Channel and Tribune. Its new fund will enable it to acquire more cable and other holdings, likely making it a fierce opponent of the effort to ensure broadband cable and phone networks are required to operate in a non-discriminatory manner.

We hope that there will be some serious soul-searching in the foundation, union, and pension investment community. More is at stake than a good return on a dollar. It’s the future of free expression, democratic participation, and civil rights.

Death of Broadband Privacy in Venice? What’s the Deal with Joost & Viacom?

Reporters are hyping the new deal between Joost and Viacom. Missing from the discussion is the impact of the new video service on privacy and commercialism. According to Advertising Age (my bold):

“So far, Joost’s ad model includes five- to seven-second ads that pop up when certain videos are initiated and mid-roll video ads in videos more than five minutes long, the number of which are scaled pro rata to the length of the content. Wrigley, T-Mobile, Maybelline and Phillips are among the beta advertisers. The idea is to have a single advertiser sponsor a piece of content, but to give it multiple elements, Mr. Clark said.

Like other web ads, they’re interactive and let users click through for more info, e-mail offers and long-form messages. The service also touts what will be powerful targeting and reporting capabilities. Echoing Joost’s founders, Mr. Clark said, “We’re combining the best of the web with the best of TV.”

We hope Joost will clearly spell out what data is being collected and reported to Viacom and others. We don’t believe its privacy policy addresses what it will be providing, for example, its new partner Viacom. But services such as Joost should embrace privacy policies which fully disclose precisely the information provided to advertisers. Opt-in should also be the standard, once users are formally and proactively informed.

Joost update. Here’s how Joost plans to help marketers conduct precision targeting, according to Octagon Music blog: “For every user that downloads the Joost application, part of the registration process is to complete a user profile with typical demographic information. It’s this user profile that will be an advertiser’s dream. Imagine being able to target viewers by location, time of day, viewing habits, and other profile information to serve up the perfect ad… Friis and Zennstram believe this unlocked targeting power will command a premium in terms of dollars from advertisers, which will hopefully keep Joost up and running.”

Media industry watcher Jack Myers reports that “advertisers will be able to cherry pick users by location, time/date of viewing, viewing history and preferences, and even profiles of Joost members who opt-in. In the future both advertisers (and programmers) will have the flexibility to upload content themselves…”
Source: Why Joost Isn’t Just Your Average `YouTube Killer’. Abbey Klaassen. Advertising Age. Feb. 26, 2007 [sub. required]

Elmo Pushes Pizza! Hey, Sesame Workshop and Co. Stop Counting Kids Dollars

CNN Money reports that Elmo will soon by promoting pizza. A new toy via Mattel will be “an Elmo doll holding a pizza, and the pizza talks and sings along with Elmo. The toy is expected to retail for $19.99.”

We think the folks at Sesame Workshop need to rethink what “Elmo’s World” should be like. Is it one that further commercializes childhood and pushes junk food, all to help bolster the Workshop’s bottom line? Shouldn’t companies that benefit from federal funding and public television distribution adhere to some higher level of conduct? Licensing of Elmo and other public broadcasting related products for children require a serious set of federal and PBS safeguards. We hope Gary Knell and company listen. Congress surely should, as it considers public broadcasting (PBS) funding.

Billion Dollars Bribery: As presidential candidates prepare to raise and spend $1 B on TV Ads for ‘08, it’s time for digital era reform

Advertising Age reports that U.S. presidential candidates are expected to spend $1 billion buying TV spots for the 2008 race. What this means, of course, is that our political leaders will be selling bits of themselves to well-heeled donors and special interests. How can we have a democracy that addresses our most serious problems when the very forces likely contributing to them are helping foot the TV ad costs? We can’t, even in this age of direct contributions via the Net. The big bucks raised are ultimately bribes from folks representing Wall Street, Silicon Valley, the Chamber of Commerce, and Hollywood.

The emerging new media platforms of broadband, mobile, and digital TV will be the methods of choice for delivering political marketing messages. Personalized style communications sent to digital video recorders, iPods, cell phones, along with “Second Life” style virtual press conferences, will soon replace traditional broadcast TV advertising. We need a law requiring free access on such platforms for all candidates (which would be accompanied by refinements in campaign finance limits). In a media world without communications scarcity ( such as with old media style broadcast TV) there is no reason to continue the “pay us for access to voter eyeball” type of media industry shenanigans.

Failure to address the problem of political communication access to the digital media will only result in the old system shaping how new media addresses our elections. It will be a pay-per-voter system where both the gatekeepers of old (Fox, Disney, Comcast) and new (AT&T, Verizon, Google) charge what the traffic will be forced to pay. A $1B tab for 2008 will be seen as a quaintly modest affair, as new media outlets reap many more future political profits (and power).

Here’s an excerpt from Ad Age: “Amid mouthwatering visions of more than $1 billion in spending on the most wide-open race since the TV era began, stations will have to devise some way to handle the rush when close to two dozen candidates come knocking at the same time… Evan Tracey, chief operating officer of TNSMI/Campaign Media, said advertising could well start in force this summer, with candidates trying to introduce or establish themselves early. Despite the early start, time is still an issue. “This kind of wide-open race is unprecedented, and there is only so much [ad] time,” said Jim Boyer, president and general manager of Des Moines station WHO-TV, a CBS affiliate.”

Source:
“TV Stations Prepare for $1 Billion Presidential Ad Onslaught
Dozens of Candidates Create Most Wide-Open Race Since TV Era Began.” Ira Teinowitz. Ad Age. January 29, 2007

The Brandwashing of America: Micropersuasion in the Digital Era. Adapted from my new book, Digital Destiny

(The following commentary was published by Advertising Age online, Jan. 9, 2007)

‘Digital Destiny’ Author Jeff Chester on How New Media Is Causing the Brandwashing of America

Published: January 09, 2007

We are witnessing the creation of the most powerful media and communications system ever developed. A flood of compelling video images propelled by the interactivity of the internet will be delivered though digital TVs, PCs, cellphones, digital video recorders, iPods, and countless mobile devices. These technologies will surround us, immerse us, always be on, wherever we are — at home, work or play.

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Jeff Chester is the executive director of the Center for Digital Democracy, Washington a nonprofit policy group focusing on digital communications. | ALSO: Comment on this issue in the ‘Your Opinion’ box below.

Related Story:

America Is Being ‘Brandwashed’ Claims Author
Jeff Chester Says Ad Industry Secretly Tracks Consumers

Following our travels
Much of the programming will be personalized, selected by us with the help of increasingly sophisticated, but largely invisible, technologies that will “sense” or “know” our interests, dislikes, and habits. Information about our travels — in cyber and real space — will be collected and stored, most often without our awareness. Our personal data will be the basis of computerized profiles that quickly generate commercial pitches honed to precisely fit our psychology and behavior.

A ubiquitous system of micropersusaion is emerging, where the potent forces of new media are being unleashed to influence our individual behavior. From the ad industry’s initiatives to better perfect measures such as “engagement,” to the MI4 research effort (Measurement Initiative for Advertising, Agencies, Media and Researchers) to harness the power of the unconscious mind, to the rapid evolution of “rich media” virtual applications, a marketing technological “arms race” is underway that will further permeate advertising and marketing in our daily lives.

Wherever we are — online or in the street connected by mobile devices — Americans (and much of the world) will be increasingly influenced by the technologies of digital marketing. Such a system will be greatly aided by the scores of supplemental “real world” marketing efforts, including teams of viral street marketers and brand evangelists (many of whom are not yet old enough to vote!).

Increasing power
The ad industry likes to claim that the public has more control over what advertising they see or whether they like it at all. Many Ad Age readers point to the increasing expansion of the media and argue that advertising is now less powerful. But such assertions are disingenuous. Fueled by global media consolidation, advertisers are now working even more closely with content companies. Product placement has morphed into “program” placement and beyond. Like radio and the early days of broadcast TV, marketing, distribution and content are increasingly seamless. The broadband internet, digital TV and new forms of mobile communications are all being shaped by the forces of marketing. As I argue in my new book, “Digital Destiny: New Media and the Future of Democracy,” advertising is becoming more powerful, not less.

In the book, I chronicle the ad industry’s role in helping shape the early development of the internet, including how groups and companies such as the Advertising Research Foundation (ARF), Procter & Gamble Co., and The New York Times promoted what was once called the “Internet Advertising Ecosystem.” It covers the evolution of the “one-to-one,” “new media” marketing paradigm that still serves as the industry’s basic digital blueprint (further fueled today by sophisticated off- and online data collection, web analytics, interactivity and the branding power of video). The ad industry’s substantial research and political infrastructure — including ARF, Association of National Advertisers, American Association of Advertising Agencies, Interactive Advertising Bureau, its many councils and committees and global groups such as Esomar — are also explained.

From online “behavioral targeting” to interactive ad networks to “virtual hosts” and other “socially intelligent interfaces,” the book attempts to lay bare what marketers plan for the country’s “digital destiny.” Although readers of Ad Age know well what is now underway and its likely impact, the public is largely uninformed. One of my goals is to encourage a meaningful national debate about the current direction of the ad and marketing industry and its impact on society.

Let consumers decide
One of the most serious concerns is about privacy. Most marketers and advertisers are opposed to permitting consumers/users to have real control over their data. They want the default to be the collection of information so we can be precisely targeted. That’s why privacy groups, including my own Center for Digital Democracy (CDD), want Congress to pass legislation requiring a full disclosure of what information is being collected, via what method, and how it is to be used. After examining such details, each consumer would decide on a periodic basis whether to agree to permit the collection of their data (known as “opt-in”).

The current “opt-out” system, where consumers have to proactively seek to place their personal information off-limits, is designed to ensure that most consumers consent by default to data collection. New threats to our privacy from marketers and advertisers have emerged, including behavioral targeting, online retargeting (where consumers are digitally shadowed over ad networks), and the emergence of “intelligent ad engines” placed in cellphones and other mobile devices.

Recently, CDD and the U.S. Public Interest Research Group jointly filed a petition with the Federal Trade Commission asking the agency to declare many of today’s interactive advertising industry practices, including behavioral targeting and virtual advertising, unfair and deceptive. It appears that the FTC is now slowly lifting its head out of the digital sand to seriously investigate the industry based on our complaint. But it will take prodding from the new Congress to get the FTC to act.

Safeguards for new technology
Beyond privacy, interactive-marketing technologies also raise unique concerns about “vulnerable” populations. Unleashing personalized and cyber-virtual marketing to children, teens, prescription-drug users, and the elderly raise important questions related to public health. These groups will need to be protected with new safeguards. But even more is at stake. The entire system of interactive advertising must become more transparent and requires intense public scrutiny, debate, and — where needed — effective public policies.

For example, advertisers are now working to harness the power of our emotions through research on “neuroscience” and “psychophysiology.” As the ARF and AAAA explained in 2005 during Advertising Week, the industry wants to “capture unconscious thought, recognition of symbols and metaphors.”

“Emotional responses can be created even if we have no awareness of the stimuli that caused them,” the ARF and AAAA noted. Such potential manipulation of a consumer’s unconscious will be even more powerful when delivered by virtual agents (such as avatars) that have been fashioned (via data profiling) to dovetail with our desires and interests.

What’s the long-term impact?
I fear that such a powerful psychosocial stealth-marketing machine, backed by the yearly expenditure of many billions of marketing dollars, will drive personal consumption to greater excess. What will be the impact on our environment, such as global warming, as a steady stream of interactive marketing messages are planted deep into our brains wherever we go? Will the digital push to buy and positively associate with brands promote an even more narcissistic human culture? What will be the impact of our personalized communications marketing system on the healthy development of children, families and communities?

The ad and marketing industries have an important role to play in our society, especially helping financially support news, information, and entertainment services. I recognize that advertising will continue to be a very powerful force in our lives. But marketers need to demonstrate greater social responsibility. They must ensure that consumers fully understand and consent to digital techniques; make certain that approaches to target our emotions and other brain behaviors are truly safe (including the impact of virtual reality); and, most importantly, help our media system evolve in a way that strengthens civil society.

Such a goal is not for the U.S. alone, but also involves how the marketing industry serves the public in the developing world. For example, what will be the impact on the world environment as China’s emerging digital infrastructure is bombarded with one-to-one commercial messages promoting automobiles?

The creation of a broadband media system will be viewed by future generations as one of our society’s most significant accomplishments. Will it be seen as one of the highest achievements for a democracy, a place in cyberspace that helped enrich the lives of many and offered new opportunities for an outpouring of cultural and civic expression? Or will it been seen years hence as a new version of what the late scholar Neil Postman aptly described as a medium even more capable of “amusing ourselves to death”? The readers of Ad Age will help determine that answer.

~ ~ ~
This column was adapted from Mr. Chester’s new book “Digital Destiny” (The New Press, 2007).

New York Times and Network Neutrality: Great position. But the paper needs to disclose its own conflicts on the issue

This week the New York Times editorial page weighed-in to support national legislation requiring network neutrality (“Protecting Internet Democracy,” January 3, 2007. Reg. may be required). We share those sentiments, of course. It’s time for a law that restores and extends Internet non-discrimination in the U.S. But we also believe that news organizations need to inform readers/viewers/users about how their own corporate relationships are affected by communications policy issues. The New York Times Co. is staking much of its future on digital media, including interactive advertising. For example, it acquired the About.com informational web service in 2005 for $410 million. The goal, said Times Co. officials, was to “increase the company’s revenue from the expanding online advertising business.” The Times Co. has historically been a leader in developing interactive marketing techniques, including so-called “surround sessions” which enable advertisers to digitally follow New York Times online users as they access the paper electronically. Indeed, as we cover in our new book, Digital Destiny, the Times Co.’s Martin Nisenholtz (who heads its digital operations) has been a key ad industry leader promoting the advance of interactive data collection and personalized targeted marketing. Few Times readers and users really understand what the Times Co. is doing with all this data in the service of its advertisers.

The Times Co. requires network neutrality—otherwise it knows it will have to pay a digital version of the Mafioso-like vig to Comcast, Time Warner, Verizon and AT&T. The major phone and cable conglomerates want to charge everyone an assortment of fees for higher-speed Internet distribution, creating a de facto pay toll road for broadband. Given that everyone will be distributing video-centered multimedia to TV’s, cell phones and PC’s, having such “premium for a price” Internet access will be a necessity to prosper in the Web 2.0 and beyond era. Therefore, the Times Co must have network neutrality if its investments in About.com and other “new media” related strategies will return the profits to help support its journalism (which is a key reason why the country requires network neutrality. Without it, serious journalism will be in future jeopardy—as it is today).

Today, the Times reported that its parent company was selling off its television station group. It’s another indication that the Times Co. (wisely) understands its future lies with broadband. But the success of such a business model depends in part on an open Internet. We believe that the Times should have explained to its readers that when it supports network neutrality, it has its own financial future at stake. The paper, and the rest of the Times properties, should also begin to inform its users about the range of data collection and targeted electronic marketing its doing. Complete and full disclosure should be the rule—not an after-thought serving as fodder for bloggers.

CDT Works to Undermine the Public Interest in Broadband/ Allies with PFF

The Center for Democracy and Technology (CDT) has long served as part of the political support system for the telecom and media industries. While many view CDT as a privacy group, a great deal of what the organization does benefits its corporate supporters—which have been some of the biggest media and data collection companies in the country. They have included Axciom, Doubleclick, Time Warner, AT&T, Microsoft, Yahoo!, Google and Intel.

Now, CDT has joined forces with one of the key corporate funded groups that has been leading the charge against network neutrality: the Progress and Freedom Foundation. PFF, co-founded by Newt Gingrich, is also supported by numerous corporate media/telecom interests, including Murdoch’s News Corp. (Fox), AT&T, BellSouth, Comcast, Clear Channel, GE/NBC, Google and Microsoft.

Yesterday, the two groups jointly filed amicus briefs in federal courts supporting News Corp./Fox and NBC’s efforts to undermine the ability of the FCC to regulate communications. The TV networks are fighting the FCC’s recent decisions on broadcast indecency. But the CDT/PFF filing wasn’t only about over-turning the FCC’s foolhardy and inappropriate efforts on so-called indecent content. The message CDT and PFF gave to the courts was they should rein in any effort by the FCC to ensure that the public interest be served in the digital media era. The filing claims that convergence of various media, including the Internet, make any policy role for the FCC related to diversity of content a threat to free speech itself. A very convenient argument that must warm the hearts of both CDT’s and PFF’s corporate funders, because they are precisely the companies who wish to avoid having a public interest regulatory regime in broadband.

Missing from the brief is any discussion of the regulatory areas for broadband (including PC, mobile, and digital TV [IPTV] platforms) that will require federal policy, including a key role for the FCC. Among them, ensuring an open, non-discriminatory content distribution policy for the Internet—network neutrality. Other rules that will require FCC action in the broadband era include ensuring “free” and “equal” time for political speech; diversity of content ownership, including by women and persons of color; localism; public service; privacy; and advertising regulation. There will need to be ad safeguards, for example, protecting children from interactive marketing that promotes obesity as well as with prescription drug ads targeting seniors via immersive “one-to-one” media techniques.

CDT and PFF argue that the new media environment provides the public with greater choice, another reason they urge the courts to limit FCC authority. But what’s really happening with digital media is that we are facing a system where the “choices” are being meaningfully reduced by the market. Wherever the public goes, the forces of conglomerate media and advertising will confront them. Consider, for example, News Corp.‘s MySpace now running Fox programming. (It’s interestingly, by the way, that neither CDT nor PFF told the courts that they have a financial relationship with some of the interests involved in the indecency debate).

We have long opposed FCC efforts to “regulate” indecency, including being critical of FCC Commissioner Michael Copps (whom we otherwise strongly admire). The indecency effort by the FCC has helped let it become vulnerable to this attack by the media conglomerates, and their supporters, who have a longstanding political agenda aimed at sweeping away all regulation and safeguards. Fox, NBC, Viacom, Disney and the rest want a U.S. media system where they can own as many media outlets as they want, not have to do any public service, nor worry about regulators concerned about threats to privacy and interactive marketing abuses.

The emerging broadband era in the U.S. will see us face further consolidation of ownership of media outlets, including the Internet, as well as an increase in overall commercialization. The cry that Wall Street has for broadband is “monetization.” But our electronic media system must also serve democracy—not just the interests of those who want to make money. Civic participation, public interest civic media, and safeguards from content and services designed to manipulate us must be addressed. There is a role for the FCC in all this. (We shouldn’t throw-out as “bathwater” the potential of our broadband media to serve democracy and a role for the FCC because we are upset about it catering to zealous social conservatives who don’t like some programming).

Finally, shame on CDT for joining up with PFF. PFF is an opponent of the network neutrality policy for the Internet. It has also long opposed any meaningful role for the FCC. But, perhaps that’s the point. If PFF gets it way, its backers–and many of CDT’s–will be free to do as they please, regardless of the consequences to our democracy.

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