MediaBizBuzz for March 24, 2008: Cleaning House: Confronting What's Broken In Politics, The Economy, Media, Healthcare, And The Web

It's easy to feel mired these days. Last week tested us on all fronts. While John McCain was busy getting his Eurail Pass stamped, Barack Obama arguably gave the political speech of his life. The Fed worked its triage on Wall Street, trying to stanch the bleeding as we approach this Thursday's reveal of 4Q GDP; if the decline's two consecutive quarters, we meet the textbook definition of a recession. But are old benchmarks - including Bernanke's close study of the 1929 Depression, outmoded themselves? In hindsight we should have expected a correction. We're smackdab in the middle of systems and processes that are quickly becoming extinct, and new approaches to thinking and economic models that are still in "beta." Human nature being what it is, speculation - whether be they tulips or derivatives - is inevitable.

While Rome Burns
John Q. Public has been getting one helluva lesson on those financial instruments that the banking sector has innovated since the late '90s. As recently as last year, Congressman Barney Frank met with former Citi head Charlie O. Prince III and asked of derivatives: "Why aren't they on your balance sheet?" Indeed. Transparency is a good strategy - even for financial models. On yesterday's Meet The Press, host Tim Russert had CNBC's Maria Bartiromo and Erin Burnett explain the fix we're in. For an eight minute segment, it's to the point. The short term looks rough - The New York Post (by way of Silicon Alley Insider) predicts 50% layoffs at Bear Stearns. John C. Dvorak thinks that semiconductor stocks are undervalued - particularly SanDisk. Our own Jack Myers looks at the economic impact in the media sector.

Barack Unbound
You'd think this were a one-party system what with the dominance of Barack Obama last week. His Tuesday speech was sink or swim -- but he defied expectations and walked on water. Not only on a rhetorical scale, but ratings-wise as well. Four million folks tuned in for the mid-day speech and Silicon Alley Insider dubbed him President of YouTube based on the millions of pageviews of the speech. It hasn't gone unnoticed that online video is the secret sauce in this presidential primary cycle: Feed's Josh Warner deconstructs how an Obama viral video was seeded in AdAge, while ValleyWag (as is their wont) lays out the "dirty tricks" strategy oppo staffers need as they mount the next Swiftboat campaign.

At Auction's End
If there was a single-minded coverage in politics, policy matters in Washington all seemed to have their source in the end of the 700 MHz wireless auction, with big winners Verizon and AT&T. [Sidebar: EchoStar bid $711M for frequencies, so look for them to get into the wireless game.] The general counsel of also-ran bidder Google posted on its blog how the consumer was the winner with the C Block open to all, even as paidContent's mocoNews.net reported that a definition of "open" is demanded as the FCC and Verizon don't seem to agree. In the same basket are ongoing debates over Net Neutrality. After Comcast admitted to stacking the last hearing at Harvard's Berkman Center, the FCC has finally agreed to an April 17 do over at Stanford. The next frontier seems to be over ISP tracking and privacy issues -- the New York Times' Bits blog gives an overview of the players in this field, including Phorm and Front Porch.

Now Hear This
Thanks to the legacy of the RIAA, the music industry continues to experience a painful evolution into its future self. DRM seems to be on the wane, but the economics of the space are skewed. While singer/socialist Billy Bragg writes in the New York Times that performing artists should see a piece of the action that social network Bebo's founders enjoyed in their sale to AOL, he was roundly ridiculed by TechCrunch's Michael Arrington, the latter saying "Recorded music is nothing but marketing material to drive awareness of an artist." This seems a fundamental misread from Arrington. Just because the cost of a digital copy is close to zero, does not mean that artists shouldn't be compensated as the glue of social networks including Bebo, Facebook, and MySpace. Bragg's piece is more of a discussion about the way forward and the ethics of performance royalties. Obviously, both the recording industry and Apple see a value for their digital music, as rumors swirl around an unlimited iTunes subscription.

11th Commandment: Honor Thy Customer
No one e-commerce company should take that to heart more than eBay, which has just announced a "restructuring" -- bringing together customer service, their Marketplace, and PayPal, while laying off 125 folks moments before Meg Whitman steps down on March 31st. While it's too soon to tell if these moves bear any relation to the recent boycott, eBay is far from alone when it comes to misreading its community. There's indifference, and then there's contempt. Not learning its rootkitlesson, Sony was going to charge $50 to remove "bloatware" from its hardware; it quickly backpedalled. Effective April 15th, DirecTV customers will see their PPV's deleted after 24 hours. Given the mire that Comcast finds itself in with the FCC over traffic shaping, here's an eyeopener: Gerard Kunkel, its senior VP of user experience, told NewTeeVee that they were testing embedding cameras in its DVRs to distinguish who's watching. And despite offering the fine In Treatment for free on iTunes, HBO has introduced DRM that prevents subscribers from watching their John Adams miniseries more than once.Way to go, guys.

Six Degrees
But for each wrongheaded -- or creepy -- move, there are evolutionary leaps forward. Casual gaming? A monster. The growth of both social networks, blogs, and online video has been exponential. While MySpace had single digit gains for last year, Facebook more than doubled in size, while LinkedIn grew 271%! For the first time HuffingtonPost outpaced Drudge, while NewsCorp's Fox likewise whipped CBS. Calling oneself an "advertising blog network" seems to be license to print Benjamins, even in this scattershot economic climate. Last week first TechCrunch first reported that paidContent was raising money, Silicon Alley Insider then called kettle black on TechCrunch. Federated's John Battelle (himself raising capital) tried to calm expectations, dissing Glam in the process. Ever since Hulu left beta, the major portals have followed their lead and begun offering full episodes of TV content. Hollywood Reporter has the rundown on their offerings. TechCrunch features PrimeTimeRewind, while Warner Bros.' Jim Wuthrich explains why movie content remains few and far between on Hulu: "It's too early to have movies in that model." He better get with the program -- On Demand is estimated by Screen Digest to be a $1.1B market by 2012. Curiosly, Veoh claims that network fare only accounts for 15% of its downloads. Here's class: Apple recently sent an email to its iTunes Season Pass customers, offering download credits for series that were yanked off the air due to the Writers Strike. Just as Microsoft and Google are about to ramp up their healthcare efforts, paidContent sponsored EconHealth. Yesterday's Sunday Times piece on health social network PatientsLikeMe is nothing short of remarkable - it's a must read.

It's fitting to close with Vint Cerf's tribute to Arthur C. Clarke, who passed on last Tuesday -- the night coincidentally of SciFi Channel's Upfront. The sci-fi author and futurist wrote about global warming in 1957, anticipated GPS, and gave us 2001: A Space Odyssey. He truly lived for tomorrow.