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Media Decoder Blog: The Breakfast Meeting: TV Pilots Move to the Web and Fox Prepares to Take On ESPN

March 5, 2013 by Leave a Comment

TV shows like “House of Cards,” “Hemlock Grove” and the latest iteration of “Arrested Development” are debuting regularly on streaming services like Netflix, signaling a departure from traditional networks and a sea change in the way television is viewed, Brian Stelter writes. Amazon.com and Microsoft are also commissioning original shows for their millions of subscribers. The shows’ production values now rival those of network television, and their proliferation is seen as a good thing for viewers that may inflame cable companies’ concerns about cutting the cord.

On Tuesday Fox will announce its intention to start Fox Sports 1, an all-sports network that will challenge ESPN’s television sports empire, by this August, Richard Sandomir and Amy Chozick report. The channel will carry Nascar races, Major League Baseball games, college basketball and football, soccer and U.F.C. fights, as well as studio shows. Fox will join an already crowded market. ESPN’s many offerings, including eight cable channels, radio network, Web sites and ESPN3 broadband network, collectively generate $6 billion annually. And then there are sports channels from NBC, CBS, the Big Ten and Pacific-12 conferences, and Major League Baseball, the National Football League and National Hockey League. Nevertheless, Fox is regarded as asset-rich, with deals in place to broadcast many sporting events, and has already spent months planning to convert Speed, a cable motor sports channel, into Fox Sports 1, and Fuel, another channel, into Fox Sports 2.

New advertising agencies are proliferating in San Francisco, Stuart Elliott reports. The agencies, often start-ups by people with years of industry experience, have embraced the entrepreneurial spirit of Silicon Valley coupled with a San Francisco independence peculiar to the city’s ad industry. Innovative thinking and offbeat nomenclature are the norm, as evidenced by agencies like Cutwater, Dojo, Eleven, Mekanism, Odopod, Sequence, Signal to Noise and AKQA (for “all known questions answered”).

An advertising campaign for the city of Houston has undergone a makeover, from a focus on celebrities who hail from that city to the lesser-known chefs, restaurateurs, artists, designers, actors, musicians and curators who make the city vibrant, Stuart Elliott writes. The campaign, called “Houston Is,” replaces the “My Houston” campaign, which has run for five years. The campaign, produced internally at the Greater Houston Convention and Visitors Bureau and with an estimated budget of $440,000, will sell the Houston by celebrating the Houstonians who are the driving forces behind the restaurants, museums, galleries and other attractions.

The Walt Disney Company plans to offer advertisers guarantees for video programming from ABC, ABC Family and ESPN distributed both online and on television, Bill Carter reports. ABC has aggressively sought a way to gather data necessary to make predictions for both television and online viewing. Television networks traditionally guarantee advertisers that they will deliver a certain number of viewers in specific demographic groups and provide free advertising if viewership falls short of the guarantees. Online viewing has lacked a service that could provide specific data about audiences — Nielsen is now using data from Facebook to help identify viewer makeup for shows.

Article source: http://mediadecoder.blogs.nytimes.com/2013/03/05/the-breakfast-meeting-tv-pilots-move-to-the-web-and-fox-prepares-to-take-on-espn/?partner=rss&emc=rss

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Media Decoder Blog: Streaming and Micropennies: The Footnotes

January 30, 2013 by Leave a Comment

In Tuesday’s paper, I wrote about the royalties that musicians and record companies earn from online streaming companies like Spotify, Pandora and YouTube.

Digital Notes

Daily updates on the business of digital music.

As an overview of a complicated issue, the article made only brief mention of some important points, and it omitted others altogether. So to flesh out this issue a little more, and, I hope, to answer some of the questions that readers have asked, here are a few additional points — call them footnotes — about royalties, streaming and the music business.

1. The role of record labels. When it comes to royalties, the relationship between artist and label has long been fraught, but it has become especially strained in the streaming age, for two reasons.

First, digital services generally don’t do business with musicians directly, but instead go through labels or distributors, which are then responsible for paying royalties. But exactly how those royalties are calculated is often in dispute. Older artists may have no provisions in their contracts for such streaming services, or digital music at all. And despite some major lawsuits, the matter is far from settled.

Second, there is wide suspicion in the industry about the deals between labels and digital services. Labels own equity in some of these services, as a condition of licensing their content. (The major labels, for example, own a minority stake in Spotify.) Critics say this creates a conflict of interest, in which labels could accept a lower royalty rate in exchange the benefits of ownership, like profits from a sale. Artists — and, especially, their managers and lawyers — worry that this money would never trickle down to them.

2. Apples and oranges. It’s tricky to compare Spotify to YouTube, Sirius XM to Pandora, Rdio to your favorite radio station’s Web stream. Subtle differences in technology and in law can result in very different payouts.

For example, the royalty rate Pandora pays to record companies and performing artists is set by federal statute; last year it was 0.11 cent a stream, which in the company’s most recent fiscal quarter amounted to about $60 million, or half its revenue. But because of different legal standards, Sirius XM’s statutory rate for the same royalty is only 9 percent of its revenue. Radio companies pay yet another rate for their Web streams.

When it comes to terrestrial radio, however, the biggest issue is that in the United States broadcasters do not pay any of these royalties, which cover the use of a sound recording. Instead, radio stations pay only music publishers and songwriters. (Changes to some of these rules may be considered in Congress this year; they have been proposed before but usually failed to pass.)

All of this makes it difficult to generalize about royalties but not impossible. In my view, all the numbers and standards and rates are equalized when it comes to the artist’s bottom line.

3. What ownership means. Will customers care about owning CDs and downloads anymore, or will they be satisfied by the access to huge song libraries offered by streaming? There is no conclusive data on this, but it gets to the heart of why streaming is both loved and feared.

If services like Spotify become as prevalent as, say, cable television, one argument goes, then it is possible that they could replace or even surpass lost earnings from CD sales. But how will they do that if so much music is available free?

Spotify says it has 20 million users around the world, a quarter of whom pay the monthly subscription rate. Others that started out as paying subscription services have felt pressure to add free tiers, and research increasingly shows that the youngest listeners simply go to YouTube. Some analysts believe that all of this could force subscription prices down, which in turn would reduce royalties.

A different aspect of ownership is also relevant: the question of who owns recordings. Zoe Keating, the cellist quoted in the article, owns her own copyrights, so she may earn a higher royalty than another artist whose music is controlled by a record label. Other hands are in the pot as well, like distributors’, which may take as much as 20 percent of the paycheck from Spotify or iTunes before an artist sees his or her cut.

4. What about touring and T-shirts? Since the start of the digital music era, one consolation for artists has been that even if their CD sales plunge, they could still make money on the road and through direct sales to their fans. But can these — and other forms of revenue, like sponsorship — completely make up for lost music royalties?

Some might say this is already the reality facing many artists, and it may only continue to spread if royalties fall. But as a general business model, it is problematic.

For one thing, the devaluation of a recording means not only that a musician will not earn money from it now, but also in the future — long after a musician may have given up touring. Also, any musician who has lugged a drum set and a vanful of amps across the country will know that touring is expensive. Even for those who can tour regularly — which isn’t everybody — there is no guarantee of profit.

5. New business models. One positive byproduct of the music industry’s digital crisis is that it has spawned lots of brainstorming and experimentation about new ways to do business. These include things like direct-to-fan businesses that let artists of every level sell premium products to their most ardent followers; crowdfunding sites that let artists raise money for projects on their own; and Web strategies of all kinds that let some musicians prosper independently.

All of these are great developments. But I don’t believe that any of them can completely insulate artists from the prevailing practices of the industry, and royalty rates are one of the fundamentals that, one way or another, wind up affecting everybody.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/29/streaming-and-micropennies-the-footnotes/?partner=rss&emc=rss

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Media Decoder Blog: Apple’s Plans for Internet Radio Run Up Against Big Music Publisher

September 29, 2012 by Leave a Comment

Apple’s plans for an Internet radio service have hit a snag over the licensing of music controlled by Sony/ATV, which recently became the world’s biggest music publisher.

The two companies are at odds over what rate Apple should pay to stream Sony/ATV songs on its service, a money standoff typical of such negotiations.

But what is new is that Apple needs to negotiate at all. Typically, streaming services have obtained publishing rights from the major performing rights organizations, Ascap and BMI, which for decades have acted as clearinghouses on behalf of publishers and songwriters.

In recent years, some music companies have moved away from that model, figuring that the returns would be better if they handled licensing directly and opted out of the blanket rates set by those organizations.

When an investor group led by Sony bought EMI Music Publishing in June for $2.2 billion, Sony/ATV, a joint venture between Sony and the estate of Michael Jackson, took control of the world’s largest music publishing catalog with two million songs, including most of the Beatles songs as well as current hits by Lady Gaga and Taylor Swift.

EMI already withdrew its digital rights from Ascap, and Sony/ATV will follow suit with the rest of its catalog, effective Jan 1.

So just as Apple hopes to line up the licenses it needs to operate a streaming radio service, obtaining those licenses has suddenly become more complicated.

Martin N. Bandier, the chairman of Sony/ATV, said in an interview on Friday that the disagreement with Apple was simply an effort to obtain a higher royalty rate for his songwriters.

“This wasn’t us not wanting the service,” Mr. Bandier said. “We want the service. It’s like oxygen. We just want to be paid fairly, no different than the N.F.L. refs.”

Apple declined to comment. The news of Sony/ATV’s negotiating standoff with Apple was first reported by The New York Post.

Article source: http://mediadecoder.blogs.nytimes.com/2012/09/28/apples-plans-for-internet-radio-come-up-against-big-music-publisher/?partner=rss&emc=rss

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Clear Channel and Cumulus Form Daily-Deal Alliance

December 5, 2011 by Leave a Comment

On Monday Clear Channel Communications, which owns about 850 stations, will announce that it will run ads for SweetJack, the daily-deals program owned by Cumulus Media. In turn, Cumulus, the second-biggest operator with 570 stations, will become part of iHeartRadio, Clear Channel’s streaming app and all-purpose online radio brand. The financial terms were not disclosed.

The deal will help Cumulus quickly expand its nascent discount service to hundreds of cities and compete with the dominant daily-deal players, Groupon and LivingSocial. SweetJack, which sells promotions to local merchants and advertises the deals on the air and online, opened in April, shortly after Cumulus agreed to pay $2.5 billion to acquire the Citadel Broadcasting Corporation.

Cumulus has introduced SweetJack in 16 cities and signed up one million users, the company said. By teaming with Clear Channel, Cumulus plans to take the service to 120 markets by the end of next year.

SweetJack will have its own sales forces in local markets, and the companies plan to share profits from the service, said Lewis W. Dickey Jr., Cumulus’s chief executive.

Clear Channel also stands to significantly expand iHeartRadio, which collects streams from 800 of its stations along with programming from broadcasters like Univision and the New York public radio station WNYC. It also offers a Pandora-like personalized music service; the company said the app had been downloaded 44 million times by users.

Over the last decade, as traditional radio companies have faced new forms of competition from satellite radio and streaming services like Pandora, the Web has become an important vehicle for the broadcasters to expand their reach.

Robert W. Pittman, Clear Channel’s chief executive, said in an interview on Sunday that the deal represented “one more data point that proves radio is not a laggard, that we do see the future, and that we’re moving toward it in a smart and fast way.”

The daily deals market is worth $1.97 billion in sales, according to BIA/Kelsey, a market research company.

But it is unclear how many players the market can support. With the success of Groupon, numerous companies have introduced similar programs, including other broadcasters like Cox Radio. Many have had limited success, and Groupon itself has stumbled; its stock has fallen about 27 percent since the company went public a month ago.

Mr. Dickey said that the wide reach of radio could give an advantage to SweetJack that no other company had, and that between Cumulus’s own expansion and the deal with Clear Channel, the program could reach as much as 90 percent of the United States market. And he believes that fans of daily deals will be interested in more than one service.

“What has happened in the daily deal space is that heavy users tend to have multiple sites they will look at on a daily basis,” Mr. Dickey said in an interview. “We found this an excellent opportunity for radio to enter that space and compete for the long tail of advertising.”

Article source: http://feeds.nytimes.com/click.phdo?i=0be49fb30e43bc875fc9d1fbfddb8ce5

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Media Decoder Blog: The Quick Demise of Qwikster

October 11, 2011 by Leave a Comment

7:19 p.m. | Updated

The New Coke experiment lasted less than three months. Qwikster did not even make it make it out of the bottle.

In a swift reversal, Netflix said Monday that it had decided to keep its DVD-by-mail and online streaming services together under one name and one Web site, abandoning the breakup it had announced three weeks earlier.

The company, which will keep a recent 60 percent price increase in place, declared that it had moved too fast when it tried to spin-off the old-fashioned DVD service into a new company called Qwikster, angering many subscribers. “We underestimated the appeal of the single Web site and a single service,” Steve Swasey, a Netflix spokesman, said in an interview, before quickly adding: “We greatly underestimated it.”

Some reacted on Monday by teasing Netflix and its chief executive, Reed Hastings, for being topsy-turvy, but many praised the company for, as Ingrid Chung of Goldman Sachs put it in an analysts’ note, “listening to its customers (finally) and working to fix its relationship” with them. On Monday morning, Netflix e-mailed people who recently canceled their accounts to tell them about the reversal.

Maybe, some said, after a season of spectacular missteps, Netflix has finally figured out how to communicate effectively about its future. Or maybe now the company is just saying what its subscribers want to hear — that those who want both online streams and DVDs won’t have to manage two accounts and pay two bills each month, after all.

Netflix stock, which has lost almost two-thirds of its value in the last three months, rose on the news on Monday morning, but declined in the afternoon, closing down 4.8 percent at $111.62.

Richard Greenfield, a media analyst for BTIG Capital, said in an e-mail message that Monday’s announcement was the “necessary reversal of a bad decision.”

“The key remaining question,” he said, “is ‘Why did they make the Qwikster decision in the first place?’ ”

Netflix said it never actually separated the services or started Qwikster. But the planned breakup was rooted in Mr. Hastings’ belief that DVDs and online streams have different cost structures and different consumer demographics.

In July, to address the structural underpinnings of the business, he announced that the company would start charging $8 a month for both its streaming service and its DVD service, a total of $16 a month for the combination. Previously, DVDs were a $2 add-on to the $8 streaming service. Of course, subscribers who only wanted one service or the other — most new subscribers only want the online streams — saw no price hike, but that fact was drowned out by the outcry.

Netflix expected some of its 25 million subscribers to cancel in the wake of the price change, but the cancellation rate exceeded expectations. The company said on Sept. 15 that it expected to report a quarterly decline of about one million in the third quarter, which ended on Sept. 30.

Still, it pressed forward, announcing the breakup plan the night of Sept. 17. “Companies rarely die from moving too fast, and they frequently die from moving too slowly,” Mr. Hastings wrote in a blog post that night. His implication then was that Netflix had to act aggressively to expand its fast-growing streaming service by severing its older, slower DVD-by-mail arm.

In a sentence that now seems like a bit of foreshadowing, Mr. Hastings also wrote, “It is possible we are moving too fast — it is hard to say.”

Tens of thousands spoke out against the plan on Netflix’s Web site and others, and Netflix stock slid sharply. Three days after the announcement, Mr. Hastings wrote in a Facebook status update, “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.”

Then came the flip-flop, announced Monday. Mr. Hastings declined interview requests, but he said in a statement that “there is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”

Mr. Swasey declined to comment on any involvement by the Netflix board in the decision to keep the two services together.

Some of the details of the reversal are still being deduced. Netflix’s plan for Qwikster to rent video games may or may not move forward; Mr. Swasey said that it was “to be determined.”

On Netflix’s blog on Monday, some subscribers called for Mr. Hastings’ ouster, but others called him courageous for owning up to his mistakes. Wrote Sean Michael McCord, a systems engineer, “I was ready to call the whole thing ‘Quitster’ for me, but now I may just stick around for awhile longer.”

Some analysts suspect that Netflix’s third-quarter losses exceeded the company’s already-lowered expectations, but the company declined to comment Monday. It will report earnings and subscriber figures on Oct. 24.

Despite the turnaround, online streaming remains the core business for Netflix going forward. A lack of compelling films and TV shows on the streaming service is a frequent lament, and it is likely to grow louder next winter: that’s when Sony and Disney films are expected to be removed, the result of a failed negotiation with Starz.

But Netflix is trying to stock up on more streaming content; last month it announced a deal with DreamWorks Animation to stream that studio’s films starting in 2013, and last week it announced a deal with AMC Networks to stream old episodes of TV shows like The company also remains interested in paying for the production of new TV shows. Earlier this year it ordered its first original drama, which is expected to have its premiere in late 2012.

It is now in talks to distribute new episodes of two canceled TV series, formerly of the Fox network, and “Reno 911,” formerly of Comedy Central. The past seasons of both shows can be streamed via Netflix — and can be rented on DVD, too.

Article source: http://feeds.nytimes.com/click.phdo?i=3cc9fbf0dd8f01d27335136151e445a2

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Media Decoder Blog: Netflix Abandons Plan to Rent DVDs on Qwikster

October 10, 2011 by Leave a Comment

10:22 a.m. | Updated Abandoning a break-up plan it announced last month, Netflix said Monday morning that it had decided to keep its DVD-by-mail and online streaming services together under one name and one Web site.

The company admitted that it had moved too fast when it tried to spin-off the old-fashioned DVD service into a new company called Qwikster.

“We underestimated the appeal of the single Web site and a single service,” Steve Swasey, a Netflix spokesman, said in a telephone interview. He quickly added: “We greatly underestimated it.”

Mr. Swasey said that the Netflix chief executive Reed Hastings declined an interview request. But in a statement, Mr. Hastings said, “Consumers value the simplicity Netflix has always offered and we respect that. There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.”

Mr. Swasey declined to comment on any involvement by the Netflix board in the decision to keep the two services together. Initial reaction to the Netflix announcement was largely positive, and the company’s stock rose about 6 percent in early trading.

In an analysts note, Ingrid Chung of Goldman Sachs credited Netflix management for “listening to its customers (finally) and working to fix its relationship with customers.”

Richard Greenfield, a media analyst for BTIG Capital, said in an e-mail message that Monday’s announcement was the “necessary reversal of a bad decision.”

“The key remaining question,” he said, “is why did they make the Qwikster decision in the first place?”

Netflix said it never actually separated the services or started Qwikster. But the Sept. 18 announcement that it intended to do so stoked anger among Netflix customers, some of whom were already incensed by a price hike to $16 from $10 for those who receive both DVDs and streaming. (That increase will remain in place.)

In a blog post that day about the plan, Mr. Hastings wrote, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.” His implication was that Netflix had to act aggressively to expand its fast-growing streaming service by severing its older, slower DVD-by-mail arm.

In a sentence that now seems like a bit of foreshadowing, Mr. Hastings also wrote, “It is possible we are moving too fast – it is hard to say.”

Netflix said that day that the separation would take effect in a few weeks. But tens of thousands spoke out against the plan on Netflix’s Web site and others, and Netflix stock slid sharply.

Three days after the announcement, Mr. Hastings wrote in a Facebook status update, “In Wyoming with 10 investors at a ranch/retreat. I think I might need a food taster. I can hardly blame them.”

The planned break-up was rooted in Mr. Hastings’ and Netflix’s belief that DVDs and online streams have different cost structures and different consumer demographics.

In July, to address the structural underpinnings of the business, Netflix announced that it would start charging $8 a month for both its streaming service and its DVD service, a total of $16 a month for the combination.

Previously, DVDs were a $2 add-on to the $8 streaming service. Of course, subscribers who only wanted one service or the other — most new subscribers only want the online streams — saw no price hike, but that fact was drowned out by the outcry.

Netflix expected some of its 25 million subscribers to cancel in the wake of the price change, but the cancellation rate exceeded expectations. The company said in mid-September that it expected to report a quarterly decline of about one million in the third quarter, which ended on Sept. 30.

But that guidance was given before the break-up was announced; Mr. Swasey said Netflix would not comment on whether the quarterly losses would exceed the already-lowered expectations. The company will report earnings and subscriber figures on Oct. 24.

On Sunday night, Mr. Swasey sought to reiterate what Mr. Hastings tried to say last month when he announced Qwikster: that Netflix had failed to communicate effectively about the price changes. “We had to look at the reality of what it cost” to mail multiple DVDs to households each month, Mr. Swasey said, noting that the round-trip postage alone for one DVD cost almost $1.

Under the plan announced on Monday, the price change will remain in effect, but the two services will not be untethered. That means that subscribers who want both online streams and DVDs won’t have to manage two accounts and pay two bills each month, after all.

Netflix tried to be crystal-clear about it, issuing a press release that was titled “DVDs Will Be Staying at Netflix.com” and sending e-mails to subscribers about the news.

“Netflix said in a Sept. 18 blog post that its DVD by mail service would operate at Qwikster.com,” the press release read. “Instead, U.S. members will continue to use one website, one account and one password for their movie and TV watching enjoyment under the Netflix brand.”

A plan for Qwikster to rent video games may or may not move forward; Mr. Swasey said it was “to be determined.”

Netflix, meanwhile, still has to concentrate on its online streaming service, which is widely considered to be its core business.

Next February, it is expected to lose the right to stream films from Walt Disney Studios and Sony Pictures Entertainment as a result of a failed renegotiation with the premium cable channel Starz. But it announced a deal last month with DreamWorks Animation to stream that studio’s films starting in 2013. Last week, it announced a deal with AMC Networks to stream old episodes of TV shows like “The Walking Dead.”

Netflix also remains interested in paying for the production of new TV shows. Earlier this year it ordered its first original drama, “House of Cards,” which is expected to have its premiere in late 2012. Now it is in talks to distribute new episodes of two cancelled TV series, “Arrested Development,” formerly of the Fox network, and “Reno 911,” formerly of Comedy Central. The past seasons of both shows can be streamed via Netflix — and can be rented on DVD, too.

Article source: http://feeds.nytimes.com/click.phdo?i=3cc9fbf0dd8f01d27335136151e445a2

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Media Decoder Blog: Starz to End Streaming Deal With Netflix

September 2, 2011 by Leave a Comment

8:20 p.m. | Updated The premium cable channel Starz said Thursday that it would not renew its closely watched distribution deal with Netflix, delivering the online streaming service a major, although not entirely unexpected, blow.

The deal is set to expire on Feb. 28, 2012. The Starz chief executive, Chris Albrecht, said in a statement Thursday afternoon that negotiations had ended.

The distribution deal is significant because Starz supplies a bounty of hit movies and several TV series to Netflix, helping retain some of the 25 million subscribers to the monthly streaming service. Starz controls the online distribution of Sony and Walt Disney films, so films from those studios would no longer be on Netflix after Feb. 28.

Without a steady supply of popular films and shows, Netflix risks the ire of subscribers. The company angered some customers this summer by separating its DVD-by-mail and online streaming services, effectively raising the price for subscribers using both services.

Netflix’s stock dropped about 8 percent in after-hours trading Thursday. It said in a statement that while the company regretted the decision by Starz, “we are grateful for the early notice” because it will “give us time to license other content before Starz expires.”

Netflix also asserted that Starz’s content had become less vital to its service over time. “We’ve licensed so much other great content,” including first-run films from Relativity, MGM, Paramount and Lionsgate. Starz content, it said, “is now down to about 8 percent of domestic Netflix subscribers’ viewing.

The statement continued, “We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.”

Starz started to distance itself from Netflix in March when it instituted a three-month delay between the time that it premieres TV episodes on its channel and when those episodes are available on Netflix.

Mr. Albrecht said in his statement Thursday, “This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content.” Starz declined to comment beyond the statement.

The original deal was worth about $30 million a year to Starz. Analysts thought a new deal could be 10 times as valuable.

Article source: http://feeds.nytimes.com/click.phdo?i=97fc4f22d563454004f7556dd5462b4b

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