Digital Dollars

            The way that production companies make money off of television shows in America is a disorganized hodge-podge of business methodologies that were obviously slapped together as quickly as possible by the Federal Communications Commission in conjunction with a number of legal and business representatives while attempting to maintain the integrity of the United States anti-trust laws.

            The situation isn’t as difficult in other countries where they were able to look at what had been done in the States, and then formulate their own system without the complexities that had developed through the spurious period of adaptation to a new form of technology.

            Today we are seeing this same response in the techniques being used by production companies to try and capitalize their products within the digital medium. Internet distribution is rapidly becoming just as needlessly complex as the American television distribution system due to the speed with which corporations are being forced to adjust their core business practices.

            However, the American broadcast system does provide a surprisingly reasonable framework upon which to base the evolution of Internet based production distribution.

            In order to operate within the laws of the United States, no business may control more than a certain percentage of a total market. This means that the major television networks are not allowed to own all of the individual local stations within the country. The business repercussions of this are remarkably similar to the situations inherent in on-line distribution where a variety of individual sites are competing on a global scale.

            There are three primary ways for a production company to make money off of a television show that they have produced in the United States.

            The first is called First Run Syndication. This is where the production company signs an exclusive agreement with a network to air new episodes of the show while it is being made.

            The second is called Off Network Syndication, or Second Run Syndication. This is colloquially referred to as “reruns”. This is the aspect of American distribution that most closely resembles Internet distribution. In this phase the show is sold as packages of multiple episodes (one to four seasons worth) to all of the individual local stations around the country.

            The specific purchase arrangements will vary from one station to the next. However, there are two specific methods that can be seen as viable to the digital medium. These methods include straight sales and bartering.

            In straight sales the production package is sold for cash with the station taking all advertising rights within the show.

            In bartering the show is given to the station for free, and the production company keeps the advertising rights in order to make their profit off of the sale of commercial time when the show is airing. This method will usually have a contractual agreement stipulating that the show will have a specific time slot.

            The third way of making money is non-broadcast sales. At this time that primarily consists of selling collectors sets of DVDs. While it can be very lucrative for a successful show it is not directly relevant to this discussion on conducting business within the on-line market.

            Now, if we look more closely at the system for Off Network Syndication we can see how the overall structure is quite closely related to Internet distribution. And, how the evolving business methodologies are reflections of the predecessing sales structure.

            At first, on-line video distribution involved no commercials or any exchange of money. It was used primarily as a vehicle for gaining publicity. Just as television shows were originally free, because they were actually trying to sell the television sets that people were using to watch the shows.

            Then, some enterprising individuals began adding commercials to on-line videos. This quickly developed into a system nearly identical to Off Network Syndication.

            Now, we are seeing the more successful digital distributors (such as Hulu) beginning to produce their own First Run shows. This then opens the door for other production companies to begin selling their shows to the larger digital distributors for First Run Syndication.

            The important aspect of this is that the digital platform allows the audience to choose what they want to watch at any time. Prime Time slots are now irrelevant. Additionally, the major networks were always constrained to the number of hours in a day. The digital platform does not have this limitation.

            A digital distributor could, in all plausibility, launch 300 First Run shows at the same time. Then, only keep the ones that get strong ratings after the first season.

            While it does mean a drastic reduction in the amount of money available for production costs, it has one huge benefit. In an increasingly tight market where production companies are constantly fighting for airtime it is now possible to give every show an equal chance.

            The potential for increasing revenue by allowing every consumer to choose which shows to watch instead of leaving the choice for airtime up to a small focus group is exponential. It also allows for a drastic shift in the way that shows are made.

            Small production companies with great but unknown writers can now have the same opportunities as large companies that get away with cranking out over used material just because the producer is friends with the right person at the network.

            It brings the success of a production company back to a merit based system. And, most importantly, it opens up new doors for fiscal gain through proven techniques that can now be refined.

            Quite frankly, I think the next decade of digital entertainment is going to be a lot of fun to make. And, I’m really going to enjoy the additional revenue it is going to generate.

Death of a Salesman

            Over the past decade there has been a great deal of positive declarations about the benefits of on-line retail. Money Morning even compiled a lengthy article detailing how on-line sales were not only growing, but also benefiting the economy as a whole.

            Many businesses have found it as a way to expand their existing services in order to reach new sales markets. It is also true that the advent of digital retail has opened up a low cost opportunity for small businesses that have interesting products, but lack the capital to found a brick and mortar enterprise.

            However, I have just read an article by Larry Downes that was published by Forbes that suggests otherwise. The articles can be seen HERE.

            Mr. Downes begins by trying to explain the complexities involved in the current downward spiral that is being experienced by Best Buy. He veers off slightly when he goes into detail about a personal encounter when he went shopping with a friend at the aforementioned mega store. However, his over all message is related most specifically to Internet sales.

            The main point that he brought up is that larger retail stores have now placed such an emphasis on digital sales that they are neglecting to maintain their standards for in store live customers. This is not entirely surprising.

            Stores used to conduct regular free events. They would employ live musicians and host elaborate holiday parties. Malls contained fountains, plants, and things to see. In the 1930’s people would go to Macy’s just to see the tree. In the 1980’s pop singer Tiffany became a household name by doing a tour of malls. And, then they stopped.

            It would be easy to blame on line sales for the losses in retail outlets. You could simply say that people aren’t showing up, because they have other options. But, that isn’t true. The reason customers aren’t showing up in person is because the stores aren’t giving them a reason too anymore.

            It began with cost cutting measures. Reducing over-head is such a simple way to make it look like you have an increase in profits without actually making any gains. Then they reduced salaries. This looked great in the budget, but employees who feel under appreciated are not overly eager to provide quality service. Then there is the ever-present threat of lay-offs, and the fact the retail stores only higher part-time employees so they don’t have to pay for benefits. Employees won’t be loyal to a company that isn’t loyal to them.

            But, the main problem is the atmosphere. There is nothing left to make it an experience. Now people are just wandering into a warehouse full of merchandise where people are rude to them.

            If retail wants to save its’ brick and mortar businesses they need to bring back the show. Add a little P.T. Barnum to the shopping experience. Get people to come because they want to see what you are going to do next, and they will spend their money while they are there.

            The best way we could save the American retail business market as a whole is if we started teaching entertainment classes in business schools the way we teach business classes in the schools for the entertainment industry.

            If they don’t give the customers a reason to be in the building, then the customers are going to stop showing up completely.

Gov's Gone Wild

            There has been a great deal of media attention paid to the sentencing of Illinois Governor Blagojevich who has just been given 14 years in prison for attempting to sell President Obama’s former Senate seat. But, what I find most interesting is that he is being sent to the exact same prison as his predecessor Governor George Ryan who was convicted of fraud and racketeering. They just need a few more Illinois State Governors and they’ll be able to start their own prison gang.

            It may seem cold to make light of such a terrible situation. Perhaps it’s the amount of time that I have spent in the entertainment industry. But, I can’t help thinking that this would make for an amazing reality show. Just imagine the first awkward conversation upon the two former Governors suddenly discovering that they’re going to be cellmates.

            Production costs would be incredibly low since the prison already has the entire building under video surveillance. You could use inmates on work release for crew to save on wages, and craft services could be covered by the prison cafeteria.

            However, there might be an incident when the boom mic operator would be accused of “wearing a wire”. Although that could lead to an entire episode of Three’s Company styled misunderstanding comedy.

            And, just imagine the hilarious Meatballs styled comedy when those wacky Gov’s tried to embezzle from the warden. Oh, how hilarity would ensue.

            All kidding aside, this situation is a truly horrible occurrence that highlights the severity of the corruption problem in America. A situation so wide spread that it has resulted in the creation of several independent citizens groups who try to draw attention to the issue through self-publishing articles such as “Corruption in America”.

            This is upsetting because The main stream media not only ignores many of the issues brought up by the independents, but the media then attacks the individuals for exercising the very First Amendment rights that make the media possible.

            The only conclusion is that the press has fallen under the influence of the corruption that they are meant to prevent by being the eyes and ears of America.

            If we want to solve this problem then we need to start with the press and follow the money back to its’ source.  Only with a truly free media can we ever hope to stop the spread of political and corporate corruption.

Fiscal De-evolution

            There has been a lot of attention in the media recently concerning the large and growing number of executives that are being brought to justice for a wide variety of crimes related to business and finance. This can be seen in articles such as those posted on Natural News or by reviewing cases posted by the IRS concerning compliance and enforcement.

            The problem has become so wide spread that the issue is even drawing attention in humor-based elements of pop culture such as Hello with Cheese.

            The terrifying thing is that this is not a new phenomenon or a sudden outbreak of immoral business tactics.

            Many of the major corporations that are collapsing in the wake of scandals recently were actually started during the depression era. The men who started these companies were able to fight their way up and prosper under extraordinarily harsh economic conditions. And, today these same companies are unable to even turn a mild profit without the executives being hauled away in handcuffs.

            Without insight this situation seems implausible. The thing to remember is that those early businessmen came from a generation where even day laborers hid their money in their mattress. Finding creative and devious methods for controlling one’s finances was a survival tactic, and those who became successful were the best at managing strategies of questionable ethical foundation.

            Today’s executives are the third and fourth generation products of those families. They were raised wealthy and never had to develop the skills for controlling dubious fiscal strategies as a matter of survival. They have simply been raised on stories of previous generations attitudes without the need to develop those skills on their own since they have never experienced a cash shortage or had a need to fight to get ahead.

            This means that executive corruption has always existed. It isn’t a new occurrence. The forensic accountants haven’t gotten better at catching criminals. Society in general has not developed an improved awareness giving them the ability to detect fraud. The simple truth is that today’s executives just aren’t very good at being criminals.

                                                            http://www.dernwerks.com/HWC/?p=278

           

Negotiation

            For my graduate class in Negotiation and Deal Making I was assigned to interview an individual in my field in relation to their thoughts and experience within the scope of practical business negotiations. My first consideration was to seek out what might be termed a “power player”, or someone who routinely deals in the more complex aspects of intense hardline negotiations.

            This did result in a humorous moment when a representative of one specific law firm told me that they would be more than happy to provide me with an interview on the topic. But, I would be required to pay their standard hourly rate for the duration of the interview. In retrospect, perhaps I should have tried to negotiate the price.

            Then, after quite a bit of consideration, I decided to take a different route. It occurred to me that following the exact methods of the usual hardline negotiators would only show me how they perceive themselves. I decided that the best tactic would actually be to interview someone who has a wholly different approach to negotiation techniques and would therefore be able to provide me with an outside view of serious negotiators in a way that they are rarely able to see themselves.

            For this reason I chose to interview a wonderful woman named Linda who is a HR Director for a major retail chain. I have consistently been impressed by the way that she always maintains a positive attitude and can stay friendly and cheerful in the face of any amount of stress. This choice for the interview turned out to be more informative than I expected.

            Much has been said about the power of positive thinking. More importantly everyone can easily see how being around people who have a positive and open attitude lifts their own mood. The interesting thing is that being friendly and cheerful can actually be your most powerful weapon in a hard negotiation.

            Hard line negotiation tactics are about focusing your anger and seeing the other party in the negotiation as your opponent or enemy. However, this becomes incredibly difficult when the person on the other side of the table treats you like a friend and refuses to become flustered by any type of aggression.

            This then eliminates the primary tool that hard line negotiators have to rely on. Without their aggression as a driving force they become flustered and are left off balance. This means that by simply being a good person it is possible to get past the defenses of aggressive hard line negotiators in order to obtain a far more viable agreement.

            This unique point of view is exactly what I was hoping to find by interviewing someone who operates outside of the standard negotiating methodology. And, I have to admit that I am truly happy to find that there is a genuine technique for dealing with difficult negotiations that allows a person to remain cheerful instead of treating every interaction as though they are walking into a bar fight.

Steve Jobs

            I am currently working on a business start-up. So far the main issue I have had is in describing the nature of the business. You see I have created a new service, which inherently means the creation of a new industry. This creates a problem when I am trying to describe what the business does to people who have no frame of reference for comparison. However, that just changed because of Steve Jobs.

            It has recently been announced that the CEO of Apple Steve Jobs has passed away. This is a sad event with wide spread cultural ramifications. The home page of Apple  has a picture of Steve Jobs with his name and the dates 1955-2011. Additionally, they have set up a page with an epitaph on their site. That page also contains information for people to contact the company with personal thoughts and memories of Steve Jobs.

            Additionally, areas outside of the company have been affected. Every social networking site now has pages dedicated to the memory of Steve Jobs. Web comics such as XKCD and Abstruse Goose  have posted memorials. Even sites that are normally satirical such as Some E-cards have included memorial materials on their web site.

            This is the service being offered by Pelicat. The chance to have your final message spread across all of your social media applications in order to give a farewell notification to all of your online friends all over the world. Despite the terrible loss of Steve Jobs he is now my best example to others of what my new service provides.

            While the loss of Steve Jobs is a sad event, I can’t help thinking that it is rather profound that even in his passing he is helping others like myself to push forward with innovative new concepts and services. Hopefully we will all be able to continue following his example of creativity far into the future.

Media medium

            There is a recent article on the entertainment business blog Business Exchange  about a DJ and music producer named Carl Cox. It can be seen at http://blog.allusb.com/2011/08/carl-cox-all-roads-lead-to-the-dancefloor-usb-album-debut/

            This article describes how Carl Cox has just released a new album exclusively in a USB format instead of the more conventional CD. The article goes on to describe other groups who have done the same thing. It also describes some of the numerous advantages including bonus photos, music videos, links to online material, and a memory capacity that can hold a far greater amount of music than the conventional compact disc.

            I find this particularly interesting due to the fact that the music industry tends to lead the film industry in technological advance. Right now most people in the film industry are focused on the film distribution capabilities of the cloud. However, customers have already issued a wide range of dissatisfied criticism against the idea of having all of the media they have purchased kept on a server that they do not personally control. The fears of mass file deletion, selective media censorship, and poor long-term site maintenance are at the top of the list.

            These are issues that can easily be avoided by following the example of Carl Cox and many others in the music industry. It would also present a number of serious advantages that most movie enthusiasts would enjoy.

             You see, a conventional DVD can only hold 4.7 Gigs of data. The raw digital footage that movies are edited in runs at approximately 1 Gig per minute. This means a full feature film would need a digital storage medium of roughly 90 Gigs for full resolution. This is why Blue Ray is so popular. A Blue Ray disc can hold up to 27 Gigs of memory.

            However, a search on USB drives will bring you to the illustrious Lexar Corporation. Lexar produces USB jump drives that reach storage capacities up to 128 Gigs. That’s roughly 5 times the capacity of a Blue Ray, which in turn has 5 times the capacity of a conventional DVD. In short, a high-end USB drive could hold 27 movies at the standard compression rate of one DVD. Or, it could hold one feature film at the full digital resolution that normally only the editor gets to see.

            Switching film sales to USB would be great for movie enthusiasts who want the best image quality possible. But, it would be even better for production companies that would be able to maintain existing distribution systems for highly lucrative returns with an actual reduction in manufacturing costs and time since USB drives can be loaded faster and cheaper than discs can be burned.

            The question is: will they bother following the logical advance into this medium, or will they just do what they are told by the corporate lobbyist with the most expensive suit?