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Advertising sucks, but TV would be worse without it

By: Mike Montgomery

Given the opportunity, many of us choose to organize our TV watching to minimize ads as much as possible. We record, fast forward or pay subscription fees to services like Netflix and HBO to watch shows ad-free. But here’s the dirty little secret of television — advertising makes it go and keeps it affordable for the viewing public.

Which is why the Federal Communication Commission’s attempt to “open” the cable set-top box to competitors has the potential to be a giant disaster for consumers. Let me explain. Although advertising is becoming increasingly easy to skip, it still funds an enormous number of programs. Last year advertisers spent $79 billion on TV. That’s down slightly from 2014 but still makes it the largest slice of advertising spending in media beating out digital and (obviously) print.

Advertising makes up as much as 50 percent of revenue for programmers and 8.5 percent of revenues for the so-called multi-channel video programming distributors. The money flowing from these ads keeps the TV ecosystem going. Networks have money to invest in and pay the creators who make TV shows. Prestige shows like “Mad Men” and “Empire” are financed by ads. But it also allows MVPDs to keep subscription prices relatively low by providing another source of revenue — one that doesn’t come out of consumers’ pockets. That helps subsidize pay channels, which is why standalone HBO costs $14.99 per month but you can get HBO through your cable provider for $10 per month.

The FCC’s proposal to open the set-top box market to third-party developers would destroy this entire system. The MVPDs would be required to provide their programming streams to anyone who wanted to use them. These third-party box makers wouldn’t be required to follow the advertising deals that MVPDs have carefully contracted. They could alter or delete the original ads or pile on more ads and keep all that new revenue for themselves, driving down the value of the “original” ads and sucking up revenue that would ordinarily go to fund new programs. Chairman Tom Wheeler has claimed the new rules won’t allow this but experts recognize that the “rules won’t prohibit extra ads around TV channels.”

Read the full article here.

Entrepreneurs Need To Embrace Futurism

By: Mike Montgomery

Entrepreneurs often struggle to capture lightning in a bottle by trying to create a product today that anticipates tomorrow’s trends. But are the bulk of these entrepreneurs not looking far enough ahead?

Early this month, The New York Times ran a fascinating article that talked a little about the recently deceased futurist Alfred Toffler’s work (Future Shock) and the demise of the idea most associated with him, futurism:

In many large ways, it’s almost as if we have collectively stopped planning for the future. Instead, we all just sort of bounce along in the present, caught in the headlights of a tomorrow pushed by a few large corporations and shaped by the inescapable logic of hyper-efficiency — a future heading straight for us. It’s not just future shock; we now have future blindness.

Farhad Manjoo, who wrote the Times piece, argues that many technological changes are happening so quickly that global crises are occurring as a result. The thrust of this piece is that our governments should really take a closer look at the academic study of futurism and try to determine how to better and more smoothly integrate technology in order to prepare for the future.

On a smaller scale, entrepreneurs, whether they are specifically focused on new technologies or not, need to do the same. The key is to learn how to properly forecast the future.

“Entrepreneurs need to be thinking about the future, but that requires they invest time into forecasting trends,” says Amy Webb, the CEO and founder of Future Today Institute. “The challenge is that trends in technology have become synonymous with things that are trendy.”

Read the full article here. 

Airbnb, Homeaway and a City’s Tortured Path to Drafting Short Term Rental Regs

By: Tim Sparapani

San Francisco’s Board of Supervisors is in the midst of a sometimes hot, sometimes cold dispute that’s currently targeting companies that facilitate short-term housing rentals online, but more broadly is a challenge to the internet platform companies that are propelling San Francisco’s and the nation’s economy. The current dispute stems from the Supervisors’ innocuous sounding ordinance that would force internet platform companies like HomeAway and Airbnb to either require those who offer rentals on their sites to register with the City, or kick the renters off the companies’ sites. If the companies refuse or resist, they face significant fines.

Of course, the City could and should just take direct enforcement actions against the property owners who aren’t complying with local laws but it wants the companies to bear this burden.

The first ordinance passed by Supervisors this spring was swiftly challenged in court, in part because it was an attack that violated a key federal law, Section 230 of the Communications Decency Act, that has helped the Bay Area’s tech innovators generate hundred of billions in economic value for the city, state, and national economy. Just last week, the Supervisors, who were previously resolute that the proposal did not violate federal law, withdrew the ordinance. They requested that the judge assigned to the case stay litigation while they rewrite the ordinance. Early drafts being circulated, however, appear to repeat the original mistake of punishing internet platforms when property owners fail to comply with the City’s registration requirements.

We live in the Internet Age, and more specifically, what I call the Internet Platform Economy. Internet platforms – Google, Facebook, eBay, Etsy, Tumblr, Craigslist, and a thousand others – are especially successful because they facilitate billions of people publishing content online, and with a few exceptions, the internet platform companies cannot be forced to police users’ content. America’s tech companies were empowered to create their online platforms by a provision tucked into a 20-year young federal law, the Communications Decency Act (CDA). With only a few exceptions, courts have ruled repeatedly that Section 230 of the CDA frees companies from liability for facilitating their users’ publication online of speech and content. This federal liability shield is the greatest single reason for the rise of these services because it is what allows internet platform companies to host billions of interactions without being constantly mired in legal disputes.

Read the full article here.

Dear Presidential Candidates: It’s Time To Listen To Millennials

By: Eli Love

According to the Pew Research Center, there are now effectively as many Millennial voters (69.2 million) as there are Baby Boomer voters (69.7 million).  But you would never know it looking at how little attention the current Presidential campaigns are paying to the substantive concerns of our generation.

The closest a candidate has come to speaking to Millennials is Bernie Sanders who was willing to discuss things like free college education. But instead of viewing the enthusiasm around Sanders’ campaign as a sign of where the conversation needs to go, the media and the political establishment derided Sanders’ supporters as naïve and selfish — voters who would disengage from the political process once their candidate was out of the race.

That’s not who we are and it’s crucial that the remaining presidential candidates move beyond stereotypes and see our true potential.

To understand what’s at risk if politicians do not tap into our enthusiasm and our energy, just look at the recent Brexit situation. Almost 75% of voters between the agesof 18 and 24 voted to remain  — expressing their belief in multiculturalism, inclusion and innovation. At the other end of the scale, 60% of voters over the age of 65 voted to leave — many succumbing to their anxiety about the profound changes happening in our world. Imagine how things would have turned out differently if the remain campaign had worked a little harder to reach more Millennial voters. Imagine if the voting public had heard from more Millennial voices who could have shared their aspirational vision for their country.

As our own election looms, it’s time for American politicians to make sure they don’t make the same mistakes.

The Millennials my organization works with every day are entrepreneurs, philanthropists and public servants who consistently defy Millennial stereotypes. And they’re not alone. We recently took a survey of 810 people between the ages of 18 and 44 to find out what my generation is really thinking. It turns out 70% of us plan to vote. Almost three-quarters of us believe that the election will have an impact on our lives but 58% say the media that is covering the election is not highlighting the issues Millennials care about the most.

Read the full article here.

Why Every Entrepreneur Should Care About Nintendo’s Pokémon GO

By: Mike Montgomery

Pokémon GO has changed the game.

By that, I don’t just mean the world of video games. There’s no question that the mobile game, which at last count was being f you haven’t played, the game works with a GPS map that shows you where Pokémon are in the real world (you can tell a Pokémon is nearby via a virtual rustling of leaves). When they’re close enough, they appear as augmented reality on your phone and you try to catch them. The result is entertaining and adorable.

Although augmented reality has been around for years, this is by far the best use of the technology. Video game designers all over the world are probably scrambling to include augmented reality in whatever project they are currently working on.

But the impact of Pokémon GO is bigger than that. It’s even bigger than Nintendo’s 100% stock climb over the past few weeks. The game is also creating amazing opportunities for brick-and-mortar entrepreneurs.

Players don’t only try to catch Pokémon in the game. They also congregate at Pokéstops (where they can collect Pokéballs and other bonuses) and gyms (where they can battle other teams). Pokéstops and gyms are locations in the real world. Bookstores, churches, restaurants and murals that happen to be gyms or Pokéstops are suddenly being inundated by Pokémon GO players.

Businesses didn’t have a chance to sign up for this. The maps of key locations come from a previous game from Niantic (the studio behind Pokémon GO) called Ingress.

But they can take advantage of the business. For example, businesses can put out lures, which temporarily increase the number of Pokémon around that business. Inc calculated that lures only cost $1.19 per hour and they can drastically increase foot traffic. A friend who was playing Pokémon GO with her son noticed a lure at a local candy shop. Her son caught a bunch of Pokémon and she ended up buying him some candy.

Read the full article here.

Justice Department To The Rescue Of Consumers And Music Competition

By: Mike Montgomery

After more than two years of review, countless public comments and some professional mudslinging, the Department of Justice has decided that the best way to preserve competition and fairness in the music marketplace is to reject requests to inject anticompetitive behavior into music licensing consent decrees.

Preserving competition in music licensing will go a long way toward ensuring the continued growth of the music industry.

You wouldn’t know this was a promising development judging by the reaction of some within the industry. An article in Billboard breaking the news of the Justice Department’s decision quotes an unnamed music publishing executive mischaracterizing the decision, “This decision will create a clusterf—k of epic proportions for the U.S. music publishing industry.”

On the contrary, Justice’s action appears to clarify what the current consent decrees require. This is, in fact, a fantastic outcome for consumers and small businesses as well as broadcast and digital entities, because all DOJ did was reaffirm the existing rules that so-called “fractional licensing” isn’t lawful.

Nothing will change save for the hangover publishers and performance rights organizations will experience as they come to the harsh realization that the process they kick-started two years ago to further enrich themselves and freely wield and abuse their market power backfired. And for all the right reasons: the common-sense antitrust protections provided under these consent decrees are as modern and necessary today as they ever were.

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