Mine was the last generation to have known the awe and wonder of downtown, that centralized beehive of retail and business activity in the community. There was no Wal-Mart when I grew up in the 1950s in Grand Rapids, Michigan. There were no malls, at least none that I can recall. If you wanted to do serious shopping, you had to go downtown, and I feel fortunate to have grown up when downtown was the place to be.
In Grand Rapids, we had department stores with odd names like Herpolsheimers (HER-pole-shy-mers), Wurzburg’s, and Steketees (like Chickadees). Wurzburg's was my favorite, because they sponsored the annual Christmas parade, so the real Santa was there. During the holidays, these stores all competed to see who could create the best window displays, and it was magical, especially when it snowed.
Herpolsheimers, Wurzburg’s, and Steketees also competed for customers in that closed space called downtown, and what happened to them is what's happening today in the world that these essays probe: television — and especially television news — in our increasingly postmodern world.
One of the central questions for local media companies these days is "How do I expose my work online to a wider audience?" Nearly everyone in any community is online these days, but local media company web efforts are limited to those they already reach on the air or in print, and that doesn't translate to a lot of new revenue. This is at the heart of the Yahoo! newspaper consortium deal, because Yahoo! claims it cumulatively reaches 70% of the users in any market, while the newspapers only reach around 40%.
For television, this is an equally perplexing matter. While people are watching more television, that viewing is so fragmented that the ratings for individual programs are shrinking at alarming rates. Hence, the universe in which a local station operates is getting smaller, so we're shifting our focus to where the money is going. While the new world is exploding with growth and is exciting beyond anything in recent memory, it's a damned frustrating place in which to work, for the "audience" is fluid, nimble and mobile. If only they'd just sit still!
They won't sit still, and worse yet, they want to watch certain things while bouncing from here to there. Hence, the titanic battle between the entertainment industry and iTunes and YouTube over who will be the ultimate host of copyrighted videos online. It's the most significant web issue these days, because there's an incredible amount of money at stake. And even more than that, it's a business war to see who will be the control panel when the marriage of the Web and our television sets is complete.
For the copyright holders, it means a bright future, if they can maintain control of videos they see (and the law sees) as theirs. For people who the industry once considered customers, the winner will get their allegiance, assuming they have a say in the videos that they see as theirs. The more the industry behaves as if people are merely "consumers" of their "products," the less likely it is they will come out on top, because the choice — at least for now — belongs with the audience for these videos.
Let's step back for a moment and view this matter from another direction. The creators or licensees of anything copyrighted have historically been able to ply their wares in authorized spaces and places, what I'm going to identify here as various forms of "spectrum," to borrow a term from broadcasting.
Movie studios used to work only within the distribution chain of movie theaters, a form of spectrum that permitted them — and only them — to compete with each other for the eyeballs of moviegoers. This was and is a tightly-controlled, closed network of spectrum. The era of video tapes brought a completely new revenue stream to the studios and spawned a new distribution network — the video store. It wasn't until digital video came along that studios began to realize the loss of control over their spectrum.
The music industry worked within the spectrum of radio, which drove people to buy records at record stores. In my youth, we bought and swapped records with our friends, and nobody argued with the fundamental fact that those records were ours to do with as we pleased. Radio stations also worked within this spectrum to profit from advertisers who wanted their products adjacent to "Wake Up, Little Susie." It was a beautiful thing. 8-track and then cassettes followed, and soon we were walking around with "our" music thanks to Sony and the Walkman. This was all new money for the music industry, and everything was fine until digital audio signaled trouble for the closed network.
The television industry (joined at the hip with the studios) functioned within the closed network of broadcast spectrum, a license for which remains an enormously profitable proposition. When the cable and satellite industries swooped in, this closed network was expanded from without, but there was enough room for everybody to be happy. While digital TV has broadened the network more, it is still very much closed, but this business with the Web threatens to blow that apart.
Telephone companies used to function within the highly closed network of lines that crisscrossed our towns and connected us with each other. The age of "Ma Bell" and its lack of competition meant monopolistic control of the spectrum and everything related to pricing. Cellular phones work within yet another layer of spectrum, the closed nature of which brings profit to the pockets of those who control it.
In each of these cases, the institutional player has been able to increase profits by bundling crap with quality, and that's the real problem from the end-user's perspective. Sandwich a loser between two winners and suddenly the loser becomes a winner. Put two great tunes on an album with ten throwaways, and you can charge extra for those hits. Force people to subscribe to lousy channels in addition to the good ones. Add fee after fee to enable people to get what they want, because you own the lines. Crank out a steady stream of mediocrity in the hopes that one will reach blockbuster status.
These are the worlds in which incumbent communications businesses work. Each is being disrupted by the Web, and each is throwing everything they've got at "the problem" of maintaining the closed nature of their former spectrum.
What makes the Web so different is that it is an entirely open network, although the deep pockets of the status quo are lobbying everyone with breath to change that by creating tiers of service. The argument in Congress is that we're running out of bandwidth, which means a TON of money to beef up the Internet, and the people spending that money should be entitled to profit from the build-out. While that's certainly true, the reality is that this disguises what is essentially an attempt by the incumbents to restore some form of command and control mechanism (tiered pricing) to the open network. This means that those with money will be the only ones able to advance the spectrum, and this is exactly the old profit model wearing new clothes. But I digress.
On the Web, all of these individual companies are merely pixels on the overall page, blips in a spectrum of equal blips. There's no doubt that mass marketing muscle in the worlds within which the incumbents currently play gives them an advantage over the other blips, but it doesn't influence the essential infrastructure. This is why innovations from other blips can explode across the entire Web and why we're seeing new models being developed everywhere.
So now let's look at this thing between the networks, the studios, YouTube, and iTunes and examine what's really taking place — an attempt to create a new "spectrum" within which the creators of content can apply old rules. Each wishes to be the aggregator that people use to access "their" videos online and eventually through their TV sets. The problem is that neither aggregates all, and that defeats the intended purpose. The only way this will ever happen is if everybody works together, and that's contrary to traditional rules of engagement.
YouTube has created a spectrum for the prosumer movement. It's exploding, because anybody can be a studio, a newspaper, or a TV station today. You can create your own music and get recognized. The networks and the studios are terrified by this, and rather than find a way to play within this spectrum, each has chosen to try and create their own.
iTunes has created a spectrum for distribution of music and videos to Apple's assortment of devices. The networks and studios don't want to play here, because Apple controls pricing, and the arrangement destroys their ability to bundle crap with quality.
So what do the incumbents do, besides lobby the government for protection? They try multiple distribution outlets, which — from a brand extension perspective — is no doubt smart. In the case of Hulu.com, NBCU and News Corp are trying to create their own new form of spectrum, which would actually make a lot of sense if everybody decided to pool their resources. And I think this is what they originally envisioned, but the other players were a little too proud to get in on something that their competitors created. Of course, if the original vision included NBCU running things, then it was ill-conceived from the get-go.
These are difficult times for incumbents, to say the least, but extending their business models to the Web will only have limited success, because the basic structure of the beast is contrary to theirs. Even people within those businesses who "get" this, don't know what to do or are thwarted by inertia and structural barriers that block getting anything done.
I'm waiting (but not holding my breath) for an arrangement between all incumbents that allows them to move their competition between each other to a single platform on the Web, to operate as they wish within this specialized platform. Think of it as moving their existing spectrum to cyberspace and operating therein. If you want network television, for example, you go to the network television platform. If you want movies, you go to the movie section, and so forth. This could actually be done — and it would be useful for "consumers" — but it would require individual companies within these industries to work together, and that is very unlikely to happen.
For local media, the same thing could be done. If users wanted access to local news video, they would go to one place, where all local news video was available. This would create a form of spectrum within the whole, where individual players could duke it out just like they do in their own universe today. The problem, again, is that it would require separate companies to work together, and that's highly problematic. The number one station would tell the others to go to hell, because they think they can a) do just fine on their own and b) it would "cheapen" them by putting their work on the same stage as their competitors.
Would this station prefer their work to stand alone as a blip in the overall spectrum of the Web or be a part of a bigger blip, a piece of spectrum designed specifically to better enable users to find their work? And this same number one station is stratching its head, trying to figure out how it can attract a larger audience.
For the answer to this dilemma, let's go back downtown, to that piece of closed retail spectrum. As people moved to the suburbs, the retail world understood that it had to be where the people were. It could not expect the people to come to them.
And so the suburban shopping mall was created, and what is a mall but a group of competitors banded together for the convenience of shoppers? Would the number one department store refuse to anchor the mall, because its chief competitor was on the other end? Of course not!
But here's the rub: Shopping malls weren't created by the department stores themselves. They were content to work from downtown locations as the suburban drift disrupted their world. Malls were built by outside developers, who could see what was really taking place. The same could be said for the communications world as regards the disruption of the Web.
Herpolsheimers, Wurzburg’s, and Steketees are all out of business today. Had they taken a more proactive role — one that actually would have been viewed as cannibalizing their own business models — they would not only be in business, but they'd likely own the malls in which department stores are now only tenants.
This idea of competing against yourself is central to overcoming disruptive innovations. The history books are filled with stories of those who chose only to defend themselves against such forces, and when television broadcasters — the creators of the video communications niche — decide that they'd rather go down fighting than live to fight another day, their fate is already sealed.
The ghosts of my youth testify it is so.