December 2011

E-Books, Shmee-Books: Readers Return to the Stores

Facing economic gloom and competition from cheap e-readers, brick-and-mortar booksellers entered this holiday season with the humblest of expectations. But the initial weeks of Christmas shopping, a boom time for the book business, have yielded surprisingly strong sales for many bookstores, which report that they have been lifted by an unusually vibrant selection; customers who seem undeterred by pricier titles; and new business from people who used to shop at Borders, the chain that went out of business this year.

A Rare Apple Compromise

Apple is learning to compromise.

Facing challenges winning over customers for its iAd mobile advertising service, Apple is softening its approach as it loses ground to Google in the fast-growing mobile-ad market. Apple is showing more willingness to bargain on the spending commitment it requires of advertisers. Having originally asked marketers to commit to spend at least $1 million—an amount later dropped to $500,000—Apple is now discussing ad deals with a minimum commitment of just $400,000, according to a person familiar with the matter. Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers, ad executives say. Instead of charging marketers every time a user taps on an ad—a policy which often led to ad budgets quickly being exhausted—Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.

CBS to Buy Second New York TV Station

CBS plans to buy a second TV station in New York, saying it plans to invest more dollars to attract viewers in the biggest U.S. media market.

The broadcaster said that it has agreed to buy WLNY-TV, one of the few remaining independent commercial TV stations in the New York area. CBS already owns WCBS-TV, which is affiliated with its eponymous TV network. The parties declined to specify the terms of the deal, but a person briefed on the matter said the purchase price was well over $10 million. WLNY, a Long Island-based station that once billed itself as a movie channel, is tiny in the context of the New York. Last year, the station had $3.8 million in ad revenue, roughly 0.3% of the $1.3 billion that advertisers spent on local TV commercials in the New York area, according to BIA/Kelsey, a local-media advisory firm. WCBS, by contrast, brought in $196 million. The person familiar with the matter said that WLNY's revenue is multiple times greater than that cited by BIA. CBS said it plans to add personnel to WLNY, and expand its local newscasts. The deal still must meet regulatory approval, but federal rules allow a broadcaster to own two stations in larger markets. The sale comes as some independently owned TV stations—especially those unaffiliated with a major national network—have struggled to survive amid growing competition. Independent stations' numbers have been declining for years, as cable television has grown.

US Homes In on China Spying

US intelligence agencies have pinpointed many of the Chinese groups responsible for cyberspying in the U.S., and most are sponsored by the Chinese military, according to people who have been briefed on the investigation.

Armed with this information, the U.S. has begun to lay the groundwork to confront China more directly about cyberspying. Two weeks ago, U.S. officials met with Chinese counterparts and warned China about the diplomatic consequences of economic spying, according to one person familiar with the meeting. The Chinese cyberspying campaign stems largely from a dozen groups connected to China's People's Liberation Army and a half-dozen nonmilitary groups connected to organizations like universities, said those who were briefed on the investigation. Two other groups play a significant role, though investigators haven't determined whether they are connected to the military. In many cases, the National Security Agency has determined the identities of individuals working in these groups, which is a critical development that provides the U.S. the option of confronting the Chinese government more directly about the activity or responding with a counterattack, according to former officials briefed on the effort.

ICANN is ready for battle over expansion of Web suffixes

There’s been a scramble to snap up domain names for the Internet’s newest designation — .xxx — but not necessarily from those you’d expect.

Adult sites have reserved their spot in the newly labeled section of the Web, but so have companies, charities, celebrities and politicians. Try “barackobama.xxx,” “angelinajolie.xxx” or “redcross.xxx” and you’ll find yourself faced with a black screen with gray type stating: “This domain has been reserved from registration.” In other words, someone’s made sure those brand names are protected from the association with porn. Companies, the rich and famous and regulators in Washington now are worried that the rush to defensively buy Web addresses will only worsen — and grow more costly — as the organization in charge of doling out real estate on the Internet prepares to unleash an infinite number of Web suffixes to add to the familiar .com, .net and .edu. Some experts say the move will change the landscape of the Internet forever. In January, the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit association tasked with managing the Internet’s addresses, known as domain names, will begin taking applications from anyone with $185,000 and a desire to reserve their own suffix on the Web. The group oversaw the launch of .xxx last week. Coming after ICANN’s review process could be .god, .abortion, .sex and .georgetown, as well as thousands of others. ICANN, based in Marina del Rey (CA), says that the new suffixes will promote innovation and it will make sure the Web addresses do not fall into the wrong hands. But lawmakers and regulators want ICANN to delay its process.

Verizon's missing 'wallet'

[Commentary] Verizon Wireless has been a key supporter of Google's Android software for smartphones and other devices, but the relationship between the two companies got complicated last week.

Google disclosed that, at Verizon's request, it had withdrawn an innovative feature from a hotly anticipated phone being made for Verizon's network. The feature is a wireless payment system called Google Wallet, which just so happens to compete with a service that Verizon and two other mobile network operators are developing. Verizon denied that it was blocking the application, but the mere suggestion that it might be is reason to support broader federal rules barring telecommunications companies from denying consumers access to their rivals' products and services. The Federal Communications Commission has adopted several rules to promote open networks, but they've run into tough criticism from conservatives and other opponents of federal regulation. One such regulation, adopted in 2007, requires winning bidders in the auction for a particularly valuable band of airwaves to let customers use the devices and applications of their choice. Verizon uses those frequencies now in its "4G" mobile data network. Verizon has to abide by the ban on blocking apps. But that's not very reassuring for the vast majority of consumers, who are likely to remain on 3G networks for several years. The Google Wallet episode gives the commission good reason to bar anticompetitive behavior by telecommunications companies no matter what kind of network they operate.

Loud TV commercials to leave quietly, thanks to FCC

The Federal Communications Commission is expected to pass regulations requiring broadcasters and cable and satellite television systems to maintain constant volume levels.

The order, which goes into effect Dec 13, 2012, "says commercials must have the same average volume as the programs they accompany," says FCC Chairman Julius Genachowski. While normal listening levels average about 70 decibels for a typical TV broadcast — 60 is equivalent to a restaurant conversation; 80 to a garbage disposal — levels on a TV channel can vary by as much as 20 decibels. To comply with the new law, broadcasters can use audio processors to measure the loudness of a program over its entirety and adjust the volume of commercials accordingly, says Joe Snelson, vice president of the Society of Broadcast Engineers. He said the goal is to avoid an abrupt change in volume when a show goes to commercial break. Some broadcasters and pay-TV providers already have begun implementing the Commercial Advertisement Loudness Mitigation Act (CALM).

Silicon Valley should support online textbook movement

[Commentary] Silicon Valley should be cheering state Senate leader Darrell Steinberg's new push to bring digital open-source textbooks to California's community college and university campuses. With skyrocketing costs for textbooks, it represents the quickest and smartest way for colleges and universities to reduce the burden on students, who increasingly are finding higher education priced out of their reach. It also could make California a model for the nation: Digital textbooks surely are the wave of the future.

Newspaper leaders see promising future

Is the newspaper business broken, for print as it currently exists? "Yes, irretrievably," said John Paton, the CEO of Digital First, which runs the Journal Register Co. and MediaNews Group, the company that includes the San Jose Mercury News. Yet despite that stark declaration, Paton came to BIA Kelsey's Interactive Local Media West conference with a message of determined optimism. Digital First's Journal Register Co.

Don't let Voice of America broadcasts go static

[Commentary] Voice of America (VOA) has become the jewel in America’s public diplomacy effort. The US government’s international broadcasting operation is estimated to reach 187 million people in 59 languages. But many Americans are unaware of it – and of proposed changes that are in prospect.

These days, radio, especially shortwave, is not only facing the competition of television in countries around the world but also the challenge from the Internet and social media. Western government-supported radio services such as the British BBC have been having a hard time of it with budget cuts and staff layoffs, while countries like Russia, Iran, and China have been spending millions of dollars to expand their state-sponsored media. Little Qatar has made great audience inroads with its Al Jazeera TV operation. The Broadcasting Board of Governors, the part-time board headed by distinguished journalist Walter Isaacson that oversees US government broadcasting, believes all this demands a major shake-up and streamlining. The BBG’s strategic plan calls for “innovation and integration,” and reaching an audience of 216 million by 2016. The BBG has hired Deloitte consultants to work out the details. The major changes being planned should get the careful attention of legislators, journalists, and practitioners of public diplomacy. Retuning America’s voice may be desirable. It should be handled with care.

[Hughes was director of Voice of America in the Reagan administration]

Benton

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