October 2013

Sony Strikes Production Deal With Netflix

Sony Pictures Television will become the first big Hollywood studio to produce a new TV show for Netflix, underscoring how the TV industry's elite are starting to view the streaming-video service as a launch pad for original series.

Sony Corp.'s TV studio, maker of hit shows such as AMC's "Breaking Bad" and this year's new NBC drama "The Blacklist," said it will begin production early next year on a psychological thriller for Netflix from the creators of the FX legal drama "Damages." Netflix, which offers its monthly subscribers an extensive library of TV shows and movies, is venturing aggressively into original programming, following the path of HBO, AMC and other cable networks. The company, whose streaming service costs $7.99 a month, sees originals as a way to lure and retain customers.

Nokia deal will offer free Netflix subscriptions with new models

Nokia has struck a deal to give away free subscriptions to Netflix, the online film service, to buyers of its latest smartphone through some vendors in the UK. The content deal underlines the importance for Nokia of gaining Christmas sales for its latest device, the Lumia 1020, a Windows phone. The model will be one of the last to be made by Nokia, which is in the process of selling its handset business to Microsoft. Nokia has run deals selling content alongside its phones in the past with mixed results. An executive at one operator pointed to an ineffective deal a few years ago that offered a free download service for music.

Media coverage of the 2012 election was fair and balanced after all

[Commentary] A majority of Americans distrust the media. And these sentiments often reach fever pitch during a political campaign when the news media are accused of emphasizing trivia or being flat-out biased toward one candidate. In “The Gamble,” Lynn Vavreck’s and my new book on the 2012 presidential campaign, we have a lot to say about what, and how, the media did in covering the campaign. This is one unique feature about our book, compared to the campaign books written by journalists. We make the media a central character — an actor in the process, not just an observer. We do this with data on 11,000 different news outlets gathered by the company General Sentiment, which gauged not only how often the candidates were mentioned but how positive or negative that coverage was.

Here is what we found:

In the Republican presidential primary, news coverage drove the candidates’ surges in the polls.
In the primary, news coverage helped end these surges as well.
In the general election campaign, it was the other way around: the polls drove the news.
Overall, media coverage of President Barack Obama and Mitt Romney was actually fair and balanced. No, really.
The news media are more prone to “root for the story” than “root for the candidate.”

[Sides is an Associate Professor of Political Science at George Washington University.]

California governor vetoes state email privacy bill

Gov. Jerry Brown (D-CA) vetoed a state online privacy bill that would have protected residents’ electronic communications accounts from warrantless access by law enforcement agencies.

The bill would require law enforcement agencies to obtain a warrant before accessing electronic communications. Law enforcement agencies would have to notify a user within three days of accessing that user’s electronic communications. Under current federal law, the Electronic Communications Privacy Act (ECPA), law enforcement agencies do not need warrants to require electronic communication companies to turn over their users’ communications if they have been electronically stored for more than 180 days. If law enforcement agencies do obtain a warrant, they do not have to notify the user. If they have subpoenas or court orders they are required to inform the user. These expanded notice requirements in the California bill “go beyond those required by federal law and could impede ongoing criminal investigations,” Gov. Brown wrote in his veto statement.

Administration looks to dodge Supreme Court challenge to NSA program

The Justice Department urged the Supreme Court to throw out a legal challenge to the National Security Agency program that collects records on all US phone calls.

The Electronic Privacy Information Center (EPIC) filed a petition directly to the Supreme Court in July, claiming that the Foreign Intelligence Surveillance Court overstepped its authority when it granted the NSA permission to collect the phone records in bulk. In its petition, EPIC noted that the Patriot Act only authorizes the NSA to collect business records that are "relevant" to a terrorism investigation. By allowing the NSA to collect records on millions of Americans without any ties to terrorism, the court acted outside of its own jurisdiction, the privacy group argued. The group asked the Supreme Court to order the surveillance court to rein in the program or to hear arguments on whether the program is legal. But in its response, the Justice Department argued that the Supreme Court lacks the jurisdiction to consider EPIC's challenge.

The Amount of Questionable Online Traffic Will Blow Your Mind

The online ad industry is facing a swelling crisis, one defined by fake traffic, bogus publishers, and invisible Web visitors. Once thought contained to a handful of rogue players that had figured out how to exploit ad exchanges, bogus ad inventory, as it turns out, is rampant.

In fact, according to numerous sources across the ecosystem, fake traffic is essentially systemic to online advertising -- it’s part of how the business works. And a slew of top companies are involved in this -- whether wittingly or not. “You see it with almost any partner you work with,” as Alan Silverberg, media platforms director at Moxie Interactive, puts it. “From AOL and Yahoo to Facebook, from pure-play partners and the network space to portals. We can’t stop it,” he says, referring to the preponderance of questionable traffic. Though for many publishers, it may be a question of whether they can’t stop it, or won’t. During a recent interview, online ad veteran Wenda Millard, president of Medialink, made the bold claim that a quarter of the online ad market is fraudulent. “What we have found is the devaluation of digital media is causing us to lose about 25 percent of the roughly $30 billion that is being spent,” she reported. “It’s stolen [ad revenue].” In defining fraud, Millard lumped together piracy, nonviewable ads, ads stacked on top of one another, inappropriate content and, of course, deliberate malicious behavior, in her analysis. “In most people’s wildest dreams, they wouldn’t imagine how much [questionable traffic] there is,” she says. “People should be very, very worried.”

On Diversity, Cable's Not There Yet

Cable celebrated its diversity efforts in New York, but surveys reflecting the amount of diversity on-screen and in the employment ranks show there’s still work to do.

A study of median household ratings during the 2011-12 television season revealed what seems like a no-brainer, given the diverse makeup of the country: Cable shows in which 31% to 40% of the cast represented people of color on average generated higher household ratings than shows in which minorities represented 10% or less of the cast. The Hollywood Diversity Brief: Spotlight on Cable Television report, conducted by the Ralph Bunche Center for African-American Studies at UCLA, also showed a majority of the casts of more than 844 shows across 61 cable networks examined had fewer than 10% minority actors and actresses. The industry committed $1.75 million to help advance the diversity cause. But National Cable & Telecommunications Association CEO Michael Powell noted that cable needs to further “engage the topic with the sense of dissatisfaction, because we’re not there yet.”

Report: Mobile Carriers Need to Wean Customers Off Device Subsidies

Mobile carriers aren’t reaping the returns from their device subsidies and need to break the long-held customer incentive, according to a new report from ABI Research. Whereas mobile connections are growing at a 10.9% compound annual growth rate (CAGR) worldwide from 2008-2013, carrier revenue growth is only increasing at a 4.2% CAGR, ABI points out. The single largest cost component for a mobile carrier over the life of a subscriber’s contract, device subsidies represent 68% of the revenue derived from a typical 24-month mobile device service contract, ABI analysts note.

Several factors are going to up the pressure on device subsidies over the next two years, they say, including:

Over the Top revenue loss
Competitive price pressure
Regulation (see EU roaming regulations)
Multiple device ownership – smartphones, tablets, smart glasses, and other wearables

This Silicon Valley startup is feeling the pain of the shutdown

For some Silicon Valley entrepreneurs, the federal government shutdown has mostly been a theoretical issue. But for others like Tara Lemmey, the shutdown has become a serious problem.

She's the CEO of Net Power and Light, a startup that created the iOS video chat app Spin, which was released Oct. 1, 2013. That’s a problem, because an antiquated regulatory regime classifies cryptographic software as a munition and requires approval from federal regulators before it can be exported abroad. Lemmey says the government shutdown means the company can't get its application approved, which means it can't legally offer its product outside the United States.

AT&T to offer only one plan for new customers starting Oct. 25

AT&T said it will offer only its Mobile Share plan beginning Oct. 25, 2013, cutting out all other service options for new wireless customers.

AT&T introduced its Mobile Share plan in 2012. Under the plan, customers have unlimited talk and texting but splits data usage with others on their plan. AT&T said it has signed up more than 13 million customers for Mobile Share since it launched, and that 95% of new AT&T customers choose that plan. With so many customers choosing Mobile Share, AT&T said it has decided to simplify its offerings and cut out its other plans. AT&T's move to simplify its offerings follows a similar strategy enacted by T-Mobile earlier in 2013, when T-Mobile also streamlined its offerings so that new customers have to choose from the company's Simple Choice plan.

Benton

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