April 15, 2009

For three years these fillips have commented on media trends in our Information Age. We find little to add to what we wrote two weeks ago.

Trends however take decades to unfold and can hardly compete for our attention with the glittering cascade of daily events. It is one thing to speak of the gradual demise of the newspaper industry. It is another to read Richard Pérez-Peña about the strong arm tactics accountants recently decided upon to contain the gaping deficit of the Boston Globe (*). The bean counters' revenge on Beantown, if you will.

Robert Weisman details how this local title progressively fell upon hard times while it turned down Internet opportunities which would have threatened its cash flow (**). Accounting rules makes it difficult indeed to present a reduction in current revenues as an investment and one can only imagine what crooks would made of such a possibility. Yet cannibalizing sales can be as important for one's future as spending on R&D.

Compulsory accounting shortsightedness distorts the opposite behavior as well. As analyzed by Stephanie Clifford, "the Los Angeles Times ran a front-page ad [...] that resembled a news column" (***). Adulterating a product to boost one's revenues is a time honored practice of manufacturers at wits' end. For an economist, it is but a divestment in disguise, reaping cash now at the expense of future sales.

Though a source of economic health, market based competition among decentralized actors provides but a boring background. The limelights are for epic battles between monopolies. Newspapers seem to have commissioned the Associated Press to stand off Google. As Miguel Helft reports "publishers do resent that [Google] is profiting from their content" (****). True enough but as the chairman of the A.P. declares "We'd like to have a pay wall but we like the traffic we get from search engines". If you live in the desert, how do you negotiate with the owner of the only well? Diplomacy is definitely needed to cover up what looks like an inevitable transformation of surviving newspapers into as many Google colonies.

Newspapers are forgiven if they eye with envy the relative success of telephone companies to secure a share of the media pie. The article by Matt Richtel and Bob Tedeschi on this subject is timely (*****). Phone companies have long known the value of time and developed highly complex billing systems over the past twenty years to charge users for every conceivable convenience. And until it was displaced by the Internet, the French Minitel showed how highly profitable a monopolistic control over information access could be. Simply burden each minute with the right tariff.

When I compared Google to a water provider for desert dwellers, readers may have wondered whether I got it all wrong. Aren't newspapers the content providers? Perhaps but once the news loses the urgency of a wire dispatch, the vital service is not to provide news related content to the readers, but to bring readers to this content. Yet readers continue to be taken for granted by all actors, a warning worth repeating.

In fact content providers are still trying to enforce copyrights by ever more repressive laws, while they think nothing of pirating the confidential information of their users. The regulatory bite has been nonexistent so far. But content providers should be wary of persistent barking.

Nikki Tait and Tim Bradshaw report that "European authorities are to investigate consumer profiling by online advertisers" (******). For EU consumer commissioner Megleva Kuneva, "consumers are in fact paying for services with their personal data and their exposure to ads. This amounts to a new kind of commercial exchange", extortion actually as part of the exchange is invisible. Meanwhile David Gelles tells us about an effort by the FTC to review "guidelines on endorsements and testimonials", aka recommendations, as buzz marketing grows on social sites.

The latter development however is not just one more daily event, it's a sign. If you google your friend, you are likely to come up with, not a pay wall as A.P. dreams, but a "join us" wall by Facebook or LinkedIn. I have already suggested that in the future "the medium needs no message". Indeed what is the role of a news provider when people use social networks to make news happen, when the users' activities become the news. According to Chris Nuttall (*******), even Google is playing catch up when it comes to real time interactions.

The Boston Globe can only "dream to create a real-time narrative that allows a real-time audience to slide in and be a part of it as it's going on".

If one continues to overlook the small, unresolved issue of user confidentiality, truly it is the beginning of the end.

Philippe Coueignoux

• (*) ............. Times Co. Said to Weigh Closing Boston Globe, by Richard Pérez-Peña (New York Times) - April 4, 2009
• (**) ........... What went wrong, by Robert Weisman (Boston Globe) - April 12, 2009
• (***) ......... Front of Los Angeles Times Has an NBC 'Article', by Stephanie Clifford (New York Times) - April 10, 2009
• (****) ....... Micro-Billing, Byte by Byte, Suits the World of Cellphones, by Matt Richtel and Bob Tedeschi (New York Times) - April 6, 2009
• (*****) ..... Brussels to investigate consumer profiling by online advertisers, by Nikki Tait and Tim Bradshaw (Financial Times) - March 30, 2009
• (******) ... Advertisers brace for curbs to online viral marketing, by David Gelles (Financial Times) - April 3, 2009
• (*******) . Race is on to tap the real-time digital torrent, by Chris Nuttall (Financial Times) - April 13, 2009