By Theory, I simply mean a statement of some causal relationship(s), and/or conditional process(es) that can be proven to be false.  Notice, I did not say that a theory is something that can be proven to be true.  This distinction – falsification – is fundamental to what it seems we call our scientific method.  Furthermore, as highlighted by the Oxford dictionary, a theory involves “general principles independent of the thing to be explained.”  The outcome and conditions are not the theory – the theory is in the spaces in between the cause and the consequent.

By Ideology, I simply mean “a system of ideas and ideals” that can be shown to be true.  Importantly, these principles may not be independent of the thing to be explained.  Instead, ideologies are alternatively explanations or interpretations.  The cause and the consequent are fused together, no longer independent.

For example, the various disciplines of the social sciences – economics, sociology, political science – are supported by various ideologies.  These disciplines are cornerstoned, and at times distinguished, by certain ideas and assumptions about the world such that explanations make sense. These ideologies then give birth to all sorts of theories about human behavior, at the level of individuals or the aggregation of individuals we call markets or societies.

The Long Tail may in fact be an Ideology – a system of ideas and ideals that once in place can be shown to be true.  I am coming to this conclusion given most challenges to the claims of the Long Tail are met with re-stated conditions and exceptions.  The objective of the Long Tail thesis appears to be to describe a set of conditions under which both the cause and the consequent would be shown to be true.

As such, the premise(s) of the Long Tail may not form a Theory to be tested, but an Ideology to be adopted and adapted.

Here is the link to the Google Chrome Browser Comic Book in PDF form.

Quite honestly, as an iPhone owner, I can say that this thing makes other phones just look like toys.  Not that toys are a bad thing.  But as more phones live and work like iPhones, social life will have to be impacted in unexpected ways.

The paper can be downloaded from the MCPS-PRS Alliance site for independent research. 

Right off the bat. An important quote: “The risk, in our opinion, is that as digital revenues increase, core revenues for entertainment companies decelerate more rapidly than we currently expect.”

Which is exactly the scenario that kicked the music industry in the ass.

Onward.

> UGC
Not a truly userful understanding of the scale and scope of user generated participation in online media. In fact, to assert this kind of fabricated “growth” they assert is dangerous.

They suggest that UGC (User Generated Content) accounts for 13% of internet page views, up from 0-1% in 2004. 1300% percent growth over three years for a sector. Their conception of UGC is completely flawed however, and this representation of the internet will lead to all sorts of similar, bogus conclusions. I have to be honest. It seems pretty naive to assert that less than 1% of internet page views, only three years ago, were the consequent of user generated media. What we have instead is simply a measure of the growth of the five sites/networks in their index. Online, UGC always has been big, always will be big.

UGC has been the heart of the WWW since the beginning. The big brands after this beginning were Tripod, GeoCities, and a host of others.. the “Homepage” phenomenon. Combined with every site of every other netizen that contains text, audio, video, etc. Similar pages have and will continue to comprise a larger proportion of views than estimated in this report. Simply put, do a web search. More than 13% of the results come from sources other than the search engine itself, or a major media company partner.

> Paradox of Choice
This cry for filters, editors, recommendation agents and such is old. It is neither new nor informative. You basically have to live under a rock to conclude anything else.

The paradox in this industry is that the value of the editor and the filter has not arrived consistently, and has often been collected by the aggregator alone, or not collected at all. Acquisitions in this area ebb and flow. From Firefly and others, to the fizzles in 2001 (you know who you are), to the big hits like Last.fm.

The “wealth of networks” is being earned by only a small section of the network. Even though the “wisdom of crowds” is being produced by an increasingly large crowd. Which Last.FM users got stock? This is where media companies, who usually played the editors as well, get screwed.

> Content and kingship
whatever. Since the beginning of media time media companies have developed content while owning “infrastructure.” From studios with theatres to labels with radio stations. The business has always been choppy. The challenge is when top-line industry revenue falls. Integration is simply a question of how you define the industry.

> Response to change
Three platitudes exist in this section, leading to doing nothing specific: (1) build organically (2) acquire (3) partner. The only other choice i can think of could be (4) do nothing, which the authors clearly just chose to leave out. The business book section of your local bookstore is fully stocked on platitudes. I know HBR has at least four leading off the july/august edition.

However, the warning against building organically seems all so reasonable, yet so painful for media companies to accept.

>Offsetting initiatives
Total advertising dollars have slowly climbed over the last five years. The percentages in the report play with you head. Core + Online = Total. Total is nothing other than Core + Online, and therefore, as long as total advertising dollars increase, newspapers (or whatever they will become) can always grow revenue.

> On the first front.
Media companies have historically also enjoyed playing the editor/filter, or having direct access to these influential nodes of culture.  So News Corp was both a producer of books, a publisher of papers, a network of stations, etc.  Even without the inbred connections of conglomeration, the network of peeps involved in this system were closely connected.  Kinda like the Wired Mafia (or the apparent hollywood-level Mafia of my alma mater, Northwestern)- the network of individuals who worked for Wired at the origins that now consistently re-appear, often working together or influencing the attention paid to each other’s work.

As the market for being the editor/filter has fragmented, media companies face a very realistic state of uncertainty.  What was somewhat of a Pipeline, is now more like a Pachinko game.  Furthermore, retailers have stepped up into the editor/filter position, either by way of their own products, or licensed systems. As such, the editors are bit less reliable in terms of their tendency to get with the program, as it were.

> On the second front.
Recommendation systems have a had a rough life.  Part of this challenge emerges since editors/filters face the same kind of competition for attention that media companies do.  Consumers have a wide set of options, and experience media reviews in somewhat of a wall of sound.  Knowing full well that “media” is most likely an experience good, we are faced with probably hundreds of options for filters.  On one site, AggregateKnowledge is doing the work.  On another, Amazons littlee collaborative elves are tossing out useless suggestions.

The real “wisdom” in this system most likely resides in our networks of relationships.  We tend to hang out with people who have similar interests, or (oddly) usefully opposing or idiosyncratic interests.  Even if we do not always share interests, trust has been developed at a level no media company could probably attain.

You will never organize this network like labor, however.  Instead, it becomes embedded within some other service and the aggregator of people and their opinions captures the value of the crowd and (otherwise) crowded wisdom.  For the rest of us, its a sort of social exchange in which we happily participate.

Google pays people less than they are worth.

This may sound like a harsh claim to make, but I would challenge you to find any business able to make a profit that does not fit the above-mentioned contingency.

You can hire the best people. But if you pay these people more than they are worth, you lose money. You can hire the worst people. But if you can pay these people less than they are worth, you will make money.

Google is able to hire exceptional problem-solving minds who have never focused these skills on calculating individual (or group) value in the context of the firm.

The cash earned by Google each quarter that could be directed towards salaries, is instead put into a cash chest that attracts investors. Shareholders balance the rest of the equation, by bidding up the stock’s value equal to, or beyond, the undervalued employee salary compensation.

Perhaps a radical perspective. But is it wrong?

(1)    Music retail is slowly dying, and that fact is not going to change.  Inflation is now the single, most likely factor that could lead to music retail seeing revenues similar to before “the crash.”  So if you want, wait ten or fifteen years, and it will be like the year 2000 all over again.

(2)    The media consumer has changed, in both their portfolio of interests as well as expectations for those products/services that match those interests.  No amount of marketing, legal recourse, or sulking is going to change these facts.  You have no option other than matching these consumer interests and expectations.  Whining that you “deserve” better, or “should” be able to choose your business model is just that… whining.

(3)    DRM is a buzz killer for music, and may not be for film (yet).  The portability expectation built into consumers, combined with industry expectations for all sorts of different business models, cannot be appropriately matched by any DRM system, known or unknown (other than a closed one).  A copy-protected DVD does not also adapt to six business models.  Interoperable and multi-configurable DRM is a lie that has been sold to you by hucksters.  You paid for this lie in lost revenues.

(4) Opening up Fairplay will (most likely) have a negligible effect upon digital music retail.  If Apple opened up Failplay, at this point in time, its much more likely the market for portable players *might* open up a bit, bringing down margins and prices on music devices.  Margins in digital music retail already appear rather thin, held up only by creative schemes for amassing payments.  Consumers might go to more, different stores, but there would seem to be little real evidence that suggests they would buy noticeably more music.

(5) Music is uniquely advantaged in the modern marketplace.  Music fans are accustomed to sharing their passions with others.  We are surrounded by music, such that we can even recall our memories by way of this music.  Music can exist as both the object of our direct attention, as well as a subtle, aural wallpaper that provides context for our experience.

You all know where the new consumer can be found.  Meet them there, instead of spending all your energy convincing these consumers what they are doing is wrong, or “unmonetizable.”  Many of us may never again pay directly for music.  And yet we still could be paying for music.

You asked for a free market.  You got one.  Find the money.