Tuesday, January 26, 2010

Authors Guild Panel: E-Rights + E-books = Turmoil

The Authors Guild held an event at Scandinavia House January 18. I believe that the title was E-Rights + E-Books = Turmoil. I only know this because the person introducing the event mentioned it. There was no placard or handout announcing the event, as one usually finds at these sorts of events. I think that the emphasis was more on the substance of the discussion than the usual promotional elements. In any case, the title (as I understood it) seems to succinctly capture the tone of the evening, which gave no indication that the equation posited is anything but correct.

My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants. I bring my own viewpoint and perspective to this discussion, which inevitably and inescapably influences my perception of the discussion. In other words, I am not contending that my write-up is “Fair & Balanced.”

The room looked to be able to accommodate about 200 people under normal circumstances. Given the gravity of the topic, especially to the author community, the room was filled to overflowing such that about 20 attendees were asked to sit on the stage, the steps were lined with people standing, and, I was told later, there were numerous people who were not able to get into the room at all.

This event was co-sponsored with the Association of Authors Representatives. Sidney Offit (spelling?), president of Authors Guild Foundation, opened the session. He introduced the moderator, Michael Cader (MC), of Cader Books.

The panel members were Jane Friedman (JF), CEO and Co-Founder of Open Road Integrated Media and former President and Chief Executive Officer of HarperCollins Publishers; John Sargent (JS), CEO of Macmillan; author Susan Cheever (SC) and literary agent Ira Silverberg (IS).

MC started the discussion by positing that the only problem with the session was that there were too many things to talk about. His primary intention, he said, was that the panel recognizes the need for meaningful conversation among publishers, authors & agents. We’re here to learn, not argue, he said, pointing out that this is not a tea party. (Note: two years ago, a “tea party” would have been a metaphor for a calm and civilized discussion. Now it means exactly the opposite.) MC also pointed out that the session was a public forum so that while the participants would try to be as candid as possible, they may nonetheless have constraints, especially since there are annoying people like myself taking notes and posting them publicly.

The first issue raised by MC was that the publishers’ position on E-books was not yet accepted by authors and agents.

JS began the discussion by voicing his concern that a proposal which Macmillan had sent to a small number of literary agents wound up being published in the New York Times. (Note: That seems in keeping in the moderator’s caveat about the public nature of this discussion in general.)

JS continued that the new formula was intended to get general agreement on a percentage of net proceeds of E-book revenues that would be returned by the publishers to the authors. They arrived at their preferred rate by examining their current royalty expense across all formats of printed books – trade, paperback, backlist, etc. – and found that it was 18.6% of net revenues attributable to those formats, which Macmillan then rounded up to 20%.

He admitted that he had heard that some publishers were paying up to 25% of net proceeds. Of course, antitrust law prevents him from discussing this issue outright with his nominal competitors. He recognized that Macmillan’s 20% was regarded “as less than satisfactory in the agent community.” He said that response had not convinced Macmillan to change its 20% rate in general, but that he understood that the marketplace is 25%. He also said that Macmillan would be willing to discuss the 25% royalty rate in every individual case.

He finished by arguing that the publishers agreements are better than the Google agreement. However, as he said, “We’re not at the end game, so we don’t yet know what the right number is.”

MC asked whether publishers are looking for a single rate for all varieties of E-books vs. the different rates that apply to books in different formats and at different points in their life cycles.

JS defended a single E-book rate by arguing that E-books are all a single product. Their rates are therefore different from book rates, which evolved from different formats. By the same token, however, he said that Macmillan has not negotiated any contract yet, implying that this discussion was somewhat theoretical at this point.

IS leapt into the fray. He argued that using the average royalty rate on print products is unfair, particularly given the different costs of E-book production. He also thought that an unlevel playing field was being created since JS had implied that the outcome of each negotiation depended on the clout of the particular author. Furthermore, he was concerned about locking in rates now when they could change in the future – “We‘re in transition.” He felt that since the business was being reinvented, he wanted to “play it straighter.”

JS defended the approach to negotiation by pointing out that different authors already get different contracts, including different rates, depending on their negotiating power.

IS, addressing the issue of a general rate for E-books, argued that backlist revenues could be pure profit to the publisher due to advances having been amortized and the lack of physical costs. The allocation of net proceeds for backlists was therefore different from issues regarding the frontlist revenue. Therefore, he contended, the largest share of net proceeds should go to the author.

The question arose as to whether E-books included books printed on demand, and JS affirmed that they did.

JF raised the broader issue: Do publishers have the rights for deep backlist? She felt that the issue of rights had to be addressed before the issue of royalty.

She was also concerned that it takes a long time to write a new contract, having been through that process herself. The contract developed at Random House in 1994 already referred to e-rights. Nonetheless, she felt that we are not in a transition or evolution; we’re in a revolution. It is therefore imperative to look at where the publishing community is headed. She was very concerned that, while books will continue to exist, that if the publishing industry does not embrace the digital revolution, it will be in big trouble.

MC therefore wondered about the pathway to resolution for these issues? Litigation?

JF said that she would like a friendly resolution. With regard to rights issues, they applied only to books from before 1992-1994. Afterwards, e-rights were in contracts. Nonetheless, this issue is very important to her company, Open Road, since it specializes in backlists because it wants to bring many now-neglected authors back to life.

SC felt that the question of e-rights will be settled, both in the courts and through negotiations. She felt that the broader issue is that we’re in the middle of a whirlwind that she likened to the invention of the printing press. (Note: this seems to be a common metaphor, having been raised in the discussion at last week’s Digital Breakfast as well.) She wondered whether the digital revolution will change the way we write and read. Will it change her relationship with her audience? For example, if technology allows her readers to purchase and read her books chapter by chapter, will she alter her approach to writing to do so chapter by chapter?

The discussion shifted to the respective roles of authors and publishers when MC posited that publishers look for authors to bring their audience to their work.

SC asked whether authors could now go directly to their audience without needing publisher, a role which the publisher had previously fulfilled.

JS argued that there is still a need for publishers in the digital age. He felt that they have acceded to the interests of the authors and have not exploited electronic rights unless authors want to - both frontlist and backlist. Furthermore, in the digital world, there would still be tremendous complexity involved in book publishing with regard to the multiplicity of digital platforms, DRM complexities, and so on. Furthermore, he argued that marketing would still necessary from publishers, perhaps even especially so if everyone goes directly to Amazon so as to stand out among the many choices available to readers.

JF also felt that a direct relationship between the author and their audience does not necessarily disintermediate the publisher. She took umbrage at having been called a “distributor” in an article in the New York Times. She adamantly maintained that she is a publisher, not a distributor.

She argued that the most important marketing tool for a book was word of mouth. Consequently, the biggest issue today is the ability of the publisher to market the author directly to consumers, especially in a world where consumers have short attention spans. She said that she does not want to lose a single sale. However, changes in demographics create changes in consumer behavior, and the publishing industry will have to adapt. For example, the youth audience wants books when they want it and how they want it. The publisher has to create the appropriate platform for this new environment.

SC pointed out that the author creates the thing that everyone is arguing about. Will there be a change the way people read, and by implication, the way that authors write?

IS was definitive that the reading experience will change. He cited a rendition of a David Foster Wallace novel in which the reader can click through to footnotes while in the body of the text. He also cited the Vook, which is adding audio and video components to books.

Also, publishers are important for marketing to retailers, which individual authors can not do. He therefore wants to be sure that authors are getting a fair piece of revenue, especially if authors bring new pieces or components to the equation as books evolve. He took publishers to task for not having adequately talked about the exciting components of changes in books.

What is next?

JS defended the actions of publishers by pointing out that there is a wide disparity of viewpoints among the various parties, which he compared to a complicated game of chess. He said that he is trying to get biggest piece of revenue possible for publisher/author in battle with the retail channels. He felt that, in the next 6 months, the foundations will be set for both retail prices and the publisher/author split of those prices.

In discussing developments made possible by E-books, he indicated that he was not enthusiastic about interactive video in the middle of a novel, preferring the traditional interaction between author and reader. He did concede that such functionality would be fine for DIY books such as yoga and cooking. In general, though, he was concerned about how to increase the connection between author and audience.

He also raised the concern that he is already seeing the shortening of books – as he said, he doesn’t want to see USA Today vs. New York Times. He also does not expect novels to be sold by the chapter. Authors are the creative force, so he is counting on them to come up with new ideas.

SC put it succinctly: What authors want is to get paid. If they write by the chapter, do they get paid that way?

JS felt that for non-fiction work, authors would be writing at least in chunks, as opposed to completed manuscripts. He said that overall payment would be based on net proceeds.

JF took that broad view that this is the most exciting time in publishing she could remember. The right approach was not doom and gloom; instead, it is important to assess how people will read differently. The author would remain as the brand. New formats such as the Vook would create unique opportunities. Likewise, for marketing, it is important to use all forms of multimedia and social networks. Furthermore, at Open Road, they have a “movie eye” on all projects as a way to further exploit the intellectual properties.

She felt that there should be rejoicing among authors, who will be able to write what they want to write.

Audience Question: Authors spend their lives in isolation. If they are dissatisfied with their publisher, can they leave?

JS answered that the standard answer is: it depends on the contract, which is the result of a process of negotiation. He also pointed out that electronic rights will become a bigger piece of the business. Publishers had been more flexible about exploiting electronic rights when they were less important. Now, they are a larger piece of the revenue and will be taken into account in the calculation of and considered part of the author’s advance.

JF asked rhetorically, How much are electronic rights worth? Nobody knows. She cited an example from 10 years ago, that the industry had gotten excited about the Rocket Book, but nothing happened. With the number of devices coming out, what is the audience size? How big can it be? She thinks it’s enormous and wants to share it with the author.

In dividing up the economic pie, JS pointed to the costs incurred by publishers in the E-book world. Even though they do not have printing costs for E-books, they still have overhead from traditional publishing, such as warehouses, since they have “a foot in each world.” In addition, E-books have their own infrastructure - server farms, electricity and other digital overhead.

Underlying all of this discussion is the concern that the value to consumers of an E-book is settling in between $9.99 and $12.99.

IS was not particularly sympathetic to the issue of the publishers’ costs, pointing out that when McMillan shifted from typewriters to computers, they incurred new overhead costs, which he was presumably loathe to cover out of proceeds that would otherwise have gone to his clients.

Buttressing his concern about costs, JS pointed out that trade paperbook printing only saves $1 over the costs of a hardcover book, implying that reduction in consumer value and pricing is not necessarily reflected in equivalently reduced costs.

Returning to general themes, MC was concerned that the underpinning of trust between agents and publishers is eroding. In addition, authors are concerned about diminishing advances, which is an economic issue, not particularly a trust issue

SC reiterated her earlier comment that she does not want the parties involved to worry only about their own “trenches.” She argued that everyone needs to think about everything and keep in mind the health of the entire book ecosystem.

With regard to the issue of retailers intruding into the publishers’ domain, JS argued that large retailers have already done their own publishing, so he was not threatened by the development of Amazon going directly to authors. In contrast to MC, he does not think that publishers are “at loggerheads” with agents. Further, he does not feel discussions have been antagonistic. The difference in the dialogue is his example that agents disclosed his letter to the New York Times rather than responding directly to him.

With regard to Amazon’s role in the development of the E-book marketplace, IS wants publishers to protest retail sales at low prices.

JS defended publishers from taking such actions by pointing out again that antitrust prevents publishers from discussing retail prices.

JF also pointed out that publishers have always suggested retail prices, so everyone is accustomed to an environment in which publishers can’t force retail prices.

Audience Q: what will the function be for publishers?

JS felt that the more clutter that exists, the more publishers can do for authors. The clutter reduces the “signal-to-noise” ratio, and the publisher can help an author cut through that. He viewed the publisher’s function as that of looking through the universe of manuscripts and selecting those with commercial/literary merit and promoting them. He felt that authors need the publisher’s expertise in order to convert new marketing methods - social networks, etc. - into sales.

SC’s viewpoint was that the ultimate goal of the writer is to get people to read their work, not to get it published, which is simply a means to that end. Publishers are there to help authors to do that.

JF also agreed that publishers cut through the clutter. Furthermore, there is now more clutter than ever because there are more books. For example, last year, for the first time, there were more titles that were self-published than published by traditional publishers. She also felt that there will be lots of experimentation in the book publishing industry. Book reviews don’t really exist anymore, and the blogosphere is a cluttered environment - sometimes it brings books to the public’s attention, and sometimes it doesn’t.

JS said that publishers are working on backlists, digitizing books and optimizing search for those books, but that they are focusing their resources on frontlist books.

For precisely that reason, JF wants her new company to work with traditional publishers to market the deep backlist because traditional publishers are focused on frontlist, including print copies.

IS asked whether JF’s OpenRoad was in conflict with traditional publishers?

JF replied that the relationship should not be combative. She felt that there is a lack of understanding as to what her new company does. She wants to create relationships with traditional publishers and to do their emarketing. She was hoping to establish 50/50 partnerships with publishers.

Q: What deals are being done for E-books?

JS pointed out that all contracts now include electronic rights. Royalty rates are currently based on the list price of electronic books. The formula is shifting to a net proceeds model due to changes in splits between retailer and publisher. While the rates are not yet set, in his mind, literary agents are claiming that the market rate is 25% of net proceeds.

MC pointed out that there is often ambiguity over definitions and asked for clarity on the meaning of gross vs. net.

JS defined net proceeds as gross revenue minus returns.

Q: Aside from marketing, how could publishers help exploit the interactive potential of E-books?

JS asserted that publishers view themselves as part of the creative team. He therefore viewed that is a battle for competitive advantage among book publishers since he felt that there was an uneven level of quality among the editorial staff across the industry in terms of knowledge, ability and helpfulness.

Q: What will change?

JS projected that e-book revenue, now 4% of total revenue, will grow to 7-8% next year. It will be the fastest growing segment of book revenue, but will not yet be a profit generator. He also expected to invest a lot of resources in setting up retail relationships, creating electronic infrastructure, etc., because he felt that publishers need to have the new environment figured out when E-book revenue hits 15-20% in a couple of years.

JF was more aggressive, asserting that the industry needs to figure out the appropriate split sooner, and that the process won’t take several years.

JS felt that development of the industry would be hampered by the fact that it does not yet have the basic business model in place. For example, Google is using an agency model while Amazon is a retail model.

Furthermore, he felt that much will depend on how much consumers are willing to spend on a book. If they can not get a book at a fair price, he argued that they will steal it. Therefore, he wants to protect intellectual property at as high a price as possible that will maximize sales.

JF felt that turning away any sales of ebooks is bad. It is necessary for publishers to meet consumer demands when they want the book. In return, she feels that the consumer will pay more for the book they want.

Summary: The size and participation of the audience, the quality of the panel members, and the energy of the discussion all spoke clearly to the importance of this topic to all members of the book publishing industry, and, by extension, to all of their consumers and readers. Furthermore, developments in the ebook industry are likely to have ripple effects on creators of intellectual property in all media.

The environment is quite unsettled. Can the participants wait for the evolution of the industry to calm down and indicate the direction in which it’s headed, or will the pace of change, and therefore chaos, simply accelerate? There are no answers today on which all parties can agree. Consumers will continue to generate a demand for books and other authored material, regardless of how the industry participants choose to interact with each other. How will the industry address those issues? Let’s turn the page and proceed to the next chapter.

Saturday, January 23, 2010

Cheap is in the Eye of the Beholder

Lauren Weber's In Cheap We Trust is truly a book for these times. Her historical review of thrift makes it clear that we neither would be in this economic mess nor would we be condemning future generations to economic catastrophe if we had only had the clarity of mind to truly understand and maintain the virtue of thrift to which we thought we had pledged allegiance. Along with helping to shatter our historical myths about virtue, the book provides a terrific review of the state of thrift in America today - a little late, to be sure, but better than never.

Lauren's mix of personal observations, candid family anecdotes, and a wonderfully piquant writing style made me wish that she had discussed the subject for more than the thrifty 279 pages in which she covers this fascinating topic. Those wishing to see for themselves can go to: http://bit.ly/6FKCOv

Monday, January 18, 2010

Notes from the Digital Breakfast: Media Forecast 2010.

I attended the January 14 Digital Breakfast: Media Forecast 2010, moderated by Lisa Davis (LD), partner at Frankfurt Kurnit Klein & Selz, with participants Andrew Edgecliffe-Johnson (AE), media editor, Financial Times, Mike Germano (MG), president and creative director, Carrot Creative, Mike Hudak (MH), co-founder, president & CEO, blip.tv, Steven Pamon (SP), VP & head of new business development, NFL, and Reed Phillips (RP), managing partner, DeSilva + Phillips. My notes are below, with the caveats that they are my best rendition of the discussion, with no claim to accuracy; much of the discussion has been paraphrased, rather than being a direct quote of the participants; and that I bring my own viewpoint and perspective to this discussion, which influences my perception of the discussion. In other words, I am not contending that my writeup is “Fair & Balanced.”

The panel represented a variety of viewpoints about the media landscape, both as representatives of different facets of the media industry as well as some divergent points of view, as was revealed during the discussion.

LD asked each of the panelists for a quick comment.

• RP said that, while 2009 had been a very difficult year for mergers and acquisitions among media companies, he saw activity picking up as 2010 developed.
• SP pointed out that media was a growing business for the NFL, both with the NFL Network and with NFL.com.
• MH stated that blip.tv viewed itself as a next-generation television network, with 50,000 independent content producers, for whom blip.tv provides “services of scale” including distribution online and, increasingly, on television.
• MG described Carrot Creative as a new media marketing agency to whom PR and advertising agencies turn to provide new media and social networking expertise. MG said he had demonstrated the power of social media during a successful run for public office earlier this decade, powered largely by social networks.
• AE pointed out that, contrary to general trends, the Financial Times had been able to grow its circulation recently and charge for its content.

LD kicked off the discussion by asking each panel member to predict a major challenge or opportunity which they expected to materialize in 2010.

• RP said that the challenge for traditional media was in changing their business model. Traditional media players have too much staff and are mired in old processes. He predicted that they will be acquiring digital media companies in order to bring new media expertise in-house.
• SP felt that the focus of the NFL would shift from supporting advertisers to supporting consumers. Interestingly, the question of the right consumer approach would be a significant topic of discussion later this morning.
• MH argued that media is shaped by technology. He contended that CBS, for example, has not changed since it began broadcasting television in 1941. Unfortunately, and perhaps as demonstrated by that example, he felt that it has been difficult for organizations to re-orient themselves to new business models.
• MG addressed that issue by pointing out that the media needs advertisers. While traditional ad agencies have been reluctant to refocus their efforts on new media, he felt that the agencies and media will change when the advertisers demand change. The fact that advertisers are moving portions of their budgets from traditional to new media will reinforce that change.
• AE pointed out that there are many competitors for consumers’ time and attention, and therefore many opportunities for advertising. He also noted that the news is increasingly driven by social media, readers’ commentary, etc. He felt that the emerging tablet computing format was exciting, at least on a long-term basis. With a combination of an attractive device and attractive content, he felt that media companies could be able to charge consumers for their products.

LD next asked who would be the 2010 victim of a revenue decline, with print having suffered a 25% drop in 2009.

• MH felt that the near-term change would be limited. New media, while a beneficiary of a shift in ad budgets, was still a small part of the total ad budget, and would probably remain so since clients and agencies do not really know how to make best use of the new media platforms. He felt that the print business had been impacted primarily by the economy, rather than a shift of ad dollars to new media.
• SP was concerned about the NFL’s customers (advertisers) spending less due to a decline in consumer spending, i.e., reductions in total ad budgets regardless of shifting allocation among media formats. He did feel that print was suffering due to a potential long-term systemic issue that consumers do not value print content.
• MH also argued that the advent of new media causes unit prices to decline, e.g., Gutenberg’s invention of movable type probably generated greater quantities and consequently lower prices for books. He also felt that media consumption was increasing but that consumer attention is finite so that demand has some limits. The solution for content providers, he posited, was for them to bring down costs of goods sold in keeping with the lower revenue potential.
• AE returned to the issue of consumer value: are there media experiences that consumers value? He questioned whether Jay Leno was still funny or whether he was stuck in an earlier decade. He felt that the possible solution was that newspapers, for example, could be made to look better, and argued that a more competitive national market for newspapers in the United Kingdom fostered better products and consequently expanded the market for multiple newspapers. His ABCD assessment of the media landscape: Agencies are dissatisfied by the state of the advertising business; Books are caught in a struggle for allocating their value among the industry participants in an e-reader world, with Amazon seeking 70% of the revenue for its contribution to the value chain; Cable is having difficulty adapting due to its historical monopoly position having caused its competitive muscles to atrophy; and DVDs have found that the market has declined.
• SP also pointed out that movie and television studios are threatened by the decline of the DVD market, which had historically been a major driver for them. Unfortunately, much of that demand had been driven by consumers building their content libraries, and that need has now been largely fulfilled.
• RP agreed that content is under-valued and that producers have suffered as a result. He cited the example of Demand Media, which has helped devalue content by paying low prices to its content providers. He also cited technological influences, such as Eric Schmidt of Google discussing a function that would allow a consumer to upload a picture of a building and thereby receive information about that building – an example where technology would essentially replace content. He agreed that consumers have limited time resources, and felt that would drive consumers to demand quality content.
• MH argued instead that the market sets the value for content. He felt that the means of content production have been democratized via technology, and that small groups have been empowered to participate in the content marketplace. The additional supply should therefore help the market reach the appropriate price.
• SP foresaw continued disruption in the marketplace. His view was that the costs of distribution and those of marketing are inversely correlated, and that “the lines haven’t yet crossed” to provide equilibrium. In the meantime, he felt that a settled marketplace was unlikely in the near term as each sector of the industry seemed to feel free to enter other sectors, viewing such entry as “easier than it is.”
• MG took a somewhat contrary view, arguing that the value is not in the content. Instead, he felt that the user experience is key. Digital formats let people decide how they want to consume the content and how they want it to come to them. He cited MLB.com as the leader among the sports leagues an example of both providing content in new and different ways, and in standardizing the user experiences at the various team websites through centralized control.
• SP pointed out that media strategies depended on which audience each participant was trying to satisfy. Not everyone in the media food chain viewed themselves as being responsible for the consumer experience.
• MH cited the example of the NHL, which had originally allowed each team to manage its own website but eventually moved to the centralized model under the control of the league, presumably to improve the consumer experience and make it more consistent.
• SP argued that the NFL focused its efforts where it felt the core consumer experience was most critical. For example, he cited the NFL Sunday Ticket program as a successful consumer service and said that the NFL would develop additional products and services as they perceived the development of consumer interest and demand. In keeping with his theme of selective innovation, he also argued that “Just because you can, doesn’t mean you should.” He brought up the example of ESPN, which tried developing new consumer experiences, such as ESPN Mobile, not all of which have been successful.
• AE projected that media companies would have to decide whether they have or can develop the necessary expertise and make the necessary investments in new media. If they cannot, they probably need to find partners.
• MH pointed out a distinction between west coast and east coast startups. He felt that the former viewed technology as the intended end or objective of the business. He argued that New York companies generally consider the user experience and value to be the key. Citing blip.tv, he said the company thinks of itself as a media company that is using technology, not as a technology company per se.
• MG thinks that the future of media companies will be subject to a generational shift with a greater comfort and facility with new media exhibited by the new generation. In addition, lower capital and other barriers to entry will enable more innovation, with consumers investing their time and attention into the most innovative companies.

LD finished the discussion portion by asking each of the participants for 3 predictions.

• AE expected more business failures to come as numerous weakened companies succumb to economic and other pressures. He also did not expect the tablet to become a mass-market product this year.
• RP predicted more M&A activity. In addition to the acquisition of digital companies by mainstream media, which he had mentioned earlier, he also foresaw consolidation among digital companies themselves.
• MG expected more business partnerships. In addition, he said that there would be significant cultural changes in the workplace environment in order to address the needs and desires of new media employees and to foster additional innovation.
• SP felt that 2010 would be the last year of the PC as the dominant consumer computing device, supplanted by laptops, phones and other powerful and more portable form factors.
• MH agreed that the PC would diminish in importance. He also pointed to the rise of televisions as part of the online experience, with the top 5 television manufacturers having models with Ethernet connectivity. That would also foster “over-the-top” consumer viewing of video from online sources instead of from cable or satellite providers.
• SP pointed out that the shift in video sourcing from cable/satellite to online would depend primarily on the valuation proposition for the consumer.
• MH felt that, in keeping with previous industry developments, independent OTT boxes such as Roku and Boxee would have their functionality eventually incorporated into the cable/satellite set-top boxes, much as at happened with Tivo and DVRs.

A question was raised from the audience – in a world with so much content from so many sources, what will serve as quality filters?

• MG felt that one’s friends would serve that function via social intersections such as the social networking sites. To validate these user-generated filters, users could make their preferences and friends public.
• MH predicted a network of filters, such as Tumblr, which seems to have supplanted the New York Times and Drudge for his news consumption.

Another question was about the opportunity for the monetization of websites in a world of disaggregated audiences.

• MH said that blip.tv is able to host shows with small audiences since they have essentially unlimited video inventory. The company provides these shows with monetization of their audiences by bundling the shows and creating scale for advertisers, in addition to targeting, which increases the value of even small audiences. He cited such aggregation in other media areas, such as regional networks of publishers.

All in all, it was a lively, engaging discussion. 2010 will both prove and disprove many of these predictions, but the most interesting events will be those that no one foresaw.

Wednesday, January 06, 2010

Trying to Help the Environment, But with Unintended Consequences?

One of the wasteful and environmentally harmful everyday items is the disposable plastic grocery bag. I completely understand and agree that it is a wasteful use of scarce resources, that they last forever whether in a landfill or disposed of in an even less environmentally-sensitive way, and that it is dangerous to wildlife.

One solution that has been bruited about, and with which we often try to comply, is the non-disposable, reusable grocery bag. My only concern is that this solution has the potential to make things worse, not better. The primary issue is that the reusable bag itself is a consumer of many of the same resources that would otherwise go into making the disposable bags, and it certainly requires significantly more resources than the disposable bags.

Question #1 therefore is: how many times must a reusable bag be used instead of a disposable bag in order to break-even from a resource point of view, i.e., that the resources consumed from manufacturing one reusable bag is equal to or less than those consumed from the manufacture of the disposable bag it replaces? If, for example, a reusable bag requires 20 times the manufacturing resources as a disposable bag, then it needs to be used at least 20 times in order to have benefited the environment, manufacturing-wise.

If the bags, on average, are being used to that extent, that would be terrific, both for the environment and for helping change our mindset toward reuse instead of disposal. If, as I fear, that is not happening, then our good intentions of assisting the environment are resulting in negative consequences as we are causing net harm to the environment through the manufacture of the reusable (but insufficiently-used) grocery bags.

If that is indeed the case, that brings us to Question #2, which is: could we achieve much of the originally-desired objective simply by reusing the disposable bags. Granted, these bags have a much shorter life than the reusable bags, being less sturdy and more prone to ripping, tearing, etc. On the other hand, if we can reduce the usage of these bags by reusing otherwise disposable items, we can still provide a benefit to the environment.

Alternatively, we can mandate the use of reusable bags and prohibit the use of disposable bags, which some local governments have apparently done. That’s a good step, but I would certainly prefer to see a bottoms-up groundswell from the populace than a top-down imposed solution. After all, since the problem belongs to all of us, so should the solution. It’s similar to the reduction in smoking – I believe that the general societal disapproval of smoking has done more to reduce its incidence than the various legislative prohibitions, which seem to be following the public mood rather than leading it. Let’s take that approach here as well.