Since Reuters is the only news source we trust, we were shocked, shocked we tell you, to read this:

Within the industry, rival cable channels will catch up to their broadcast rivals, securing an estimated $22.3 billion in advertising dollars by 2009 compared with $22.5 billion for the networks. The Internet will be close behind at $17.2 billion.

We really wish we had known that the internet was doing so well a bit earlier. Curse you Reuters for withholding this precious data from us!

Public Relations expert Richard Edelman has some interesting thoughts on the massive change facing his industry:

* Every dollar coming out of print advertising revenue for newspapers is replaced by only 33 cents online, according to Citigroup analyst William Bird. Print advertising accounts for approximately 66% of total revenue for newspapers. This money is ebbing away to web competitors like Monster.com or Yahoo.

* The largest 50 Web companies are attracting 96% of the ad spending on line, according to Pricewaterhouse Coopers, with the majority going to AOL, Google, MSN and Yahoo. The hottest genre of Web advertising is 15 second commercials that run before on line videos on sites such as WebMD.

* An estimated 9.5 million homes in the US now have TiVo or another digital video recorder. According to a study by CBS, 64% of DVR users skip all ads and an additional 26% skip through most ads. The number of homes with DVRs is expected to triple in the next five years.

These are only a highlight of many interesting stats that he lists but we’re not so sure his advice to PR-folk is very useful. [via Ito]

From the why are we always behind department:

About 8.7 million Europeans will be watching television over the Internet by 2009, or 9.4 percent of a market currently dominated by cable and satellite operators, according to a forecast issued on Monday.

...

“It will emerge faster in Europe and Asia than in the United States,” Schmitt added, saying similar initiatives by U.S. telecommunications companies are only just getting underway.

Tell us something we don’t know. On the other hand, being slow and retarded has its benefits: it makes our job of prognosticating pretty simple. All we need to see the future is to catch a flight to London or Tokyo. No more need to spend money on expensive crystal balls (we take no credit for the assumed drop in crystal ball manufacturer’s stock prices).

From “The End of TV (As You Know It)”:

The video-on-demand (VOD) phenomenon isn’t confined to cable-system menus and iTunes downloads. The entire Internet is, in a sense, media on demand, says Tobaccowala. “That has changed how consumers feel toward all media, training them to feel puzzled and even cheated when they can’t get what they want when they want it.”

It gets even better because they actually break down how much money people can make off of iTunes versus network TV ad rates:

That’s why the networks are dipping their most profitable toes into unknown waters, making some of their top-rated shows available in new ways. A deal ABC struck last month to have episodes of its hit Desperate Housewives available for download on Apple Computer Inc. (AAPL ) video iPods for $1.99 shows how the networks are cautiously experimenting. The series about the wacky women of Wisteria Lane generates $11.3 million in ad revenue per episode, according to Forrester Research Inc. (FORR ). That translates to an estimated 45 cents per viewer per episode. By contrast, ABC is expected to earn $1.20 per download of an episode after Apple has taken its cut. Even if 20% of the show’s audience shifts its viewing from traditional TV to iPod and ad revenue falls accordingly, ABC would still net $1.8 million more per episode than if Housewives weren’t available on demand.

If this is true, it is quite impressive.

It seems the island-dwellers are ahead of us in more ways than one:

The internet, on the other hand, allows advertisers to target consumers more accurately and track their responses. It has become so popular among British advertisers that the value of website advertising rose to £490.8 million in the first six months of this year, up 62 per cent on the same period last year and more than the £407.8 million spent in the whole of 2003.

For the first time, the money spent on web advertising in Britain was more than that spent on outdoor advertising and more than the money spent on radio and cinema advertising combined.

At the end of the article, the experts backtrack to say that TV is still a “powerful” medium but that the days of TV ruling the advertising roost are on the way out.

Unsatisfied with merely conquering the Internet, Google is now considering setting its sights on TV:

(CEO Eric) Schmidt said the company also was mulling how it might extend its ad brokering system to television. “It’s certainly on the list” of projects Google is considering, he said in an interview. ..."Putting Google ads on TV is a tremendous undertaking,” he added, saying he wouldn’t speculate further on such an initiative. Such a move by Google, whose success has already instilled panic in some media companies seeing their ad revenue shrink, could incite similar fears in the TV industry.

We want to hear from you dear readers. What do you think of this move? Is it brilliant strategic thinking or has Google finally overstepped its boundaries only to be smacked down by old media?

Every once in a while, for our own amusement, we cruise the shady back alleys of the media insiders world. A world where content makers, advertisers and public relations lackeys engage in all sorts of unspeakable acts. We hit the streets so that we can bring you, dear reader, the latest on the seamy underbelly of the media world. You know things are getting weird when media-porn outlets like PR Week say the following:

It is no secret that traditional media have suffered in credibility and reputation over the past few years. While promises by public editors and apologies by editors-in chief for publications’ transgressions have become far too common, some outlets are now considering other ways to regain readers’ trust.

Kerins says media companies are more likely to utilize outside PR firms than in previous years.

“You’re seeing a much greater convergence of public relations in the news media,” he says.

For many media organizations, transparency is a growing trend, says Sam Whitmore, editor of Sam Whitmore’s Media Survey, a website that offers analysis of the industry.

“I think media are trying to figure out a good way to involve readers and listeners in their processes without necessarily handing over the keys,” he says.

To give you some context, this quote was pulled from an article on “PR Trends” where their greatest minds mull over the near future of the PR industry. We find it endlessly amusing that the news industry’s response to the massive drop in quality journalism is to employ PR flacks to “improve their image.”

Most interestingly though is involving the audience “in their processes without necessarily handing over the keys.” This is exactly the dilemma faced by old media as new media begins to rise, there really isn’t a way to imitate the interactivity of the net with one-to-many media like television, newspapers and magazines.

Tristan Louis does a thought-provoking break down of how much money AOL has spent per blog in the WeblogsInc network:

Data for the rest of us?

In acquiring Weblogs Inc., AOL has now provided us with some numbers traditional media are willing to pay for a blog. Looking at the numbers above, one can try to guess at the value of a link from an external site. a single link on the weblogsinc network represents 0.002258559942180087 percent of the overall network.

He then goes on to figure out that each link to the blog network is conservatively valued at $564.64. It’s a fun way to break down what traditional media companies are willing to pay for blogs (if one can even consider AOL a “traditional” media company). [via MetaFilter]

OTX did a study that shows that the same core audience that is abandoning TV has also been abandoning film:

Males under 25 years-old, a core movie audience, saw fewer films this past summer but watched more DVDs, played more video games and surfed the Web more often than previously, according to a study released on Monday.

These alternatives to film are also the reasons given in the slide in Nielsens ratings for young males.

They must read BBB because the New York Times has a piece on how internet distribution cuts down on costs for smaller video producers:

While there have been a few successful subscription services for Internet video, most notably those offered by Major League Baseball, the driving force of the online video market is advertising.

“The advertising model is extremely simple and very attractive: you simply put your 30-second commercial in front of the video,” said Josh Bernoff, an analyst with Forrester.

Advertisers are paying $25 per thousand users who see their online commercials, more than they pay for network television, Mr. Bernoff said.

The world of wildly inaccurate Nielsens is over. Advertisers are willing to pay a premium for smaller online audiences because they know exactly what they are getting. 

The media giants continue their infiltration into the domain of snarky critics:

AOL will inherit 85 blogging sites, including Engadget and Autoblog, where users can read about everything from travel to technology and debate on topics like parenting and movies.

The agreement, which was signed Wednesday, is expected to close next week. The deal will make the Santa Monica, Calif., and New York-based Weblogs a wholly owned, stand-alone subsidiary of AOL, operating with full editorial control and independence.

Where the eyeballs go, the dollars go. This is a fact not lost on Fox or AOL. Perhaps they didn’t feel like sitting around and letting the future fall into the unscrupulous hands of Yahoo and Google.

Just in case you weren’t paying attention and you thought it was safe to sink thousands of your precious dollars into the future DVD format:

“After more detailed assessment and new data on cost, manufacturability and copy protection solutions, we have now made the decision to move ahead with the Blu-ray format,” Thomas Lesinski, president of Paramount Pictures, said in the release.

Toshiba said in a statement on Monday that it believed Paramount continued to back HD DVD, basing that position on comments made by Paramount officials in previous press reports.

Are you confused yet? Apparently Paramount at first announced that they would support HD DVD. So are they backing out and supporting a different format or are they now endorsing two formats? Will every movie be released on both types of discs? Can they afford to do that? Why are they all going through this agonizing bullshit again?

Lesinski said the fact that Sony’s next-generation PlayStation 3 game console would come equipped with a Blu-ray DVD player was a key factor behind its support. PlayStation 3 is due to be launched next spring.

The subtext to all this is that Microsoft/Intel threw their weight behind the technically inferior HD DVD format because they want Sony’s new Playstation 3 to suffer. But if I were Microsoft I’d make my new console play both formats. It will look stupid when everyone has to throw out the Xbox 360 because it won’t play the most popular movie format.

Interesting goings on at Google:

Google is looking to hire a full time project manager for GoogleTV in Mountain View, CA. The candidate must posses experience developing/launching products in one or more of the following areas: interactive TV, set-top-boxes, personal video recorders, video-on-demand, IP TV or cable TV technologies.

Google has since removed the job posting from their site because of the massive interest generated by it. Funny how you can tell what’s going on about a company just by looking at their HR pages. Seems Google has some IPTV goodness up its sleeves. (via Slashdot)

From Freedom to Tinker:

Hollywood argues — or at least strongly implies — that technology companies could stop copyright infringement if they wanted to, but have chosen not to do so. I have often wondered whether Hollywood really believes this, or whether the claim is just a ploy to gain political advantage.

Such a ploy might be very effective if it worked. Imagine that you somehow convinced policymakers that the auto industry could make cars that operated with no energy source at all. You could then demand that the auto industry make all sorts of concessions in energy policy, and you could continue to criticize them for foot-dragging no matter how much they did.

If you were using this ploy, the dumbest thing you could do is to set up your own “Perpetual Motion Labs” to develop no-energy-source cars. Your lab would fail, of course, and its failure would demonstrate that your argument was bogus all along. You would only set up the lab if you thought that perpetual-motion cars were pretty easy to build.

Which brings us to the movie industry’s announcement, yesterday, that they will set up “MovieLabs”, a $30 million research effort to develop effective anti-copying technologies. The only sensible explanation for this move is that Hollywood really believes that there are easily-discovered anti-copying technologies that the technology industry has failed to find.

So Hollywood is still in denial about digital copying.

We couldn’t have said it better ourselves. (via BoingBoing)

It seems that the internet is making good progress in its journey to surpass TV ad spending:

U.S. INTERNET AD SPENDING WILL surpass $10 billion for the first time this year, projects online industry market research aggregator eMarketer in a new report released late Wednesday. The report, which is derived from leading industry data tracking and forecasts, and is benchmarked against the Interactive Advertising Bureau’s and PricewaterhouseCoopers’ Internet advertising tracking report, predicts advertisers will spend $12.9 billion on Internet advertising in 2005, up from $9.6 billion in 2004, and more than double the $6 billion marketers spent online just three years ago in 2002.

Now before we get too excited we should point out that there is still a long way to go before this is anywhere near the amount of money expended on TV advertising but doubling in less that three years is pretty good.

As any regular reader of BBB is aware, Japan is the mirror that the rest of the industrialized world looks at when it wants to see its own future (minus the extraneous tentacles of course):

Throughout August, 133 Japanese TV stations are airing commercials to promote the importance of…commercials. Japanese advertisers, like those in the U.S., worry about growing use of digital video recorders, now in 15% of Japan’s homes. By letting users skip ads, DVRs have knocked $489 million off the value of commercials to advertisers, says the Nomura Research Institute. To win back advertisers, the National Association of Commercial Broadcasters in Japan named Aug. 28 TV CM (commercial) Day. In one spot, a singer Aya Matsuura works a puppet that says, ‘Commercials are fun, aren’t they?’ adding, ‘It’s ventriloquism, so of course I’m made to say so.’ Viewers, of course, may skip these ads, too.

Interesting to note that DVR penetration is about double that of the U.S. market so you TV execs should start planning accordingly. I wonder if Aya Matsuura’s puppet resembles something similar to the pets.com sock puppet because that would be awesome.

OK. Here comes the BBB official prediction: in order to compensate for lost 30-second spot revenue the entire model of TV will change to a PPI system (Product Placement and Integration). Remember the Texaco Star Theater that aired back in 1947? TV is going to start going back in time, to the land before 30 second spots.

If you read the title of this article and think we’re going to talk about architecture, we’re sorry to disappoint:

Before Iger’s remarks, studio executives spoke of releasing DVDs simultaneous with a theatrical run only in the context of fighting piracy. Many studios are already premiering films around the world on the same date to undercut pirates who distribute illegal copies of films in China, Eastern Europe and elsewhere.

In the United States, studios are pressured by a box office slump and a DVD glut that has led to a sharp decline in sales for new releases that compete for shelf space with old TV show box sets and older hits.

New technology is adding to the competition as cable operators promote video-on-demand services and phone companies, such as SBC and Verizon, are creating high-speed Internet networks that will make on-demand viewing even easier.

NATO (National Association of Theater Owners) is freaking out because the window between when a film is released theatrically and its accompanying DVD release is now only 4 months. But in reality, 4 months is a long time to consumers. Obviously the trend will be to continue the shrinking of time, but the studios will have to make concessions. One day, DVD releases will have to be simultaneous in order to beat piracy, so we predict that theater owners will demand that they receive the lion’s share of the profits from the opening weeks.

But the Studios’ faith in DVD sales is folly. People made fun of Bill Gates for announcing that “shiny plastic discs” will be but a distant memory in the future and as loathe as we are to admit it, he’s right. In the future anyone can download a near-DVD quality film to their high-end flat-panel home theater before a film is even released theatrically. What do you think will happen to DVD sales then. In fact, DVD sales are already in a slump and there isn’t even any serious piracy challenge today.

Just remember, no more SHINY DISCS.

<small>Just because Bill is right doesn’t mean we like him.</small>

The New York Times reports that the partnership between Motorola and Apple is finally bearing fruit:

SAN FRANCISCO, Aug. 29 - Apple Computer and Motorola plan to unveil a long-awaited mobile phone and music player next week that will incorporate Apple’s iTunes software, a telecommunications industry analyst who has been briefed on the announcement said on Monday.

The development marks a melding of two of the digital era’s most popular devices, the cellphone and the iPod, which has become largely synonymous with the concept of downloading songs from the Internet or transferring them from compact discs.

This will be an interesting experiment in convergence: will people buying iPods decide instead to buy a cellphone with iPod-like features and/or will cellphone users want a cellphone with iPod features? BBB experts tend to think that such a device will be a failure. The iPod sells well because of its inimitable design that focuses solely on music playback. Cellphones are inherently complicated and unsavory. Combining these two just results in yet another franken-phone that no one likes.

Jack of all trades, master of none. Now if only motorola could make decent cellphones before trying to cram an iPod into one of them.

Wired has a great article today on Yahoo’s new push into video search and entertainment. They start off with a great summary of the chaos Yahoo is entering into:

This onslaught is already turning the entertainment business inside out. More music videos are being watched on AOL than on MTV. Procter & Gamble is cutting down on pricey 30-second TV spots to beef up the online presence of its packaged goods. TV Guide announced in July that it would drastically cut the amount of space it devotes to listings, an acknowledgment that viewers now turn to the Internet and onscreen programming guides. And CBS is squaring off in a content-indexing smackdown with Google. Meanwhile, the guy down the block has turned his backyard into a back lot, his basement into an edit bay, and he’s landed a global distribution deal - with his ISP.

For its part, Yahoo! is working with SBC and Microsoft on an IPTV/fiber-to-the-curb initiative called Project Lightspeed that uses Yahoo! software to deliver video-on-demand, instant messaging, photo collections, and music. Meanwhile, chief executive Terry Semel, who spent 24 years as an executive at Warner Bros., has recruited a crew of network personnel in Santa Monica to crack open the contractual vaults containing 50 years of rights-encumbered TV and film archives. And Yahoo! has already become the Internet home of broadcast fare like Fat Actress and The Apprentice. “They’re clearly thinking of themselves as the fifth network,” says Jeremy Allaire, founder of Brightcove, a Net video distribution startup.

As we’ve said before, BBB is always wary of PR puff-pieces and this article has little in the way of criticism but its the non-Yahoo content of the article that is most amusing. Check out this quote about Yahoo competitor (and perennial BBB idol) Google:

At a meeting with CBS last year, Google execs proudly mentioned that after working on an index of the grand old network’s video collection they had compiled a digitized database of CBS programs. Never mind that 11 million households around the country are doing essentially the same thing with their DVRs; CBS executives were aghast. The problem wasn’t so much that CBS was unaware of the TiVo phenomenon. It was Google’s Spock-like gaffe of plainly stating an obvious but painful fact: The networks’ stranglehold on content is slipping away. The meeting ended abruptly, and the Googlers were shown the door.

CBS’s reaction reminds us of the time that Bram Cohen was asked to speak at a Billboard conference in LA, as he plainly stated that the music industry was dying (in no small part due to products like his own BitTorrent) the audience simply shut down and refused to understand.

In general this article brings up one of the key sticking points about the unavoidable death of television. For a dying medium there sure is an awful lot of content out there. There are now so many channels and so many hours of programming that people have to resort to devices like Tivo to filter it for them. What Yahoo, Google, Blinkx and every other video search engine out there are trying to do is replace the role of TV Guide and your Tivo: they want to be able to find all the cool shows for you.

Why? Because in the future, whoever brings you the cool shows first becomes the new “network” of networks.

What the article lacks in hard-nosed journalism it makes up in anecdotes. Check it out.

It seems that dumping old and broken business models is coming a bit late to the music industry:

Warner Music Group is creating a new music-distribution mechanism that will rely on digital downloads instead of compact discs.

Edgar Bronfman Jr., Warner Music’s chairman and CEO, said Monday that the new mechanism will be called an “e-label,” in which artists will release music in clusters of three songs every few months rather than a CD every few years.

It doesn’t take a brain surgeon to figure out that people like paying less for fewer songs rather than being forced to purchase whole albums. You’d think with all the success Apple’s iTunes music store has had that record companies would be falling all over themselves to rush to the digital future. Alas, it is still slow going.