You know something is up when an audience member is taking cell phone photos of the presenter's slides for instant transmittal to a business partner.
Chris Anderson does have killer slides, full of exuberant detail, defining the exact shape of the still emerging opportunity space for finding and selling formerly infindable and unsellable items of every imaginable description. The 25 million music tracks in the world. All the TV ever broadcast. Every single amateur video. All that is old, arcane, micro-niche, against-the-grain, undefinable, or remote is suddenly as accessible as the top of the pops.
"The power law is the shape of our age," Anderson asserted, showing the classic ski-jump curve of popularity - a few things sell in vast quantity, while a great many things sell in small quantity. It's the natural product of variety, inequality, and network effect sifting, which amplifies the inequality- Stewart Brand, The Long Now Foundation
Chris Anderson has served as editor in chief of WIRED since 2001. Under his leadership, the magazine has garnered nine National Magazine Awards and 19 additional nominations and has won the prestigious top prize for General Excellence three times. In 2010, AdWeek named WIRED the Magazine of the Decade. Anderson is the author of two New York Times best sellers, The Long Tail and Free: The Future of a Radical Price, both of which are based on influential articles published in WIRED. He is also a cofounder of 3D Robotics, an open source robotics company. Before joining WIRED, he was a business and technology editor at The Economist. He began his media career at the two premier science journals, Nature and Science. In 2007, Anderson was named to the Time 100, the news magazine’s annual list of the world’s most influential people.
William Randolph Hearst III
William Randolph Hearst III became president of the William Randolph Hearst Foundation in early 2003. Son of William Randolph Hearst, Jr. and grandson of William Randolph Hearst, Hearst is also director of the Hearst Corporation.
William R. Hearst III joined Kleiner, Perkins, Caufield & Byers in January, 1995, and currently serves on the boards of Akimbo, Applied Minds, Juniper Networks, Oblix, OnFiber, and RGB Networks.
In addition to his portfolio company boards, he is also a director of the Hearst Corporation and Hearst-Argyle Television. Hearst is a Fellow of the American Association for the Advancement of Science, and a trustee of: The Hearst Foundation, Carnegie Institution of Washington, Mathematical Sciences Research Institute, California Academy of Sciences, and Grace Cathedral in San Francisco.
Will Hearst was Editor and Publisher of the San Francisco Examiner from 1984 until 1995. He is a 1972 graduate of Harvard University, holding an AB degree in Mathematics.
William Randolph Hearst, 1906.Library of Congress, Washington, D.C.(born April 29, 1863, San Francisco, Calif., U.S.died Aug. 14, 1951, Beverly Hills, Calif.) U.S. newspaper publisher. Hearst in 1887 took over the struggling San Francisco Examiner, which he remade into a successful blend of investigative reporting and lurid sensationalism. After buying the New York Morning Journal (later New York Journal-American) in 1895, he fought fierce circulation wars with other papers and helped bring about the era of yellow journalism, employing circulation-boosting strategems that profoundly influenced U.S. journalism. Distorted reportage in Hearst papers fanned public sentiment against Spain that led to the Spanish-American War. He served in Congress (190307) but ran unsuccessfully for other offices. In the 1920s he built a grandiose castle in San Simeon, Calif. At the peak of his fortune in 1935 he owned 28 major newspapers, 18 magazines, radio stations, movie companies, and news services. Extravagance and the Depression weakened him financially, and by 1940 he had lost control of his empire. He spent his last years in virtual seclusion.
Yes I agree with Chris Anderson that if you have something that is unequal to the other multimedia products which are present throughout the history, these will have more chances to be remembered and therefore accessed at a higher degree.
Sorry about tMy First Post..I misunderstood Something..Please admin delete the First post..
I think the Above information is very Reasonable...I always wondered about that..i will put Fora TV in my Bookmark
Under search driven demand:
We find that 66% of the search traffic is going to posts that are older than one month old.
Great explanation of google prefering old content with lots of backlinks
New content does not have time to build backlinks or googlebot does not have the the time to find them that quickly
In reply to Hawaye - I think the way that mobiles have developed is a good thing in a way, I remember the time when it was basically just used to call or text someone, but nowadays we need to use it for more advanced things, people need to access the internet while travelling for work, and accessing emails etc, just the way the world has gone.
I am frustrated that more people do not pressure their cell companies, companies that are among the most abusive of all companies, They are just too hard to pressure if you every have tried, Some type of phone is pretty essential nowadays in the USA, not to live, but to function with others, Mobile people usually will choose a mobile phone.
It is obvious that cell phones are not just simple voice communication devices anymore. They have evolved into devices that can do much more than just place telephone call.
Cell phone cameras are also useful for quick documentation. You can shot a picture of a sick tree to take to the garden store. You can also easily take a picture of sky and sun, clouds, etc
Another useful cell phone feature is wireless Bluetooth technology. If you purchase a cell phone that supports this technology it allows the information and conversations on your cell phone to be transmitted wirelessly to another-enabled Bluetooth device.
This is a series about long-term thinking, and what's been especially fun about it is to talk to speakersand get them engaged and they then realize that what they're doing actually has a long-term thinkingaspect to it. Now it is the case here that one of our-- actually, our first sponsor Will Hearst is here andwill join Chris on the stage, said You know, there's really a time dimension to this. And he'll tell yousomething of what he thinks about that tonight.So I called Chris, and said there was a time dimension, and he said, Yeah I know.And so we got into exploring it further, and so this talk, in anticipation in just a month or so,The Long Tail, which is coming out, is part of expanding what has turned out to be an extremely powerful idea.One of those ideas that will probably be around for a couple decades, because of a change that theinternet has wrought. And so your part of that process tonight, I'm wearing the yellow hat as anindication these are the people who collect your questions will bring them up to me and Kevin Kelly inthe front, and it's going to be an editor-fest. Will Hearst is an editor, Chris Anderson is an editor, I'man editor, Kevin Kelly's an editor. That's what we do. Chris Anderson, it's yours.Thank you and good evening. What I'd like to do first is run through about twentyminutes of just a little background and framing of what The Long Tail is, what it means,and then change in dimensions in looking from the traditional concept of the long tail tothe time version of it. Um, there's going to be a lot of charts and data, you don't have topay attention to it, it's illustrative, the book, the research, the article, and most of mythinking about this is all driven by numbers.We're very fortunate to live in a moment where the economics of the 21st century lie inthe server databases of Google and Yahoo! and Netflix, and Amazon. And if you onlylook, you can see extraordinary things, and surprisingly few people are looking, and I'vebeen fortunate enough to have their cooperation, and you'll see some of that, but we'rejust scratching the surface of the really different economics, culture, and lens on ourculture, lens on our world around us, that we can see out there in these databases.It starts with numbers. And this is the sort of the shape of our age, I believe.It's called a power law, you may know it also as a Piretto, Bilford Pirettowas the Italian economist who observed that 20% of the Italian populationhad 80% of the land, leading to the 8 0/20 rule, the notion that a smallnumber of things have a large impact. Low-frequency, high amplitudeevents...earthquakes are distributed in power laws. A small number of bigearthquakes and a large number of small ones. Populations, citiesdistributed in power laws, it's a small number of very big cities and a largenumber of small ones. The shape is kind of a one over x, it's an exponential,it's the simplest possible curve, and yet it turns out to be absolutelyubiquitous in human affairs, economies, and nature itsel.If you plot a power law linearly, it looks like that. With a small number ofthings on the left, high impact on a large number of things on the right, thathappens to go on forever. I've cut it off, I've truncated it at a randomnumber. If you plot it log log, which is to say that each axis now goes infactors of ten, you should get a straight line. Sometimes that line-- the slopeof the line doesn't matter, depends on the market, it depends on thecircumstances, it depends on the units you're using, but it should be a straight line.Unless it's not. This is US Box Office over a 3 year period. The box officegross is on the left, exponential, in a large scale, and the ranking of the film,the number one film, which did several hundred million dollars, all the waydown to about fifteen hundred films. Something happens right there. Andwhat happens right there is really interesting because it sort of tells youeverything you need to know about the distortions of the last century in our economy and culture.What happens right there is not that the films got worse. It didn't switch intoforeign languages. It didn't stop making films. What happened is they ranout of screens. The carrying capacity of the American theatrical network,mostly the big-screen megaplexes, is about a hundred and twenty films ayear. However, the number of films shown in film festivals is closer to13,000. The vast majority of films never make it to megaplex. They neverget out there. There are not enough screens to show all the films.And so as a result, you end up with this distortion, you end up with themarketplace apparently falling off the cliff. Not because people didn't wantthose films, not because they didn't exist, not because the films weren't good,but because of the scarcity, of the bottleneck, in distribution. And so in asense, everything we think about, the extent that we thought Hollywoodrepresented American tastes, to the extent that we thought that hits werewhat our society collective society wanted, it turns out that in fact hits arewhat the distribution channel wanted. They only had so much shelf space.And so for channels of television, for radio channels, for retail shelf space,every one of these traditional ways of distributing content, where I startedmy research, has a scarcity effect.Every one of those scarcity effects, every one of those bottlenecks, ends updistorting the market and by extension distorting our culture. In a sense, itlooks like this. There is the same power law, and yet it just gets hacked off.Truncated. But now we're entering an era where you have distributionmethods that don't have scarcity functions, or at least, they're pushed muchfurther down. The internet has infinite channels and infinite screens andinfinite shelf space. And so what you realize is when you go back to thatline, you realize this pink bit right here is the latent market that we weremissing before, because we couldn't reach those products. Because wecouldn't connect supply and demand. And that right there is the marketwe're just now starting to explore, and it turns out to be remarkably large.Here's some actual data from Rhapsody, which is a subscription onlinemusic service that benefits from unlimited shelf space. What you have here,in the red part, is the albums and songs that are available in Wal Mart, whichis America's largest cd retailer. It has about 4500 albums in the averageWal Mart. So these are the hits. And these are the albums that Wal Marthas, and that Rhapsody has. Down here in the yellow, these are the niches,these are the albums, tracks, that Wal Mart doesn't carry, but Rhapsodydoes. What's notable about this is that although some complicated mathinvolving converting albums to tracks, I calculate that the Wal Mart inventoryis about equal to 25,000 tracks. Rhapsody, right now, carries 1.5 milliontracks. Itunes carries about 2 million tracks. The peer to peer networks arelooking at about 9 million tracks, there's probably 25 million tracks out theresomewhere in vinyl, live, remix, all the other songs that are out there andcould be and will be brought online.Another way of looking at it is right here. This is Wal Mart's inventory, andthis is Rhapsody's inventory. What we thought was the music market was atiny tiny fraction of the music market. In fact, we're looking at overallmagnitudes in increase and variety, and so too for dvd's. The averageBlockbuster carries 3,000 dvds, Netflix is at actually 60,000 right now.Over here at Amazon, the typical Barnes and Noble or Borders carriesabout 100,000 books, Amazon's now tracking 3.7, there's probably another6 million books out there. Bring in the network to used book stores, whichare now sort of seamlessly integrated into these online marketplaces, andyou could be looking at maybe as many as 10 million books in variouslanguages. Extraordinary increase in variety.And what you find is that although we'd assumed the retail channels hadassumed that those niche low-sellers were insignificant, sub economic, justnot worth carrying, in fact, when you add them all up, those onesies andtwosies are starting to amount to a significant market. In music, they areclosing in on half the market. In Netflix, about a quarter of the market. Aquarter of their rentals are things that are not available at a Blockbuster.Amazon's also about a quarter. The books that are sold at Amazon arebooks that are not available at a Barnes and Noble or a Borders. All thosenumbers are growing. It looks like we're trending to an era where about halfthe market is sold through traditional retail channels, and the other half of themarket is only available through these sort of abundant, unlimited channels,such as, with online in particular, but also things like the US Mail, anotherpowerful network, as Netflix revealed.So. Let's talk about the time aspect of that. There I've been sort of talkingabout mainstream and niche. So Blockbuster, Tower Records, Wal Mart,Borders, they tend to carry the hits. When shelf space runs at-- the cost ofa shelf space for one dvd is $22 a year, in Blockbuster. You need a lot ofturns. You need to rent quite often to pay back its shelf space. So theyhave to carry the most popular items. So that's the way I initially looked atthe long tail. Hits to the left, niches to the right.But there's another way to look at it. When you think about it, over time,even hits become small sellers. Even hits lose their traction in themarketplace and they sell less, and so the tail's actually made up of a mix ofsome niche titles and some old titles. For fun, I thought I would just showyou 2B's, that's the Bee Gee's first album, and this is Broken Social Scene'snew album, called Beehives. This one was a number one, and now isranked around 20,000. This started at around 15,000, a very niche title,just a year ago, and is now at around the same rank. The two of them areright next to each other in the long tail, but one's an old hit, and one's a new niche.So we're mixing these two markets together, and they obviously havedifferent behaviors. So I set out to quantify this. What I'd like to show youover the next few slides is really just a work in progress as we try to quantifythe long tail time. So if you tease apart the reds and the blues, you basicallyhave two dimensions. You have one that's sort of, it's niche vs mainstream,broad vs narrow, and the other, new vs old. Both have decay functions.Both have a power law shape. But so how do you combine the two. Well,I realized that there's sort of a topology here. That basically, hits here, theirsales decline over time. Well that's true for niche titles, their sales declineover time as well. But hits decline faster over time because they've gotfarther to fall. Niches decline more slowly, and there's some shape in therethat will tell you a lot about the latent demand in the marketplace.So what is that shape, and how do we quantify it? Well, this is messy. Butresearch often is. What we did is we looked at the top ten, or the #1albums for the last ten years, and we looked at their current rating. And sowhat we assumed is that the newer they were, the higher the rating wouldbe. They all started at one, and the new ones, the one released this week, isstill one, the one released ten years ago has fallen to some other level. Sowe thought if we scatter-plotted it, and then we could sort of run a littlecurve-fitting and see whether we could get a shape, and sure enough. Butwe could do more rigorous work than that.There's a fantastic-- again, we're very lucky to live in a time where basicallyeverything is measurable. Someone out there is tracking it. All these servershave all these data, increasingly they're available. There's a service calledInfoFilter, which kindly let me in, and we started tracking the decay functionof albums on amazon. Basically the sales rank goes up as the sales decline.So here is an Arctic Monkeys, which made it to, it was released right there,and obviously in pre-release, it went up the charts, then it peaked close tothe day of release, and then it declined. So that's the decline function of analbum that hit number 2 on the charts. Then we looked at other albums,we've done these for hundreds, but this one is a gospel album, also releasedaround the same time, this one sort of started at number 500 and declinedand now it's about 1500. So a more gradual decline, a more gradual decay function.So, you know, going back to this original chart, you can see that we'restarting to kind of, if you wanted to, in music, you could start to have a senseof what the exponentials were, what the constants are, to describe each oneof these curves. This is important. And here's why. What do these fiveartists have in common? These five artists were five of the top ten topgrossers last year in the music industry. There is an incredible demand forolder stuff. Some of it's because it's good, some of it's because we'renostalgic, some of it's because we can get it. But these are just the hits.Each one of these did more than 50 million dollars in business last year. Buthalf of the top ten last year were basically classic artists. I find it odd thatU2 is considered a classic artist now, but there you have it.So that's music. I'm going to now plow through a couple of other examples,because then we can turn to the interactive component with good will. Butit's true for dvd's as well. There's a very interesting service called DVD Station.And what it does, is it takes a, it's got a box with a big hard drive, aterrabyte drive, and a dvd burner in it, and a screen. And you can put it inany store, it could be a Blockbuster, it would be the corner grocery. Andyou can basically pick a dvd, and it'll burn it and rent it and you can bring itback. It can have more inventory than a Blockbuster, but it doesn't have to.What it does, more importantly, is it alleviates one of the other problems oftraditional retail, which is that it's very hard to find things. In traditional retail,the store is set up for one-size-fits-all, the new stuff is stacked a hundredhigh in the back, the older stuff is randomly put in some taxonomy that may not make sense to you.I remember looking for Akira, Japanese anime, is that science fiction, is itkids, is it foreign, is it drama, you know where section does it go in? Youdon't know and the clerks can't help you. What DVD Station does by beinga kiosk is it allows you to have a Google-like functionality. You can search,it has recommendations, you can see previews, you can read moreinformation about it. The two limiting factors in traditional retail are inventoryand findability. This is an experiment in solving the findability problem. It'sinteresting what you see here. So right here the purple stuff represents theBlockbuster sales and the blue represents the DVD Station sales. These arethe same dvds, but as you can see they're getting older. So here's the decayfunction over time, and what you see here is that the older titles sell better,are more popular, when you can find them. Maybe that stands to reason.And you also see there's this interesting structure right here. These areclassics that people love, these are things that have passed the test of time,but have been lost in the aisles. Lost in the bins of a traditional Blockbuster,but findable through a more Google-like interface. And so what you see isthat the curve is flatter. And that the area of the curve is non-zero. Thisright here, 5, 6, 7 years old, this world of Blockbuster, basically, theireconomics doesn't allow them to care about it. But if you have abundanteconomics where you can carry everything, you realize that the demand is non-zero.For instance, here's another way of looking at it. This is the demand for oneyear or older. Let's see how much larger it is for the kiosk, Google-like wayof finding, or Amazon or Netflix way of finding it. Same inventory, just moredemand for the older titles when you can get past the findability. What'sinteresting about the old stuff is that the economics which we assumed wereworse are actually better. The reason is, is that the acquisition costs forDVDs have a decay function as well. A brand-new dvd costs about $19 tobuy, and in Wal Mart is sold for about $16. They lose money on dvds,initially. Now it's a loss leader and they attract people into the store withthese cheap prices and then sell them refrigerators. Over time, theacquisition cost comes down dramatically. In the fourth month, it's nowdown to $15, and then right around here, it becomes profitable to sell.Because you can see, the price, the blue line, declines gradually, whereas thecost, the purple line, declines more rapidly, and so the margins go fromnegative to very positive over time. So because the acquisition costs arecheaper, the older stuff is more profitable.Interestingly, it isn't just more profitable, it's actually more satisfying. Netflixdid some analysis on this. Netflix also has the capacity to have unlimitedinventory and to recommend titles that you'll like based on your history, andto give you previews and samples and more information. What they find isthat, as I just said, the older titles have a lower cost, so that's higher marginsfor them, but what surprised them is that the satisfaction ratings were muchhigher on the older titles, and when you think about it, this makes perfectsense. Older titles have passed the test of time. The reviews have come in,word of mouth has spread, people know what they think.Newer titles, the quality of the titles is overwhelmed by the marketing. In itsfirst week, what you're seeing is a huge flood of marketing from the studios.Maybe you haven't read the reviews, maybe you hadn't had a chance to talkto people, maybe the sort of consensus view has not come in, and so youtend to just sort of, you know, you're seduced by the marketing, that's howit works. And what they've found is that the ratings on the new titles weresignificantly lower than the ratings for the old titles.So when you think about it, Blockbuster, which because of its need to stackthem deep and high and to push the new titles the most, are the place wherethe movies cost the most and return the lowest satisfaction. Whereas Netflixis in the part where the movies in the older films where they push the manback over time, is in the part of the market where the movies cost the leastand have the highest satisfaction. So Netflix is in the sweet spot of theindustry, and Blockbuster is in the sour spot, simply because Blockbuster is driven by the tyranny of the new.Google is another interesting example of this. Will's in the newspaperbusiness, and I'm in the magazine business, and I can tell you that there's thenotion that the new news is the important stuff, and the old stuff is pervasive.There was the presumption that your front page is what matters, it'sfreshness, it's what's right here and now that is what's popular. But Googledoesn't think that way. The way that Google algorithms work is that there'sa number of factors that determine relevance, but one of the most importantones is incoming links. You know, the consensus view on how important,relevant and different content is. Older stuff has longer time to build upincoming links. Over time, the relevance, the quality, the sort of measuredvalue of older stuff, rises. And Google actually doesn't even-- the spiderdoesn't even get to the new stuff.So Google almost-- you know, traditional Google, obviously they haveGoogle News and Google Blog Search, but traditional Google won't evenknow anything over the first 48 hours. And then over time, things get morerelevant, not less. So as we see more and more of the traffic to all of oursites driven by Google, we find that it's not going to the front page tradition,it's not going to the new stuff, it's going to the old stuff. Here's some datajust from our own sites. We find that 66% of the search traffic is going toposts that are older than one month old. So 2/3 of it. And as a result, thisis, just to unpack this, this is the new stuff here. This is the old stuff thatcomes from search, and this is the old stuff that comes from links.What you're finding here is that this bit right there is driving demand. This isthe growing part here. The stuff that's coming from search. And it istraditionally, you can see, the old stuff, the stuff that is more than one monthold. As a result, the archives are suddenly becoming really really important.And you're seeing the balance of the traffic growth going to your old stuff.This is absolutely new, and suddenly makes you realize that the presumptionthat there was no value, that you barely had to leave them online, youcertainly didn't sell ads against them, is turning out to be completely wrong.We now realize that quality doesn't disappear over time, instead recognition increases.I'll give you a few other examples before we turn to Will. The rise of printon demand is a real driver toward the backlist in books. Again, one of theproblems with books is the notion of shelf-space. The fact that the inventoryprocess of storing books is significant. How would you store books withnear-zero inventory? You store them from digital files and you print them ondemand. Print on demand technology is basically just a big photocopier.But today, you'll buy books from Amazon that are print on demand and youdon't know it. You cannot tell. The color, they have proper colors. Theyhave charts, graphics, you can't tell, they're not marked in any way.Amazon just bought a print on demand company, there are six of them beingstarted just this year, and what's fantastic about this is it not only allows youto take the older books, rather than taking them out of print, just taking themto print on demand. They cost nothing to store, you print in small batches,sometimes as little as one, and the price is a little bit higher but not a lothigher and the margins are positive because there's no costs. As it sits there,it doesn't gather dust. It doesn't exist, in a sense. Till it's printed. What'simportant about this is it not only allows them to monetize these archives,monetize the back catalogue, but it also allows them to smooth out demand at the front.One of the big problems with the book industry is the notion of returns. Oneof the policies of the bookstores is that they're allowed to return new booktitles for free if they don't sell. Why would bookstores over-order, grosslyover-order? Because they want to make sure they don't run out. If costsare borne by the publisher, they might as well over-order. And pulp therest. Send it back for credits. However, there is a small cost, becausethose books sort of have to sit in a warehouse, the bookstore's warehouse,so if they could avoid that they would, they just don't want to run out. Well,right now we print books in batch. Big batches, ten thousand, twentythousand, a hundred thousand. But if you could say, well, it's not going tobe sixty thousand now and sixty thousand six months from now. It could besixty thousand now and as much as you need from now on, we can get it toyou in 24 hours, we can print 30, 40, 300, 3000, you can smooth out thedemand, and you won't run out, then the bookstores won't over order.So technology that was designed to sort of unleash the value in the archive isactually going to have most of its economic impact in smoothing out demandat the head of the curve. That's a really important advance in an industrythat's struggling. Movies, right now. We're seeing the rise of very verycheap dvds. Dvds again, especially through Amazon and Netflix, are a greatway to distribute content without shelf space constraints, and there isdemand. For television, you're seeing the rise of classic collections, whichare again, you know, I Love Lucy or anything else, there is demand for this.Some of this is nostalgia, some of it is good content. DVDs are a great way to distribute it.One little note, in our analysis we have found that television represents thebiggest divide between the amount of produced content and the amount ofavailable content. The television model is one of just, produce it, it existsephemerally, it's broadcast for a brief window and then disappears. Thevast majority of television isn't syndicated, the vast majority of televisionhasn't made it to dvd, the vast majority of television wasn't tivo'd, it's justgone. And yet it exists out there. And if you can clear the rights, which issomething perhaps we may talk about a little but more with Will, you findthat there is an appetite for old tv. If only you can get it out there.A final example I wanted to give you is games. I'm a gamer and I grew upin the generation that had the Nintendo and the Atari. And a lot of us thinkof this stuff very fondly. However, it's not available. If you don't have theoriginal machine, you can't play the games. There's this notion of abandon-ware.Manufacturers now actually not only don't sell them anymore, but theywon't let anyone else sell them. So they live in this netherworld. Oneof the reasons is that the retail channels don't support old games. They'reniche products, they have a small demand. But they're a passionatedemand. But there's a new distribution channel in video games. It's onlinemarketplaces, and all 3 of the new consoles: the X-Box 360, the NintendoWe, and the Sony Playstation 3, are all going to have broadband distributionof games, and Nintendo in particular is building an emulator for all of its oldsystems right into the machine. So every game they've ever made will beplayable on the new machine. Distribution costs, inventory costs, near zero.There's demand for this, and they're finally able to tap them. So there'smore of this in my book, which is coming out in July. But we can get intofurther detail by now turning to Will, who knows a lot about this. Will?Great talk, Chris. Last time I saw you talk on these subjects was down inYale and you added a tremendous amount of dimension, so I guess the firstthing I want to do is maybe just slow the pace down a bit and go throughsome of the things that you talked about, but let's start with-- there's twodimensions of time that I'm particularly interested in, and you've probablydone the best job I've ever seen of quantifying these things. And you cantalk about these things in terms of facts. But the two dimensions that interestme, one is sort of an evolutionary process. I think if you're talking abouttime, you're talking about change and evolution. And certainly in this sort oflarge sphere of media properties, there are changes in distribution, changesin economics, there are some perpetual things and I want to come back tothat in a split second.But you do see these bottlenecks and I'd just like to sort of think out loudwith you a little bit. But looking at television, let's take that for example,when I was a kid, there were basically three networks and a bunch of otheralso-ran local independents, so to speak, and that was the scope oftelevision, and it seemed to satisfy people. But with the technology thatcable television brought into the marketplace, starting with out of market andbetter signals and people that had two of the networks getting three, but youvery rapidly became all 13 channels to have content. And then there was acreative response to that, and a kind of marketplace evolutionary responsebecause all of a sudden you had MTV, there was nothing like that before.We had CNN. We had Discovery. We had all kinds of new content response.So I'm kind of interested in if the internet has sort of changed publishing andmagazines were changed maybe a decade earlier by desktop publishing, youknow there seems to be a kind of evolutionary pattern when you blow openthe distribution and change the cost of entries, you get a creative response.So I wondered if you had any thoughts about the blow-open internetdistribution as it moves up into video, which is sort of the way a lot of us getnews, for example. What's your bet about the...let's start with the creativecommunity response.Let's just start with, I'll show you one bit of data on this. So we have aprecursor to the internet, which is in the form of cable. We started with fournetworks, and then as people got more and more channels, we started tosee the beginnings of an abundant distribution. And we now have ninehundred channels, maybe even a thousand channels. This right here, thewhite line, represents the rise of what they call multi-channel, which isbasically what they call cable, and it's basically 95, all homes have cable.And the black line represents what that did to the networks.Network share.Network share, exactly. And what we found out is that we went frompeople watching the network 75% of the time back when fewer than half thehomes had sort of this abundance of choices. Now it's less than 50% of thetime is spent watching the network. So what that means is that as people--you know, in 1957, 75% of Americans watched I Love Lucy on a Sundaynight. It was kind of the peak of lock-step culture, where we all did thesame thing at the same time. The peak of the water cooler era. Now thatwe find more channels, more choice, we find we're fragmenting, we'redistributing across these many channels. The modern equivalent of that isYouTube. Or Google Video. And we've now gone from 900 channels toan infinite number of channels. We've gone from commercial content to skateboarding videos uploaded.We find that we've gone from a kind of commercial marketplace, where youhad to have a commercial reason for making video, to an amateurmarketplace, where you don't need any reason to make a video because thecost, everyone has a camcorder, and distribution is free. I think what you'refinding is two things. First of all what you're finding is that the pool ofproducers is expanding hugely, because we've democratized the tools ofproduction and democratized the tools of distribution. So before, youneeded to have gotten into the machine to get your stuff out. Now you don'thave to get into the machine. The machine is-- we all have the necessary tools.You don't have to be a member.You don't have to be a member, exactly. And we're also finding that thepool of viewers for this content is also growing. We assumed that there wasno demand for amateur skateboarding videos. We assumed wrong. Youknow, YouTube is partly a reflection of pent-up demand for commercialcontent not distributed at the right time, and the right channel. Sort of TiVoin the air. And partly a demand for stuff that was never commercial in thefirst place. I think we're seeing a renaissance in culture. We're seeing thisextraordinary explosion of talent, of variety, of choice, of cultural richness,that we'd only had glimpses of before in underground film festivals and oneon one sharing. Now we can actually measure it and it turns out to be massive.Now I would certainly agree, and I think it's worth mentioning thatsimultaneously, there's sort of an economic shift going on too. Because inthe first part, in the left hand side of this diagram, there's kind of a near panicin the traditional media corporate offices, and in the right hand side, whichlooks like the disaster continues, there's actually been a sort of shift in thekind of strategies of the big media companies. So where the NBC, ABC,CBS's of this world were kind of being struck in the left, they now owncable networks, and are trying to reconstitute the economics by sort ofparticipating in the phenomenon. So where this all goes is interesting. Thereis a kind of consolidation afoot, and it's not, to my way of thinking, entirelyaccidental and random that Fox is now the owner of MySpace. There is asort of economic second response. You know, when railroads get to be toomany, pretty soon you have consolidating railroads.You could talk about this for a while.I think about it sort of in slightly economic terms. Before I was at Wired Iwas at The Economist, so I've been sort of drilled in economics. Youknow, we see, you know, we now see a huge expansion of supply.Oh, and by the way, before you go, I want to also make a point that whilethis looks like some sort of declining business, and let's all diversify intogolden oil, in fact the media business during their entire slide here has beenlower left to upper right in terms of--It's total dollars!So the number of people involved, the total economic dimension of this hasactually gone up with the fractionalization of audiences.You know, one of the paradoxes of our time is how the market share thenetworks went down but the revenues went up. Every year, the up front.Every year, the advertisers pay more and more for a smaller and smalleraudience. They had no choice. Now they do have choices.Getting back to the economics. We basically have, you know, we havesupply, a growing pool of supply, we had all the commercial content, boththe stuff made now and the stuff made all over time. There's that poolsupply, now growing because of the democratization of production. Andthen you have this demand. All these people who wanted not just what'sbeen broadcast now but also the stuff that was broadcast last week, lastyear, ten years ago. And all those people who want the stuff that wasn'teven broadcast at all. But we just couldn't measure it. So a huge expansionin supply, and a huge expansion in demand.So where's the problem? It's in putting the two together. Now, anybody,any institution, and often those institutions are sort of broadcast mechanisms,that stands in between supply and demand, is going to run into trouble. Foxis an interesting example, they're on the supply side. They own content, theyhave a relationship with the content producers. But the affiliates are thebottleneck, what Steve Jobs refers to as orifices.There is some road kill here.There is indeed. So you know, the people who own the content, the peoplewho can sort of catalyze more content, want to find a way to reach all thisnew demand. The problem is is that as you said, all the money is comingthrough these traditional channels. How do you manage to--Well, one might argue that the affiliates, who are getting killed in this, arereally not media businesses at all, they're distributors.So...so it goes, you know. People--I just gave a talk at the NAB, the National Association of Broadcasters inLas Vegas about the decline of the hit, and I hadn't actually realized, this isthe biggest television conference of the year, and I hadn't realized that the Bin Broadcasting means terrestrial broadcasting, and that most of the peoplethere were radio engineers, brilliant people who basically built the incrediblecommunications systems we have now, but their skill set is in sort of tuningsignals so they can go out over-- and I'm thinking, you mean like rabbitears? And I like, wow, that's the way the industry is still organized, around rabbit ears.And there's still a lot of regulation that's based around the ability for you toput up rabbit ears and get a signal and your constitutional right to do that is alot of the screwiness of the regulatory...Exactly.Um, another fractionalized media business was magazines. And I think we'rewe're both old enough to remember Life and Look, which were the sort ofnetworks of publishing. And that business got creamed and became specialinterest publishing, but something interesting happened out of that, which isthe advertising was supported, mass market publishing went away, or wentto television, but another kind of advertising that the trout fishing advertiserthat advertises in a trout fishing magazine came in and created a wholeparallel industry, and I think in some ways Google Ad Sense, and theapplication of technology to more rifle shot-- you know, what is an ad otherthan a link? It's like, hey if you're interested in this, might you be interestedin that. And I think that's in its infancy too, I still--I agree.Think that Google Ad Sense, which is the sort of Holy Grail of this thing isreally the, you know, miniature Holy Grail, because there's so much morethat can be done to try and be smart about. I think Amazon's book findingand book referencing engine which is based on a collaborative filter and isabout ten times more interesting than Ad Sense, which tends to throw upstuff that appears to be relevant but really isn't.I agree. You know, it seems to me, think about an ad can be defined assomething you don't want. It's an interruption.Yeah, it's a synonym for that!But a marketing message that is properly targeted is content. And youknow, often you'll find that, you know--If you take a special magazine, take the ads out, the audience is less interested.That's right. That's right.You take the suppository ads out of the football game, that's okay.So the, so you know what the...It's true. It's true. And if you think about it,you know, what's wrong with advertising on television is the notion of sort ofkeeping you from what you want by forcing you to watch a message forsomething you don't intend to buy. The problem is that you've got a one sizefits all bucket. You know, you are willing to broadcast the suppository to ahundred million people to reach the two million you actually--Yeah. Isn't there an old joke here, about ah...But it's worse than that. It's not half that's wasted, it's 98% that's wasted.So you're willing to annoy 98% of the population, and waste the money toreach that 2%, but if on the other hand if you put for example, if you knowwho that person is watching. Let's say you're distributing the Superbowlnow in the internet, and you slot the ads in based on what your knowledge isof who the person is. How old they are, where they live, etc. Then thatgoes to-- rather than annoying people with ads they don't want, you'reactually giving them things that have a much higher chance of being relevant.I mean there's the tension here because I think this is what's going tohappen, frankly. But I think there's an unintended consequence that we'regoing to live in a very monitored, Big Brother kind of world where peopleknow more about you than maybe you really want them to know. Andwhile it's all presented as, hey we're here to help, and you might like a coke,you know, there is a kind of creepy quality to knowing the last hundred tvshows I watched and...I mean I give that information to Amazon by virtuallysurfing there, so it feels harmless, but...Well, I think there's going to be a choice. You know, I think fundamentally,you can sort of opt in, and your inclination to opt in will be based on howrelevant the ads are. So you let Amazon track your behavior because youget value from it. You know, it's net positive. Because we probably trustthem on some level.Right. But I wouldn't want them to turn that over to the Bush administrationto figure out if I'm reading the wrong kind of stuff.Are you?Yes! I am! That's the cause of my concern. But okay, let's shift gears alittle bit, because I want to try and mine this time thing. Which again, I'venever really seen anything like the quality of the stuff you presented tonight.But the other sort of time dimension. First one is evolution, change, howmany changes, and I do want to come back to that, because I think we'realso at the infancy of sort of figuring out what this new-- I mean, we'rethinking of it as the new cheaper distribution mechanism, and enormousimpacts take place. If you go from ten channels to a hundred channels, it'snot a very interesting technological change, but it's a gigantic creative change.Now if you have something that is a genuine technological change, likeinteractivity, you're probably not doing a very good jo-- I remember when Iwas working at a newspaper, when the computer first came out, the editorsaid, we can't really run a story, and I said, well people are buy them, this isa phenomenon. He said, ehh, find out what's the application. So I wentaround and re-interviewed all the people that I'd spoke to, and I said Whatare people going to use computers for? And we came up with filing recipes,and writing your own programs. So we didn't see desktop publishing, wedidn't see-- we didn't even see word processing. Never mind the internet oremail. So I think we're in that kind of early, pre- D. W. Griffith, wherewe're filming Broadway plays and calling that a movie. We haven't figuredout close ups and camera tracking or any of that, but we'll come back to that.The thing I want to talk about is the archival dimension. Because goingalong parallel to your talk on this decay of hits, which is certainly quite true,is the loss of material. And again, I don't have an answer or a hitch, or afund raiser that I'm doing, but I feel that, you know, this happens over andover again. Most of the silent movies are gone. You read about them, andsomebody tells you this was a good picture, and you say, Gee out ofcuriosity I'd like to see it. Forget it, you know, when the people who haveseen it die, it is gone. It never took place, and so...It, you know, the, the, you know, the recognition that there is value in thearchives is just the start. How to extract that value is really really tricky andwe should probably talk about this for a few minutes because there are a lotof dimensions to this because there are a lot of dimensions to this, thequestions begin to come up.Okay, great.There's a decay function over time. There should be, as I said, the decayfunction tends to be a parallel, tends to be a straight line, instead of-- youknow, if we, rather than do film rank here, if you just turn this axis here intoage, you find that you get this also this sort of plummeting effect. This pinkbit right here is the value of an archive that's untapped. This is a reallyimportant issue right now. So as you know, MGM just sold its archive,there are a whole bunch of archives out there that everyone's assuming theyhave x value. And that x value is based on existing distribution mechanisms.However, if you switch to abundant distribution systems, that value goes up.We've been running a kind of-- again, it's not good enough to publish, butwe've been running analysis where we look at sort of the sales of things overtime. The value of an archive sales. And draw a straight line. And thencalculate what-- this amount right here is basically the difference betweenwhat an archive is currently valued at and what it would be valued at in aperfect world. If you're out buying archives, and there's a lot of people whoare, and you do this analysis, and you realize that everyone is underbiddingand you could bid more because you can find a way to tap that, you have acompetitive advantage, and there's a big big sort of business school andprivate equity exercise going on right now in trying to do this analysis.The reason it's a little tricky is basically three things. One is the format. Ifit's in a-- you have to digitize archives traditionally that's costly. Sometimesit's degraded and you can't get to it. The second big issue is rights. Rights isthe elephant in the room of the long tail. You cannot clear the rights to oldstuff easily, especially the music. A famous case is that of WKRP inCincinnati, which was a 1970s, possibly 80s, television show that was set ina radio station. There is demand for WKRP in Cincinnati out there, but theproblem is, that throughout the entire show there's music of its era playing inthe background. And the cost to clear all the music playing in thebackground of WKRP in Cincinnati is ruinous, and it has become the sort ofcase study as sort of the hardest nut to crack in all of television. And if youcan find a way to clear the rights to WKRP in Cincinnati, you can clear therights to everything. But we haven't, yet. And so we don't know how to tap that.I would imagine that the cost of clearing the rights in 2006 is higher than thecost of buying the rights when the show was made.That's right. They tried doing things like changing the music. And theproblem is that the people who were really buying it for nostalgic reasonsremember the music. And they're like, that's not WKRP in Cincinnati. Soit's, you know, I, you know, the company person, legislator who can figureout how to clear rights on an industrial level, batch process, really reallyefficiently, is going to be able to transform this industry.Well, you've probably talked to and thought about Larry Lessing's views onthe subject, so do you want to..Yeah, this is interesting. So--Give us Chris' view of Larry's view?Yeah, I'll try not to do violence to Larry's view. Larry Lessing is theStanford University law professor who has been opposing the extension ofcopyright. Basically every year, or every ten years, copyright gets extendedanother ten years. This is largely to protect Disney's properties, MickeyMouse and all that. Now Larry's view, and this is where I'm probably goingto do a slight injustice to him, Larry's view is that older stuff doesn't havethat much value, and therefore we don't need to protect its rights. Fiftyyears, forty years of copyright extension is enough. Anything beyond that,that the sort of social benefit, of getting it out there so we can all use it, muchas Disney used classic fairy tales that were in public domain to build itsmovies, that there's a value in just freeing it up, and at a certain point, yousort of say the value has been extracted, the money has been made on thisproperty, and there's a social benefit in letting it out.I'm very sympathetic to this point of view except for the fact that it runssquarely against the long tail. The long tails says, in fact, there is value in thearchive, that we've been underestimating the demand for old stuff, notoverestimating it, and that if you can only free it up you'll find that it haseconomic value, not just cultural value. So I think there's a way to squarethese two, and one of the-- and the problem with copyright law right now isthat automatically is conferred, it's automatically extended whether peoplewant it to or not.What Larry has suggested, and others, is there's a sort of a diminimous onedollar renewal. You basically have to put up your hand and say, yes please.That's all you need to do. A penny. A penny renewal. And simply justsaying, please renew it, that's enough, you know, you cared enough to haveit renewed. The presumption is that 99% of the stuff, no one wants itrenewed, and in fact maybe didn't want the copyright protection in the firstplace, it wasn't intended to have that kind of protection, and that mostcontent would then fall into the public domain simply because no one cared enough to extend it.Yeah, it's a very mixed picture here. I mean, reading aside maybe theimportant question is social policy. But I think economically, Larry is wrong.There's lots of examples of archives becoming more valuable, youmentioned the MGM case, that was a library that was sold twice andconsidered valueless, sold to Ted Turner, he bought it for ten years, when hefinished exploiting it it was considered valueless, and now it sold last year toComcast and Sony, so it doesn't seem to be going down in value--No. No, it's going up.And yet the picture is getting older and older, and black and white, and sothere's that problem. And then there's this other oddball problem of oldbooks, I think we all know people or who have friends who have publisheda book that goes out of print, cannot get the rights back, and that seems likea tragic circumstance as well, where the rights are sort of-- it's kind of therights problem in another shape or guise in the sense that something isimprisoned rights, or imprisoned content, rather than disappearing content.Exactly. Books are a fascinating example. The rise of the secondarymarket in used books has transformed the industry. So the traditional notionis that books go out of print, and then they're not available. But by simplynetworking all the used bookstores and sort of having them type in theirinventory and then collecting that inventory in a single place, Librus is onecompany, it's a local company that does this, but Amazon lists used booksright next to the new books. Basically, it has created a liquid market in usedbooks that makes it so that nothing ever goes out of print. If it's notavailable at the top line, buy it new, it's available at the next line, buy it used.The book is often in similar condition and the only difference is that theauthor doesn't get any money from it. When you buy it used, it's...youknow, you pay the used bookstore, but nothing goes back to the author.And this notion of re-selling old books is great for our culture and for us asconsumers in that we now-- out of print is out of fashion, out of print is nolonger meaningful. But it doesn't solve the problem from the author'sperspective, and you're right, that it's hard for them to get back the rights,and sometimes they don't even want to this is the interesting thingsometimes they don't even want to switch to print on demand.Because print on demand books tend to be more expensive than newbooks, and a lot of authors say, if you make me a print on demand book,you're going to keep the book, you're going to keep it in your catalogue, it'snow going to cost 50% more than it used to cost, and my sales aren't goingto go up. If you would give it back to me, I would talk to a more creativepublisher, and they would market it, and they would give it the audience itdeserves. And you, by turning it into a print on demand book, are actuallyruining my market. And it's a debate not yet solved.I don't know about the dollar to renew, but I do think there ought to besome sort of principle and law that if I bought the rights to something, I ownthem and I tie them up and I'm supposed to be economically exploitingthem, and I'm not going that, then I think they should revert, okay yourtime's up. You have to either keep paying me and keep-- I mean, what Ihate to see is a film maker makes a movie, struggles to get the thing funded,and then can't hang on to any rights because in order to get the theatricalrelease, you've got to give up rights. And the contracts read, "on any planet,any universe, known or unknown, technology, invented or not invented," Imean these are incredibly broad wavers of rights, and you know great, ifyou want to exploit the rights to print my book on Frisbees, then print it on Frisbees.Well, I think one thing we can be sure of is that Congress will not solve thisproblem. So I think it's a great opportunity right now. I think this is anentrepreneur opportunity. We're in the right place for people to think ofcreative ways to route around this problem, offer economic incentives,technological abilities, demonstrate the demand out there so that the ownersof these rights, the people who are keeping these sort of valuable culturalcommodities locked up in warehouses, see the opportunity. See the wayand the reason to get it out there.Okay, well I'm going to dive into the questions here, because they're building up.