The value of news in the digital age runs in inverse proportion to the amount of time since its release.

If a news item is published at 1:00pm PCT, it has half as much value by 2:00pm, as it did when it was first posted, and only a quarter remaining value by 5:00pm. Obviously, a more accurate measurement of shelf life would take in to consideration the online network on which the news was published, the original posting time (early morning posts tend to get wider reach than early afternoon), and several other factors.

Some media companies, such as the New Yorker and Wired magazine, have recently determined that this is largely because they are giving their news away to 3rd-party providers for free, unreasonably diluting the brand value of their offering. Their solution is to terminate those relationships (as they did earlier this week by removing access to their content from such renowned platforms as Flipboard).

Other media companies are laying off reporters in droves, as they desperately try to save their way to prosperity, under the same “bricks, mortar, and paper” model as ever. talk about lunatics running the asylum…

I think there’s a much simpler solution and, as ever, it all comes down to content.

Consumers don’t place the highest valuation on a distribution channel, platform, or app, but rather upon the content itself. Flipboard may well fail if too many content providers remove access via that platform. The UX is unquestionably appealing, but who cares that the library is pretty, if there’s nothing to read therein? That said, if content providers restrict access to their content too zealously, minimizing consumer ability to share and spread the appeal of that content, they will effectively squander the “early release” value of their content, and vastly diminish its value, by extension.

Before I propose what I consider to be an enormously simple solution, let’s accept and agree upon some basic truths:

  • Good news comes from good reporters. Not (bless ‘em) good printers, nor good truck drivers. Journalists such as Nicholas Kristof (@NickKristof) and Lisa Napoli (@lisanapoli) are demonstrating that direct connection to their “readers” vastly increases the spread of their content.
  • The Paywall method of news delivery is a clumsy protectionist system that works only in the absence of better paradigms.
  • People will get their news, and entertainment, one way or another. If you stand in their way, they will work around you. If you develop a solution that is a win-win for everyone, they are more than likely going to work with you.

Taking in to account the aforementioned and obvious fact that news has highest value early in its lifecycle, and marrying this with the fact that netizens place high value on content that raises their network visibility, it stands to reason that those wishing to take on the mantle of “influencer” will be prepared to pay for “early access” to compelling media content. If it costs $4.95 to have a big headstart on the rest of the web, when it comes to news and other media, I know many who would gladly pay. The difference between this scenario and the current paywall system is that my solution does not exclude all other netizens from access to the content. After a sufficient time delay, content could be released to the wider public, free of charge. It’s an exercise in transparency and digital openness, with a nod to commercial necessity. If you want to access content in the first hour of its publication, you need to be a subscriber. If you want access within the first 2 hours, you must be either a subscriber, or have access to the link via a subscriber (further elevating the viral power of full subscribers, and cementing their loyalty to your media brand). If you are willing to wait until the end of the day, so be it. The model needs refinement, but the concept is sound.

Take for example Nicholas Kristof’s latest Op-Ed piece, entitled “My Iranian Road Trip”. As is usual with his work, the Twitterverse and Facebook ecosystem have exploded with activity, as this video goes viral, and spreads around the web. The New York Times has a paywall up on their site, so only subscribers can see the video. However, because this is the ONLY option offered, someone has kindly reposted (at least until the NYT reports it!) the video, free-of-charge, on YouTube:

The New York Times gets no love nor revenue out of this scenario. Nicholas Kristof gets his story out. The readership shares the YouTube link, and ignore the NYT site altogether. Were my solution in effect, nobody would likely be compelled to waste their time extracting the video content from the NYT site, and reposting it, knowing it would be freely available in a matter of hours. Instead, they would be focusing on positioning themselves as first line influencers, sharing the NYT site link and thereby their subscriber access with their own network. Subscriptions would rise, content “piracy” would be mitigated, brand value would be strengthened, and the value of viral media would be elevated in a manner consistent with both the ideals of an increasingly transparent society, and the realistic needs of any business. My scenario recognizes the need to shift from a “control” mentality to a “collaborate” one, recognizing that the core value is highest at point of publication and readership (journalist and consumer), and everything in between is either conduit or obstacle.

I’ve been invited to a private event at the Los Angeles Times building tonight, hosted by Muck Rack (@Muckrack) and the LA Times. It’s been labeled as “a casual cocktail event for a few select journalists, PRs and news junkies to talk about journalism in the age of social media”. I’m eager to see what this constituency makes of my “crazy idea”…

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JD-About-Town Jonathan Handel shares here some very interesting insights into the NBC/Leno/O’Brien slap fight. For the international reader, Jay Leno and Conan O’Brien are two big talk show hosts here in the USA, ostensibly “trapped” in a web of intrigue (others may suggest a quagmire of confused corporate fumbling) surrounding their futures as talk show hosts on that particular network. NBC, one of the USA’s top television networks, brusquely replaced Mr. Leno, former host of the renowned “Tonight Show”, with Conan O’Brien, in an effort to appeal to the prized younger demographic. They secured the demographic, but lost overall viewership. Meanwhile, the consolation prize offered to Mr. Leno, in the form of a prime time talk show, also failed in the ratings (again, some may prefer “was not given enough of a chance”). The Network affiliates revolted, and NBC – just as brusquely – announced an odd reshuffle that led to the current (and apparently soon to be resolved) standoff. For more details, read on!:

That sweet walkaway payday for Conan O’Brien might not be as rich as it sounds. Media such as Variety are reporting that NBC is likely to pay Conan $30 to $40 million to settle out his contract, with a deal to be reached shortly. But what none of the media appear to be mentioning is the two magic words of employment contract settlements: mitigation and offset. Depending on how those terms are deployed, the hit to NBC could be much less than the numbers imply – particularly if Conan scores a deal with Fox for a new show to start in September, as many observers expect.

Here’s how it works. First, as background, the NBC payments are likely to be made over the period of time remaining in his contract – at least, that’s what customary. Conan’s attorneys, agents and manager would probably press for some acceleration though, unless the tax consequences of doing so would be adverse.

In any case, mitigation is the concept that the terminated employee, i.e., Conan, has an obligation to seek other employment. If he fails to do so, the payments from NBC could stop. To protect against this, Conan’s representatives will seek, and may get, a “no mitigation” clause. In that case, the payments would keep coming even if Conan decides to sit on the beach for the next 2-1/2 years (reportedly the remaining term of his contract), though he’s unlikely to want to damage his personal brand name by simply disappearing.

At the very least, though, Conan’s team will argue for no mitigation from now until a new Conan show could feasibly be launched, which is generally assumed to be September, i.e., the beginning of the fall TV season. They’d also probably seek a guarantee that there would be no mitigation if Conan is offered and refuses a show of lesser stature, or one at a lower salary than he was receiving at NBC, or one that reaches too small a percentage of households in the country. In other words, under such contract terms, Conan would be able to refuse a “demotion” without violating a duty to mitigate.

Now on to offset. This is the concept that whatever the employee earns at his or her new job, if any, would be offset against the settlement payments owed by the old employer. This would apply only for the remainder of the old contract. For instance, suppose the agreed NBC termination payment (“liquidated damages,” in legal terminology) is $40 million, and suppose Fox pays Conan $30 million over the next 2-1/2 years. In that case, the $30 million could be offset against the $40 million, and NBC would only have to pay $10 million.

Naturally, Conan’s representatives will seek a “no offset” clause. This would be a hard-fought point, however. NBC would argue that Conan would be getting a windfall and, even worse, that he’ll be cashing those checks while competing against NBC itself. That’s like biting the hand that feeds you, but knowing you’ll get fed regardless.

Here again, there’s a compromise available: Conan and NBC might agree that his salary from the new show would be only partially applicable (i.e., partially offsetable) against the NBC liquidated damages payments. For instance, if 50% of his Fox salary (if he does a Fox deal) were applicable, then $15 million (in the above example) would be applied against the $40 million, reducing NBC’s obligation to $25 million.

On a different note, it wouldn’t surprise me if NBC seeks a non-disparagement clause from Conan. Paying him liquidated damages while he’s getting paid by Fox to bash NBC in his monologue might be too much for the NBC suits to accept.

Of course, this is all speculation. No one’s seen the existing contract, let alone the settlement agreement, since there is no settlement yet (and it’s not clear to me whether NBC would be required to file a redacted copy with the SEC). But it’s easy to see how mitigation and offset amount to a win-win. Those provisions could allow Conan’s people to leak big impressive figures, yet reduce the bite for NBC.

Whether that would be enough to keep heads from rolling at NBC is another subject. If the Comcast deal goes through, under which the cable operator would acquire a majority stake in NBC Universal from corporate parent GE, then I’d expect some hasty departures. Someone might get the ax even if the deal isn’t consummated. (The antitrust division of the Justice Department recently announced they will be reviewing the deal.) Ironically, terminating the responsible executives would probably require NBC to make more contract settlement payments.

Moving Jay Leno to 10:00 p.m. was an understandable experiment. It seemingly kept both Leno and O’Brien in the family, and lower ratings were acceptable to the network, since production costs for five nights a week of a talk show are a lot less than for five nights of scripted dramas.

Unfortunately, it looks like the downside wasn’t evaluated as thoroughly: Leno’s lower ratings at 10:00 meant diminished ratings for 11:00 p.m. local station newscasts, an unacceptable price for network affiliates, for whom the newscasts are a cash cow. Moving Leno back to late night gave NBC one host too many: Leno, O’Brien, Jimmy Fallon and Carson Daly. That’s four hosts for three chairs, and when the music stopped, O’Brien was out. Now, for NBC, it appears time to pay the piper.

Jonathan Handel is Of Counsel at TroyGould and practices digital media, entertainment and technology law.  He is an adjunct professor at the UCLA School of Law, and his op-ed pieces have appeared in the Los Angeles Times, the Daily Journal, and the Los Angeles Business Journal. Visit his site at jhandel.com.

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Jonathan Handel is well-known as “the insider” when it comes to entertainment and media industry dealmaking. His latest posting examines the current struggles between and amidst the various content creators, providers, aggregators, and distributors:

Until moments ago (mid-day Jan. 1), when a deal was reached, Fox was threatening to black out its channels, most notably Fox broadcast, from Time Warner Cable (TWC) unless TWC anted up a subscriber fee of reportedly $1 per subscriber per month. Historically, cable networks such as HBO, Showtime, AMC, etc. got those fees, but broadcast networks didn’t. They need them now, with ad revenue shrinking, and customers departing networks in favor of cable channels — a multi-decade trend — and, more recently, video games, Internet TV sites such as Hulu, unauthorized (pirated) content, and user-generated content such as on YouTube.

Broadcast networks have started to get paid — CBS, for instance, reportedly gets up to $0.50. TWC apparently offered Fox only $0.30, but the terms of the deal they reached are undisclosed and most likely higher. Even though Fox ultimately didn’t pull the plug, it took the intervention of Senator John Kerry to keep football and “American Idol” from going dark on TWC. That’s not the sort of attention a media company wants. So why didn’t TWC just ante up the $1 and pass on the cost to consumers?

The answer is that MSO’s (cable cos. like TWC) are afraid that if they keep raising cable prices, they’ll drive more consumers to satellite or induce them to drop cable and just watch TV on the Internet. That is, instead of buying an Internet+cable bundle from Time Warner Cable, the customer might just drop the cable portion and buy Internet only.

Even worse for TWC: If customers opt for Internet only, some will be peeled away by telephone+Internet or cellular+Internet bundles from ATT or Verizon, causing TWC to lose the customer altogether. It’s called churn, and it’s especially likely because customer perception of cable company greed would dovetail with the belief that telcos offer better customer service anyway. Thus, raising cable prices could cost TWC dearly.

So, the battle between TWC and Fox is just another facet of an n-dimensional war between MSOs, satellite cos., landline telcos, cellular cos., cable networks, broadcast networks (ABC, CBS, CW, Fox, NBC), network affiliates (the local stations that actually broadcast the network signal), video game companies, Internet TV sites, unauthorized (pirated) content, user-generated content—and, of course, the consumer. And that’s not even to mention the companies that manufacture the hardware, such as handsets, TV’s, cable and satellite receivers, and other set top boxes. They’re always looking to play transmission companies off against each other and capture more of the consumer dollar.

To add to the confusion, there’s cross ownership between some of these companies but not all of them, meaning that ostensible competitors have very different profiles from each other, and also that they must often collaborate. For instance, when the ComcastNBC Universal deal closes (assuming, of course, that it does), Comcast will control a cable system, a broadcast network, and multiple cable channels, whereas Time Warner Cable is a cable system only (that’s because Time Warner Inc. spun off TWC) and Fox’s parent, News Corp., lacks a cable system. Speaking of News Corp., throw in the fight between newspapers and Internet sites, and it’s clear that the Internet sparked a revolution that’s got everybody up in everyone else’s business. It’s the media equivalent of string theory, except that MBA’s usually have better hair than Einstein did.

Jonathan Handel is Of Counsel at TroyGould and practices digital media, entertainment and technology law.  He is an adjunct professor at the UCLA School of Law, and his op-ed pieces have appeared in the Los Angeles Times, the Daily Journal, and the Los Angeles Business Journal. Visit his site at jhandel.com.

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We pass ballot initiatives with no method of funding. We put our legislature in a straitjacket with a 2/3 vote requirement on budgets and then ask them to fix our state’s problems. We make it easy to cut taxes, but impossible to raise them, meaning that a small majority can deprive the state of needed revenue. . . .We killed the dominant school funding mechanism by passing Prop. 13 and then demanded that the state fix it and fund our schools. . . . We want to protect OUR programs and cut THEIRS. . . . We are our own worst politician and our own worst enemy. We, the short-sighted, instant-gratification seeking, detail averse, California public. We refuse to see the difficult choices, nuance, and complicated details of public policy, yet we give ourselves the power to make laws that can virtually never be repealed.

LA Times reader Brandon Ruiz, quoted in 12/27 article about California’s political year.

As the holiday entertaining period washes over us, this little snippet from 2003 seems particularly apt…:

The November 9 issue of the Los Angeles Times magazine cover story is all about “The Role of the Guest“. With primers on RSVPing, and other social manners, it delves into a subject close to the hearts of me and my best friend, Emily Post

For the record, I don’t agree with everything the author writes, but that’s because I’m more of a Debrett’s disciple. However, it’s still well worth the read.

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