Eric Schmidt at Edinburgh

 I  was fortunate to hear Eric Schmidt, Chairman of Google, speak at the Edinburgh Television Festival and to attend the Question and Answer session the following morning.

Schmidt posed one big question -- in my view a massively important one: why hasn’t a country like the UK built large technology companies? (He reminded us that the first commercial use of a computer was at the headquarters of J.  Lyons, once famous for its tea shops, in West London).

For the audience of British TV Executives the question took a more specific form: why doesn’t British broadcasting do better globally, lead in Europe? After all, the British speak a global language -- and other Europeans, like many nationalities, are used to watching dubbed or subtitled content.

His answer was: first, we don’t teach computer science enough in schools or encourage it enough at universities; second, we are over-regulated.

In his brief tribute to Steve Jobs, who had announced that he was stepping down the day before, Eric Schmidt reminded us that Apple makes sure its technology is beautiful.

It’s hard not to agree that our education system could give a much more positive message about science, innovation and entrepreneurship. (What is the point of media departments teaching Marxist or post-modernist theory to people who want to work in advertising or TV?)

But his regulation argument aroused little comment. Why?

To be blunt, British broadcasters and producers are deeply attached to their regulations. I expect they would fight like cats and dogs to keep them.

The BBC is regulated from top to bottom, and funded by a mandatory levy. It totally resists any change.

The public services broadcasters (PSBs), BBC, ITV, C4 and Five, get mandatory “prominence” on all guides. They would hate to lose that.

British producers are entitled to keep rights in programmes even if they have been funded largely by public broadcasters.

Yet Schmidt is right. Regulation does hold back innovation and entrepreneurship. Regulation, as he delicately put it, usually favours the regulated. It deters innovation and entrepreneurship by newcomers, putting the emphasis on continuity and risk avoidance by the current players.

Schmidt proclaims himself a Capitalist and a Technologist. California invents the future in a cultural and political landscape utterly different from Europe, with its high public spending and tax rates and extensive social policies.

But that’s why Europe needs to be very smart about the impact of regulation and the danger of decline. If it cannot support entrepreneurs and build large companies in key emerging sectors, we have a big, big problem.

I have two recommendations which I think are worth exploring by people who are ready  to be fearlessly objective.

One, national regulators should switch their thinking to a European rather than a national scale: Schmidt’s critique of the suppression of the Kangaroo project by British competition authorities got a round of applause.  (I am not an expert in competition law so I am going to return to this when I have taken advice.)

Two, the UK should ask tough questions about the costs and benefits of every piece of regulation, with a strong bias towards abolition.

The UK could start with some like these:

Quotas for original production: the PSB’s have detailed commitments to original production, even though there is a 50% EU rule for European content. Nearly all major channels in Europe exceed the 50% quota of European content, the vast majority of which is domestic. This is because there is a very strong preference for domestic content in every Member State. Are these UK rules really  serving a useful purpose? (If Governments want to be very specific, say about Children’s’ content, they should contract for that directly.)

Guide prominence: it’s actually getting a bit silly. The public broadcasters want to keep their prominence at the top of the guides but now want to charge Sky, for example,  retransmission fees. Sky, I guess, would like to get the revenue for its top slots. Why not take out the regulation and let them sort it out?

A proper assessment might keep some rules but modify them in the interests of a more open market and more competition. For instance, the independent terms of trade have helped to build the UK’s format industry worldwide, but they also act to keep large independents and public broadcasters in an exclusive ritual dance.

Eric Schmidt himself mentioned Contract Rights Renewal (CRR) by which, following the mergers that created what is now ITV, the price of advertising is held at a given level.

There is a job to be done here. Perhaps Eric Schmidt has provided the driver. Anyone agree?

Internet TV? Just buy a cable connector

From TV Debunked, Fortune Magazine, January 2011

The lead picture in this post – and nearly all the numbers -- come from a piece in January’s Fortune magazine. (Click on the caption for the link).

The writer, Jessi Hempel, has just received the brick-sized box enabling her to hook-up Google TV, and having played around with some of the cooler functions (like tweeting from her TV (@jessiwrites) she set out to watch some real stuff, namely of a recent episode of the sitcom Modern Family – but it’s not available. Or rather, she can get it from Amazon for $1.99 (if she is already a cable subscriber) or get old episodes from Netflix. Modern Family plays on ABC, and ABC like all the networks and major broadcasters, are teasing with the new media. At bottom, ABC still wants to keep you watching new episodes the way you always have, on their main channel. (You can see Modern Family on Sky1 in the UK).

In fact, the best new-tech option – if you live in the US – apart from watching it live on an HD TV, would be to catch up the latest episode on ABC.com. (From the UK, I could watch highlights of the next episode on ABC.com  but the latest full episode was blocked.)

All the devices in that picture, and the failures in their wake like Joost, add lots of convenience extras like search, and even more potential benefits like targeted advertising. But as Jessi puts it, “Netflix, Google and Apple can’t just swoop in and disrupt the $85 billion home entertainment industry. Their challenge lies in navigating the entrenched interests that make up the television business.”

So far they have not succeeded in doing that.

TV on Laptops or PCs: The Knowledge Gap



Viewing via PC or Laptop: Source BARB

 In the UK our staff are always being asked if we can measure the viewing of content on PC’s and laptops.

The answer is No, or rather Not Yet, at least not in the way conventional TV is measured. (There are some other options which I will mention later).

Traditional audience measurement needs credible, common standards that provide the basis for advertising trading currencies.

Audience measurement companies are very aware of the challenges of digital viewing. In the UK BARB is field-testing a device that will capture TV viewing on laptops.

The chart in this blog tells you about the take-up of viewing to TV content on computers. The test panel of 75 people set up by BARB uses a new meter from TNS/Kantar called the "Virtual Meter". Albeit based on a very small panel, we can see that the use of laptops and PC’s for watching TV is growing fast.

BARB is also trialling a system for monitoring on-demand viewing. This requires much larger data sets than  for conventional “linear” TV. For the system needs to recognize a digital "signature" on every piece of content monitored.

You may ask: if they have the technology, why don’t they use it? But the technology is in fact the least of the problems.

Measurement systems like BARB are based on sampling, on panels of people who represent a population. But statistics based on sampling need adequate samples, otherwise the errors can be very large and the findings very unreliable. (My colleague, Farid el-Husseini, has given examples of small channels in the BARB system where the errors on some audiences can be plus or minus 200%).

Those who actually watch content via PC's or laptops do so, apparently, for nearly two hours a week on average. But across the population, that is, taking account of all the people who do not watch on the Internet, their viewing amounts to only a small proportion of total viewing, between 10 and 20 minutes per week -- whereas the average person watches conventional TV for three or four hours every day.

Panels are expensive to run and expensive to recruit – and if they are not large enough to give a reasonable degree of accuracy for every item viewed they are not much use. The BARB panel covers nearly 6000 UK homes. In a perfect world, BARB would wait till enough of those panel homes were watching TV on laptops or PC’s to give a reliable rating.

Unfortunately, it is still too early to say whether or when Internet viewing to TV content will be reliably covered by systems like BARB or Nielsen in the US.

As for the other options, lots of companies carry heaps of information about the people using their own services because they own the servers on which subscriber viewing is captured. But they have been quite reluctant to publish detailed data or organize it in a way that makes it comparable to BARB statistics.

BSkyB in Britain, for example, uses its server data on household behaviour to create statistics comparable with BARB data but they are not in the public domain. (This kind of data is called “server side”, whereas data gathered from people with devices in their homes is called “client side”.)

Google Analytics, which many companies use to monitor hits on their websites, is a “client side” system because it relies on peoples’ willingness to carry a code that monitors where the hits come from. I expect some the traditional audience measurement companies are concerned that someone like Google may jump in ahead of them.

All this is frustrating for rights owners and producers and advertisers. Though they may be getting accurate information about the hits or downloads of their own content – because that is how they earn their living – they are not learning nearly as much about these new viewers as they would like and they have no way of monitoring competitors.

Naturally, we are very aware of this knowledge gap since our clients keep reminding us it matters.

We may have more to say on this before too long. Please watch this slot.