Big Media or Big Losers?
Guest Commentary
By Larry Honig -- Broadcasting & Cable, 10/17/2004 8:00:00 PM
Despite criticism, 20 years from now, media observers will recall FCC Chairman Michael Powell's tenure as remarkable for its revolutionary fervor and impact. In the face of a flood of technological challenges, Powell's regulators, to their credit, have most often been the dogs who do not bark in the night. In fact, far from anointing winners, this incarnation of the FCC has ensured the fall of the media baronies in their present form.
The FCC was once necessary to police the access to radio and TV channels. Now, however, comes broadband—and sending content as a stream of packets breaks the old model. Many voices effectively time-share what used to require silence from all except the sole authorized license owner. Geographic proximity to the transmitter is meaningless. The final frontier—ubiquitous Internet Protocol dial tone—is right around the corner. Get ready for an Internet browser in your car.
How easy will it be to access (or share) this content? In the last decade, the FCC's policies have greatly expanded the utility of frequencies that require no licenses. Wi-fi technology applied to this meager slice of spectrum already has had a profound, irreversible impact. This will balloon if the FCC claws back spectrum now allocated to analog TV.
As media consumers get used to the idea of programming their own "mix," the old blowtorch economies of scale no longer add value. The corporate rush to consolidate represents what private pilots call a "sucker hole" in the clouds. While some content (breaking news, sports) needs to be seen in real time, the dirty little secret is that little of any broadcaster's feed has time-sensitive value; in geek parlance, it is latency-tolerant. TiVo and cable video on demand (VOD) demonstrate that.
Further, the actual creators of content—the writers, editors, musicians, videographers—now have an unprecedented set of very low-cost tools. Blogging is merely the first wave. The sheer number of other data streams coming together in just a few years will be a giant body blow to cable operators and common carriers.
The black-helicopter crowd concentrates on whether the relaxation of crossownership rules will mean the silencing of diverse voices and opinions. Fine. They need something to yip about.
But, thanks in large part to the Powell FCC, the value proposition that underlies all big-capital broadcast media bets is going the way of—well, the way many uncompetitive oligopolies do when their foundations erode. (Think Erie Canal.)
The Big Media response to this FCC-fostered environment of creative destruction remains a version of the old studio system: Buy up as many stars as possible and lock them into a closed distribution net. As a result, it is likely to fail. The present dominant players are missing the boat. The success stories will more likely resemble Google or a diverse directory of multimedia blogs—where creative types create content and meta-programmers help drive traffic their way.
So, far from presiding over a media monoculture, the supposed beneficiaries of the FCC's actions may, in the future, end up a lot smaller, poorer and less influential.
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