[opendtv] Re: Is 'Fair Use' in Peril?

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 2 Dec 2004 09:26:53 -0500

At 5:41 PM -0500 12/1/04, Manfredi, Albert E wrote:
>But this is not "the real issue."
>First off, advertising causes products to be sold in
>greater quantity. Therefore, one can easily argue, the
>price of each unit (e.g. tube of toothpaste) can be
>lower than it would be if ads were not available. So
>that's from the advertized product point of view.

See my response to Jon on this subject.

>  > I am growing very tired of paying ~$45/month for a
>>  bunch of broadcast and cable channels that are all
>>  filled with ads.
>There are two simple responses:
>1. Just say no.
>2. If you made those ads useless or less useful, by
>allowing ads to be skipped by all the PVRs that might
>be installed, are you prepared to pay upwards of $90
>per month for the *same* service?

Why. The PVR could well be the vehicle that will deliver the targeted 
ads of the future. As we have seen with many examples of technology 
driven disintermediation, companies eventually adapt to the changes 
and frequently take advantage of them to make even more money.

This is how a technology that was likened to the Boston Strangler 
attacking helpless women, became a multi-billion dollar source of 
revenue for Hollywood. We've spent considerable time discussing how 
many people use VCRs to skip commercials, but the economic impact of 
this use of the VCR is in the noise, when compared to the billions 
that are generated annually in packaged media sales.

I find it interesting that the migration to DVD is now beginning to 
threaten the traditional distribution channel of advertiser supported 
TV programming. Millions of people are buying DVDs with complete 
series of TV programs, all without commercials. And the content 
owners are making even more money selling their content directly to 

>That's the "real issue." That ad revenue would have
>to be replaced by something else if you made ads
>less productive.

What if we made ads MORE productive?

Ads are already VERY LOW on the productivity scale. Why bother 
talking about technologies to avoid ads, when humans are already 
equipped with ad avoidance systems. We have talked about bathroom 
breaks, and the channel surfing that happens when ads come on. And 
then there is the use of TV as background noise.

No technology can force us to watch and analyze advertising messages.

So the real question for the future is HOW to get people to opt into 
advertising experiences. This is one of the most significant impacts 
of the Internet. It has become a vast resource for information about 
products. You can go direct to the manufacturer and get excellent 
information about their products. You can get reviews about products 
from people who actually have purchased and used them. And you can 
compare features among alternatives.

The real role of advertising in the future is likely to be as a 
funnel through which you can lead people to much more useful 
information that can be obtained in a 30 second ad.

That being said, MANY of the products that are advertised as 
commodities, for which we already have brand preferences. Does anyone 
on this list run out to buy a Coke when they see or hear an ad for 
this popular soft drink? The reality is that for commodities 
advertising has become a necessary component of brand reenforcement, 
which is then reflected in the INCREASED cost of the product.

>>  The real issue is not the ads, but their relevance
>>  to the viewer. Shot-gun advertising rarely hits real
>>  targets.
>This is another topic, a tangent. More advanced ad
>targeting is fine, as long as ads aren't zapped.
>With DTV, this is possible, and we have already
>discussed options recently, including for DTT.

Yup. There is tremendous potential to IMPROVE the advertising 
experience. In the end, what really matters is that enough revenue is 
gene (but cheap) ad impressions that have little if any relevance to 
the viewer. It can also be done via just ONE RELEVANT ad experience 
for which the advertiser will spend a bit more. And it can also be 
done via direct payment for the content; remember, the "cost" to view 
"FreeTV" works out to about $0.25-0.50 per hour per home when you 
divide the number of eyeballs watching, into the cost of the ads 
contained in a program.

I would opt to view a single 1-2 minute ad that is relevant, then the 
uninterrupted program, versus having that program interrupted with 
multiple irrelevant ad breaks.

The point is that technology is going to make MANY business models 
for paying for TV content possible. So why hang onto something that 
many people find objectionable?

>But this is a separate discussion. What we were
>referring to was this notion that the (supposedly)
>ubiquitous PVR of the future would allow ads to
>be completely bypassed. And that Congress is
>considering legislation to prevent this.

Congress is being pressured to do this by an industry that wants to 
maintain the status quo. The same industry that wanted to BAN VCRs.

It is ludicrous to believe that advertising will not change to take 
advantage of new technologies that will improve the ROI on 
advertising expenditures.

>And again, unlike VCRs, digital recording devices
>provide a series of still frames in FF, which is very
>good to get the gist of the ad going by.

And there are studies that suggest that watching ads in FF is JUST as 
effective as watching the actual ad. This is particularly true of 
branding ads for commodity products. It may take noting more than 
seeing ONE familiar frame to create the "impression" that the 
advertiser is paying for.

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