We have witnessed several changes over the last decade. First ascendecy of wireless cellular over land line phones. Then it was Pay-per-View over B&M rentals. –

The Dallas-based company has been warning for almost two years that it might need bankruptcy court protection to reorganize its nearly $1 billion in debt, as it struggles with dwindling cash and a shrinking business hurt by competition and its own store closings.

A “pre-planned” bankruptcy filing in mid-September is now considered the most likely scenario for Blockbuster, according to unnamed sources quoted by the Los Angeles Times. That would require agreement from the company’s biggest creditors and suppliers, among others.

Blockbuster CEO Jim Keyes recently visited all the major Hollywood movie studios with an entourage of senior secured-debt holders and restructuring consultants, the Times reported.

Source

So yes I am leading up to what I suspect is the ‘Next Middling Thing’. Its this –

vs this –

At first glance you might say ‘How’? The theater might have seem to have all the cards. Big screen experience with a professional sound system, night out plumage, food on demand, all the trappings of being part of a night out on the town. But hold on you also get to experience teenagers yacking through the whole movie. Several people not have the conviction to turn their cell phones off. Then to top it off be prepared to pay about $40 for a couple to see the viewing with ticket, drinks and popcorn. Its that cost vs say no more than $3 to do the same in the comfort of your home.

But here is the kicker, I don’t think any of the other tech blogs has caught on to the nature of this coming issue. LCD TVs have not been gaga tech for quite some time. Same with Pay-per-View. So this has been slipping by under the radar. But you can be assured that the Suits running the theaters certainly are considering it. Its not tech but a tipping point issue that is quietly giving the nod to In-Home viewing.

The tipping point is cost. You can walk into any Best Buy today an purchase a 50″ or larger LCD panel for around a $1000. Add a DVD player or Roku NetFlix box for another $100. That is a pricing level that is affordable to every middle income family in the nation. Home Theater is no longer the providence of well heeled households. Then just roll the numbers. If you figure that the average unit will last 5 years or more then consider many may go to the movies twice a month. It does not take long for the system to pay for itself in deferred expense. Its substitution. Another entertainment deflation.

The second tipping point is scale. Large screen LCD’s are now selling briskly even in this down economy. When a large segment of the population can do their viewing at home the theaters are toast. We are not even close yet, but give it 5 years as the conversion continues and theaters will be gone or greatly reduced in number.

Its no great shucks but it is something you can take to the bank from a business perspective.

RightHaven LLC, the swarmy, scurrilous legal troll is generating heat. Folks are organizing to prepare to fight their tactics. –

If you are a mom and pop blogger, getting hit with a Federal lawsuit out of the blue has got to be terrifying. Many of those being sued by RightHaven LLC do not have deep pockets and are afraid that they will lose everything. Clayton Cramer reported that some of those being sued will probably have to declare bankruptcy.

Fortunately, its seems that the victims and those opposed to RightHaven’s tactics have started to organize. Realizing that information is key, a new website has been established called RightHavenLawsuits.com. They say their mission “is dedicated to gathering together and posting for the public information about Righthaven LLC.” They have links to some of the lawsuits as well as articles on RightHaven LLC.

Another website called RightHaven Victims lists every individual, business, and blog that has been sued by RightHaven LLC for copyright violations. It encourages those sued to work together to share information and to unite to form a collective front against RightHaven LLC. They realize that one of the keys to RightHaven’s success will be the use of a “divide and conquer” strategy. This website is also sharing defense strategies being used by the defendants.

Source
My hat off to those preparing to make a stand. A first logical move is that every defendant request a change of venue to their locale. Make the actual charging as expensive as possible. If it becomes economic to file the charges RightHaven will fold and the suits will go away.

Good luck to you all.

Tom Silverman is a guy who has been in the music biz longer than I have been in IT. So he knows the trade and its tricks. It is refreshing to hear an insider to state that the current music model is broken —

One of the biggest problems with the old model, which has been going for 50 years, is thinking, “We’re the labels, they’re the artists, and we make money even if they don’t make money. We reduce our risk, they put their blood, sweat and tears into it, and we only give them money when we sign them and when they deliver a new album.”

In between, the only place where they get money is from their booking agent, because they’re touring. They all love their booking agent, because their booking agent gives them a check every month, or every week, and we only give them a check every year and a half when they deliver a new record — and most of that money goes to their lawyer, manager, the taxman, and making the record. Not much of it ever goes in their pocket, and that’s been true for 20 years. Unless they have a five million seller, most of that money goes into that project. Of course they don’t like the labels, because they’re not getting that reinforcement of regular cash flow. They see the labels making money, and them not making money on records.

He also considers the use of the Internet and social networking much a waste of time. Even though in this same article he admits that Susan Boyle broke thorugh on the basis of internet presence. –

No, I think you have to be out there. You have to spread the word to get exposure, but I think the problem is context. When you’re in a glutted environment, you need to differentiate yourself more than ever, so you need a great story. Story is context; it’s not content. The songs on Susan Boyle’s record are forgettable, and her performance is just okay. There are a million singers who can sing that well at least. It’s just the story that sold it. If people could learn from her, regardless of what kind of music they did — “How can I make my story so that when people hear it, they have to spread the word?” That would activate the medium more effectively than trying to get another 50,000 followers on Twitter, which doesn’t seem to do much at all.

Silverman also suggests a different management model. Using LLC’s and Silicon Valley type investment techniques. Oddly we suggested that very thing on this blog well over a year ago. And it is right.

But there are some pieces that Silverman I think is missing –

• The first is good talent is extremely common, and extreme talent is in good supply. Go into any good size church in the USA and there are probably 2 singers in the choir equal to or better than what is screamed out of Hollywood. Is that the case?

  Empirical evidence. Neil Sedaka held a contest with several radio stations as part of a record tour/sale 5-6 years ago. Thousands were screened by the radio stations. Sedaka was floored that several hundred were good enough to be considered by his measure of talent. Anecdotal I know, but good talent recognizes that in others.

  Value in many ways is a perception, especially when the goods are of a nonphysical nature. So when the perceived supply of the goods rises dramatically because consumers perceptions are altered by the sheer volume of good choice the cost curve must drop. Its supply and demand. There is a huge talent supply and only a finite consumer supply.

• The other is this one. Silverman sees it, calls it the ‘clutter the marketplace’. He is of course, right. $3k and you can foam a garage, buy mikes and stands, a 2yo PC and a midi/mixer card and have the equivalent of what a decade ago cost $500k. So anybody can be in it if they want it enough, such is modern technology.

  But again that is not the biggest issue as I see it. Look the big labels are soon to be gone. They are right now where the major studios were back in the 60’s. Then as now, every release had to be a mega blockbuster as that what the audience expected but the costs were beyond belief. The end game will be the same too. Fundamentals now are also different.

  A band, even if it does not break thru to the levels that Silverman expects which is 100k distribution as the floor. Well run the numbers at $10 per disc. $1m gross. Deduct 5% for production costs. (Yes that cheap.) Zero out distribution costs as most bands at this level would sell either direct over the internet or more likely direct at the concerts wher they make most of their money anyway So out of say $900k split 10 ways with band, light, stage men that is still $80-100k. No you won’t get overnight rich at those numbers, but that is a descent upper middle class income with unlimited upside you you do break thru.

To an extent Mr. Silverman’s lament recognized for what it is runs head long into supply chain economics. The Internet has eliminated the middle man in most cases. Producer and retailer become one. No industry is immune from it even music. And for a lack of a better analogy, iTunes IS WalMart in the music industry.

Linky

Sorta, as in right now its register, then get an invite. Its not a bad strategy either. Run a test case with a small body of users to get the kinks out. A method I would heartily support.

But the question I have is it it worth $10? For the money you get –

• Access to more shows from the major networks.
• Access to the past seasons archives.
• It will be viewable on more devices (iPod, iPhone, Samsung devices, Sony PS3, Xbox, your PC)
• All of it available in HD.
• Oh, and you still have to watch all the ads. The price of entry does not spare one from this.

Now ole Fuddy-Duddy here says maybe its worth $10. Fact if they would ditch the ads I would give a serious thumbs up. I would also suggest they consider bringing in other partners like USA Network as well. Finally I could really care less that HuluPlus runs on an Xbox or PS3. I don’t game.

But with a little jiggering of the content. Dropping of the ads. Then getting some of the channel partners like HBO on board in an ala carte fashion this could fly. There is only one problem. HD already exists over the air and that ole trusty Tivo is still there with the FF button. So questions boils down to does access to the archive of shows worth the $10.

My last Ah-Ha. Does HuluPlus set the new price model for broadband content? Personally I think it does. Not because I think the content is competitive as what $40/mo cable provides. No, its a market perception thing. Once the public gets it in their mind that $10 is the value proposition the cable Cos won’t be able to shake it. Serious downward pressure waits in the wings.

Now, do the networks have the guts to pull content off the cable providers?

Linky

The battle between IPTV and cable providers is about to begin as this Wired article intones. —

The stage is set for a showdown between television networks and cable/satellite TV services, thanks to the internet. It won’t happen overnight, but your monthly cable or satellite bill could eventually be replaced by a monthly bill from Hulu, an online service that streams TV shows on demand.

For $10 a month, viewers will reportedly have access to a wider selection of shows than the free, ad-supported version Hulu currently offers. The service would work on PCs and specialized devices such as the iPad, videogame consoles and set-top boxes. The company plans to test a version of this “Hulu Plus” subscription, an expected development, with select users as early as this month to find out whether they’ll will bite, according to sources cited by the Wall Street Journal and All Things Digital.

In order for consumers to pay for a video service like that, it will need to be reasonably comprehensive. So it’s no accident that the same week Hulu’s subscription plans came to light, a Bloomberg report surfaced that the company is talking with CBS, Viacom and Time Warner’s television studio divisions to add their shows. That would be on top of a line-up that already includes “Fox, NBC Universal, ABC, ABC Family, Biography, Lionsgate, Endemol, MGM, MTV Networks, National Geographic, Digital Rights Group, Paramount, PBS, Sony Pictures Television, Warner Bros. and more,” including Wired.com.

Source

There is one piece that I believe will not bode well —

Cable and satellite are classic middlemen. When the internet meets the middleman, the middleman tends to disappear — or at least be replaced by a thinner middleman. We’ve seen it with record stores, classified ad-dependent newspapers, video-rental stores, bookstores and any other business that delivers something that the internet can deliver more efficiently.

If you look at the Supply Chain Collapse that have gone before, in industries like retail, trucking, warehousing, etc, there is no such thing as a thinner middleman. There were only dead middlemen. There is a twist to this scenario however. For IPTV to work one has to have a fat pipe. That means Cable, FIOS, or WISP as a provider. So the carriers may not be dead but they certainly will be wounded. So how does this all play out –

• Hulu launches the premium service. Expect the cost to rise to $15-20 end game. More providers will want to get in on the act which will raise the cost.
• Expect cable costs to collapse. That $40/mo you have been charged will wilt under the shift that is about to occur.
• But that cost savings will not go without a price. Expect the Comcasts of the world to respond to this by cutting services. All those cut portals that require maintenance by high priced talent will be shelved. YOYO will be the name of the game.
• We will finally see a shot at ala-carte services. It would be a no brainer for Hulu to provide ‘The Indie Channel’ at a $1 a month. They give you a key on subscribing that is entered into your HTPC. Hulu keeps the key current as long as you are subscribed. When you drop it they cease the update and the channel stops working. That capability is the real nail in the coffin of cable tv.
• Expect in some corners to see a large shift away from network produced product to lower priced indie production. Able to tap into Hulu, these indie producers could create short run series. The model is already there with shows like Burn Notice and Royal Pains.

The content choices are going to explode here very quickly. The beauty is you may only pay for what you want. Out of a million choices you may only subscribe to 40 channels for $15-30/mo or less. I can’t wait.

It also makes Verizon’s choice to go with a Cable-like pricing model the wrong move. They should have derived the FIOS pricing on the cost to deliver the pipe as a data only service. Just like they have done for the last 150 years. Like the knight in ‘Indiana Jones’ related — “He chose poorly.” Indeed they did.

The bugler that is; to play taps over BlockBuster. The former darling of Wall Street is $900m in the hole, savaged by bad management, RedBox, home theater and a bad economy. –

Blockbuster is in discussions with bondholders to get up to $150 million in so-called debtor-in-possession financing, said people familiar with the matter. Such loans, which typically carry high interest rates, are used to help companies operate while under Chapter 11 protection. The senior bondholders, owed about $630 million, would provide the financing to protect their original investment should Blockbuster enter bankruptcy court.

The talks don’t necessarily mean Blockbuster will file for bankruptcy. Blockbuster is pursuing other options, and troubled companies often negotiate bankruptcy loans as a precautionary measure and still reach deals with creditors to restructure debts outside of court.

On a separate front, Blockbuster is talking with possible strategic partners about a new cash infusion, a person familiar with the matter said. Under that scenario, a group of lower-ranking bondholders owed $300 million would likely convert their debt to equity, this person said.

One potential investor could be NCR Corp., which provides the company with Blockbuster Express-branded vending machines, this person said. It remained unclear what other possible investors Blockbuster had sounded out. Blockbuster and NCR declined to comment.The movie-rental chain faces possible bankruptcy as its debt has mounted amid stiff competition.

Moves of a company that is looking for operating capital through the bankruptcy proceedings hoping for a white knight buyout. That will only work if there is a desirable level for a pennies on the dollar deal. The problem for BB is that its floor rent is tied to a cost structure of 2-3 years ago in a commercial real estate market that is selling square footage at 50% discount.

The other problem for BB is that the nature of the competition matrix has not changed and will increase over time. Home theater systems are getting cheaper all the time. RedBox is expanding at a furious pace and will be offering Blu Ray rentals shortly. Even the Pay-per-View market is holding up well as the customer seems satisfied with the pricing. Add it all up and the BB market is not looking good for a B&M model.

Another loser in the Whack-the-MIddleman sweepstakes.

Linky.

A blonde is praying to God

[Blonde] Dear God, I pray night after night to win the lottery and never do.
[Blonde] Do you hear me Lord?
[God] Child, I hear everyone.
[Blonde] But I don’t win the lottery, ever.
[God] Child, meet me half way at least — Buy a ticket!

Oh yes, it is a dear old joke. Been around for years. But there is a reason I mention it. There is a corollary in today news feeds –

Apple has re-instated the popular iPad news-reading application Pulse. The move seems to overturn a decision earlier today to remove the app because of objections from The New York Times that the app violated its terms of service by encouraging readers to read the Times.

Apple did not respond to a request for explanation, but it looks to be sticking a finger in the eye of the Times, which it has heavily partnered with to promote the iPad.

The Times objects to the news-reading app because it includes it as one of five default publications whose RSS feeds can be read. The Times also objects that the two Stanford student programmers charge for the app, which the Times says violates its non-commercial license for the feed. And it objects that the app launches links from excerpts of its stories to the full Times site in a browser window inside the app, rather than to an external browser.

Read More here

So lets get this straight. NYT who is in the business of pushing news, even via RSS feeds, is objecting to somebody READING their news? There is alot of sidebar legal mumbo-jumbo, but the nit is that it sounds like NYT is objecting to that very action.

So am supposed to show sympathy for the Media, when an organization like the NYT sends a cease and desist letter to Apple to remove the Pulse application? Pleeeeze, that is like driving a stake through your eye and wondering why it hurts. Not only that but there is another old saying — “When you are the piker, stay away from the poker table.” You can’t afford the ante. For most of the industry that is exactly where they are. NYT should be thankful that somebody even thinks they are worth the time to develop the app.

Not one dime of my tax money to these idiots!

The Internet is a wonderful thing. Yes there are nasties out there like child perps. (scum) But there are upsides too. One of the axioms of the ‘Net is if you intend to slander, defame, sue, or press legal action you better have your ducks in a row. It appears that especially true for those with a nefarious nature. Case in point –

A Western Michigan University student is giving a Kalamazoo towing company a costly lesson in customer service and the power of the Internet.

The problem began in January when T&J Towing removed Justin Kurtz’s car from his apartment complex parking lot, saying he didn’t have a parking permit. Kurtz, 21, said he had a permit, but the tow crew scraped it off his windshield to justify taking his car.

After getting nowhere with the company and paying $118 to get his car back, Kurtz created a Facebook page, “Kalamazoo Residents Against T&J Towing,” which has attracted more than 11,000 members since February, many with similar complaints about the company.

For firms that have a larcenous streak the power of Facebook can be a powerful thing. 11,000 friends many also wronged by the towing company makes for a very stong witness list when on goes to court. The real power of the Internet is the ability to transform a very big town into a small village where everyone knows everyone else’s business. For fly by nighters that is deadly.

Linky.

Theaters and studios are complaining about flat revenues at the box office. –

Movie Tickets Reach the $20 Mark

For the first time, a major Hollywood film will hit the $20 threshold at the box office, as movie-theater owners test the public’s ability to absorb ever higher ticket prices.

Several theaters will charge $20 per adult ticket to IMAX showings of the animated 3-D family film “Shrek Forever After,” the fourth “Shrek” installment from DreamWorks Animation. The theaters include the AMC theater in Manhattan’s Kips Bay neighborhood, AMC Loews 34, AMC Loews Lincoln Square and AMC Empire 42nd Street.

The increases weren’t officially announced, but were reflected in prices posted Wednesday on movie-ticketing Web sites such as Fandango.com and tracked by BTIG LLC media analyst Richard Greenfield.

Source

$20 for a ticket. Are they out of their minds?? I will grant that IMAX if done right is worth a reasonable premium but no $20 worth. I can go down to BestBuy 6 months after the fact and buy that movie in Blu-Ray for $24.99. So I spend a marginal overhead for the film vs a single ticket experience. But I just acquired the right to view the thing as many times as I want.

The Suits wonder why the movie going public does not show up any more. Why should they? The prices are too high. Beside with many going to personalized home theatre the rationale for going to a movie house is gone. Buy the flick, or rent, at view at your schedule. But the math is pretty simple — $80 for a family of 4 vs waiting a little and spending merely a $1 from RedBox. Pretty dang clear to me.

How about you?

Update: It appears that the source article was in error. Or should I say that several AMC theaters were in error in how they reported pricing for Shrek. We pass along this as a corrective action.

Oh its not about their security or selling YOUR data, though that it is the cause. Their problem is they have spawned a new generation of Facebook wannabees –

Diaspora: Personally Controlled, Do-It-All, Distributed Open-Source Social Network

The vid above is for the upstart Diaspora. Another that is starting up is Appleseed. Both are running forward as Open Source projects. Interestingly, Diaspora has already raised nearly a $100k of Angel financing thru individual contributions to the effort.

What sets these two fledglings from Facebook? One is philosophy. They believe the user should be in control of their data. That is a FOSS core concept of its existence. The second is approach. Whereas Facebook used the central server farm approach, these two firms are going to take a distributed approach. My understanding being your data stays on your machines and the option to share is local. The protocol having many of the attributes of torrents but much more sophisticated.

If they can get these tools off the ground and accepted (and hopefully a merged api) I see a much broader use for the tool. How? Maybe financial transactions. Companies passing annual reports to the SEC for example in the accepted BRXML format. Or how about micropayments? The coke machine taking your dollar transfer to it from your cellphone using the api and a validation code from PayPal where the dollar came from.

But we have to walk first. So lets see now much impact one or both of these platforms have on Facebook. Its a shame really. Facebook had an excellent business model that could have been monetized differently without the privacy issues. A bad business decision is going to lay them low. Better competition will put them under.