Is "proved true" or "can't be proved false" the right standard for journalism?

Unless you've been living under a rock for the last couple of weeks, you've probably heard about the battle between Elon Musk of Tesla and The New York Times. Here's a summary:

1. New York Times reporter John Broder took an electric-powered Tesla S sedan on a test drive for the purpose of seeing whether he could drive it from New York to Boston without running out of power. Broder claimed that his Model S ran out of power on the last leg of the trip and had to be towed.
2. Several days later, Tesla CEO Elon Musk tweeted that detailed logs of Broder's test from the Model S showed significant inconsistencies between what Broder wrote and what actually happened.
3. The New York Times replied in part by saying "We, of course, stand by our story."
4. A couple of days later, Elon Musk published the results of the logs on Tesla's blog, pointing out that in two of the three cases where Broder recharged the car, he only did so to a portion of the battery's capacity, and on the leg of the trip where Broder wrote that the battery died and the car had to be towed, Broder had charged the battery to less than 30% of capacity. He also pointed out discrepancies between how Broder set the heat in the car and what the car reported, and also, that Broder drove significantly faster than he reported. Musk wrote that he believed that Broder had deliberately botched the test.
5. On the Times' car blog, Broder gave point-by-point rebuttals for most of Musk's arguments, but couldn't explain why Tesla's logs showed the Model S going much faster than Broder claimed he ever drove. (Tesla's logs showed the Model S getting up to 80 miles per hour at one point, while Broder claimed that he never exceeded the speed limit.)
6. CNN and a group of Tesla owners (among others) reproduced Broder's test (albeit in slightly warmer weather) and said that they comfortably made it from New York to Boston without running out of power and without problems in finding charging stations.
7. New York Times Public Editor Margaret Sullivan interviewed Broder, reviewed his written logs, reviewed Tesla's logs from the car, and talked to owners. She concluded that there was no evidence that Broder or the Times had deliberately botched the test. However, she also found that Broder had done a sloppy job of documenting what he did in the test and couldn't substantiate a number of things that he wrote in his article, that Broder should have fully charged the car when he had an opportunity to do so, and that both Broder and Musk had made misstatements.
8. Elon Musk responded to Sullivan's article with a blog post that thanked the Times for reviewing Broder's article and reporting Sullivan's conclusions. In his post, Musk emphasized Broder's mistakes but didn't mention that Sullivan found that he had made misstatements as well.
9. New York Times Cars Editor James Cobb (Broder's boss) then took to Twitter to attack Musk for "smearing" Broder, who he (Cobb) called a "consummate pro."

When I read Cobb's tweets, it was apparent to me that the John Broder he was lauding wasn't the John Broder that Margaret Sullivan interviewed and wrote about. I responded to Cobb's tweet with my own:

.@NYTjamescobb @elonmusk As your own public editor pointed out, @jbrodernyt was far from a "consummate pro," and you failed to fact-check.

Cobb responded back to me a bit later:

@lenfeldman Unaware of a single error of provable fact. 

Cobb's response shocked me--there were many discrepancies between Broder's article and blog post and Tesla's logs. I didn't respond back, but many others did. My biggest shock, however, was how Cobb defined his standard for reporting: "Unaware of a single error of provable fact."

Since the end of the "yellow journalism" days, the standard for whether or not to go to press with a story has been "proved true." That means that the reporter has corroborated his or her story with interviews from multiple parties, has gathered facts from third parties that also corroborate the story, and has fully documented his or her own efforts to find the truth. However, Mr. Cobb is applying a much different standard: "Can't be proved false." Leaving the entire "you can't prove a negative" argument aside, what "can't be proved false" means is that there's some possibility, no matter how slight, that the reporter's account might be true.

Under Mr. Cobb's standard, Mr. Broder's practice of keeping sloppy notes and writing things that he couldn't verify is perfectly acceptable: If Mr. Broder says that what he wrote actually happened, and there's no one else in the car and no other means to provide independent verification, that meets the "can't be proved false" standard. The problem, of course, is that unbeknownst to Mr. Broder, everything that he did with the car was recorded, in minute detail, by Tesla.

Let me be clear--there are times when the "can't be proved false" standard is perfectly acceptable. Reviews of movies, plays, concerts, etc. fall into that category, because they're records of the personal opinions of the reviewers. A reviewer may write "This was so-and-so's worst film to date." Even though it's written as a statement of fact, it's clear that it's the reviewer's opinion. Car reviews can also fall under that standard, since so much of what's written in a car review is the reviewer's subjective opinion. However, what Broder did with the Tesla S wasn't a car review--it was a news story, to determine if it was possible (and practical) to drive an all-electric-car 300 miles from New York to Boston. The appropriate standard was "proved true," and Mr. Broder didn't do that.

I hope that the "can't be proved false" standard is unique to Mr. Cobb, not a reflection of general editorial standards at the New York Times. However, I'm going to be reading everything in the Times with a much more jaundiced eye from now on...at least until the newspaper officially repudiates Mr. Cobb's position.

What happens if Apple's announcements are no longer news?

This was the week of Apple's big iPhone 5 reveal, and it was like many of Apple's press announcements: A packed Yerba Buena Center; Apple executives describing product features using superlatives usually reserved for...well, for Apple product launches; and the usual product videos, including designer Jony Ive talking about how incredible his latest design is. There was also the endless parade of television news trucks lining the streets around Moscone Center, and the ever-increasing number of liveblogs covering the events AS! THEY! HAPPENED! What there wasn't was much actual news, and that could be a problem for future Apple product launches.

As the Columbia Journalism Review pointed out, virtually every detail of the iPhone 5 had been leaked before the event. The iPhone checked all the boxes on the "must have" feature list--bigger screen, faster processor, better camera and LTE--but there wasn't anything groundbreaking about its design or functionality. If you didn't know that the iPhone 5's bigger screen can accommodate an additional row of icons, it would be hard to tell the iPhone 5 apart from the 4 or 4S at a glance. (Update, September 23, 2012: The iPhone 5 is actually fairly easy to tell apart from the 4 and 4S, even when it's not turned on. Apple has done away with all the chrome trim on the phone, and the back is metal, not glass.)

In addition, the presentation was long. There was everything you'd expect in an iPhone rollout, followed by everything you'd expect in an iPod rollout. I suspect that Apple tied the two announcements together in order to get more attention for the new iPods, but if the company is actually planning to launch a smaller iPad next month, it probably wouldn't have hurt anything to announce the iPods at that event.

The CJR picked up on some of the liveblogs' sense of disappointment: They noted that Engadget's coverage reached parody levels, with 78 exclamation points in 122 minutes. The New York Times' coverage was deemed sober, although assigning four reporters to the story was overkill. The Wall Street Journal also avoided getting over-excited.

Some observers say that Apple is most likely going down the same path with the iPhone that it followed with the iMac, MacBook Pro and MacBook Air product lines: It's optimized the physical design of the iPhone, and future changes will be more incremental than revolutionary. That makes sense and may very well be true, but you rarely see the huge press turnout and coverage for Apple's Mac product announcements that you see for the iPhone and iPad.

It's true that customers don't seem to find the iPhone 5 disappointing--it sold out of its first week's allotment in 30 minutes, and that was with pre-ordering starting at 3:01 a.m. Eastern time in the U.S. However, what matters in this case is whether the press sees a lot of news value in Apple's future announcements. If all the major news leaks before the announcements, the story is going to become what Apple was still able to keep secret, not what it announces. Given that Apple has so many production partners, keeping new products under wraps will only get harder.

Apple's had an enormous advantage over its competitors because it could count on at least $100 million in free publicity for each launch from the world's biggest media outlets, processed through news organizations in order to give it an extra level of authority. If Apple's announcements lose their newsworthiness, they'll also lose their impact. Even if Apple's management figures out how to go back to the CIA-like levels of security the company's product launches had in the past, its "reality distortion field" may be gone for good.

Bogus reviews and how to spot them

About a week ago, The New York Times wrote an article about someone who sold bogus positive book reviews that he posted under a variety of identities on Amazon, and presumably, other websites. His company lasted only a few months until it was "outed" by a disgruntled author who didn't like the review of her book that the company posted. The Times used this one company, and one piece of research, to insinuate that there's a torrent of fake book reviews on Amazon, and that all four and five star reviews should be considered to be fake unless proven otherwise.

The Times not only drew a sweeping conclusion from relatively scant evidence, but it also "buried the lede": The problem of fake reviews on the Internet pervades every product category, not just books. It also discounted the fact that fake reviews can be both positive and negative. I chalk up the Times' article to lazy reporting and sloppy editing, but there's a very real problem with fake reviews.

(Update, September 8, 2012: It does appear that Amazon is full of fake book reviews, but according to The Guardian, the practice isn't limited to self-published authors. Author Jeremy Duns figured out that best-selling crime author R.J. Ellory was posting breathtakingly positive reviews of his own books under the pseudonyms "Jelly Bean" and "Nicodemus Jones," and was trashing competing authors with 1-star reviews, including Stuart MacBride and Mark Billingham. Ellory has since apologized, but I suspect that the only thing he's really sorry for was getting caught. The Guardian's article also notes other examples of best-selling authors getting caught giving themselves positive reviews, and in some cases, trashing their competitors. Amazon is going to lose a huge amount of credibility unless it comes up with a way to confirm the identities of reviewers. Publishers could also add clauses to their contracts that prohibit writers from posting reviews under any name other than their own or paying third parties to post reviews.)

It's important to keep in mind that reviews are inherently going to be more heavily distributed toward very positive and very negative ratings, because people are more motivated to review things that they're very happy or unhappy about. Think about going out for dinner to a modestly-priced restaurant and getting an "okay" meal at the price you expected. You're unlikely to write a review about that "meh" experience. On the other hand, what if you get one of the best meals you've ever eaten, or what if the food is bad, the service is worse and the night ends with the waiter spilling a hot cup of coffee in your lap? Either way, you're much more likely to write a review, and the review is likely to be very positive in the former case and very negative in the latter one. So don't automatically assume that great or terrible reviews are fakes.

There's been some research published on how to spot fake reviews. For example, MIT's Technology Review reported that researchers at the State University of New York at Stony Brook used the TripAdvisor site to come up with rules for identifying fake reviews. They started by assembling a group of "likely valid" reviewers--they'd written at least ten reviews, each review was more than a day or two apart, and their ratings didn't deviate too far from the average ratings for all hotels.

The researchers then compared reviews from its "likely valid" group with those of one-time reviewers to see if the one-time reviewers gave a significantly higher number of five-star ratings. They also looked at the ratio of high to low ratings given by different groups of reviewers, as well as sudden bursts of reviews (multiple reviews posted over a few days) that might indicate a deliberate marketing campaign. Then, they compared their results with a previous study they'd conducted, in which they hired people to write fake positive reviews, so that they could identify tell-tale clues such as use of too many superlatives. The researchers found that they could identify fake TripAdvisor reviews "in the wild" around 72% of the time.

The SUNY Stony Brook research focused on fake positive reviews, but a couple of years ago, Consumer Reports' The Consumerist website asked its readers for suggestions on how to spot both positive and negative fake reviews, and they came up with 30 "tells". Here are a few:

• The reviewer only has a single review on the site.
• There's little or no information about the reviewer in their site profile.
• You can't find any information about the reviewer on other sites, such as LinkedIn.
• The reviewer uses a pseudonym that has more than three numbers at the end.
• Multiple reviews, either very positive or very negative, show up about the same subject in a very short period of time (a day, or a few days.)
• The wording of multiple reviews is very similar.
• The review uses the "official" name of the product or service. If it keeps using the official name over and over, it may be an attempt to game search engines.
• There are no details, just a broad statement that the subject is great or terrible.
• They use "marketing speak"--no one would write conversationally the way that the review is written.
• There's a "conversion story"--the reviewer thought that they would hate the product or service, but then they tried it, and now they love it.
• If the subject has multiple locations (such as a chain store or restaurant), the exact same review can be found for multiple locations.
• The review is very negative about the subject and strongly recommends a competitor by name.
• There's a link to the subject's website, or a third party's website, in the review.
• The spelling and grammar in the review is poor--it suggests that the review may have been written by an offshore review mill.

Reviews can save you a lot of money and aggravation, but you have to look for obvious signs of fakery. A fake review can be worse than having no review at all.

The New York Times now gets more revenues from subscriptions than advertising

According to New York Magazine, subscription revenue exceeded advertising revenue for the second quarter in a row at the New York Times Company. In Q2, print and digital advertising revenues from its newspapers declined 6.6% year-over-year to $220 million, but subscription revenue was up 8.3% to $233 million. This represents a dramatic shift for the Times Company, and for newspaper publishers in general, which have gotten the majority of their revenue from advertising for many decades.

Revenue from print advertising has been declining since the 2008 financial crisis, and the growth of online advertising revenues has stalled. On the other hand, the Times' aggressive program to increase digital subscribers has been successful--digital subscribers for all its newspapers increased from 454,000 in Q1 to 509,000 in Q2. The company also increased the price of its morning print newspaper, but it didn't have much impact on sales.

As Ken Doctor of Newsonomics told New York Magazine, "The future looks like it's going to be a majority reader revenue. What we don't know is at what level. And that's huge, because it tells us how big of a newsroom they can support."

Mixed news on the tablet eMagazine front

There's been some mixed news concerning tablet eMagazines today:

• Zinio, an ePublishing pioneer whose electronic newsstand competes with both Apple and Amazon, is looking for a buyer, according to Fortune Magazine. The company has hired Montgomery & Co. to manage the process, and is trying to sell itself for $50 to $100 million. There's no word on whether there's any interest from potential buyers. 
• Flipboard, the tablet eMagazine/aggregator that just added an Android version alongside its popular iPad/iPhone app, won one and lost two today: According to paidContent, The New York Times will make the full contents of its newspaper available through Flipboard. Paid subscribers will have access to all the articles, while non-subscribers will have access to a limited number of free articles and additional ones through a paywall. 
• On the other hand, Ad Age reports that two Conde Nast magazines, Wired and The New Yorker, will stop selling advertising through Flipboard, and will instead only make headlines and a few sentences of each article available through the app. Clicking on the article will either load the Wired or New Yorker app if it's installed, or tell the user to subscribe in order to get the full article. It's not clear whether Conde Nast changed its approach because advertising sales through Flipboard weren't working, or because the publisher wants to focus solely on its own apps. 

Self-published Iowa writer gets seven-figure deal from Penguin

The Des Moines Register reports that Tracy Garvis Graves, an author whose manuscript was rejected by 14 publishers before she decided to publish it herself, has just signed a two-book deal with Penguin imprint Dutton & Plume for what she reports as "seven figures." The contract covers On the Island, the title that she self-published, and Covet, a novel to be released in 2013.

Graves' manuscript was rejected by 40 book agents and 14 publishers before she spent $1,500 for editing and formatting and posted the eBook to Amazon. It only sold 100 copies in the first month, but then sales took off, thanks to word-of-mouth and thousands of positive online reviews. She's also released the title as a paperback, and as of last week, it rose to #7 on the New York Times' combined print and eBook bestseller list. Amazon, HarperCollins and Dutton & Plume all bid for book rights; Graves sold the rights to Dutton & Plume because of Penguin's relationship with Temple Hill Entertainment, the production company that made the "Twilight" films. They also work with MGM, which acquired the film rights to On the Island.

Graves has quit her day job at Wells Fargo Bank and is focusing on writing her second book.

Somewhere between wishful thinking and delusion: Can Barnes & Noble save print books?

There's an article in today's New York Times about Barnes & Noble titled "The Bookstore's Last Stand". The central premise of the article is that publishers are depending on Barnes & Noble to keep the print book alive. The tone of the article, or at least the quotes from publishers, is somewhere between wishful thinking and delusion. Here's an example:

Carolyn Reidy, president and chief executive of Simon & Schuster, says the biggest challenge is to give people a reason to step into Barnes & Noble stores in the first place. “They have figured out how to use the store to sell e-books," she said of the company. "Now, hopefully, we can figure out how to make that go full circle and see how the e-books can sell the print books.”

"...we can figure out...how the e-books can sell the print books"? That's like saying that if we wish hard enough, we can use calculators to sell abacuses. There's an incredible denial of reality going on here: Print still represents a majority of book sales, but it's been declining for years, while eBooks' share of book sales has been growing. If you're fixated on maintaining your print book sales, you're guaranteeing that your business will be marginalized over time.

If trends continue, eBooks will represent more than 50% of trade book sales within the next two years. Textbooks and specialty titles will take longer, but they'll likely reach or exceed the 50% point before the end of this decade. Denial of reality is only going to make the transition more painful. Publishers can survive in a majority-eBook market, so long as they manage their businesses to do so.

So, what can publishers do? They can consolidate their warehouses and get rid of excess capacity. They can move to a "digital first" model where eBooks, not print, drive the editorial and production process. They can anticipate smaller print runs and start implementing print-on-demand production. If they don't do these things, they'll have no one to blame but themselves when their companies fail.

As for Barnes & Noble, it too has to manage for a future when eBooks comprise most book sales. It has to be prepared to shrink the size of its stores, dramatically decrease the amount of display space dedicated to print books, and use electronic displays to replace physical shelves. It should already be privately prototyping and testing these new-generation stores, so that it's ready to start rolling them out in the next few years. It can't go forward by staring in a rear-view mirror.

The handwriting is so clearly on the wall that any publishing or bookselling executive who ignores it is guilty of willful ignorance.

YouTube's scattershot channel strategy

Earlier today, the New York Times reported that YouTube will launch more than 100 channels of third-party video programming. YouTube is said to be paying the producers of the new channels, which will begin launching in November and continue throughout 2012, as much as $100 million to create original programming. The producers who have signed on with YouTube range from well-known media brands such as The Wall Street Journal, The Onion, Lionsgate, Reuters, Rodale Press and the WWE, to companies that were entirely unknown until today. Celebrities such as Ashton Kutcher and Deepak Chopra are also involved.

YouTube's plan, which is intended to eventually produce 25 hours of original content each day, is to build the new channels into places where viewers will return day after day, and advertisers will be willing to pay substantially higher rates than they pay for user-generated content. It's a good idea, but YouTube is taking a very scattershot approach to implementing it.

In the past, I've written about YouTube's plans to attract more and better programming. Last December, YouTube gave $1,000 credits to 500 of its YouTube Partners. At the time, I wrote that there's not much useful that a video producer can buy for $1,000 that would make a significant improvement in their productions. YouTube would have been much better off giving $10,000 credits to 50 well-targeted producers.

I feel much the same way about YouTube's new plan. The channels selected are all over the board in terms of content, and are likely to be equally all over the board in terms of quality. Instead of starting with 100 channels, YouTube should have started with 20 or 25, and worked carefully with the producers to insure that the quality of the channels would be high. Then, they could roll out a second wave of channels, perhaps six months down the road. By greenlighting 100 channels at the outset and rolling them out rapidly, YouTube has almost guaranteed that it will end up with a confusing mishmash of shows.

YouTube's intention is to build up a big library of compelling original programming quickly, but they're just as likely to create an assortment of channels carrying junk that would have never been produced had YouTube not committed to pay for it.

New media has to break its addiction to old media

People have been trying to turn the Internet into a new medium that can compete on an equal footing with television, radio, newspapers, etc. since the Netscape days of the mid-1990s. So, fifteen years on, what have we accomplished?

• Netflix has more subscribers than Comcast, but it lives or dies based on which television networks, cable networks and movie studios are willing to do business with it, what shows they're willing to supply, when they're willing to supply them and at what cost.
• Hulu has much the same problem, even though it's owned by three of the four major U.S. television networks.
• YouTube is trying to cut distribution deals with many of the same television networks, cable networks and movie studios as Netflix and Hulu.
• Pundits spend an inordinate amount of time discussing how much The New York Times and The Wall Street Journal are charging for access to their newspapers online, whether paywalls work, how to circumvent paywalls, etc.
• Hearst, Condé Nast and Time Warner will offer their eMagazines on the iPad if they can only get a business deal worked out with Apple. Meanwhile, News Corporation's "The Daily" is on the iPad and is losing money.
• Clear Channel is building its own clone of the Pandora streaming music service and plans to launch it this summer.

The "new media" has largely become a repackaging of old media for Internet delivery: Old wine in new bottles. Almost all of the content on the Internet that's economically viable comes from old media companies.

In order for content to be economically viable, it has to have two key attributes:

1. It has to attract a large audience, and
2. It has to be repeatable--audiences have to be willing to come back day after day, week after week

Content that repeatably attracts large audiences can be sold to national advertisers, which generates the revenues necessary to create more content and make the business attractive to investors. Viral videos, like those found on YouTube, meet the first criteria: A popular viral video can get millions of views. The problem is that they're not repeatable. The vast majority of viral videos are "one-hit wonders". Google has found that it's possible, but very difficult, to sell advertising against viral videos. Many advertisers don't want their ads to run alongside "objectionable" content, yet it's that same objectionable content that makes many videos go viral.

On the other hand, webcast networks like TWiT and Revision3 get audiences that come back week after week for original shows, but the audiences aren't big enough to generate a lot of advertising revenue. They make enough money to make a nice living for a few people, but not enough to attract investors.

That's why new media companies keep turning to old media companies to get their content. The problem is that old media companies don't want to risk their existing revenue streams, even if those revenue streams are already being eroded. If you're an Internet company and your business plan depends on convincing old media companies to license their content to you, you're starting with two strikes against you. Even worse, your biggest suppliers are in a position to become your biggest competitors, if they aren't already competing against you.

New media companies have to break their dependence on old media, and the only way to do that is to produce original content in new forms that old media companies can't, or won't, duplicate.

Sony: What were once strengths are now weaknesses

In the late 1980s, I worked for Toshiba and traveled frequently to Japan. The Japanese electronics brands that we know in the U.S. look considerably different in Japan. One big difference is that they were in lots of (sometimes bizarre) businesses. In those days, Sony offered financial services. It sold real estate and ran an Internet service provider. It ran a travel agency. Every big Japanese electronics firm was diversified in ways that would cause you to do a double-take to make sure you had read that sign correctly. Panasonic refrigerators? Check. Hitachi air conditioners? Check.

Today's New York Times has an article on Sony's pursuit of a ..."Bold Success to Match Its Scale." The article starts with a description of a new Sony store in Nagoya, Japan that's largely a clone of the Apple Store design, then talks about how Sony's new 3D HDTVs and partnership with Google are evidence of a comeback. However, it's Sony's very scale that's at the core of many of its problems.

As the article points out, the Sony store is a spin on Apple's successful model (although it can also be said that Apple took its inspiration from the Sony Style stores that started in Apple's backyard in San Francisco.) Sony is already somewhat late to 3D; Samsung and LG are already shipping 3D HDTVs, and Panasonic will be showing its $20,000 3D camcorder at NAB in a couple of weeks. It's building a Sony Online Store that's basically iTunes several years late. The Sony/Google/Intel initiative is following the same course that Apple took a few years ago with Apple TV. Sony's new Playstation Move controller looks like a Wiimote with a dollop of ice cream on top.

The fact is that Sony is in a raft of markets but leads in very few. It's still the leader in broadcast and digital cinematography cameras and camcorders, but that's not a huge market. It lost its lead in consumer HDTV to Samsung and in audio players to Apple. It similarly lost its lead in game consoles to Nintendo and Microsoft, and has never been able to push Nintendo out of the top position in portable consoles. It gave up its early lead in eBook readers to Amazon. It's an also-ran in portable computers and mobile phones. Sony's strong in audio recordings and motion pictures, but it's not the market leader in either business.

My belief is that Sony is trying to do too much. The companies that are really successful focus on a limited number of markets, technologies and opportunities. No company could do everything that Sony does and do it well.

It's time for Sony's top management to start thinking about splitting the company up, not for financial benefits, but to better compete in the segments that it chooses. Sony could divest some of the smaller businesses and focus on the areas of greatest potential. It could give the operating units more autonomy and allow them to make decisions that are best for their business, not necessarily best for the strategic interests of some other Sony division.

Apple succeeds through obsessive focus. Samsung is dominant in a few critical markets, such as HDTV and memory. Research in Motion only does BlackBerry smartphones, and it does them very well. By trying to do too much, Sony is almost guaranteeing that it's going to fail at many things. The company has to develop the discipline necessary to focus on a few opportunities, rather than to grab at every opportunity.

Amazon and Publishers: Playing "Chicken" Over eBook Prices?

According to The New York Times and other sources, Amazon has stopped selling all of Macmillan's books and eBooks, including imprints such as Farrar, Straus & Giroux, St. Martins Press and Henry Holt. The problem, which has not been officially confirmed by either Macmillan or Amazon, is that Macmillan wants Amazon to raise the eBook price of its bestsellers from $9.99 to $14.99. My wild speculation is that Macmillan threatened to delay or stop sending eBook files to Amazon altogether, and that Amazon retaliated by pulling all of Macmillan's titles, both print and electronic, out of its store.

This is a very dangerous game of "chicken" for both companies, and it may establish who has the real pricing power in the book distribution channel, publishers or resellers. For Macmillan and the other major trade publishers, Amazon is one of their biggest resellers in the U.S. Losing Amazon's revenue would be a huge blow. On the other hand, customers expect to be able to buy books from every publisher when they go to a bookstore. Losing the Macmillan catalog means that Amazon will be less attractive to customers.

Amazon's Jeff Bezos said this week that for every 10 copies of a print title with an eBook version available, six copies of eBooks are sold. Simple arithmetic shows that only 37.5% of the unit sales for those titles comes from eBooks. Given Amazon's pricing structure, it needs the sales of those print copies to help subsidize its eBook pricing model.

Both Macmillan and Amazon have valid arguments: For Macmillan, lowering the price of its bestsellers to $9.99 cheapens the value of those titles and builds customer expectations not to pay more than that, even for the print versions of titles. Given its deal with Apple, it appears to accept that eBooks should cost less than their print equivalents, but not so much less than they completely devalue its print versions.

I don't know what's in Amazon's distribution agreements with publishers, but I suspect that it says that Amazon has the right to sell titles for whatever it wants, independent of what it pays the publishers. What's not clear is whether the publishers are obligated to supply Amazon with copies of all their titles in eBook format, or whether they have to supply the eBooks at the same time as they supply print versions. It's very common for eBooks not to be available "day and date" with the street date of print titles, and few people have had a serious problem with that.

If one or more of the other major publishing houses join Macmillan's position, Amazon will have some very difficult choices to make: Pull all of their titles out of its store, agree to the publishers' demands, or negotiate a middle ground that works for both it and the publishers. There are also antitrust considerations, on both sides of the fence: Publishers could be seen as colluding or fixing prices, and Amazon could be charged with using monopoly power in both the print and eBook distribution businesses to force book publishers to agree to its eBook pricing model.

My opinion is that Amazon's decision to pull all of Macmillan's titles off its shelves may, in the short term, force Macmillan to capitulate, but it will strengthen the resolve of the trade publishing industry to wrest control over eBook pricing from Amazon. My suspicion is that Amazon has thrown the first brick in this war, but it may find that it's the one living in the glass house.

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• Amazon and Macmillan go to war: readers and writers are the civilian casualties (boingboing.net)

Profiles in Cowardice

It looks as though the negotiations between NBC and Conan O'Brien will be completed as early as tomorrow, and I couldn't be happier. With the disaster in Haiti, this entire situation doesn't even deserve ranking as a sideshow. However, a couple of things have happened that tick me off and point to the high level of cowardice within NBC's current management. First, Dick Ebersol, the president of NBC Sports, criticized O'Brien and David Letterman for their jokes about Jay Leno, saying that it was "chicken-hearted and gutless to blame a guy you couldn’t beat in the ratings." He went on to say that "what this is really all about is an astounding failure by Conan." Later, he claimed that if O'Brien had only taken his (Ebersol's) advice to water down his comedy to fit the 11:35 p.m. audience, everything would have been fine.

Let's take those arguments, in reverse order. O'Brien DID make his comedy blander and less pointed in order to avoid offending the "Tonight Show" audience. I don't think they ran the Masturbating Bear once during the last seven months, for example. I'd argue that it was removing exactly that edge that made The Tonight Show less entertaining and less interesting. In the last week, O'Brien has taken the gloves off, and his ratings have soared.

Second, the "failure" at 11:35 was hardly Conan's fault alone. NBC knew that putting Jay Leno on at 10 p.m. was going to draw away some of the older audience, and that they might not stay up later to watch O'Brien. If I recall the statistics, the average shortfall in ratings that NBC affiliates suffered by putting Leno on at 10 was 17%. That meant that a 17% lower audience was carrying over into the 11:35 time period for NBC. Of course O'Brien's ratings were lower, because he wasn't fighting on a level playing field. He had to start with the damage caused by The Jay Leno Show.

Before I skip to the first charge by Ebersol, let me bring you another quote, this time from an article last Friday in the New York Times, including a quote from Jeff Zucker, chairman of NBC Universal:

"Mr. Zucker said that it was during a phone call in the first week of January from Jeff Gaspin, NBC Universal’s head of entertainment, that he learned that the network’s affiliates were threatening to pre-empt the Leno show. 'It was becoming tough to deal with,” Mr. Zucker said. “The pressure from the affiliate body was strong.'

Mr. Gaspin’s idea was to move Mr. O’Brien’s show to 12:05 a.m., and give Mr. Leno a half-hour show at 11:35 p.m. 'That’s what he wanted to do, and I said, O.K., give it a shot,' Mr. Zucker said. The shot exploded in their faces."

Ahh, so it's Jeff Gaspin's fault, is it? If all that Zucker was doing was assenting to a plan proposed by his subordinate, why did Zucker go ballistic and threaten to not only pay O'Brien nothing but to keep him off the air for 3 1/2 years? He seems awfully invested in someone else's idea. It sounds more like Zucker is trying to make Gaspin the fall guy. Zucker was the one who came up with the plan to give The Tonight Show to O'Brien in the first place and to give Leno a show at 10 p.m. after Leno wouldn't agree to a show at 8 p.m. If he didn't originate the harebrained scheme of musical chairs starting with moving Leno back to 11:35, he most certainly approved it.

Which brings me to the "chicken-hearted and gutless" remark by Ebersol. Who's more chicken-hearted and gutless in this situation: O'Brien, standing up for himself, or Zucker, hiding behind Gaspin? For that matter, when Ebersol's Winter Olympics coverage loses $100 to $200 million for NBC, which he's said that it's going to do, I wonder who he'll blame or whether Zucker will stand up for him.

Brightcove positioning itself as a survivor?

Not too long ago, I wrote about which Web 2.0 startups would survive this recession, and one of the danger areas I pointed out was video services. The fallout is already happening, but one of the companies that's likely to survive is Brightcove. In the last few days, both The New York Times and AOL have shifted their video services to Brightcove. Like most video ventures, Brightcove started with a consumer focus, but it shut down its consumer services fairly quickly to focus on being a supplier of services to larger media companies, including Discovery Communications, 20th Century Fox, Showtime and The Wall Street Journal. It recently launched its third-generation platform. While YouTube dominates consumer video, Brightcove has become the arms dealer of choice for video infrastructure. There are other major players out there that are also doing fine, such as Comcast's thePlatform, but the outlook is bleak for consumer-oriented video sites that hope to switch to a business focus in order to ride out the recession.

The Christian Science Monitor to cease daily publication

In what's likely to be the first of a wave of fundamental restructurings in the newspaper industry, The Christian Science Monitor announced today that it will cease publication of its daily newspaper by April of next year. According to Online Media Daily, the newspaper will shift to a weekly print edition, along with a continuously updated version of its website, CSMonitor.com, and a daily electronic subscription product. There's been an ongoing debate within the Christian Science church over whether or not to keep the newspaper alive, and this strategy appears to be a compromise that will keep the Christian Science Monitor in business by shifting daily coverage to the web and dramatically decreasing costs.

Weekly newspapers are about the only bright spot in the newspaper industry, and moving from a daily to a weekly will help the Christian Science Monitor capitalize on this trend. I think that this is likely the model that many newspapers will follow--daily coverage on the web and a weekly print version. Whether that will save enough money to keep hundreds of newspapers from failing is anyone's guess, however, especially with advertisers pulling back across the board, including online.

It seems likely to me that in many markets, the job of providing daily local coverage will fall to the websites of television stations, not newspapers. The local newspapers in those markets will either have to survive as weekly lifestyle-oriented publications, or not survive at all. The strategy pursued by The Christian Science Monitor will work best for the national or quasi-national newspapers, such as The Wall Street Journal, New York Times or Washington Post.

In any case, we're witnessing the start of the final transition of print newspapers to electronic distribution, or to history.

Update: According to Advertising Age, only two of the top 25 U.S. newspapers gained circulation in statistics from the Audit Bureau of Circulation for a year-to-year six month period ending September 30th. Those two are USA Today and The Wall Street Journal, and the gains were 0.01% in both cases. Some of the other changes were The New York Times down 3.6%, the Los Angeles Times down 5.2%, The New York Post down 6.3%, the New York Daily News down 7.2%, the Chicago Tribune down 7.8% and the Houston Chronicle down 11.7%. Overall, daily circulation declined 4.64%, and Sunday circulation dropped 4.85%. In both cases, the overall rate of decline increased from the year-ago rate, which was 2.6% for dailies and 3.5% for Sunday. Not an encouraging trend.

A Lesson from Tim Russert's Death

The sudden death of NBC's Tim Russert last Friday has been covered extensively, but the details of what could have caused his heart attack are starting to emerge. According to the New York Times, Russert had a history of coronary artery disease, high blood pressure and an enlarged heart (cardiomyopathy). In particular, cardiomyopathy and coronary artery disease are linked to sudden cardiac death syndrome, where death occurs within minutes of the first symptoms of heart attack.

There's a question as to whether or not an Automated External Defibrillator (AED) was present in NBC's newsroom. According to Russert's cardiologist, in an interview on CNN, there was an AED present, but it wasn't used; according to other reports, there wasn't an AED available, and CPR was administered by an intern. In either case, by the time paramedics arrived and defibrillated Russert, it was too late. One of the big advantages of AEDs is that they sense the presence or absence of a heartbeat and only shock the heart if a shock is needed, so there would have been no risk to Russert in using it.

In any event, there's an enormous lesson in this tragic event: An AED should be in every television station and in every electronic newsgathering truck, and all full-time station employees should be trained on how to use them. AEDs can be purchased for as little as $1,000; they're cheap insurance. I'd like to see either the National Association of Broadcasters (NAB) or the Radio and Television News Directors' Association (RTNDA) get behind an effort to distribute AEDs in Russert's name. If even one life is saved with an AED, the effort will be worth it.