The media industry mantra “Content is king” once reflected the legacy industry’s power to dictate terms of media consumption through oligopolistic distribution and pricing. But technological change has undermined content control, and so at last many in the media industry are acknowledging a new ruler: the audience. Fortunately, the audience has an insatiable demand for content. Hurrah: long live content the king!

I saw this shift in industry discourse first hand at the 2012 and 2014 Time Warner’s Thought Leadership Faculty Seminars. As I previously reported, presenters in the July 2012 seminar insisted that TW was committed to “bolstering the ecosystem,” that is, the old business models. I saw presentations on the evils of “piracy” and the importance of physical media (DVDs), and I heard confident predictions that time-shifting millennials will enjoy linear viewing and commercial interruptions once they get a bit older.

TW executives toed a different line in July 2014. Opening the seminar, the Warner Bros. Senior Advisor of Media Research explained that TW executives are kept awake at night worrying about how “to protect our assets” from the “volatility of the media ecosystem.” Rather than sustain the “status quo” (translation: fight a rear guard action against change), TW must adapt to the “disruptive forces that challenge our business models.” Within the past decade TW has shrunk from a behemoth conglomerate to only three companies: HBO, Turner, and Warner Bros. Reducing its dependence on advertising revenues by spinning off Time Magazines and AOL, TW is now a “pure content play,” which will, executives claim, continue to thrive however distribution platforms evolve. HBO, as one of these executives baldly announced, plans to “feed the addiction” for its content. HBO’s recent deal with Amazon may indicate it is studying Amazon’s strategies for building consumer dependency.

When asked about the threat of piracy, the HBO executive neatly “pivoted” to piracy’s value as a form of market research: “Our learnings are that hits drive pirating behavior; hits attract pirates; and if we can convert pirates to paying customers, maybe one in ten, that will add up to real dollars.”  Another TW executive described a new “consumer friendly” approach to handling unauthorized access to content. “We want to give consumers easier access,” she explained, because “that’s where innovation is going on.” So TW is “piloting in the sand, not in concrete, because the world is changing.” TW wants to be flexible enough to follow consumers wherever they go (although the metaphor of sand seems an unfortunate one).

Though they conceded that young viewers timeshift, TW executives still insisted on the primacy of scheduled linear viewing, pointing to the “water cooler” value of Game of Thrones episodes. The HBO executive noted that social media chatter spikes when an episode is first released, then trails off. To “manage this conversation” and “keep subscribers engaged over time,” HBO simply has “too much investment in shows to release all episodes at once,” Netflix-style. HBO’s subscription strategy depends on an artificial scarcity of episodes (“We want to retain subscribers”), possibly because HBO is still dependent on MSOs to deliver their customers. Recently, however, TW CEO Jeff Bewkes has openly noted that HBO is trying to become more like Netflix, not the other way around, indicating a possible shift away from the strategy of content withholding.

A CW executive explained the changing economics of television advertising. In 2012, TW executives insisted that online (“digital”) episodes should have the same ad load as linear TV. Advertisers, however, were reluctant to pay for online viewership without the demographic data Nielsen supplies for linear viewership. In 2014, knowing the majority of its young audience timeshifted on digital platforms, the CW partnered Nielsen and Doubleclick data to prove that at least half of their digital viewers were the targeted 18-34 year olds. By offering to charge advertisers only for the 18-34 year olds (in other words, providing a 50% discount), the CW was able to sell more ads, doubling the ad load per episode, and thus to come out even. The CW also offered advertisers more buying flexibility. Most networks force advertisers who want to buy time on a top-rated program to buy time also on a lower-rated one; the CW allowed advertisers to buy only on the programs they wanted. The CW executive noted, however, that viewing and click-through metrics for digital commercials seemed to have much more to do with the quality of the commercial “creative” (the ad idea and execution) than with the quality of the program interrupted by that commercial. All these changes favor the advertiser, not the audience: eschewing policies such as YouTube’s True View, in which audiences may skip a commercial, the CW, like most of the rest of the television industry, continues to search for the holy grail: a technology that makes everybody watch the commercials.

Warner Bros. Home Entertainment, once the revenue powerhouse driving DVD sales, is now focusing on how to take TW film and TV content and “monetize it downstream.” Noting that physical media is a dying market, a Home Entertainment executive explained the new strategy of “electronic sell through.” In 2012, WB promoted Ultraviolet, a difficult-to-use digital service; in 2014, WB is simplifying consumer sharing experiences (although the “legal team is nervous”) and experimenting with social media, online communities of fans (WB A-list), and “long tail” content (WB Archive Instant has “rabid fans”).

Although the Time Warner Thought Leadership Faculty Seminar is designed by its media research executives, and so reflects only one company’s views, I recommend that scholars interested in learning more about the changing media industries attend these free events. Unlike trade press articles or industry conferences, they allow us to ask questions directly of industry executives, who likewise may benefit from hearing our perspectives. The 2014 seminar ended with TW executives making a plea for collaborative research with academics: as one executive put it, professors can research “longer term future ideas” that TW can’t get to because they “have to deal with today.” Whether or not we choose to collaborate with TW, this two-day seminar can teach us a lot about how such a legacy media conglomerate is hoping to transform disruption into “opportunity.”

1) The NFL season kicks off this week, but the organization has been in the news for less-positive reasons as of late. First, ESPN cut ties on an upcoming collaboration with PBS’ Frontline for a special investigating concussions (“League of Denial: The NFL’s Concussion Crisis”) after allegedly bowing to pressure from the NFL, an accusation ESPN denies. The special was meant to include ESPN images and logos in a co-branded production. While it is not clear exactly why ESPN pulled out, though ESPN president John Skipper claims his viewing of a promotional trailer that appeared “sensational” made him turn sour on the deal. PBS plans to move forward with the special, condensing the two-part series into a single broadcast backed by a massive media blitz. While the NFL can deny involvement in ESPN’s decision, they cannot deny the recent $765 million settlement to thousands of former players over long-lasting injuries (including Alzheimer’s, dementia, and encephalopathy) caused by concussions. The agreement avoids the hassle of addressing all the individual claims, but may set a wide-reaching precedent for future lawsuits against them or in other sports.

2) Turning to what I’m calling the “Story of the Summer,” Time Warner and CBS are still fighting over retransmission fees, with the CBS blackout in three major markets lasting over a month hurting consumer perception of both brands. In the meantime, CBS has extended its deal with Verizon’s FiOS, with CBS CEO Les Moonves claiming Time Warner Cable has been offered and rejected a similar deal. There was a brief détente when Time Warner agreed to suspend the blackout in New York City for the airing of two high-profile political debates, making this the biggest news a comptroller debate has ever made (Thanks, Spitzer!). Both sides have taken strides to curry favor, with Time Warner offering a free preview of the Tennis Channel during the U.S. Open as well as offering free antennas, as well as providing a $20 credit through Best Buy to buy their own. CBS, on the other hand, has begun airing ads in the three major markets featuring NFL stars Peyton and Eli Manning emphasizing the lack of NFL coverage should the blackout continue. And if you are wondering what the FCC is doing, they have finally stepped up to help end the dispute in a limited capacity.

3) From the “Story of the Summer” to the unofficial “Song of the Summer” (though I give it to Daft Punk if only for the Stephen Colbert clip), Robin Thicke’s “Blurred Lines” has come under attack from the estate of Marvin Gaye over the song’s similarities to “Got to Give it Up” and Funkadelic’s “Sexy Ways,” leading the song’s producers (Thicke, Pharrell, and T.I.) to file a pre-emptive lawsuit. Thicke’s side offered a six-figure settlement, which Gaye’s family allegedly declined. You can judge for yourself, with this YouTube mashup featuring a guy’s cat playing with fish:

4) Speaking of YouTube and copyright infringement, Lawrence Lessig has filed a lawsuit against Liberation Music Pty Ltd after a video of a lecture of his featuring a set of clips to the song “Lisztomania” by Phoenix was taken down from YouTube with the claim it violated Viacom’s license. The founder of Creative Commons is now fighting for the very thing his organization strives for: more open creative uses of licensed content.

5) Ok, one more music-based lawsuit. Satellite radio powerhouse SiriusXM is being sued for compensatory damages by SoundExchange (a nonprofit music royalty collector), alleging SiriusXM has been underpaying copyright owners, especially those from pre-1972 recordings. The suit claims between $50 million and $100 million in back payments. In a hilarious quote from SoundExchange’s attorney, he states, “This is serious. Pardon the pun.”

6) Another large lawsuit just ended, with the MPAA winning its copyright infringement case against cyberlocker Hotfile, a site that allows for the uploading, storing, and then downloading by other parties of copyrighted material. This looks to be a landmark case, as it is the first time a US court has held a cyberlocker like this accountable for copyright infringement.

7) In an update on the Fox Searchlight/intern lawsuit from a few months back, in which interns on the film Black Swan filed a class action suit for fair labor, Fox Searchlight has won the next battle, with the judge granting a limit on the time period others can join the suit, limiting the scale Fox will have to deal with and possibly pay/settle.

8) One last lawsuit, I swear. In this one the newly launched Al-Jazeera America is suing AT&T for not carrying the network for its U-Verse subscribers. Al-Jazeera America is claiming AT&T wrongfully terminated an existing contract that existed prior to Al-Jazeera’s purchase of Current TV possibly for religious reasons, with the high number of U-Verse subscribers in conservatives states in the South.

Because it is a slow news time, here are two silly stories to lighten the mood as summer unfortunately comes to an end.

9) Hopefully you have been following Jason Mittell’s weekly feature here on Antenna, Breaking Bad Breakdown. If so, you’d be happy to hear that after last week’s episode, the Mexican restaurant featured prominently in one scene (Garduno’s Dip) reports a surge in orders for table-side guacamole (It’s made in front of you!), due in no doubt to the server in the episode’s insistence upon its deliciousness.

10) In an update to our last edition’s story of Michael Jackson’s glove, which the US is currently suing for against the son of the dictator of Equitorial Guinea, I am pleased to report that while the case is far from over, the US will get to retain the glove during the trials proceedings. U.S.A! U.S.A! U.S.A!

1) Apple has lost an antitrust lawsuit brought by the Department of Justice in a ruling that found Apple to have colluded with five major book publishers in an effort to raise e-book prices. To summarize Apple’s actions, they helped push the e-book publishing market from a “wholesale” model to an “agency” model, “where publishers set the price and Apple got a fixed percentage of the sale price.” This was all part of Apple’s attempts at undercutting Amazon, who have dominated the e-book sales, having once held 90% of the market. A hearing has been set for August 9 to discuss remedies/damages, but Apple says it is already planning an appeal.

2) Just what is happening at Hulu? After weeks of buyer speculation, with recent reports claiming a final group of four buyers (including DirecTV and Time Warner) were making moves to finalize a deal, the sale was called off entirely. The current owners, 21st Century Fox, NBCUniversal, and Disney, claimed the final offers didn’t meet their expectations and have come to a unified strategy. However, reports claim the three owners are considered bringing in more partners, with Time Warner Cable being a potential front runner. Who knows what will happen, as Hulu has been placed on and taken off the auction block before.

3) Speaking of Time Warner, they have some bigger issues at hand as their deal with CBS for retransmission ended in June, and the #1 network is asking for a huge increase in fees. The behind-the-scenes negotiations have spilled out into public threats by CBS to pull the plug, using the threat of blackouts to pressure Time Warner into giving in, claiming in a new ad blitz that Time Warner is, “threatening to hold your favorite TV shows hostage and drop CBS.” While currently nothing has been done, public outcry of blocking a free-to-broadcast channel could lead to FCC or Congressional action.

4) After recently deciding to cut ties with Warner Bros. after eight years, Legendary Pictures has come to a new distribution (and co-financing/marketing) deal with NBCUniversal. The new five-year deal will begin in 2014, following Legendary’s focus on tentpole action films which they hope to leverage with Universal’s theme parks and other cross-promotional opportunities.

5) The announcement and reveal of Rolling Stone’s August issue generated massive controversy, as the cover depicts alleged Boston Marathon Bombing suspect Dzhokhar Tsarnaev and has drawn comparisons to the similar style of framing as their celebrity-laden covers. The cover and the surrounding controversy has led to multiple retailers refusing to carry the issue including Kmart, CVS, Walgreens, Rite Aid and some 7-Eleven stores. The city of Boston has responded as well, with college bookstores taking varying degrees of bans/display and mayor Thomas Menino writing to Rolling Stone’s publisher bemoaning the cover that “rewards a terrorist with celebrity treatment” rather than focus on the survivors.

6) Following last week’s news of the departure of President of Interactive Entertainment Don Mattrick, Microsoft has now detailed a organizational realignment which sees Julie Larson-Green, formerly the head of Windows, becoming the head of a new entertainment-focused group that includes all hardware development, games, music, and video. This shift comes at a crucial time for Microsoft with the release of the XBox One later this year, stuttering Surface tablet sales, and the PR snafu of the new XBox policies and their subsequent reversal.

7) Following the lead of News Corp. and Time Warner, Tribune has announced plans to separate its publishing and broadcasting divisions that will see the Tribune Publishing Co. take control of its eight newspaper holdings, while Tribune Co. will retain the local TV stations, WGN America, and stakes in Food Network, digital and real estate assets. The spin off is meant to allow both companies to retain greater focus and tailor operational strategies to better suit their mediums. Some are wondering if this means a potential selling of either new company in the future, as Tribune is not publicly traded.

8) Although Google, Microsoft, Yahoo, AOL, and other advertising network managers recently unveiled a set of voluntary “best practices” to help fight copyright infringement, the Motion Picture Association of America (MPAA) does not think it is enough. The anti-piracy plan calls for the networks to respond to copyright holder complaints with a dedicated contact person. The ad network would then lead an investigation to decide whether to contact the site, deny ad placement, or simply remove the site from the network. MPAA chairman Chris Dodd claims this only addresses a small part of the problem while placing too much burden on the rights holders… like the people in the MPAA.

9) In a follow-up to reports a few weeks back regarding the shutting down and then reopening (a less-staffed) Greece public broadcasting station, the Greek government has now launched a new network, Greek Public Television (EDT), to take over for the Hellenic Broadcasting Corporation (ERT). ERT’s staff is now opposing the new channel, demanding a re-opening of the original broadcaster.

10) Aereo has won again at the courts, as a U.S. appeals court has declined to rehear the case brought by major broadcasters like Disney’s ABC and Comcast’s NBC. The broadcasters claim Aereo (an online television start-up that retransmits over-the-air networks) infringes copyright, but courts refused to shut down Aereo at a hearing back in April. The larger cases (CBS Broadcasting Inc et al v. AEREO Inc and WNET et al v. AEREO Inc) are still being decided, but for now, Aereo will stay on the… online.

Ten (or more) media industry news items you might have missed recently:

1) Surprisingly, the biggest news items of the past two weeks come from the ‘dying’ world of publishing. The ‘Time’ in Time Warner is officially breaking off as Time Warner has announced a split with its magazine division, Time Inc. The spin-off will make Time Inc. an independent, publicly traded company, currently the number-one magazine publisher in the U.S, featuring People, Sports Illustrated, Forbes and of course, Time. But Time Warner isn’t the only conglomerate making bold publishing moves, as News Corp. is creating a new publishing-focused company, still named News Corporation, granting it a healthy starting-allowance of $2.6 billion. This has led to multiple reactions from the industry with fears of possible layoffs at Time.

2) Staying in the world of magazines, Next Issue Media has expanded beyond Apple to launch on Windows 8 and Microsoft products like the Surface. Following a subscription model for unlimited access to over 80 magazines, Next Issue has been called both ‘Hulu’ and ‘Netflix’ for magazines. (The jury is still out on which one we are all going to call it. Post your suggestions in the comments below!) CEO Morgan Guenther is aiming for 1 million subscribers in the next 18 months.

3) Back to battling conglomerates, new information in the legal battle between Cablevision and Viacom has come to light. To catch you up, at the end of February, Cablevision filed an antitrust suit against Viacom, arguing against the mass media giant’s method of bundling its less performing cable networks with must-watch ones claiming, “The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong,” in what may very well be the least self-aware statement ever made by a corporation. Now, Cablevision is claiming Viacom was threatening a $1 billion penalty if Cablevision refused the lower-tier networks. More on this irony as it develops.

4) The release of EA’s highly anticipated reboot of the SimCity video game franchise may go down as one of the biggest disasters in the industry’s history (though nothing touches the unforgettable landfills of Atari E.T. cartridges). Utilizing EA’s already highly controversial always-online DRM protection, SimCity became unplayable for thousands of players due to server issues and shut-downs. An alleged EA employee blasted the company on Reddit, expressing frustration and disappointment over the launch. EA responded by increasing server capacity and offering a free game, but many have not been assuaged, especially after computer modders/hackers revealed the game can function offline, but EA refused to allow that capability despite the massive amount of server failure.

5) In more video game news, the Entertainment Software Ratings Board (ESRB) and the Entertainment Software Association (ESA) have announced a new campaign to educate parents on the industry’s ratings system and parental controls. This comes as a response to increased media scrutiny, particularly in the possible connection between video games and violence in teens and young adults. In a related move, the ESRB has changed its policy on game marketing, following a model similar to Hollywood in that publishers may show trailers for Mature (M) rated games to a wide audience, as long as a green slate (a la movie trailers) precedes the footage.

6) Hulu’s future is in question, as Disney and News Corp. are discussing strategy for the online streaming service, with the implication begin one may buy out the other’s stake (which would be another third. The final third is primarily owned by Comcast, who is barred from management decisions to a federal regulatory agreement). The talks appear to be centered around the companies’ divergent views on Hulu’s primary operation, with News Corp. favoring the paid subscription model of Hulu Plus while Disney wants to focus on advertising-based revenue from free streaming.

7) News from the ‘upfront-line’: upfront season has begun! Cable and smaller broadcasting divisions have already begun the annual process of selling airtime to advertisers. Two of the more newsworthy reports come from NBC News Group, where Matt Lauer joked about recent negative reports on his image and Today’s slipping ratings, and Disney Kids, pushing the use of multi-screen viewing patterns and, much more importantly, the upcoming summer spin-off “Girl Meets World.” We demand Mr. Feeny!

8) At the box office, the past two weekends played Jekyll and Hyde for Hollywood, providing them their first flop and first mega-success of 2013. Two weeks ago, Jack the Giant Slayer brought in an estimated $28 million domestically, just 14% of its nearly $200 million budget, though it shows promise in Asia. Last weekend, however, Oz: The Great and Powerful proved to be just that, bringing in over $80 million domestically and $150 million globally. While this is good news for a Disney, who started planning for a sequel before Oz‘s release, it is better news for the entire domestic box office, as current year totals are 17% behind 2012.

9) Unionized healthcare workers at the Motion Picture Television Fund hospital stated their intention to strike for three days starting this Monday, March 18. MPTF responded with intentions to hire replacement workers for the strike. Talks fell through this past Wednesday, and the union plans on following through with their strike.

10) A new study from Carnegie Mellon‘s Initiative for Digital Entertainment Analytics, published on March 6, draws the conclusion that since the shutdown of piracy-giant Megaupload, legal digital movie sales and rentals have increased, drawing a distinct correlation. Their findings show, “a positive and statistically significant relationship between a country’s sales growth and its pre-shutdown Megaupload penetration.”

And finally, The Silly Side, the news stories too inane not to share:

• A countersuit has been filed over the Fifty Shades of Grey porn parody (Fifty Shades of Grey: A XXX Adaptation). Smash Pictures (really) is claiming Universal’s lawsuit is unjustified on the grounds that due to its being originally published online as part of a fan fiction series, it is technically in the public domain.
• Please don’t turn off your smartphones. App, a new horror film from the Dutch studio 2CFilm, involves utilizing a free interactive app movie-goers can use during the screening, that adds complimentary information and scenes that are activated by audio cues in the film.
• Russell Crowe saw a UFO and posted a video of it. That’s really all I have to say about that.

Occasionally media companies also organize these programs. Last week I attended Time Warner’s “College Professors Thought Leadership Seminar,” focused on media research, at their new Media Lab in New York City. Presenters included vice presidents of media research from Turner, HBO, Warner Bros. Entertainment, and Time.

Halfway through the program, our MC announced that much of the research material is “proprietary” and should not be “shared” publicly. His comment shows the tension within the media industry between promotion on the one hand, and control on the other. For TW, educational aims don’t square perfectly with competitive aims. Of course I feel no such conflict.

The presenters emphasized TW’s commitment to “innovation” and “unparalleled passion for storytelling.” But they confessed also to an interest in “bolstering the ecosystem,” which eventually emerged as their main objective. In fact TW’s chief innovative strategy is TV Everywhere, the plan to restrict online program access to subscribers to cable and satellite video services. And what recommends it to company executives is precisely its supposed ability to “extend an existing successful business model” and discourage “cord cutting” (i.e., canceling multichannel video subscriptions). The industry’s dogged, perhaps panicked, insistence that its business model will survive social and technological change was one of the most instructive features of the seminar.

The Turner VP presented studies from 2008 and 2010 “proving” that audiences will sit through as many ads in online video as in linear television (non-timeshifted viewing). In these studies, more ad interruptions did not lower the viewing rate. When I suggested these studies predated the rise of Netflix, an ad-free streaming option, this executive remained serene. Audiences won’t change, he insisted, and everybody in the industry is “happy” with the interrupting ad model. I am skeptical, however, that the audience will share the industry’s contentment.

The HBO representative bemoaned his company’s lack of access to customer information, which is held by multichannel video providers (cable operators, DBS, telcos). HBO depends on those providers for marketing HBO subscriptions and so is reluctant to break from that “ecosystem,” despite evidence that there may be a market for freestanding OTT (over-the-top or streaming) HBO GO subscriptions. That HBO is reluctant to break from its providers, despite being well positioned to compete with Netflix in the OTT “space,” indicates the depth of resistance in the cable industry to such a possibility.

Famed media researcher Betsy Frank presented a biometric study in which participants wore belts measuring heart rate and respiration, and glasses with tiny POV cameras. While the study demonstrated the fragmented attention spans of “digital natives,” it left open the question of whether sustained attentiveness is a consequence of the technology used or the maturity of the users. Every media shift has produced hand-wringing over youthful attention spans; is multi-platforming a new behavior or just a newly measurable behavior?

Warner Bros., one of the largest television program production companies, also syndicates programs to local broadcast stations and cable networks. Such programs include off-network shows, such as reruns of Friends and Big Bang Theory, and first-run shows, such as Ellen and TMZ. This presenter explained that “syndication” is an old media term: they have renamed themselves “WB Branded Networks” because they offer, along with the usual episodes and 30-second spots, the opportunity to integrate advertising into these programs using three strategies. When, say, clips of Big Bang characters eating hamburgers are wrapped around a commercial for Burger King, we have “contextualization.” When a week of episodes is “themed” around an advertiser, we have a “brand takeover.” When the ad is integrated directly into the program, we have “branded entertainment.” Ellen DeGeneres, for example, promoted Ore-Ida sweet potato fries during her talk show not only with an ironic, Arthur Godfrey-inspired pitch, but also with a tongue-in-cheek dance routine using dancers costumed as giant sweet potato fries:

Integrations are as old as broadcasting itself. The inspiration for the Ellen integration is probably this 1952 example for Old Gold cigarettes:

But the Ellen integration relies on irony to disarm audience resistance to the shill.

Much more can be said about TW’s seminar, but I hope I have inspired some readers to take advantage of these industry programs. While TW may expect educators to follow its “thought leadership,” in fact industry programs give us the opportunity to develop our own informed critiques of media industry strategies.