A famous Oatmeal cartoon showed the cartoonist making a good faith effort to buy Game of Thrones. He finds that the show is not available on iTunes, Netflix, Amazon, or Hulu. He tries to buy HBO Go, but it's only available as an add-on to a cable package. Finally, the cartoonist gives up trying to pay for the show and pirates it through Bit Torrent. This cartoon is probably the best ever expression of the "piracy is a customer service issue" thesis.
In a way, this doesn't make any sense for HBO, which makes its money off subscriptions and would ostensibly welcome an opportunity to sell subscriptions to another market segment. HBO claims that (a) people aren't interested in a la carte HBO Go and (b) the transaction costs are too high to do their own billing, etc. The technical term for these explanations is "bullshit." Cord cutters are a relatively small market segment but a fast growing one and I think it unlikely that cable subscriptions will fully rebound when the recession ends since the issue isn't just price but convenience. Moreover, I see no reason why HBO can't handle billing and other logistical issues when the Metropolitan Opera and the NFL, not to mention Netflix, don't seem to have any trouble running their own separately billed streaming video services. Of course there are transaction costs associated with billing, but it can't possibly be anywhere close to the cost of a basic cable package.
And here we get to the real issue. It's not that HBO would like to cut out the middleman and sell to us directly, rather requiring you to buy basic cable is the whole point. Cable is a total cash cow and a more flexible business model means lower revenues. The reason is that the incumbent business model of cable combines the features of bundling (basic cable) and a two-part tariff (premium cable channels) for a perfect storm of price discrimination. For much the same reason as Disneyland could only lose money if it sold a la carte tickets to Splash Mountain for $20 without requiring $80 park admission (which includes access to Main Street, Jungle Cruise, etc), cable companies would lose money if you could buy HBO Go for $20 without first buying basic cable (which includes access to ESPN, Mtv, etc). Basically, economic theory (and some reasonable assumptions about the structure of demand) suggests that an a la carte video market could not make as much money as a bundled video market.
So, that's why the cable companies don't want you to buy a la carte HBO Go, but why is that HBO's problem? Let's contrast it with the NFL. The NFL offers standalone access because the credible threat of a streaming business model gives them more leverage to negotiate with the MSOs. In contrast, HBO doesn't want leverage because most of its sister companies are part of the basic cable ecosystem. (They used to have an actual MSO as a sister company but they spun off Time Warner Cable in 2009). Time Warner makes a lot of money from HBO subscriptions, but it makes even more money from carriage fees on CNN, Cartoon Network, and most of the cable networks starting with the letter "T." Unlike HBO (which would do well under an a la carte model) most of these other channels rely more on channel-surfing audiences than cult followings and so couldn't sell subscriptions on their own and would have to settle for something like a Hulu Plus or Netflix business model, probably with less money per subscriber and far fewer subscribers than they currently get through basic cable. Basically, cord-cutting would help HBO but devastate the rest of the company. For what is a media conglomerate profited if it gain a few hundred thousand a la carte HBO Go subscriptions, and lose its carriage fees and ad revenue? What can a media conglomerate give in exchange for its Turner and WBTVG divisions?
Time Warner more or less acknowledges in their investor report that disruptive innovation could screw them: "Furthermore, advances in technology or changes in competitors' product and service offerings may require the Company to make additional research and development expenditures or offer products or services in a digital format without charge or at a lower price than offered in other formats." This is on the first page of the "risk factors" section of the report, whereas piracy doesn't come up until the third. This order is consistent with my own reading of the industry and with the history of the recorded music industry, the proximate problem of which is not piracy but digital singles.
So basically, we can call this the "HBO has to take one for the team" model. We can get a similar result with a slightly weaker model which doesn't require long-term corporate cross-subsidization but treats HBO as autonomous from the rest of Time Warner. In the short-term, HBO itself is highly dependent on cable companies. The target market for a la carte HBO Go would be households with broadband but no cable, or about 5% of all US households. This is dwarfed by the 20% of households that have cable but no broadband. Moreover, although 70% of households have both cable and broadband, most of them aren't familiar with streaming video through set-top devices. So as a rough ballpark, let's say that half of US households have cable but either lack broadband and or wouldn't know how to use it with a set-top device (even if they already own a Blu-Ray player or game console with built-in streaming support). This means that the number of households HBO could appeal to with a la carte HBO Go are one tenth as numerous as the households they rely on cable companies to reach. And HBO does rely on the cable companies to reach these households through marketing promotions and the like. If HBO figures that angering the cable companies could cost them even a small fraction of these households then they're better off alienating Matthew Inman and myself rather than angering Comcast. The same logic explains why Netflix is interested in creating a cable channel and recent rumors that Hulu will switch to the HBO Go business model.
Of course for the cable companies to punish HBO would require them to forgo their half of HBO subscription revenue. This sounds like cutting off your nose to spite your face but that's not unheard of, especially if doing so deters your face from pissing you off again by flirting with a disruptive business model. We see a similar dynamic with how theatrical exhibitors react whenever movie studios suggest closing the video release window from its current 17 weeks. (Ironically in this scenario it's the cable companies who are the innovators trying to disrupt the stodgy incumbents). For instance last year, Universal floated the idea of experimenting with tightening up the pay-per-view window for Tower Heist. The theaters were livid and threatened to boycott the test film. This despite the fact that the experiment was on ridiculously unappealing terms to the consumer: $60 to watch a mediocre film three weeks after theatrical premiere and that's only if you live in Atlanta or Portland. Ultimately Universal backed down, deciding it was better to keep their old trading partners happy than try to develop new ones.
(By the way, I'm sure you'll agree it's a total coincidence that Universal was bought by a cable company shortly before the Tower Heist incident. Similarly, a total coincidence that this same cable company has a history of playing hardball with internet companies that offer infrastructure for streaming video services that compete with cable TV).
All that is to say I can understand why HBO Go isn't available yet to cord cutters. Still, let's say that tomorrow HBO starts offering standalone HBO Go subscriptions (as I sincerely hope it does), how would I explain that? I could see this happening if HBO decides that the transition will happen eventually and it is better to do it while they can still do so favorably. We saw a similar dynamic ten years ago with the recorded music industry, which acceded to a low price point digital singles market as it saw its market share eroded by piracy, but only moderately so. In 2003, when the record labels agreed to participate in iTunes, unit sales were down about 15% from the pre-Napster peak, which wasn't fun but also wasn't catastrophic. Most people were still buying CDs when the record labels agreed to a legal digital singles market that would eventually destroy the CD market. They did so in order to transition consumers to a new model before most of us had fully committed to piracy. It's a lot easier to get someone to buy singles for $1 if they're used to buying CDs for $15 than if they're used to pirating singles for nothing. Similarly, as the number of cord-cutters increases this will be an increasingly attractive market for HBO, and not just because it can get these people as customers but because it can keep them from developing the habit of pirating content that isn't promptly made available through legitimate streaming markets. We may not be at that point yet, but I wouldn't be surprised if we reach it before HBO runs out of Fire and Ice novels to adapt.
The paper of record’s inaccurate reporting on a nonexistent criminal investigation was a failure that should entail more serious consequences.
I have read The New York Times since I was a teenager as the newspaper to be trusted, the paper of record, the definitive account. But the huge embarrassment over the story claiming a criminal investigation of Hillary Clinton for her emails—leading the webpage, prominent on the front page, before being corrected in the usual, cringeworthy fashion of journalists who stonewall any alleged errors and then downplay the real ones—is a direct challenge to its fundamental credibility. And the paper’s response since the initial huge error was uncovered has not been adequate or acceptable.
This is not some minor mistake. Stories, once published, take on a life of their own. If they reinforce existing views or stereotypes, they fit perfectly into Mark Twain’s observation, “A lie can travel halfway around the world while the truth is putting on its shoes.” (Or perhaps Twain never said it, in which case the ubiquity of that attribution serves to validate the point.) And a distorted and inaccurate story about a prominent political figure running for president is especially damaging and unconscionable.
A newly discovered artifact buried with one of Jamestown’s most prominent leaders suggests he could have been a crypto-Catholic.
After 400 years in the Virginia dirt, the box came out of the ground looking like it had been plucked from the ocean. A tiny silver brick, now encrusted with a green patina and rough as sandpaper. Buried beneath it was a human skeleton. The remains would later be identified as those of Captain Gabriel Archer, one of the most prominent leaders at Jamestown, the first permanent English colony in America. But it was the box, which appeared to be an ancient Catholic reliquary, that had archaeologists bewildered and astonished.
“One of the major surprises was the discovery of this mysterious small silver box,” said James Horn, the president of the Jamestown Rediscovery Foundation. “I have to say, we’re still trying to figure this out. You have the very strange situation of a Catholic reliquary being found with the leader of the first Protestant church in the country.”
Has the Obama administration’s pursuit of new beginnings blinded it to enduring enmities?
“The president said many times he’s willing to step out of the rut of history.” In this way Ben Rhodes of the White House, who over the years has broken new ground in the grandiosity of presidential apologetics, described the courage of Barack Obama in concluding the Joint Comprehensive Plan of Action with the Islamic Republic of Iran, otherwise known as the Iran deal. Once again Rhodes has, perhaps inadvertently, exposed the president’s premises more clearly than the president likes to do. The rut of history: It is a phrase worth pondering. It expresses a deep scorn for the past, a zeal for newness and rupture, an arrogance about old struggles and old accomplishments, a hastiness with inherited precedents and circumstances, a superstition about the magical powers of the present. It expresses also a generational view of history, which, like the view of history in terms of decades and centuries, is one of the shallowest views of all.
The new version of Apple’s signature media software is a mess. What are people with large MP3 libraries to do?
When the developer Erik Kemp designed the first metadata system for MP3s in 1996, he provided only three options for attaching text to the music. Every audio file could be labeled with only an artist, song name, and album title.
Kemp’s system has since been augmented and improved upon, but never replaced. Which makes sense: Like the web itself, his schema was shipped, good enough,and an improvement on the vacuum which preceded it. Those three big tags, as they’re called, work well with pop and rock written between 1960 and 1995. This didn’t prevent rampant mislabeling in the early days of the web, though, as anyone who remembers Napster can tell you. His system stumbles even more, though, when it needs to capture hip hop’s tradition of guest MCs or jazz’s vibrant culture of studio musicianship.
The agreement doesn’t guarantee that Tehran will never produce nuclear weapons—because no agreement could do so.
A week ago I volunteered my way into an Atlantic debate on the merits of the Iran nuclear agreement. The long version of the post is here; the summary is that the administration has both specific facts and longer-term historic patterns on its side in recommending the deal.
On the factual front, I argued that opponents had not then (and have not now) met President Obama’s challenge to propose a better real-world alternative to the negotiated terms. Better means one that would make it less attractive for Iran to pursue a bomb, over a longer period of time. Real world means not the standard “Obama should have been tougher” carping but a specific demand that the other countries on “our” side, notably including Russia and China, would have joined in insisting on, and that the Iranians would have accepted.
Orr: “Sometimes a thing happens. Splits your life. There’s a before and after. I got like five of them at this point.”
This was Frank offering a pep talk to the son of his murdered former henchman Stan in tonight’s episode. (More on this in a moment.) But it’s also a line that captures this season of True Detective so perfectly that it almost seems like a form of subliminal self-critique.
Remember when Ray got shot in episode two and appeared to be dead but came back with a renewed sense of purpose and stopped drinking. No? That’s okay. Neither does the show: It was essentially forgotten after the subsequent episode. Remember when half a dozen (or more) Vinci cops were killed in a bloody shootout along with dozen(s?) of civilians? No? Fine: True Detective’s left that behind, too. Unless I missed it, there was not a single mention of this nationally historic bloodbath tonight.
Even with the overwhelming recent New York cover story, the women pay a price for speaking out.
Who still defends Bill Cosby? After newly unsealed depositions revealed that the comedian admitted to acquiring sedatives to give to women he wanted to have sex with, his longstanding backer Whoopi Goldberg recanted her support for the man accused of dozens of rapes over the years. The singer Jill Scott, too, said she was wrong when she suspected a media conspiracy against him. And if Cosby’s former costars, including Phylicia Rashad, still believe him to be the target of an illegitimate smear campaign, they haven’t spoken up to say so in a while. Cosby’s lawyer is currently making the rounds in the media to say his deposition has been misconstrued—but that argument, even if believed, doesn’t refute the idea that he used drugs to take advantage of women.
This is the third in a series. Readers are invited to send their own responses to firstname.lastname@example.org, and we will post their strongest critiques of the book and the accompanied reviews. (The first batch is here.) To further encourage civil and substantive responses via email, we are closing the comments section. You can follow the whole series on Twitter at #BTWAM and read all of the responses to the book from Atlantic readers and contributors.
Several years ago, Ta-Nehisi Coates took his son, not yet 5, to see a movie on the Upper West Side of Manhattan. As his son made his way off the escalator, a white woman pushed him and said, “Come on!” Chaos ensued. There was a black parent’s rage and a white man’s threat to have the black parent arrested. Coates narrates the incident in cool, steady prose. Ultimately, he writes of the regret he carries: “In seeking to defend you I was, in fact, endangering you.”
U.S. officials are turning to Russia for help with Iran and Syria, even as the Ukrainian conflict persists.
If you believe all the talk out there lately, Vladimir Putin is not only duplicitous and hypocritical—the Russian president’s also been pretty damn busy recently. Busy cutting secret deals with the same Europeans and Americans he has been vilifying for years. And if you believe the rumors, the Europeans and Americans have also been busy selling out Ukraine to the Russians.
Not that any of this would be unusual or particularly surprising. Cynicism, duplicity, and hypocrisy are often the reserve currencies of politics, where interests tend to trump values.
There have long been suspicions that the United States and Europe might give Ukraine up in exchange for Russia’s support in securing a deal to curb Iran’s nuclear program. Additionally, Washington has been seeking Moscow’s backing in securing a managed, orderly, and negotiated exit for Syrian leader Bashar al-Assad, which would go a long way toward ending the conflict in that country.