Bamboozled at the Revolution

Peter Wayner writes: "If you're one of the last few who believe that the numbers on your portfolio statement are any more permanent than a spring day, a sun tan, or a wink in a bar, you may want to tune into John Motavalli's new book, Bamboozled At the Revolution: How Big Media Lost Billions in the Battle for the Internet. The book follows the stumbling attempt by the old school in the media to turn their so-called power into dominance over the new domain. Numbers fly back and forth. Executives fret over turf. Dreams of glory float skywards. Yet in the end, it's just as Ecclesiastes warned: 'All are of the dust, and all turn to dust again.'" Read on below. Bamboozled at the Revolution: How Big Media Lost Billions in the Battle for the Internet author John Motavalli pages 334 publisher Viking rating 7.0 reviewer Peter Wayner ISBN 0670899801 summary Stories from the big media boardrooms and their quest to extend their dominance.

The book is an inside tale told by an insider who chronicles the frantic days when the insiders were certain that the Internet was going to change everything. In this case, the insiders were the golden boys at media conglomerates who managed through some mixture of luck, devotion, and talent to control the worlds of cable television, newspapers, magazines, and movies. In the mid 1990's, the Internet threatened to overturn their world when they realized that anyone could set up a website, turn a bedroom into a corner office, and join the media. One minute some Mom in NJ is burning spaghetti sauce, the next minute Madonna is coming over for a chat on her weblog.

Reading the book is an ideal way for Slashdot readers to stick their nose into the exclusive tent filled with media moguls. The book does an ideal job of conveying the NY mindset that the world is made up of billions of sheep just waiting for the media to tell them how to bleat. When the Internet threatens to lure some of the flock, the big guys with the big corner offices start writing checks hoping to find a way to own a piece of it.

The book is played out chronologically and begins with Time-Warner's desire to build a full-service, interactive cable system in 1993. The final epilog was probably written in April and it's already a bit dated because it went to press before the accounting upheaval at AOL. In between, the executives of the big media companies struggle to find an Internet strategy-- something that never really gels for anyone.

Motavalli documents the progression with details that matter to media executives. We learn where people went to college (Haverford, Harvard), where they ate dinner (City Grill, "a gross strip mall" in Vienna, VA that serves great pizza,), the names of their yachts (Highlander), if their offices were big (yes), and if they got along (no). All of the executives in this book are always getting irked, losing confidence, chafing at some new org chart, or jettisoning some division.

Nothing seems to work for these guys. They try merging with each other; they try pop-up ads; and they try building portals. Yet through it all, the value of advertising just keeps dropping. The more time people spend on-line, the more page views they create. That means, more viewers mean lower ad prices. Uh-oh. The law of supply and demand seems to insist that success only begets failure. How are people going to make money on-line? We may never know, because nothing except the severance packages ever work out for the guys in the corner offices. The Internet won't be tamed.

To some extent, the title of the book is a misnomer. There aren't many stories of fast talking Internet guys pulling the wool over the eyes of the old media guys, at least in the way that Lyle Lanley talked the town of Springfield into building a monorail. The media moguls knew that the Internet was going to be big and they knew they only way they could be part of it was to invest. As Bob Pittman says at the beginning of the book, the networks ignored cable channels and then woke up one day to see that the upstarts controlled the new landscape. The old school media magnates knew they had no choice and they spent freely.

The title is also a bit wrong because the bamboozled are usually outright losers, conned completely -- and that certainly hasn't happened to all of the media titans. The list of the top news sites from Jupiter Media Metrix includes plenty of old corporate names . Despite the loss of cash, some of the old media companies were able to dominate the Internet. That doesn't mean they'll stay in the business and it doesn't mean that they're making money, but no one is worrying about the Mom in NJ.

This world view is a bit myopic. It should come as no surprise that web sites like the Drudge Report or Slashdot don't make it into the conversation. This is really a book about the few guys at the top of the New York media empires and their desire to somehow, some way, get a handle on this Internet thing. Truly interactive sites like Slashdot seem to be beyond the understanding of these guys because Motavalli notes that despite the "Letters to the Editors" section, most magazine and newspapers editors don't understand how to interact with readers.

The most telling details may be what didn't make the book. Motavalli spends little time talking about the words and images on the web pages. His subjects liked to use the word "content" as an abstraction for what the little guys serve to the little sheep. No one seemed to wonder whether it was good or bad, noir or funny, juvenile or sophisticated, or anything more than pure content. Aside from an occasional note about some truly lame web site, there's little discussion about what makes a web site good.

This is too bad because a few parts of the book hint that the guys below the big guys were really struggling to find the right voice for the on-line medium. They were asking questions like whether audience liked the ability to pick and choose the video snippets in the evening news. Was an on-line soap opera compelling enough to watch every day? Was there anyone who was willing to camp out by their keyboard to be the first to access some web site? Was buying an MP3 like buying a single or a full album? Did people want one portal or many?

As anyone who's posted to Slashdot in search of karma knows, finding a way to please the crowds is not an easy task. Every artist knows that after all of the hype, all of the press, and all of the marketing, a song, a book, an article, or a Slashdot comment needs to stand alone on the stage, if only for a brief second, and live or die on its merits. Motavalli's book best contribution may be showing us how little the media big wigs cared about these moments. It wasn't about the story or the presentation or even what the sheep seemed to like. It was all about the org chart.

Peter Wayner is a writer, consultant and media mogul himself. If you're one of the sheep reading this far, you might consider consuming his latest content on secure information handling ( Translucent Databases ) or his content on steganography ( Disappearing Cryptography). You can purchase Bamboozled from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

Comments

Re:We have been SOOO Lucky!

[Golias]

It would have taken only one media magnate, back in the 1970s, to envision the possibilities, and start taking interest in, investing in, and ultimately controlling the evolution of the technology, and the internet today (and the world) would have been a totally different place.

That actually happened though. Not in the 70's, but in the late 80's and early 90's. Several companies attempted to own j00. Compuserve was the one everybody was betting on, along with AOL and few other players.

Good ol' market forces saved us from that. University students missed the open networks when they graduated from school, and Compuserve was not what they wanted. Mom & Pop stores filled in the gap, and the closed networks lost. Compuserve was bought out by AOL, then AOL dropped their network and became a vanilla ISP (which is still searching for a way to make money off all this.)

I don't think the media moguls could have pre-empted this, even if they were clueful back in the 70's. To introduce a technology, you need early adopters, in the case of the emerging Internet, that means geeks. Since the geeks prefer open networks, there was little chance of a more closed system emerging on top.

Creating Non-quantitative Shareholder Value

[Spud Zeppelin]

You are falling into the all-too-common fallacy these days (reinforced, unfortunately, by the shareholder lawsuit epidemic) that shareholder value is precisely equal to direct shareholder return. The first thing you learn in Management 101 is that there are two principal objectives to which a board is responsible:

1. Survival -- keeping the company in existence
2. Maximizing shareholder value -- for some definition of "shareholder value"

For example, Thrivent is a Fortune 500 company that is incorporated as a nonprofit: 100% of its proceeds (less allowed carryover) must be spent charitably. To that sort of organization, value maximization is exactly the opposite of what you are suggesting: it is precisely how much you can afford to give away that determines success.

Now, moving back into the Ben and Jerry's realm for a moment, consider that the bulk of Ben and Jerry's shareholders were Vermonters who supported completely the company's philosophy of community involvement because it benefitted them directly, by making Vermont a better place to live -- to them, they were receiving value from the donations in a non-quantitative form. Needless to say, there are certain tax advantages in getting your value that way rather than in dividend form as well!

Unfortunately, a lot of people tend to miss this point (particularly when they compain about taxation) in their personal lives as well; they seem to believe that only by optimizing their own discretionary income can they enhance their quality of life, when quite the contrary is in fact possible. Consider, for example, the net impact of a community filled with Lexus owners, who all agreed that they would drive Toyotas instead of Lexi [plural!?] and invest the difference in community improvements like parks and libraries -- would their quality of life be better or worse?

That said, and circling back to the original point, too much has been made of cash-oriented shareholder value, without empahsizing that a lot of that positive cash emphasis has come at the expense of creating negative shareholder value in other arenas. Consider, for example, the shareholders of the company that opts to use some inferior component as a cost savings -- but then the inferior component fails in ways that cost lives (potentially including some of those same shareholders). Things like quality of workmanship, reduced pollution, and employee satisfaction create types of shareholder value (what Adam Smith referred to as the "invisible hand" when conceiving of modern Capitalism) that the present bottom-line obsession ignores altogether; today's bottom-line-fallacy-based model ceased to be Capitalism before it ever left the barn.

Salon.com Article

[greenhide]

Scott Rosenberg wrote what I feel is an insightful review of this book at Salon.com in mid-August.

His premise was that this book went along with the media industry-held view that web content was essentially dead, and that the lesson to be learned from the whole thing was that the Internet wasn't as strong of a medium as people had once thought. A quote from the article:

That, at any rate, is how much of the commercial media world views the Internet saga. New technology thing came along. Couldn't figure it out. Seemed important. Threw a lot of money at it. Down a hole. It's over now, thank God.

And that would be the story's end, if it weren't for one stubborn fact that refuses to vanish -- instead it just sits there, center stage, after the curtain has dropped behind it, thumbing its nose at the booing crowd: The Internet itself hasn't gone away.

Scott Rosenberg contrasts Bamboozled at the Revolution with Small Pieces Loosely Joined, a collection of essays by David Weinberger. This book follow the growth of personal, non-commercial internet content and "communities of interest." "The crucial difference between these two books" writes Rosenberg, "is that Weinberger focuses on people who actually use the Net -- whereas Motavalli concentrates on people who didn't, and probably still don't."

All in all, an interesting read.

Re:why did they fuck up?

[milo_Gwalthny]

Well, big companies don't keep their books in a big, green book anymore. They have large complicated accounting systems with lots of interconnecting modules. For Sullivan to look at draft reports, determine how much less in expenses he needed to make the wall street number, weigh the increase of capitalizing some costs against the decrease of the additional amortization that this causes, decide on the (probably) hundreds of changes needed, determine the appropriate subledger, write up the journal entries and then find a terminal where he could log into the system and hand-enter these entries all by himself or with just one or two people helping him seems unlikely.

What seems likely would be him looking at the draft report, looking an underling in the eye and saying 'I think you should have capitalized a billion dollars of these line charges.' and the underling goes and has his department figure it out and do it. Meanwhile the underling rationalizes it by saying to himself 'GAAP is so darned vague on this point. It certainly could be interpreted that way.' and the underling's underlings say to themselves 'Our bosses are a bunch of morons who don't understand GAAP. Oh well, it's their asses on the line, not mine.'