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

why did they fuck up?

[garcia]

Greed.

My gf is taking a finance class this semester. She was disturbed by the fact that the first chapter talked about how awful it was that Ben and Jerry's like to give away a ton of money to charity, etc.

Greed.

Re:why did they fuck up?

[pubjames]

I see this as a social problem with the USA today.

Society has become obsessed with being rich and people think money is more important than anything else. It's not.

The bad thing is that this is making a lot of people very unhappy. If you read one of the latest Ask Slashdots "If You Didn't Need Money, What Would You Do?" it's amazing that a lot of people list thing that are really simple, and things they could do now, like working on a farm or spending a lot of time fishing or whatever.

It's an argument I am forever having with some of my friends who are unhappy with their jobs. I ask them, what would you do if you could do anything? The finance guy says he would like to be an interior decorator, the IT guy that he would like to be a gardener. And I say, so why don't you do that then? And they say they couldn't possibly because it wouldn't pay enough. To me it's an idiotic mentality - these people are prepared to spend thiry years of their lives doing something they don't really like just because of the money.

Thankfully I realised very early on in my career that the most important thing is to do what you enjoy, not the money. Unfortunately I think people like me are in the minority.

Re:why did they fuck up?

[Jester99]

Well, when they say "live on the farm" or "be an interior decorator," they're only telling you half the story.

What they really mean is "keep the large car, fancy vacation, and everything else they have, but ditch the high pressure job and work on the farm."

You're right. They could become farmboys tomorrow if that was all that they wanted. But, they want two competing things -- a simpler job, but the lavish lifestyle. And in their minds, the latter weighs heavier than the former. It's just a choice one has to make for him or herself.

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.'

Misattribution

[Hayzeus]

...it's just as Ecclesiastes warned: 'All are of the dust, and all turn to dust again.'

I'm sorry, but I believe it was the 70's rock group, Kansas, that actually said this.

Either that or this Ecclesiastes dude just totally ripped them off...

Re:Misattribution

[tempest303]

I like seeing Ecclesiastes quoted once in a while. It's an incredible work that most Western Christians (or even people who are neither Christian nor Jewish, but interested in theology) don't seem to pay nearly as much attention to as it deserves.

I couldn't agree more. I haven't been Christian for a very long time, but I have always held that particular book of the Bible in the highest regard. Talk about old school existentialism - this stuff beats Sartre by 2000 years. :-) And yet, unlike Sartre or Camus, Ecclesiastes isn't hopeless - rather a lesson in humility that is often unfortunately ignored. While most religions could really use a good reading of Ecclesiastes, I find it sad that most Christians themselves have very little, if any knowledge, of that particular book. My respect goes out to any priests/pastors/reverends/etc that manages to even halfway-successfully preach a sermon on Ecclesiastical wisdom in a modern Christian church.

it's because they don't understand their customers

[LinuxWoman]

Non-geeks started getting on the internet and BBS's because there THEY and not the media controlled the content - what they viewed, when they viewed it, even how it got presented.

Big media when they realized the web would be a lasting media realized that they'd better hurry up and get involved, but they did so incorrectly and too late. They came in expecting they could force us to stick with their basic "this is your entertainment whether you like it or not" just like they do with TV, newspapers, radio, etc.

For example, I recently moved to a small, isolated town and I'm about to fork out the money for sattelite radio for my car. I have 3 choices for music - country, heavy metal or 2 top 40 stations that I refer to as "all Britney all the time". What happened to choice? It's not like the people here are listening to that because they want to - I know a huge number of people that would kill for an alternative station - but someone somewhere decided that's all the music we need. Most offices I've been in listen to internet radio because that way they have a choice in what they hear.

RIAA is mad mostly because they've figured out we pick music they're not trying to push down our throats. Corporations are mad because suddenly we're posting our opinions where they can be seen. People are exercising their freedoms and all of a sudden media types are realizing they don't have the control they thought they had. Too bad.

We have been SOOO Lucky!

[heretic108]

About the only reason the Net is quasi-democratic today, and why it isn't *only* a marketing force-feed to disempowered consumers, is timing and surprise.

The traditional media playing field is a sheer vertical cliff, but the Internet turned out to be merely a steep hill.

Why?

Because decades before the net attracted real interest from Big Media, the universities with their more open philosophies built the underlying TCP/IP layers on a peer2peer premise.

Yes, folks - yes, RIAA/MPAA/BSA - the core infrastructure of the Net is Peer2Peer!

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.

Instead of TCP/IP, we could have instead seen a network architecture based on strictly one-way client-server, with absolutely no possibility of peer connections.

Like, imagine if the Internet was instead completely modelled on SNA (or a variant thereof), where all protocols and protocol implementations were tightly patented and copyrighted, where you can't even log in without Big Media knowing about it and adding to your bill, where Big Media owns all the international backbones, routers, switches.

As an example - in such a regime, you would need to sign a strict and expensive licensing agreement , and purchase and install expensive equipment, just to run a web server - and Big Media's editors would have total veto power all your content. They would charge whatever they like for each hit to your site - even $1/click. Any content clashing with their editorial policy would get pulled, and your site possibly terminated.

Phew!

History has been so kind to us! It feels to me that the Net is the offer of redemption for centuries of people's mass folly in giving away their rights.

Let's not get complacent and lose what little freedom we have left in this new frontier.

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.

Content

[jbolden]

What's interesting is who has been successful in big media on the internet. Almost universally it's been media that genuinely does research: The Wall Street Journal / Barron's and Lexis-Nexis for example. In news sites The New York Times has done quite well. Relative to their print readership non mainstream editorial sites have done well: Znet, Common Dreams, Antiwar.com... Simply restating the obvious and well known and quoting mainstream sources doesn't work. That's going to be very difficult for ABC and CBS (traditional television news powerhouses) to deal with. CBS destroyed their research divisions starting almost 2 decades ago; are they willing to spend the money to rebuild them? Can Disney afford to allow ABC to become more eclectic in their editorial viewpoints?

Pretty much to survive on the internet you have to offer one of 3 things:

1) Material that is not easy available elsewhere
2) Material that is available elsewhere at a much higher cost
3) Material that is cheaply and readily available elsewhere but organized in a unique fashion.