Apple has $29 billion in cash. Will it use $3 billion of it to buy internet rights to all TV shows?

Robert X. Cringley has written a fascinating article called “The Future of Internet TV (in America).” You can find it in its entirety on his blog. 

His argument is simple. Despite hulu.com’s growth, it’s not making any money. It’s only growing because it doesn’t have to pay writers and actors, having received unprecedented concessions from their respective guilds. Since it can’t pay its own way, it’s destined to fail. When it does, who’s going to fill the vacuum? As always, the guys with the money. And in this case, almost no one has more money that our old pal Steve Jobs at Apple. Cringley writes:

Apple has at this moment just under $29 billion in cash and not many good ways to get a reasonable return on that money.  Only Microsoft has more cash than Apple and Microsoft is being pulled in a lot more directions so Microsoft doesn’t have Apple’s flexibility.

What will Apple do with that money?

Most of it will remain unspent is my prediction, but I’m guessing we’ll shortly see $3 billion or so per year go into buying Internet rights for TV shows — not old TV shows but NEW TV shows, shows of all types.

It seems all too plausible. Monetizing content is something Apple has already done brilliantly in the music business. Would anyone really be surprised if they figured out a way to do the same thing with television (to say nothing of the things we read)? Not me, brother. Always bet on the black mock turtleneck sweater.

The death of direct mail – or at least of the organization that delivers it

Georg [sic] Jensen has written an insightful article for the American Interest Online about the grave problems of the United States Postal Service. With all due respect to the longstanding incompetence of Chrysler and General Motors, if ever there was an organization that has been begging to go out of business through half-assed management and non-existent strategy, it’s the Post Office. Here’s a taste of what Jensen has to say about their future:

“By rightsizing the infrastructure and implementing secure and legal ‘electronic postal mail delivery’ like other countries have, the USPS could become profitable and sustainable within two years, preserving far more jobs than if it continues to operate as if the Internet has not changed the world forever. Darwin, Deming and Schumpeter are all looking down on the USPS to see if it becomes a victim of natural selection, or a beneficiary of it. As things stand today, its survival prospects don’t look so good.”

Of course, if the USPS tanks, the private sector will rush in–or perhaps in this economy, it may be more accurate to say “limp in”–to fill the void and deliver the time-share real estate offers on which so many direct marketing careers depend. Certain though that is, it is equally certain that mail will only continue to become less important. Electronic communication eliminates another reason for it with every passing day.

On a final note, am I the only one who finds it astonishing that Postmaster General used to be a cabinet position? Does anyone need another indication of how far snail mail has fallen? Today the head of the Post Office no more deserves a seat in cabinet meetings than the president of Quizno’s does. But a cabinet-level position overseeing electronic communication–that, friends, may be worth discussing.

Does the internet need a border fence to be profitable?

Brad Stone and Miguel Helft write in today’s New York Times that the exponential growth of internet usage in developing countries is bleeding the profit from many web-based companies. What’s happening is very simple: People in places like Turkey, Indonesia and India are spending extraordinary amounts of time on sites like YouTube and Facebook–far more than the average consumer in North America, Europe and Japan. They’re sucking up a tremendous amount of bandwidth. The problem with this is that thus far advertisers has placed little to no value on the eyeballs popular sites are attracting in the developing world. If these foreign consumers can’t or won’t buy their products, they don’t want to pay for reaching them.

As a result, the big online players have to ask themselves if growth that cannot be monetized is something they really want. It’s not out of the question that some of the most popular sites on the web will become restricted to residents of certain countries. Though this seems a betrayal of the egalitarian ethos of the internet, failing to make money is a betrayal of the reason the companies exist in the first place.

The television re-stakes its claim as the most important electronic device in the home.

Samsung has introduced a new television with an integrated Yahoo widget engine that will enable people to access the web while they watch TV. Similar products from Sony, LG Electronics and Vizio are on the way. It’s a great idea and one that Mark Cuban predicted would take the marketplace by storm quite some time ago.

Of course, the big losers in this could be computer manufacturers. It’s too early to say for certain, but a 52-inch HD screen that can access any kind of content you want–whether it’s live TV, video on demand, web sites or games–at any time is pretty stiff competition. Check out the full story from the Wall Street Journal Online here.

“No sex, no gasoline. Just give me some technology and leave me alone.”

A recent study by German boadband association Bitkom reveals that 84% of young people would choose having the internet and a mobile phone over having a romantic partner and a car. No word on whether the car was German or American.

What do you suppose the figures would be for other media? I suspect television would be nearly as high. MP3s and gaming consoles as well. While I take the study with a big grain of German salt, I think it’s not wrong to ask how technology is changing both what we feel we need to have a happy life and the social structure itself.

Perhaps Sartre got it right when he said, “L’enfer, c’est les autres” (“Hell is other people.”). Heaven, apparently, is an iPhone.

The Brand Companions Hypothesis: All media will be free for high-value consumers.

Now and again, I like to try to imagine how media are likely to change in the future. Today I was thinking about what I’ll call high-value consumers–people with a lot of disposable income who tend to purchase products with high margins. Is it possible that a group of brands (i.e., the consumer’s constant “brand companions”) will come together to “sponsor” the media consumption of such consumers so that they no longer have to pay for cable TV, internet access, satellite radio, etc?  What if, for example, BMW, Heineken, Whole Foods, British Airways, Exxon,  Apple and Costco pooled their consumer intelligence data and together ascertained that consumers of a certain profile were extremely likely to use all of their products? Would it not logically follow, then, that these brands would want to do whatever is necessary to ensure that they get a hammer lock on said consumers’ wallets? The best and most effective way to do this would be to block other advertisers out of their lives as much as possible. They could do it by picking up the tab for whatever media these consumers use, and for high-value consumers, the math could make sense. 

Of course, different groups of brands would emerge and align themselves with consumers of various profiles; that goes without saying. What bears some more thought, however, is how this kind of arrangement would change the advertising the consumers would see. If brands “own” consumers, will there less hard sell and more of a partnership between the brand and the consumer?  Will less advertising suffice? Perhaps only PBS-style announcements that “the following program is brought to you by your friends at BMW, Apple and Whole Foods” will be more than enough. Perhaps even more to the point, will your free cable TV get yanked away from you if you buy a Lexus instead of a BMW? It probably should.

Also, what will be the effect on consumers who aren’t part of these groups of high-value consumers that are rewarded with free media? Will they do whatever is necessary–including buying brands they can’t really afford–to reap the benefits enjoyed by others, or will some other system evolve to serve them?

I think this is a fascinating idea. Please let me know if I am alone.

Stupid yet amusing new iPhone app; smart and profitable online idea from Prince.

Not happy with the way your lips look? Can’t afford Botox, zany lipstick or really pointy teeth? You’re in luck. Thanks to a new iPhone app, you can talk into the back of your phone and a cartoon mouth on its screen will synch-up with yours. Check out “Mouth Off” here.

In other less stupid news and nakedly capitalistic news, Prince is offering a new internet subscription services. For $77, he’ll perform for you live from his ever-so-tasteful LA rock-star pad. He’ll even take requests. I have already asked if he can do anything by Gene Autry. No response as yet.  See all the gory details of the subscription service offered by the Artist Who Formerly Displayed His Backside here.

Clay Shirky, the death of print and the befuddlement of advertising agencies.

Here’s a thoughtful if longish post from Clay Shirky on the travails of the newspaper industry. If what he and others (including your esteemed lecturer) have been saying is true, magazines will be circling the drain soon as well. It’s not a question of whether people like reading things in print; it’s all about economics, and printing things on paper (and then distributing that paper to everyone who would like to read what’s on it) is a damned expensive proposition.

This is a moment of seismic shift in the advertising industry. Large agencies will find themselves no longer in need of their print production studios and absolutely bereft of people with the digital skills whom they will need to replace them. Astonishingly, despite the warning shots that have been crossing the bow of these agencies for years, quite a few of them will be caught flat-footed. This is because people who don’t understand the fundamental shift in the media world have been wasting their energy attempting to defend television against the onslaught of the internet. TV will be just fine. It will become more interactive every day, but it certainly isn’t going away. Print, on the other hand, awaits its iPod–the thing that will finally and utterly make paper a collector’s item. It may be the Kindle, but it will most certainly be something.

The anonymity of the internet makes people brave. Unfortunately, being brave doesn’t make them smart.

John Hawkins has written a worthwhile piece on pajamasmedia.com called “How the Internet Damages Our Culture.” The crux of his argument is that the ability to speak out anonymously has emboldened the crude, the rude and the thuggish to spew their venom without threat of public censure. He’s not wrong. Civil discourse has taken a giant step backwards. Ad hominem attacks are the rule of the day. Rational argument has been marginalized by the spectacle of public abuse. In our own industry, the recent firestorm over anonymous comments about Eric Silver and Lee Garfinkel confirms it.

However, I’m not sure the internet bears complete responsibility for this development. Long before people ever heard of blogs or message boards, we began behaving badly thanks to a totally different piece of technology–the automobile. When people are sealed up in their driving capsules, they get astonishingly brave. Minor breaches of traffic etiquette are met with breathtaking fury and gestures suggesting unnatural sex acts. And more often than not, the people making these gestures would probably mutter a slightly embarrassed, “sorry” if you accidentally bumped into them in a train station.

I’m certainly no Luddite, but it’s hard to get around the conclusion that technology that isolates us and hides our identities diminishes in some way our humanity. Social networking must not be allowed to wipe out the rules of collegial discourse that apply in the town square. Say no to anonymous posting. And while you’re at it, roll your windows down in the car.

Does social networking make you feel lonely?

  On the remote chance that  you’ve let your subscription to Biologist magazine lapse, here’s a link to an article by Aric Sigman, “Well Connected? The Biological Impact of Social Networking.”  It won’t make you feel any better, but it will help explain the science behind that empty feeling you get when you realize you’re sitting by yourself in a darkened apartment in front of your Facebook page on Saturday night.