This week the Digital Distribution Consortium (DDC) decloaked after six months silence and released a carefully written proposal, not only for a new distribution system for digital public media, but for a new business model for the public media network of the future. The full proposal is available as a .pdf file at the DDC Wiki here or the IMA site here and is worth reading carefully if you want to understand the full scope of these ideas.
It's a serious piece of work by well-intentioned professionals with some of the best new media experience in the system, so I'm unhappy to report that it is deeply prejudiced in several of its core assumptions.
Most significant issues: the DDC was charged with developing a new business model for public media, but if the DDC business recommendations are followed, they will cost the system billions in potential income over the next ten years alone, as well as a net loss of independence from corporate and political influence. Those are the most serious problems; there are others on operational and policy levels.
First, there are two prejudices that influence everything else, both based on ideologies that require serious reconsideration before they are applied to any reform:
One is a prejudice toward free, "open syndication" of web content (i.e. podcasting and open streams) with the goal of maximizing usage, which drives the decision to base service revenue overwhelmingly on advertising, with minor additional revenues from content licensing and ancillary sales commissions. I argue that we need an intelligent mix of free, ad-supported, and subscription services supported by an integrated service platform.
Two (ironically) is a prejudice against direct engagement with the public. For a system that trades on the name "public" broadcasting, the DDC framers seem to consider a direct relationship with the public as a liability to be avoided if a machine can't do the job. I argue that this is actually the single most significant relationship in the system, a powerful asset that should be nurtured and developed as a means of stabilizing and maximizing system income long-term.
These two prejudices have resulted in a flawed model, with features that are necessary but not sufficient — and led the DDC to avoid or ignore several of the hardest business issues in conceiving a centralized service platform.
The DDC proposal turns public broadcasting into commercial broadcasting by applying the commercial broadcast advertising model to public service content. This would ultimately mean the end of "non-commercial" media, in favor of centralized ad and underwriting sales + barter exchange of programming for local advertising slots.
Call me old-fashioned, but there should be one damn place to go in the mediasphere where one can escape the pervasive influence of advertising. That's idealistic, but on a business level I believe that this scheme would devalue the association with public service media by pricing it at market ad rates. I argue that public media can be monetized at significantly higher levels overall by combining free, ad supported, and subscription services.
The revenue potential of the DDC proposed ad-based system is only a fraction of achievable subscription revenue, and will cost the system billions in lost income. Only 700,000 subscribers at $10/month would surpass DDC revenue estimates of $80M/year from advertising in a mature service. Does anyone doubt that a system with 30 MILLION current listeners and a history of support for voluntary subscriptions can do much, much better than this in the long run by offering a powerful new online subscription incentive? 2 million subscribers would produce $240 million/year in income. It's the difference between tens of millions and hundreds of millions of dollars a year.
It doesn't even make enough to support the participants. Income distribution is proposed as proportional to measured traffic via streams and downloads, but DDC's own projections indicate expected income is not even enough to provide truly significant support to the major program brands, much less the smaller content providers or what they call "presenters" (aggregators) like stations.
The DDC system assumes a high level of web competence at the edges of the network. This may be true for a new class of online program and service aggregators, but is certainly not true for the existing base of public stations, who actually need a turnkey solution with simple customization options in the short term, and lots of hand holding and support in the longer term to develop truly effective web operations.
Editorial operations to vet content and ensure consistent quality are underestimated and unfunded. The proposal makes a fashionable nod toward user-generated content and admits that "editorial guidelines, content reviews and policies are required to ensure high quality," but there is no mention of the actual cost and staff impact of this in the operations estimate. I argue that this is actually a significant cost center for any content network and would become a serious problem if there is not adequate revenue to support it.
As presently conceived, the DDC proposal would make the system more dependent on advertisers and external funders, rather than strengthening the direct connection to the end user. It would result in a net loss of financial autonomy, immunity from political manipulation, and income for the system.
Though I believe unintentional, the DDC proposal would result in a further centralization of power and money in the major program producers and distributors in the current system. Some of this is inevitable, but a truly equitable system would help level the field and incentivize all participants, not worsen the inequalities.
A digital system for public media needs to support BOTH open, free distribution and subscription models, by making effective distinctions between underwritten, ad-supported, and value-added services to incentivize subscriptions. By choosing to ignore this, the DDC proposal condemns the system to dependent status in the digital economy, when it could be advancing and solidifying its position.
Subscription income is the blood plasma of public media. It maintains and supports the life of the host. Expanded web services provide a perfect vehicle for current and future users to ratify their relationship with the system's mission and actual service delivered.
:: Stephen Hill