Hollywood appears to have peaked. [...] The people who run it are so mean and so politically connected that they could do a lot of damage to civil liberties and the world economy on the way down. It would therefore be a good thing if competitors hastened their demise.

[...]

How do you kill the movie and TV industries? [...] What’s going to kill movies and TV is what’s already killing them: better ways to entertain people. So the best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?

How adorable! It’s not exactly unusual to hear the fatuous assertion that ‘Hollywood is dead’, despite it being a $10bn industry worldwide based on theatrical box office alone (excluding home video, merchandising, broadcast licensing). But to move beyond that and suggest that the entire CATEGORY of movies and TV (whether produced through the Hollywood industrial complex edifice or not) are somehow on the way out is new.

Did radio kill newspapers? Did movies kill radio? Did TV kill movies? Why would anyone think a completely new kind of entertainment would kill the old ones?

Further to that, the completely new form of entertainment Y Combinator is seeking is already here: video games. The kind of gaming experiences made possible through motion-sensory devices, internet connectivity, 3D, social graph, augmented reality, and so on, are at the beginning. I’d be investing there, before I start asking Silicon Valley entrepreneurs to come up with ‘completely new’ types of entertainment.

In essence, the UK Open Rights Group (which Doctorow co-founded) has conducted research which has found that digital retailers (like iTunes) are 30-50% more expensive than DVD or Blu-ray retailers and with vastly reduced range, and often delayed releases. In that context, little wonder users turn to copyright infringement.

This matches my experience. Warner Bros has been at the forefront of trying to change this, however, by being the first studio to go day-and-date, and by aggressively transitioning catalogue titles to digital.

There are however a lot of problems with his piece.

1. If digital services are poor when compared to physical retail, why isn’t this pushing consumers toward physical retail, rather than copyrightinfringement? If the argument is that a reasonably-priced, wide-range retail offering will convert infringers, why has this obviously not happened?
2. On the question of range, how does Doctorow know that it’s unavailability of titles that is pushing consumers to infringe copyright, rather than the fact it is free? Although data on piracy is hard to find and harder to verify, any I’ve ever seen suggests that it’s mostly major blockbuster films – widely available on both physical and digital platforms – that is being pirated.
3. On the same question of range in the digital market, why does Doctorow appear to blame studios? In my experience, a studio will sell any title that a retailer is willing to buy – of course they will. If retailers sensed any genuine consumer demand for these niche titles that Doctorow claims is fuelling piracy, then why aren’t they requesting them from studios? The answer is obvious – there is little demand for these titles. Studios and retailers have not beefed up the range on offer through digital services because they’d prefer to focus their demand on titles that the consumer wants. Does Doctorow really think that adding BAFTA winners like The Purple Rose of Cairo (1985), The Savage Voyage (1971) and Shakespeare in Love (1998) to the iTunes store is going to stem piracy? A quick look at Google Insights for Search shows pretty much zero interest in torrenting any of these titles.
4. Similar point on pricing: why does Doctorow blame ‘Hollywood’ for the street pricing, which is set by retailers? Furthermore, over 80% of the market for home video is still physical product – if a Hollywood studio set out to undercut their biggest customers (like Amazon) with some of their smallest customers (like Apple), they would be in a great deal of trouble. Doctorow does realise these are companies trying to make money doesn’t he?

All in all, I’d love to look at the ORG research. But on the basis of Doctorow’s summary it sounds every bit as selective and misleading as anything Hollywood has come up with.

The background is that Netflix, the USA-based over-the-top video provider with 24m subscribers is producing a new series of Arrested Development, to be made available exclusively to their subscribers.

Geordie’s post in summary:

Starting in 2013, yet another copyrighted creative work will be screened exclusively to consumers of a particular [service] and exlusively to those who live in the contiguous 48 states of the USA.

[...]

[A]fter this, the rest of the world or those Americans who are not Netflix customers, will access the same creative work by infringing on they rights holder’s copyright.

[...]

The studio executives and rights holders will continue to be bewildered as they make less money, year after year.  Some rights holders and studios will cease making copyrighted works like this, and will bitterly blame piracy for the now absent profitability.

This post makes a number of assumptions:

1. That Netflix don’t know what they’re doing. Netflix’s strategy in developing Arrested Development and the David Fincher-Kevin Spacey project House of Cards is not to drive revenue, it’s to drive subscriber footfall. It’s a loss-leader. Furthermore this strategy makes enormous sense. With licensing costs going up, offering exclusive, unique, desirable content is one of the few ways left to turn a profit in today’s content marketplace: it’s the HBO strategy, the BSkyB strategy, the Foxtel strategy, and it’s a proven one.

2. That Netflix will not make this content available outside the USA. With the NBN well and truly on the way Netflix are reportedly in talks with local ISPs to set up an Australian operation in the next 12 months. I would put the possibility of a local Netflix by 2013 at better than 50%. Even if they don’t open an operation it could well be that they license iTunes to sell day-after episodes outside of the US. (More likely, however that they’ll shoot for TV licensing and DVD sales, as I’ll explain).

3. That Netflix would actually make more money by going day-and-date with the USA. Based on the DVD sale rate and the ABC2 broadcast audience, factoring in piracy, Arrested Development’s true fan base in Australia is realistically less than 50k. For newer shows like Community, Treme, The Walking Dead, Parks & Recreation, it’d be 20k maximum. It might be hard to believe when you pay attention to the connected, savvy, early-adopter hyper-consumers on Twitter, but the segment who are fans of brand-new TV from the USA is an incredibly small niche – even in the States the audience for shows such as this is considered pretty niche.

If you took the option of selling Arrested Development direct, day-and-date, worldwide, with a video-on demand offering you’d stand to make $800k revenue at most (approx $17 per season, based on 13 episodes x $1.20 each). And that’s not taking into consideration the marketing costs of reaching and converting those 50k fans, and overheads. You’re left with a figure so tiny that it’s no wonder studios might not bother.

Instead, they prefer to have one licensing conversation with an overseas TV network and take the money. In that instance, for a niche property like Arrested Development it can actually be preferable to delay the content in other territories by 6 months. After the show has launched in the USA, and hopefully become a hit, the demand and potential audience in Australia will grow markedly due to word of mouth. The TV licensing deal will be much bigger – but if you’ve already sold the property into Australia through video-on-demand you will command a much lower licensing fee.

Sometimes this strategy doesn’t really work: The Walking Dead, first aired in the US in October 2010, will not screen in Australia until 2012, which is clearly too long, and much longer than Fox will have wanted. However, the second season of TWD will air day-and-date on Foxtel at the same time as the USA – this is a risk however, and Foxtel will need to over-invest in marketing to see a return.

4. That addressing copyright infringement is the key strategic issue for studios. Obviously, the possibility of consumers quickly and conveniently downloading and viewing copyrighted content at no cost is going to eat into profitability. You might assume, as indeed do a great many people, that this is therefore the overriding strategic issue that publishers must address. Then, when they don’t appear to, you might think that they’re stupid.

I can’t say too much about the legal aspects of the issue, but here are some points about copyright infringement, most of which are widely acknowledged:

• It is confined largely to one segment of the population. About a third of the population admit to it, with the 80/20 rule very much in effect within that third. That is, a very small portion of the population is responsible for the vast majority of infringement.
• Infringement does not appear to have increased over the past several years (at least not for movies/music).
• The vast majority of infringed video content can’t be considered a lost sale – in most cases, people infringe on content that they wouldn’t have an interest in spending money on anyway.
• Most importantly: beyond legal remedies it’s not clear that anything can really be done about infringement. Even if studios cut prices by 50% and rapidly expanded distribution hubs, it’s by no means clear the growth in sales to converted infringers would offset the decline in revenue from loyal buyers. There is no cheaper price than $0; why wouldn’t habitual infringers continue to opt for that?

The bigger challenge is making content that the vast bulk of consumers want to pay for, and delivering it to them in the ways that they want to watch it. Studios are definitely not ignoring this challenge, especially considering the margin on digital distribution is much higher than the margin on physical DVDs or Blu-rays. The Netflix/Arrested Development deal is actually a great example of this, and I wouldn’t be surprised if it doesn’t come to Australia as well. Yes, it won’t immediately address infringement; but so what?

There are actually plenty of digital distribution points in Australia: iTunes, Playstation Store, Foxtel On Demand, Telstra T-Box, Fetch TV, XBox Live, Quickflix, with launches by YouTube, Netflix, Amazon, LoveFilm, and perhaps physical retailers all likely just around the corner. Hollywood studios have launched a new streaming standard called UltraViolet, which should increase the value of owned content, and which will launch in Australia at some point.

But in all of these instances studios are at the mercy of distributors (although some, like Warner Bros, are experimenting with selling direct) who aren’t moving as aggressively as they’d prefer. And distributors are at the mercy of their customers, who aren’t telling them they want to migrate to digital en masse, despite what you may think if your research is purely Twitter-based. 30% of Australian households don’t even have broadband, and only a subset of those have a decent-sized download limit. 95% have a TV set and a DVD  player.

Fair enough – I’ve no doubt the numbers are correct, and I certainly can’t think of anything that might have been bigger in the first day of release. But the ‘first 24hrs of release’ is an arbitrary metric, chosen by Activision purely because it favours the video game medium above others.

When Harry Potter 7.B was released it screened back to back on almost half the screens in Australia for weeks – but in order to have a chance of matching MW3, you would have had to drastically expand the distribution channel: build 100s of new cinemas! No home video product is going to match a big video game because of (a) the difference in price per unit (~$25 vs ~$100) and (b) a lot of the excitement has gone from the franchise by the time it reaches home video. Music and books are a better comparison, and to be fair, MW3 smashes both mediums.

A fairer benchmark I think would be life-to-date franchise sales – representing the total amount spent on an entertainment franchise, in the entire world, ever. And if you were to compare theatrical box office and home video sales of Harry Potter, Star Wars, and Lord of the Rings, I think they’d be easily in front of the CofD franchise. But it may still be a top 10 property, which is a substantial achievement in itself.

The easiest way to get IPTV services into people’s homes is through a simple software solution. My ultimate solution would be TV manufacturers including iTunes Airplay software (or similar) in their TV sets. Consumers simply use their smartphones or iPads as remote controls to browse the iTunes store on their TV sets. Apps can be downloaded direct to your TV, enabling access to a whole world of paid-for  content.

The problem here is this would mean consumers making the big leap to thinking about their TV sets in a way that people simply do not – i.e. as an interactive device. And without large-scale household penetration, there won’t be the kind of content distribution deals needed to grow demand for the service.

So there’s a conundrum here, which I’ve expressed below:

Put simply, a software solution is easiest and cheapest, but consumers won’t understand it. A hardware solution will be easier to understand, but consumers won’t be motivated to buy it. There clearly needs to be a circuit breaker in this market.

At the moment I can only see this circuit being broken one way: Apple getting into the hardware game with an iTV screen (mockup below via). Quite simply, the amount of media coverage and buzz Apple can get for a major IPTV launch would vastly eclipse what Sony, Google, Samsung, LG, Walmart, Netflix and everyone else could achieve combined. It would create demand purely by being an Apple product, and the coverage would educate consumers and open up the market for competitors to enter.

Building in the iOS ecosystem would give iTV a range of impressive features, with Airplay, iCloud, the App store, Siri, while Apple has the scale to pull off the best content deals with publishers.  Working with content providers to create iTV content apps would be an amazing way to launch the product.

Even then there’d be some significant hurdles. Keeping down the cost of the hardware would be a massive challenge, for instance, and I’m not sure even Apple could make a $3,000+ TV screen anything more than a top-end luxury item. $2,000 would be more like it (for a 42-inch screen). I’d get one.

Artist's impression of the media landscape in the near future

Quick response to Tim Dunlop’s piece at The Drum, ‘Hold your nose and support the coming media paywalls‘

Here’s Dunlop’s argument in a nutshell:

Constant, day-to-day, up-to-minute, comprehensive, fair, balanced, accurate and compelling journalism that can hold power to account is the work of big, mutha-fuquing corporations, not half-a-dozen well-meaning people and the smell of an oily rag in somebody’s spare room.

[...]

Put simply, the mainstream is the only game in town and we have to support them – with actual cash – even if we have to hold our noses to do it.

If I genuinely thought that we could starve the mainstream into better journalism – that is, if I thought that the loss of one of the two big newspaper corporations would somehow open the way for a viable alternative – then I would be all for it.

But the if-you-destroy-it-they-will-come plan is a fantasy, and as Robert McChesney says in Will the Last Reporter Please Turn Out the Lights, “It is impossible to conceive of effective governance and the rule of law … without a credible system of journalism.”

In other words ‘support your local multimedia conglomerate’. My position on this issue, having spent years thinking about it, including being paid to do so in a newspaper company, is that I’m very short traditional newspaper companies, but long journalism. Here’s my response in bullet-form:

1. If he really believes that, then the battle’s already lost. No scaled industry or business ever survived on that kind of quasi-charitable appeal. Not for long anyway. People have been saying ‘buy Australian-made’ for decades but it failed to stop our manufacturing sector going into steep decline. Industries survive because they provide value to customers, not on philanthropy and good intentions.

2. Why is media special? Many industries – e.g. manufacturing, above – have gone through equally painful restructuring and decline, with hundreds and thousands of job losses, and yet (a) Australians have more, and cheaper, consumer durables than ever, and (b)  unemployment sits at a respectable 5%. In other words, the ‘if-you-destroy-it-they-will-come’ scenario is not a fantasy. It’s been played out many times in this country, and the market has always done it’s work because the underlying consumer demand is there. Demand for journalism is there – based on time spent with media there is more journalism consumed in Australia now than ever before – so why not be bullish about its ability to restructure?

But to the detail: where’s the journalism going to come from? Here is what I think.

3. About 90% of newspaper journalism output can be easily supplied by the market. Newspapers do 3 basic kinds of journalism: 60% is basic reportage: who said what, when, and where. 30% is opinion. The smallest part, 10%, is hardcore investigative journalism.

• Basic reportage is a commodity that will consolidate with fewer companies. Put simply, it’s absurd, irrational and unsustainable in the future for 50 media companies to provide 50 slightly different descriptions of a single football match. So the market for commodified reportage will simply consolidate, whether with a wire service like AAP or with a news masthead.
• The internet can supply opinion. I don’t think we’re in danger of running out of opinions.
• The last 10% – investigative journalism, proper journalism – is the hard bit. Here’s what I think will happen…

4. It’s the age of the whistleblower. The internet makes it possible for any insider with juicy information to get it out. Two of the biggest stories of the past 5 years – Wikileaks and the MP expenses scandal in the UK – were broken as a result of whistleblowing activity. Obviously both used newspapers to disseminate the information, but it’s impossible to argue that newspapers were necessary in this. In the case of Wikileaks whistleblowers newspapers were simply more convenient; for the MP expenses whistleblower, the newspaper route was infinitely more lucrative. But both stories could have happened anyway, without the support of the NYT, the Guardian or the Daily Telegraph (UK).

Investigative journalism is expensive because of the investment of time and effort in journalists understanding the issues, chasing down leads, finding the right people to talk to etc. Reaching all those people and finding out what they know takes a long time and is very hard to do – that is, unless you are already one of those people. An insider in a corrupt organisation already has the info the journalist strives for and the newspaper invests $ in acquiring, and they can now disseminate it for free. The barriers to whistleblowing have never been lower, and the potential liabilities are not stemming the flow of information.

One of the best examples of investigative journalism has been the phone hacking scandal in the UK, with The Guardian’s Nick Davies leading the charge. But surely a big reason the story came to light is because the hard yards were already done. The journalists already knew the main players in the story – other journalists – already had a full book of contacts and phone numbers, and probably knew peripherally that the practice was going on. Journalists-investigating-investigative-journalists is a comparatively easy beat. If the same scandal was happening in a mining company or a software company, it would likely never have been discovered, not without a whistleblower.

Phone hacking is the worst example to use to make point: “If it wasn’t for professional journalists, it wouldn’t have been discovered”. If it wasn’t for the professionalised, industrial journalism, under pressure to fill pages with content to support advertising targets … it would never have happened in the first place.

5. Crowdsourced investigation has a business model. Look at TMZ. Seriously, don’t be put off by the fact it’s lowbrow, it’s still ‘investigative’. When I worked at the Daily Mirror in the UK, celebrity journalism was the most expensive thing to do – they sent multiple journalists and photographers overseas, often to expensive locations, to hunt down reports of celebrity behaviour. Now TMZ has a business model of supplying the exact same product at a fraction of the cost using crowdsourced tips, photos and stories. The company is valued at $100m. Explain to me why this can’t be done with ‘hard’ journalism?

6. Enthusiastic amateurs are pretty amazing. It’s easy to say that amateurs can’t do investigative journalism. But why bet against it? Amateurs have put together high-quality full-length feature films with basic equipment; they’ve built incredibly sophisticated and powerful pieces of software. There are thousands of people doing these two things right now. No offence to the journalistic profession but both of these things require astronomically higher skill levels, and a much bigger investment of time, than journalism.

7. There are too many newspapers anyway. I don’t think all newspapers will disappear. I just think many of them will because the sector will consolidate around a few key titles. Newspapers in the pre-internet days relied on a monopoly of distribution in their geographic area. The New York Times, the LA Times, the Washington Post all owned their cities. But thanks to the internet that monopoly is gone and these mastheads all compete in a geography-free marketplace, and frankly, there’s just way too many of them.

So the weaker of these mastheads will fail. And you know what – who cares? Because if the WaPo falls over, the NYT moves in and eats up its audience. So the WaPo is conservative while the NYT is liberal and famously NYC-centric? The NYT puts more journos on the ground in DC, employs more conservatives (probably ex-WaPo ones), and repositions itself.

As the NYT has gone behind a paywall The Guardian is ramping up its website coverage of USA news, including employing more US-based journalists. The Daily Mail (UK) is doing the same. Should paywalls in Australia fail, who’s to say that successful media brands like the NYT, Guardian, BBC won’t expand out here and fill the gap? Why bet against it?

Summary: Demand for journalism is as strong as ever. There’s no reason to think the market won’t supply this, and in fact it’s already happening. Short newspaper companies / long journalism.

I settled on the Western Digital 2TB Elements hard drive, as I have used the brand before and am happy with it. It was advertised at £68.99 which I naturally assumed – being Amazon and given the exchange rate – it’d be as cheap and more convenient than almost anywhere else.

But before I clicked ‘purchase’ I decided to have a look around and see if any reputable retailers were offering a better deal. Officeworks in Australia were selling the exact same model at $98, which was pretty surprising to me, as I am used to seeing technology costing 30-40% higher in Australia as a rule. Even taking into account the current exchange rate (where the AUD is at near historical highs against the GBP) it was $5 cheaper from the Australian store.

The website was a joy to use – very simple, apart from no option to checkout as a guest. The biggest surprise however was that Officeworks were offering

FREE

SAME-

DAY

DELIVERY

!

Amazing. In the end I ordered the item at about 10:30am and it had arrived by lunchtime. No non-magical US or Europe-based retailer that could hope to compete with that. Even if the product cost had been slightly more expensive the free, same-day delivery would be more attractive option by far.

So my question is: why is e-commerce so hard for every other Australian retailers? Why do much larger retailers like Harvey Norman and David Jones get it so hopelessly, sadly wrong? Or, perhaps, how do Officeworks manage their supply chain to deliver this incredible service, and why can’t others replicate it? And why hasn’t Wesfarmers better leveraged Officeworks’ expertise with other group retailers like Kmart and Target?

Edit: The hard drive ended up not working at all, despite being compatible with OXS 6 which I’m running. Which is frustrating. I rang up Officeworks and they arranged to replace the drive, no questions asked, with a new one which they’d again deliver later the same day. They also arranged to pick up the faulty drive at the same time at no cost to me.

But a major Apple announcement is one of those occasions you can’t ignore tech news, so through scarcely any fault of my own, I found myself reading about Apple’s fairly major upgrade of one of their highly successful products. And what a pile of complete bullsh*t it was. I’m not even talking about the incredibly-specific-yet-100%-wrong predictions about an iPhone 5 release, which Gawker hilariously chronicled here. I’m more concerned with the [ahem] “analysis” after the launch.

I take as a typical example this piece. It wasn’t the worst I read; far from it. In fact I actually value Delimiter’s coverage, when I read it, and think the site’s operator, Renai Lemay, is perhaps the best tech journo in Australia. It just happens I didn’t rate this piece, and it is the closest to hand. Let’s begin with the Survivor-referencing headline:

Apple just lost Australia’s smartphone conch

It’s never properly explained what it means to own the ‘smartphone conch’, although it doesn’t relate to anything significant like  sales or market share. My best guess is that ‘losing the smartphone conch’ means Apple has lost whatever it is that makes the tech press breathlessly report everything they do – and frankly I don’t believe that for a second.

The handset’s predecessor, the iPhone 3G, had, after all, literally set the world on fire when it launched 12 months previously

Apart from a few episodes like this I feel this is something of an over-claim.

The launch of the iPhone 3G was particularly huge in countries like Australia, [...]. The week of the launch felt like a festival in Sydney, where many fans queued up for days to buy an iPhone at midnight, accompanied by lavish parties put on by the major mobile telcos.

Do you remember that wonderful, magical time, back in 2009 when the iPhone 3G was launched? Feasts, all-night parties, Roman orgies and dancing in the streets? Nope, me neither. I also question use of the word ‘many’. According to analysts from IDC, Apple iPhone accounts for approximately one-third of all new Australian mobile phone sales. Only a tiny proportion of these millions of phone buyers actually “queued up for days” and I’d suggest the behaviour of a very small segment of atypically-loyal consumers is a poor metric to gauge success of what is mass-market consumer hardware.

By comparison, iPhone 3GS week in Australia in June 2009 was still big, but there was a more muted feeling about the festivities. [...] Engadget summed up the feeling well in its review of the iPhone 3GS. “The iPhone 3GS is a solid spec bump to a phone you already own … but it is, at its core, a phone you already own,” wrote the publication, questioning whether a tech specs speed bump, a compass and video recording features were worth paying a hefty upgrade fee.

For 99% of consumers, there is no level of upgraded tech enough to justify a ‘hefty upgrade fee’. Consumers – actual, normal civilian people of sound mind – don’t just throw their old phones in the bin every time a new iPhone is announced. That is what tech journos do. Normal people wait until their contract is up and then they buy the best new phone available, based on comparisons of price, features etc. If Apple can make a competitively priced and featured phone, and history proves they can, then they will sell very well.

HTC’s Dream handset, which was viewed principally in Australia as a curiousity which would appeal to die-hard anti-Apple bigots who would prefer to opt out of its somewhat restrictive ecosystem and choose a more open source, half-baked iPhone alternative.

Rubbish, unless by ‘Australia’ you mean  ’me, and other tech journalists’ rather than ‘actual Australian mobile phone buyers’. In which case Android models like the HTC Dream were viewed as possibly inferior but also cheaper iPhone alternatives and purchased accordingly.

In short, the iPhone 3GS succeeded in Australia because it represented a substantial upgrade on a phone which was already independently setting the market on fire, at a time when the competition was extremely tepid. The iPhone 3G was a paradigm changer and the 3GS accelerated the change.

[...]

Unlike that previous incremental Apple upgrade, the iPhone 3GS, the iPhone 4S is not a paradigm-changer, and it does not launch in Australia at a time of diminished competition in the market.

This whole article is making a tremendous song and dance around a simple, banal fact which ought to be obvious to anyone with business sense: the smartphone market is reaching maturity. A mature market is defined by a relative (a) lack of innovation (b) stable market share and (c) slowing growth. Having said that, the smartphone market is still growing relatively sharply, although innovation and market share have stabilised. And none of this is Apple’s fault; it just happens as markets play themselves out. There’s not a lot, having created this market through their own innovation, that they can do about it, other than the totally unrealistic expectation that every product release would be revolutionary like an iPad or iPhone 3G.

And furthermore, it’s not in Apple’s interests to be totally revolutionary with every announcement. As is pointed out in this excellent post, the R&D cost of a major hardware form factor upgrade is significant. So much so that if Apple invested in ‘revolutionising’ their hardware with every update it’d cut into their profits quite a bit. Having a minor upgrade in between cycles allows them to recoup their R&D investment and make a handsome profit.

[When considering those casual, non-early-adopter customers] who are coming to the end of their Apple or Android plan, that you start to realise that the company is going to face a pretty harsh dogfight for market share in the short to medium term.

These customers make up 99% of mobile phone buyers, and the author is describing a normal, mature market. However, with Apple’s excellent pedigree and world-leading branding, I think they’re pretty well placed. In fact, I can’t think of any other company in any other consumer segment the size of the smartphone market that is doing anywhere near as good as Apple is. Not computing, not apparel, not automotive, not retail, not entertainment, certainly not FMCG. After all, there’s only really two smartphone brands in the market: iPhone and not-iPhone.

Australians are currently quite enthused by the [Windows Phone 7] system in general.

Oh, come on. Citation needed. Really needed. I am peripherally interested in tech, and have never heard of the Windows Phone 7, so am frankly sceptical that actual, normal Australian phone buyers could care less about it, let alone be enthusiastic about it.

Now, none of this is to say that the iPhone 4S won’t sell well in Australia. The iPhone 4 needed an update to keep up to speed with the competition, and the company’s announcement this morning was precisely that. On paper (we won’t know more until review houses get it into the labs for testing), the iPhone 4S will easily take its place amongst the top ranks of Australia’s smartphones. It will hold the line for Apple in terms of market share.

In other words, the Apple iPhone 4S release is the entirely predictable continuation of a proven, successful product strategy the company has pursued for quite some time, and any sensible person who isn’t a complete idiot can see that it will likely continue to be successful.

Oh look! iPhone 4S preorders have completely sold out! As did the iPhone 4, the 3GS and the 3G! WHO WOULD HAVE GUESSED?!?!?!

In this bizarro world you could easily be forgiven for thinking the media inquiry means that politicians and newspapers don’t like each other. This seems odd considering how closely they confer, trade information, openly collaborate for mutual benefit, exchange personnel, and otherwise utterly rely on each other for their day-to-day operation. Now that the terms of the media inquiry are here and all the main players have had their say, it’s a good time to parse some of the public statements for their true meaning.

According to Senator Stephen Conroy:

The fact is, news gathering and quality journalism costs serious money. And the business models that have provided that money in the past are under threat. The inquiry will be asked to assess the effectiveness of the current media codes of practice in Australia – particularly in light of technological change – the impact of this change on the business model that has supported investment in journalism … and ways to enhance media diversity in the digital era.

For Malcolm Turnbull, who found little merit in the proposed inquiry but did say:

I’m particularly interested — and I’m sure everyone in the media is – at finding out what is the answer to making newspapers profitable again. [...] As Thomas Jefferson said hundreds of years ago and I agree with him “Government functions best with a strong and independent press, but if given the choice of no Government or no newspapers, I’d rather have no Government.” 

According to John Hartigan, News Ltd CEO:

Quality journalism is a fundamental requirement of a well-functioning democracy and there is a public interest that Australia has a vibrant, independent and healthy media industry.

The terms of reference for the inquiry – strengthening the Press Council, the effectiveness of codes of practice – are all couched within the broader question of newspaper profitability. Any discussion of divestment has been ruled off the table, which is a good thing. Divestment of News Ltd’s properties was always a non-starter, and the fact that the Greens continually mention this is testament to their own naivety. Many newspapers in Australia are marginal concerns – Fairfax recently posted a $390m loss, while The Australian is widely believed to be loss-making and sustained only by cross-subsidy with the more profitable Herald Sun and Daily Telegraph.

Who’d buy the Herald Sun anyway? No less than Warren Buffett has said of investing in American newspapers “we would not buy them at any price … they have the possibility of going to just unending losses.” Therefore the new owner would have to be someone with an agenda other than profit, or an agenda of pure profit at expense of all else. Gina Rinehart, anyone? Google? A Russian ‘businessman’?  Most likely it’d be a slash-and-burn private equity group. Inconceivable as it may seem to Bob Brown, there’s an excellent chance that Rupert Murdoch is already the most ‘fit and proper’ potential owner of his newspapers.

So with that messy matter dealt with, doubtless the first order of business in the inquiry will be furious agreement on the point that QUALITY JOURNALISM (i.e. what newspapers do) is VERY IMPORTANT for a functioning democracy and that (newspaper) journalism must be PROTECTED AND PRESERVED at all costs. The fact is, despite being initially seen as an instrument for bashing News Ltd, the inquiry is likely to work in their favour. Not that you’ll know it from the inevitable whinging from the opinion writers of The Australian.

Most likely, the next order of business will be around strengthening regulatory mechanisms to act on complaints. As others have pointed out, the Press Council already appears to have proposed a new statutory body with new powers to cover all media. According to Jonathan Holmes, the new authority would “have the power, in serious cases, to insist on the production of evidence by media, and to levy fines or other sanctions.”

But any new move to strengthen regulations around privacy, public interest, or accuracy, will also strengthen established media companies. If the potential to penalise is introduced, News Ltd and Fairfax will complain loudest and longest about this. However, News Ltd generates the kind of profits that means they can afford to deal with any penalties – it will simply become a cost of doing business, albeit one which they scarcely need.

For a more marginal group – say, an online outfit like Crikey or New Matilda – new risks and barriers could put them out of business entirely. News Ltd and Fairfax can afford in-house legal counsel and law firms on retainer – a website employing 10 staff and operating out of a 3-room headquarters cannot. At the moment there is no complaint mechanism for online media, but that’s what Conroy has alluded to. It’s inconceivable and unfair that any such authority would cover a Fairfax website but not an online-only operation like Crikey.

Increasing the potential liability for acts of journalism will reduce, rather than bolster sorely-needed competition in the news business. There will be clear winners and losers: News Limited will win, since they will have less competition; politicians will win because they will be able to complain about coverage, accuracy, privacy etc. Everyone else, including smaller media companies and news consumers, will lose.

As a matter of urgency the inquiry ought to take a platform-neutral view of journalism. Journalism is not something that occurs solely in newspapers, nor is it something performed solely by full-time professionals. The inquiry ought to take as broad a view as possible of ‘acts of journalism’ as incorporating user-generated online platforms, and then consider what a desirable – and feasible-  level of regulation might be, if any. That’s if they want to foster competition, rather than simply help prop up News Ltd and Fairfax’s struggling businesses.

The one thing that needs to be addressed in the Australian media landscape is diversity. The oft-repeated but little-understood figure about Murdoch’s ’70% share of news’ does signify something – too much of the news consumed in Australia comes from just two sources: Murdoch and the ABC.  Finding a way to introduce the controls and complaint mechanisms that the community wants, while also – crucially – fostering competition, ought to be the central concern of the inquiry.  But at this point it seems just as likely that the mutual interests of politicians and established media companies will converge on the former at the expense of the latter.

He is in Australia at the moment, and appeared on the ABC’s Q&A program, where he uttered an immortal line that will remain forever burned in the memories of the audience. In response to Crikey founder Stephen Mayne’s criticism of Rupert Murdoch’s stranglehold over the media, O’Neill said:

“Replace the word ‘Murdoch’ with the word ‘Jew’ and that’s exactly the kind of conspiracy theories that existed years ago”

Bananas. Absolutely, totally, utterly meaningless and silly argument. But let’s explore this:

“The Jews control 68% of the Australian metro newspaper market, excluding local and regional press”

“The Jews are angling for full control of major broadcast media properties on several continents”

“The role of the Jews in the phone hacking saga has not been adequately investigated”

“We need to break up the Jew empire in the interests of free speech and democracy”

Oh my god! O’Neill is right! I AM a conspiracy theorist.

(Hat-tip to @Ragertarian for that last one.)