Twitter's Valuation

Twitter—like all of the social media—is totally dependent on advertising revenues from a purely commercial point of view. Like virtually all other so-called tech companies, it is losing money even as it is preparing to go public with an initial public offering (IPO).

The company values itself at $11.1 billion, which seems from out here, viewed through innocent eyes, as rather a huge number considering that it had revenues of $422.2 million as of September of this year, alongside losses of $133.9. Let’s annualize those figures. Extended to 12 months, revenues will be $562.9 in 2013. That would be equivalent to 1.5 percent of total Internet advertising expenditures of $36.6 billion last year. Twitter’s losses for 2013 project to $178.5 million, meaning that its revenues don’t even cover costs yet—never mind profits.

More to the point, advertising, considered as a function of the total economy, is actually much ado about nothing, as I illustrate in the last post. Total ad revenues, all media, stood at $141.7 billion in 2008—and had dropped to $135.9 billion in 2012. Doesn’t look like a growth industry at present.

The message, of course, is that the Tech Bubble continues still. Come to think of it, “tech” seems to produce them. There was the Railway Mania in Britain in the 1840s—an illuminating bit of history worth revisiting as we see the “social media” and “mobility” soaring. There are such a thing as real utility, real industry, and real technology. But when irrational expectations produce investment hysteria, even real estate can have an unreal bubble—based on “innovation” in financing instruments—another “technology.”

Much Ado About Almost Nothing

This is a repost of an entry from the first LaMarotte originally published on July 27, 2009. I revive it now, with an update of the numbers, to support another posting which follows this one.

The Gross Domestic Product in 2008 was $14,264.6 billion (all right, that’s $14.3 trillion). GDP is the sum total of all economic activities in the United States. In that same year total expenditures on advertising amounted to $141.7 billion. With calculator in hand we can determine that advertising is just a sliver under 1 percent of GDP (0.99%).

[Corresponding values for 2012? Here they are: GDP $16,244.6 billion ($16.2 trillion), Advertising $139.5 billion, and advertising as a percent of GDP still only a hair of the total GDP, less than 1 percent (0.86%).]

I was led to make this calculation because today’s Business Day, the business section of the New York Times, perhaps coincidentally, was crowded with stories about advertising or closely related subjects. Stories dealt with (1) curbing commercials, (2) measuring responses to advertising messages, (3) late night TV programming battles (featuring ratings), (4) a TV morning show, (5) the role of giveaways in marketing, (6) NPR activities on the Internet,  (7) a technology convention being used as an advertising medium, (8) promotion of investing by using cartoons,  (9) a trademark battle between brands, and (10) a user-designed magazine and user-designed ads. Other stories were closely linked to the communications field: (a) iPhone, (b) Amazon and the Kindle, (c) a wireless acquisition, (d) Twitter, (e) the digital divide (African Americans are less represented on the Internet),  and (f) a story about the Gannett news organization. Only a single story, about toxic assets, even hinted at the fact that 99.01 percent of the economy [in 2008] might be doing something other than worrying about advertising or the media. I hasten to add here that the New York Times’ coverage of business is usually more diverse.

Since advertising is intrinsically linked with communications, it is visible because it has to be, intrusive because, well, it has to be, and therefore its presence is artificially exaggerated by its very function. We’re barely aware of the rest of the economy—unless some part of it fails us.

Our ways of perception have evolved so that we notice change above all—any deviation from the normal, ordinary, and habitual. Advertising exploits this aspect of our natural design. Our communications media, similarly, can only prosper when they’re seen. Both commercial and regular media therefore attempt to grasp our attention. The two ways to do so are by tempting or by shocking us. The relentless auction that modern life has become therefore produces a highly distorted sense of reality—sex and violence everywhere. But we see virtually none of that unless we’re in contact with media. Interesting. In the chart I’ve inserted, what we see is “All the Rest.” What we see on the media, writ very large, is the little sliver that I’ve labeled “Advertising.” Inverted impressions.

BF In Red

The plastic bag in which, this morning, the Detroit News reached my door. Amusingly Black Friday is rendered in red. And the sale begins at midnight this day at Kohl’s. It was a very thick bundle because every merchant wants a little sliver of this bonanza of a day. I separated the readable from the rest, which, in our household, is transferred straight into a Kroger paper shopping bag unseen. For recycling. What remained was 1-1/2 inches, the advertising material was 5 inches thick. Kohl’s, I am told, has pretty good prices, by the way, had such even before launching Operation: Black Friday. But rendering that name in red may be, for this merchant, courting disaster. What if you stay? In the red.

In a way this reminds me of the Greek who said, “All Greeks are liars.”

Voice Spam

We use a Uniden cordless telephone on two floors. In the basement is a venerable old green telephone of the bygone age. To be sure it has push button dialing, but underneath it says, impressed into the brass plate, “Bell System Property, Not For Sale.” I spend my morning in that basement. And now, now that the season of voice spam is reaching its most hysterical boiling point, I make my coffee in the morning and then stick the cordless Uniden into my shirt pocket. It has a little screen, of course, and when the phone rings I look there to see if a family member, friend, or doctor’s office is on the other end. That helps a little. The current form of my Denial (of everything modern, that is), takes the form of pushing Talk and immediately afterwards pushing End. What the little Uniden lacks is a way of automating answering. I wish I could program it with a handful of numbers—and, at my option—cause it to hang up, automatically, on all the rest, indeed before it permits itself to ring.

A certain cost in time and effort goes into the creation of an automated telephone message. The school board candidate who just called me automatically (sometimes if rarely I do actually answer) probably had to visit a studio, may have paid for parking, spent some time before (writing, honing, practicing his message), recording it, and the listening to the result. He had help, and help must be compensated. Then there is the cost of getting it on the air and programming it to call a set number of numbers—the acquisition of which has a cost as well. Money.

At last the call comes to interrupt me. Such phenomena of disembodied persuasion always make me wonder if anybody is actually moved to any kind of useful action from which the candidate benefits. I doubt it. Faith in the power of advertising, however, is bottomlessly deep. The philosophers who claim that reality is Pure Will can take comfort from such behavior. Money is no object if you believe—believe in the fulfillment of your wish. And those who sell this kind of ethereal Brooklyn bridge at least get paid in real dollars.

Nor can I sanction those who call me—by carefully noting their names and not voting for them because they called. Those I’ve long ago decided to support also call. And even that inconvenience won’t change my mind. In some still extremely dim future, humanity will look back on the Magic those people believed in. And some, in that future, will try to practice it too—only to discover that it doesn’t really work.

Newsweek, Google, Microsoft

I remember a day when you had a choice of three major car brands (GM, Ford, and Chrysler) and three newsmagazines (Time, Newsweek, and U.S. News and World Report). Families had loyalties then. We liked Chevrolet and Pontiac; I was partial to Time Magazine because it was the  first such thing I’d bought when in the Army. U.S. News and World Report left the print arena in December of 2010. Today I read that Newsweek will go into virtual mode as well after December 2012, leaving only Time in the ink-and-paper format.

People’s loyalties weaken as those legal persons, corporations, change. We became a Honda family; and today we read a virtually unknown magazine called The American Conservative. I abandoned Time, oh, around about the mid-1960s. I thought that it had thinned out. Its publishers probably through they were adapting—to a friskier, hipper audience. More pics, less print, shorter, brighter. Naw, I said. To hell with news. Harper’s. Atlantic. Substance, please.

Google posted unattractive numbers prematurely yesterday—and because the release was premature, Goggle’s stock plunged. Microsoft reported financial dismalities as well because, in trading eyes (but not really) the PC is, like, an endangered species. And the French are perfecting a law that would protect their ink-and-paper newspapers from being cited in Google searches. Why? To protect the papers from loss of advertising revenues.

Now it is striking that advertising, measured against the economy as a whole, is virtually invisible. In an earlier post (link) I noted than in 2008 it was 0.99 percent of U.S. Gross Domestic Product. And it is also obvious that the leading business news most days is also about advertising, directly or indirectly. Bad news at Google—directly. Advertising clicks are Google’s only real food. Bad news at Microsoft—indirectly. Mobile devices are cannibalizing the market for larger computers—and the aura of “excitement” that surrounds mobility is caused by the presumed rise of a new advertising market. But the advertising market is not infinitely expansive. There is only so much to go around, and advertisers are like ducks at the edge of the pond when people arrive with bags of dried bread. They flock to the most recent arrival. Newsweek now, U.S. News and World Report two years ago, Time Magazine at some future date are abandoning or will abandon their defining businesses to garner ad-crumbs on the Internet.

So what’s ahead? We’ll probably have, sooner or later, an advertising melt-down on the Internet as well. Easy to predict, actually. Everything changes. Towering growth—exhaustion. I feel a little exhausted this morning. This site permitted, until this morning, Anonymous comments. I’d put that in place to help family and friends avoid having to key in almost illegible test-words before sending a comment. Little did I know. At first a trickle and now an avalanche of comment-spam began arriving. Today a hundred pointless comments, each with a commercial link embedded, caused me to spend three precious minutes erasing all the garbage. Sooner or later even the Russians (who generate most of these comments in sometimes comical English) will grow weary. Which reminds me. I ought to give Putin a heads-up. He is quite reliable when it comes to crushing infamy.

Amazon: Amusingly Alert

So our 20-plus-year-old kitchen sink began to leak in ways that careful research informed me could not be easily fixed in the usual way. I learned this two days ago by looking at like twenty, thirty websites, gradually refining my search to the phrase “2-Handle Kitchen Faucet” in order to get the right kind of diagrams. Along the way, probably (if not consciously) I must have visited Amazon.com. But, I emphasize, I visited lots and lots of sites, including corporate sites by Moen, Peerless, and others.

Then, in succession, Brigitte and I bought a kitchen faucet at Home Depot. We brought it home and, after some examination, decided to buy another at Loews. I took back the Home Depot product, got my credit, and went to Loews to purchase Brigitte’s first choice there. That was yesterday. This morning I called our trusty plumber (Positive Plumbing), and arranged for its installation tomorrow. All this done, I had time to think about important things.

One of those, this morning, was to look up the word manifold. I’d used the word in something I was writing, in a philosophical context, and got to wondering what it really means. There are some philosophers absolutely in love with that word, over-using it, it seems to me. So I began my search. The word has its derivation in mathematics, particularly as applied to topology. That did not satisfy me. Finally I put in the search phrase “manifold in philosophy” and let her rip.

The first page I chose from Google’s offering finally told me how this word managed to wiggle into philosophy. Kant used it to mean (in German it’s Mannigfaltigkeit) “the unorganized flux presented to the senses.” And the philosophers who tend to use it cut their teeth on Kant. Scrolling down the page to the very point where this bit of information was presented, I looked to my right and saw the inserted ad.

I had to laugh! Amazon is amazingly alert. It was serving up, in a philosophical context, a pretty good deal in a Delta 2-Handle Kitchen faucet! Amazon is getting closer and closer to omniscience. Too bad they don’t patrol my credit card—the same one I use both to buy faucets and books. If they had, they might have known that they are just a day or so late. An additional element of amusement arose because the original use of the word also derives from plumbing. It was used in 1884 to mean a “pipe or chamber with several outlets.” In the Great Unconscious of which Carl Jung was a worshipper, my interest in kitchen faucets was perhaps reflected in my sudden interest in the philosopher’s use of the manifold. Which, come to think of it, a faucet with hot, cold, spout, and sprayer really is. Somebody up there already is omniscient—and has a sense of humor too.

Signs of Unraveling

This morning a story in the New York Times informs me that services exist that sell the eager buyer Twitter followers, Facebook likes, and YouTube views. The story (“Buying Their Way To Twitter Fame”) suggests that we can prove this to ourselves by doing a Google search on the phrase “buy Twitter followers.” Celebrity for Sale.

It seems to me that the rapid spread of social media—with just about every corporation with some meaningful footprint on the web attempting to create its own—arose from a false premise—namely that the Internet had revealed a hidden human proclivity for forming networks. But there was nothing hidden about it. We’re social animals. The convulsive attempts I’d noted, two or three years ago already, reminded me of the years leading up to the dot.com bust when people talked about a new paradigms in business (“profits do not matter”) and with hyped excitement that “the new price is Free.” We used to collect such statements at our own enterprise in anticipation of what would come later. And it’s not over yet. In today’s issue of the Wall Street Journal comes a story titled “When Freemium Falls Short.” It points to cases where the strategy of building a business by giving the product away is the straight road to bankruptcy.

Such careless thought on the positive side had its parallel in the massive growth of spamming on the negative side of the Internet’s development. Free and easy access, praised to the skies, has its heavy downside. The numbers can’t be trusted. It used to interest me to know how many people read my blogs—until I discovered that the numbers are diluted by masses of people hoping to garner visits by causing bots to click on my site. Visitors are recorded by Google. At first I was amazed by having ninety visits, say, from some to me obscure url—and would follow it home. Only to discover that it was really spam—wanting me to do just that—so that its site would gain “hits.” This is yet another version of a little known method of faking followers, interest, and lifting numbers entirely illegitimately. Knowing that my numbers are “cooked,” I no longer have an interest. But some people publicize these numbers for self-glorification or use them to attract advertisers.

A third aspect of the Internet mirage is the belief that the number of eager advertisers out there is infinite. With “freemium” still the accepted model for new enterprises (at least for now), the only hope of getting revenue is by advertising. But some advertisers are now beginning to realize that they may be looking at a bridge to their customers built mostly of vapor.

This subject has its parallel in another institution of much greater age—but going in the same direction. That institution is Democracy. In that case the mirage arises from thinking that the ignorant and careless deserve the same power as the responsible and thoughtful. Over time the coherence of the commonwealth is lost as Truth becomes what the majority favors. Or the majority, in effect, disappears in deadlock.

Expanding Canvas, Shrinking Paint

The WSJ yesterday carried a story titled “Social-Media Stock Frenzy Fizzles.” Whatever the content here, I admire that headline. Catchy. Now all this, I think, began when General Motors called its advertising money back from Facebook—in advance, one speculates, of pouring out vast masses of it on NBC’s coverage of the Olympics. Tell you the truth, I’m falling in love with Chevrolet all over again. The Olympic spirit? Oh, it’s Okay. The Chevrolet spirit? Now that’s the shining red pickup I want to drive to heaven.

I got to thinking yesterday, what with that frenzy fizzling. The abstract thought was: If supply expands fueled by frenzy—but demand shrinks because the customer isn’t shopping anyway, no matter what you say, no matter how low interest rates are, no matter how radiant that Shining City in the Cyber Sky, why then there is a mismatch. And even those people dancing the St. Vitus dance will eventually notice. The visual image that came unbidden into my mind is the situation of a painter who discovers that his canvas is expanding as he tries to cover its surface, and the faster he paints, the more his paint-supply diminishes.

We’ve all noticed it, of course. With-it broadcasters have developed a new sign-off line. “See us online anytime. And follow us on Facebook and on Twitter.” Why is that list so short? Wikipedia shows a list of 198 social-media (link)—from “43 Things” to “Zoopa”—and it doesn’t even include Zynga, a “major player” in services and games.

Painting the sky Chevrolet red? GM has no problem doing that—on NBC. Watching sports big time every four years? Yes. Discovering what itsibitsiThunder has to say on Twitter today? That isn’t quite so big a magnet.

11th Commandment

Anxiety and anticipated Schadenfreude†are beginning to erupt. This coming Thursday Facebook will publish its first earnings results since going public. Does Facebook have the moxie to attract the advertising revenues that may in future rival Google’s? Those who hunger and thirst for an uninterrupted population growth in the Olympus of the Cyber Cosmos—especially as Yahoo seems to be ailing—are anxious. Those who delighted in Facebook’s rocky IPO are sharpening their pencils; whatever the results next Thursday, they will find them wanting.

Now, don’t you know it, advertising must be personalized. The ads appearing when You land on Facebook must mean You, You, You. And Facebook, presumably, has all the stuff it needs to personalize the ads. After all, its members reveal such tightly-held secrets as their gender, age, and where they went to school. And then there are those many words they write there that can be individually mined and polished into pointers straight at ads. Am I a little doubtful? Yes. Suppose I shared with Facebook that I spend a minimum three hours a day in giving myself elaborate pedicures. Just suppose that. Now if I really did that, I would have quite an arsenal of nailclippers, creams, and even nail polishes already—not to say tiny little cotton pads to place between my toes to keep them sweating as I labor on their edges or polish, prime, and paint their sufaces. Foot odor would be a no-no, several brands of foot deodorants would stand there waiting to yield creams and sprays. Therefore, arriving at Facebook, all those ads trying to sell me Surecut Serrated Toenail Scissors (which I usually call SSTS here at home) or Sally Hansen Clip n’ Catch—or bottles of her Hard As Nails, of which one is still half full—or Pour Homme Ultra Slim Clipper in Black Leather Pouch (which I bought and only use for clipping the small toe nail on my left foot), why all those ads would mean nothing at all to me. They would be same-old, same-old. Yes, I have my doubts.

But what can a poor industry, entirely dependent on advertising revenue, do? What except to innovate? Yes, to innovate. Thus Facebook has a program of tracking people’s off-Facebook travels on the Internet and examine, using little bots (they work for mere pennies per nanosecond), the key words found on those sites so that, when people return to Facebook again, new ads, based on this on-the-hoof research can be presented to the owner. I went to check out how the Roman poet Virgil’s name is spelled. In the future, once that innovation is in place, I’ll see on Facebook is an ad offering me Virgil’s Aeneid. But I already own three different editions.

So what else can the poor industry do? They can drive me, lash me, seduce me, prod me to do even more self-entertainment. Only when I do that can they present me with their ads and if the minor gods of statistics so will it, I will actually click through. It should be a commandment, the 11th Commandment. Thou Shalt Engage in Entertainment. Failing which, the Cyber Heaven will cloud over and the radiance of the gods up there will dim.

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†The German word means joy over others’ misfortunes, literally “damage-joy.”

Nader on Advertising

In an article published July 18 in Common Dreams (link), Ralph Nader says (“Growing Doubts About Advertising”) heretical things such as I’ve been saying for fifty years—ever since I got to know the field by working in it. You can see the parallels by looking at five postings on the current and ten on the previous version of LaMarotte (accessible by using the Categories feature). Indeed Nader mentions the subject of my last posting on this subject here—GM’s termination of its advertising on Facebook. Nader’s authority is the same as mine: based on observation of human behavior and on thought. But Ralph Nader’s decades-long prominence as a consumer advocate gives his pronouncements a certain radiance, as it were—which is all that advertising ever bestows on brands. My own most slashing attack has been to say that advertising is about as effective human sacrifice was in our southern continent—or in Carthage, for that matter—but a little more humane. Carthage fell to Rome eventually—and the Aztec Empire to the conquistadores.

GM Face-Off

Genuinely interesting business stories are so rare. The Dow is off because the Greeks don’t want to play? Again? How many more times? An investment bank is rocked by losses? Again? The stock of a company leaps on news that it will have massive layoffs? Yawn.

The news today that GM will no longer advertise on Facebook, having, as it were, tested the waters by spending $10 million—why that is something worth contemplation. Have I said it before? Probably. Certainly on the old LaMarotte. I’ve felt, ever since my own days in advertising, which now seems pre-historic, that justifying ad expenditures by results may not be possible, with any precision, unless you’re advertising in the Wanted sections of papers. Well, GM has found the way to do so, and evidently FB does not deliver.

Our latest “industries” consist largely of banks of computers and software connected to the Internet: Facebook, Twitter, LinkedIn, and their imitators. They depend on building up massive bases of names and e-mail addresses—“monetizing” which to channel advertising messages is where the “industry” actually is.

Assemble a huge crowd in an abandoned drive-in movie theater and then show them masses of ads on a huge screen. Is that the model? No. Not really. Assemble a huge crowd in an abandoned drive-in movie theater and then show them a tense thriller on the huge screen. But scatter postage-stamp-sized little ads on the grounds so that the few who have to go to the toilet in the dark might see them, bend down, and pick them up. That’s the model at work on the social media.

A question today sent me to FB; I am one of the millions Facebook counts as its monetizable base, but I visit the site only rarely. Okay, I am a minority perhaps. Still, I did my business there. It’s content is immensely rich, complex, all those people who are my friends, all the stuff they say, the links they provide, the pictures. Did I even notice the ads on the right? No. Did I look there? No. I’ve learned to ignore the right column precisely because I know that it holds ads. Can’t do that when watching TV. That’s where the mute button comes into play.

“Got Milk?”

The advertising campaign known by that name is viewed as one of the most famous commodity brand campaigns in the United States. It was created in 1993 by Goodby Silverstein & Partners for the California Milk Processors Board; the campaign was later licensed to others in the industry. Now here is the interesting outcome of this campaign, still running today. It increased milk consumption—but only in California.

Below I present per capita consumption data on all dairy products published by the Economic Research Service of the U.S. Department of Agriculture (link to the data is here).

To bring out the movement in the commodities made from milk, I show the largest portion of the dairy industry, fluid milk, indexed to the right axis; if I didn’t do that, the growth or decline of the other categories would become invisible. But all data are shown in consumption per pound. Milk is by far the most dominant product category in dairy—and consumption has been in steady decline; milk, incidentally, also includes (as reported here), yoghurt and sour cream.

The “exciting” new product in dairy is cheese! It has shown dramatic growth in this 1975 to 2010 period. Interestingly enough, one component of that category, cottage cheese, has declined almost as much as milk; the growth of American cheese has been mild; the big advances are associated with the “other cheese” category, the cheddars and the like. Butter has held its own, as it were, growing just a little. All other categories have shown decline.

A big surprise here (for me) is the decline in per capita consumption of ice cream. That category has four subdivisions: regular, low-fat, sherbet, and frozen specialties. The biggest decline has been in regular ice cream. The low-fat variety showed flat growth; the frozen specialties, however, actually increased their hold on the consumer.

The “all other” category includes evaporated and condensed milk and dried milk products, including, surprisingly, dried buttermilk. They too point downward.

Milk provides an interesting comment on the effectiveness of advertising. All those celebrity-lips whitened attractively by milk have not actually delivered growth for the fundamental product of this industry. The public does its thing. Advertising appears to influence behavior only on the margins.

Before Twitter, Flicker

Children are said to have short attention spans, but I’ve seen quite small children intensely concentrating on a single thing for extended periods of times. They do so if what they are doing actually holds their attention. I’ve seen them, for example, intensely observing a big bug lying on its back and moving its feet. I’ve seen such things hold their attention for an hour—and then lead to all kinds of related, you might almost call them scientific, activities. I’ve watched them carefully taking things apart with tweezers or painting intricate designs on an egg. Brigitte was a Montessori teacher in the Long Ago. I’m sure that she will back me when I say that in the ideal education of the quite young child, the right materials will produce intense and perfectly voluntary concentration.

Just yesterday I sat at a beach and watched sparrows and seagulls on the sand. They behaved just like children do. Stimuli attracted their attention; they responded at once; but they also showed strong concentration when the right circumstances held them to the task.

The notion of short attention span no doubt arose because children don’t behave artificially, meaning the way adults wish them to behave. And this has produced—and I making a leap here—the endless flicker on television. Some pop-psych great must have pronounced that to hold people’s interest, and especially children’s, you must constantly move things to rivet their attention.

Last Wednesday I watched the PBS Newshour. Toward the tail of it came a program by Miles O’Brian titled “How Making Stuff Helps Make Science More Appealing to Kids.” Up to that point the programming had been normal, but inside this feature segment—and perhaps because it was intended in part for kids—a new editorial mode of presentation suddenly introduced much more rapid cuts between the images. They started changing rapidly, half-a-second or more frequently, presumably to signal “fun” to the viewer. And Science is fun, don’t you know. Why, if we don’t flicker, they might (horrors) click off and go read some literature.

Advertising has gone the same route—flickering to the viewer by way of arresting the rational functions and holding more easily reached emotions. Amusingly enough, if the ads are intended for the elderly, the flicker stops. And the most pleasing ads want to sell me anti-depression drugs. These almost crawl. Only the side-effects, which invariable at some point promise me death in extreme cases, are murmured rapidly, softly, and almost beneath apprehension while the depressed person looks out over lovely, unmoving, flickerless landscapes and almost, but not quite, smiles. The smiles will only come after the purchase.

Before Twitter we already had Flicker. And we have it because its easier to sell to animals than people. I’ve watched many a bird yesterday rabidly rushing at a bit of rubber or dark bit of sand only to spit it out again. But they, at least, were smart enough to spit.

Give Me an Embedded Break!

A teaser at the top of today’s NYT Business Day, under the heading of Advertising, says: “Embedded Breaks. PBS’s ‘Nature’ and ‘Nova’ will start showing promotions in the middle of programs.”

Now I note this here on LaMarotte not in order to have a phony eruption of righteous indignation but merely to record the fact that PBS, in its very slow crossing of the Rubicon, evidently wishes to pause, mid-river, to take a brief embedded break. The fact is that our only public medium has been running advertisements for quite a long time already, enough so that exercising the mute button on that channel is also quite habitual—but, thus far, only while waiting for a program to start—or the next one to begin.

Ads, promotions, and Thank You Notes to generous foundations flanking shows, plus weeks on end of Public Begging Seminars, will now be joined by Embedded Breaks in midst of two programs only (for starters) is a little shiverish and saddening, but one gets used to it. The feeling is something akin to seeing Grandma in miniskirts, her once severe grey hair suddenly raised to a tower and dyed bright orange, her fading lips thickly over-painted by a lurid lipstick. One would like to drape her in a blanket, quickly, and put her in the van where the sunglare-glass is dark enough to hide her aging charms. Ambiguous emotions in which long respect, love, and a family feeling will not go away, where Grandma will remain forever Grandma, but please. Isn’t it perhaps high time simply to retire, to vanish from view? Honorably while honor is still possible? And we’ll pay for the tall fence to hide your degeneration from the prurient public eye.

Public TV: An Alternative History

In science fiction we often speak of “alternative histories”—thus how things might have been had we decided things differently in the past. What if the U.S. had remained a neutral in World War II, for instance? The other day I got to thinking about another alternative history. What if the U.S. had rejected, rather than embraced, a market-based approach to public communications, particularly television?

This came to mind as Congress once more prepared to starve or entirely to rob PBS of public funds. Then Market Size Blog yesterday published (here) data on the BBC’s licensing fee income in 2010. That triggered this post. It brought to mind Brigitte and me, a young couple, watching television in Germany. No ads in sight. Television is a genuine public enterprise over virtually the entire world today, and has been since its dawn. Television is supported by a licensee fee imposed under state law. In some places TV is supported by governments grants alone—no fees—but in most places a fee is charged, usually per household; other users (hotels, corporations, etc.) pay a fee per set. It is only in the United States that television is entirely commercial, only here that public TV is a minor player, an also ran, underfunded, the Begging Channel.

Now it is a fact that TV (with radio) has become a complex industry. Generalizations understate the complexity, but, well, here goes. In most advanced countries today Channels 1 and 2 (as they tend to be called) are public; other channels, sometimes numbered, sometimes named, feature advertising. Generally these other channels only have a relatively small market share. And, significantly, in most countries households have to pay to use the airwaves—even if people only watch commercial television or listen to commercial radio. They cannot opt out. The airwaves are treated as a national possession. So are they here—but here we’re giving them away to commercial interests.

This said—I looked up what fees are levied in Germany, the United Kingdom, in France, and in Japan. Wikipedia provides a very handy site for this purpose here, showing fee or grant structures across the world. In the case of Germany and the United Kingdom I also checked the numbers independently by consulting websites in each country. Here is what I found, going from highest to lowest; I’ve converted monthly fees-per-household to dollars at the most recent exchange rate: Germany - $26.68, United Kingdom - $20.27, Japan - $17.84, and France - $14.60. These are, as stated, charges per month; they include TV and radio. If no TV is registered a lower radio fee is charged; in Germany, for instance, the radio-only fee runs $8.55 per month.

Now I got to wondering what might have been had the United States adopted this method of funding television back when that medium first appeared in the 1950s. We have 117.5 million households in the United States, and television penetration is at the 99 percent level. We also have 1.3 million doctors offices, approximately 2.5 million hotel rooms, 6 million corporations of some size, and 18,000 nursing homes. We could add to that college dormitories, military establishments, not-for profit corporations, etc. Let us, in round numbers, assume another 12 million licenses to add to our households, thus 129.5 million all told. And let us assume that we pay Germany’s rate, a round $27 per month or $324 a year for each license. That would produce $41.958 billion a year in fee income for a national public television system.

Now you might wonder. Isn’t that just a drop in the ocean of U.S. television advertising revenues? Well, let’s take a look. Total U.S. advertising revenues, for all media, were $131.1 billion in 2010 according to Kantar Media (the gatekeeper on this subject here). Television represents approximately 38 percent of that, thus $49.8 billion. Suddenly our fee-based projection isn’t just a drop any more. It represents 84 percent of all the money our current television depends on for its programming. And indeed, in most other countries, where some commercial television is present, the commercial slice is also roughly that size, ranging upward of 10 percent.

Just imagine the alternative history we missed: sixty years of television—news, documentaries, and entertainment—uninterrupted by advertising. Sixty years of entertainment uninfluenced by advertising—thus driving the programming to an ever lower, ever more sex- and violence-drenched content in effort to hold an ever-more-jaded audience.

But what would the programming have been like? Well, we know what it would have been like. We can and we do watch it, usually on PBS. We watch and love British, Australian, and less frequently French and German shows. The programming would have blended the extremes of American ideology, a little to the left of center, perhaps (as in Britain), but not very far. Brigitte and I recall that, in Germany, weekend programming tended to be kitschy, but most of the time it was elevated in content and responsible—rather than exploitive—in tonalities. The mysteries and spy-thrillers were tense. The love stories romantic. The channels showed plenty of sports; and the same old sports prattle. We’re not talking Soviet TV here.

I wonder. Would the U.S. public have benefitted from avoiding the storms, winds, tornadoes, indeed tsunamis of unremitting, concentration-destroying commercialism that have washed, thundered, and swept over two generations of Americans? Might the level of public discourse been a little more elevated? And would we, perhaps, have wasted less of our wealth on junk?

We’ll never know. That’s how it is—with alternative histories.