AT&T Fell for Media’s Inflated Sense of Self-Importance

AT&T has entered the “content” business in a big way with the acquisition of DirecTV and TimeWarner. This is not a new plan–they’ve been in love with the glamour of Hollywood for years. But it is a misguided plan.

AT&T hopes to provide value and profit from exclusive content through focused advertising.

This is a fool’s errand.

Folks other than I have talked about the reasons why in greater depth for many years, most notably Andrew Odlyzko, formerly of AT&T Labs, whose “Content is Not King,” First Monday 6(2) (February 2001), persuasively showed that people pay overwhelmingly for connectivity, not content. And not by a small margin either.

The reason is simple: humans are gregarious. We are social animals. We want to reach out and touch someone.

Chris Anderson’s “The Long Tail,” Wired (October 2004), proposed that given infinite, instant availability, sales of things, particularly digital things, would tend to accumulate in the long tail of a Pareto distribution. That is, value would accrue to things that had had minimal value before. A follow-up analysis in 2008 at the Harvard Business Review noted that while this was the case, the long tail got longer and thinner so that the popularity of things on the thick end of the tail became more significant. (You can also see this with the current shape of income inequality.) That could provide hope for AT&T’s advertising plans, but it doesn’t because of two factors outside of their control: time and the supply of money.

Time and money are finite. Time cannot exceed 24 hours in a day. Money is artificially constrained by governments and their agents. But content is essentially infinite: All humans create things. All humans want to share what they create. Alas, there’s nowhere near enough time to consume infinity, and one’s personal supply of money restricts what little can be consumed even further. I have to choose between writing this, correcting a crontab entry, listening to a podcast, making dinner, lifting weights, watching the Champions League, voiding my bladder, and so forth. No matter how much I want to find out right now what happens when the Ice Dragon breaches the wall, for me to actually do so depends on those two things: time and money. I’ll wait, and get the DVD from the library.

Money, or the lack thereof, is what drives cord-cutting. Even were there infinite money, time trumps everything.

Or, you cannot squeeze blood from a stone.

Oddly enough, AT&T’s earlier foray into advertising, the Yellow Pages, was similarly profitable for the same reason telephony is: connectivity. Rather than shouting at customers “Buy Me!” the directory simply sat there, waiting, until a customer needed something. It, and the classified advertisements which provided much of newspapers’ revenues, have been gradually replaced not by pay-per-click advertising on the Internet, but by services built on the World Wide Web–basically Google and Craigslist–accelerated by the general decline in local economies. Everyone’s price sensitive these days.

But I can understand why they’ve made the choices they did. There’s only a certain amount of time in a day, and only a certain amount of time to spend reading or listening or watching or working or playing. It’s highly likely that the idea connectivity is more valuable than content never crossed their minds.

Better to invest in what enables connections and carries all of that content. And ignore the shiny distractions.

So what next? What could AT&T do with what they have?

What do people actually need? It’s not more advertising and it’s not more content; there’s plenty of that.

The Customer Perspective

There’s too much wrong with the FCC — in all its various political, technical, and regulatory aspects — to get into arguments on the line. However, I’d like to point out one small piece of anecdata from Number Two Daughter’s iPhone 6. From the customer’s perspective, Internet access providers are common carriers.

Number Two Daughter (15) has service with Cricket (a subsidiary of AT&T) and pays $30/mo. for cellular service with a 2GB/mo. soft cap on data usage. It’s a soft cap because after using 2GB, the transfer rate is throttled. A hard cap prevents usage.

She primarily uses the phone to chat with friends, watch movies, and keep up to the minute with BTS. Most of that activity happens here at home, so in the best of all possible worlds she’d be using our domestic Internet connection provided by Frontier Communications rather than the LTE connection provided by AT&T. However, there’s a mechanical difficulty with either the antenna or the wifi chip in her phone, so she doesn’t connect to the 802.11n network.

YouTube, Netflix, and Amazon Prime Video, nor even BTS, are not the top consumers of bandwidth; they are slightly more than bumps on the long tail. Apple Music and Spotify and Pandora don’t even register. iMessages and SMS chats are miniscule pinpricks. Facebook, Twitter, and Instagram are so 5th grade; only toddlers use those.

Snapchat was. And the month isn’t over yet.

The internet is NOT television. And no one wants “content.” They never have. They want a connection with other people.

Reach out, and touch someone.

Please, Sir, May I Have Some More?

Netflix noticed something strange and unexpected among users of their video streaming service: they would watch all of the available episodes of a series before starting a new show, and they would watch for hours on end. They called this consumption pattern binge-watching. What explained this novel behavior? What did it mean, not only for Netflix’s business, but for everyone in theater?

But this behavior is not novel, and should have been expected, if the industry had not confused the limits of their production and scheduling processes with customer preferences. Any librarian or bookseller worth her salt could predict this. What do their clients ask for when they find a good book? More of the same. Even Hollywood moguls know this. Applying this knowledge is what they, still, have trouble with. Streaming video services, the medium formerly known as television, should remember to take this customer preference for more into account. Attempting to stretch a product over time through artificial limits such as the gradual release of episodes may inadvertently lead to lost viewership and reduced profitability.

The summer of 1981, I bought Lord Foul’s Bane at The Little Professor Book Center in Montgomery, Ohio. I remember this because it was the first book I bought on my own. I picked it out from the shelf. I smelled the fresh ink. I ruffled the pages. I complained about sales tax. After I read it, I went right back out — at my parents’ convenience — and bought The Illearth War and The Power That Preserves. But The Wounded Land was only available in hardcover, so I read that at the library. And that’s when I discovered that The One Tree would not be available for another year!

image of the first edition U. S. paperback covers of The Chronicles of Thomas Covenant the Unbeliever

One year?!

Well, by the time it arrived, I had forgotten a bit of the earlier book. I read The One Tree — one must finish a series, y’know — but without the enthusiasm I’d pursued the previous volumes. I eventually read White Gold Wielder. I think. I’m not quite sure.

Storytellers have quite a few tricks, “narrative techniques,” to capture the attention of their audience. Cliffhangers, for instance, are quite effective. But their enemy is time. Will the audience come back after intermission?

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Jon’s Radio: “How do they do it? My theory: less time spent in meetings.”

ROFLMAO

At one time, SBC was intending to migrate their members’ personal home pages to our servers. Why didn’t it happen? I was only involved for six months, but the project had gone nowhere for 18 months before that: meetings, staff changes, more meetings, more staff changes, more meetings, and no deliveries.

I wonder how long will it take for SBC to migrate to Yahoo.

FCC News Release: FCC PROPOSES $6 MILLION FINE AGAINST SBC COMMUNICATIONS, INC. In approving the license transfers, the Commission required SBC to offer the shared transport unbundled network element in the former Ameritech states on terms at least as favorable as those offered to telecommunications carriers in Texas as of August 27, 1999. In today’s Notice, the Commission found that SBC appears to have violated this condition in each of the five former Ameritech states by attempting to restrict the use of shared transport by carriers providing intraLATA toll service. The $6 million fine proposed by the Commission is the statutory maximum for the five apparent violations (one in each of the former Ameritech states).