On May 1, 1776, the people of Pennsylvania voted "no" to independence. Sam and John Adams then set about to undermine and overthrow the validly elected state government of Pennsylvania. William Hogeland chronicles the events leading up to this day in 1776 in Declaration: The Nine Tumultuous Weeks When America Became Independent, May 1-July 4, 1776.

I'm constantly reminded of this chapter of history on two fronts. First, Adam Savage tweeted today, "When I read about the vitriol of Washington's cabinet. How Adams, Jefferson & Hamilton FOUGHT, it makes me feel better about things nowadays." When one looks closer one finds that in most arenas, the more things change, the more they stay the same.

Second, as a person who tends to lead changes in society, I run into those who have an idealism that no compromise or means that isn't ideologically pure is acceptable. Those nine weeks and the amazing document show that some means that don't match ideals are often the only way to achieve a greater goal.

It's hard to argue with 235 years of prosperity and expanding freedom.

The Supreme Court today released its opinion regarding California’s attempt to ban the sale of so-called violent video games to those under 18. My company, Vindicia which is a subscription billing provider, filed an amicus brief in the case, Brown v. Entertainment Merchant’s Association, to make sure the Court was aware of the ramifications of the California law in the digital gaming world.

The decision is being widely reported as 7-2, which is true enough on the merits of this law. But looking closer, the decision is really 5-4 when it comes to the question of whether the First Amendment categorically protects the sale of video games to minors.

As I noted in a blog post after attending oral arguments in the case, Justice Alito and Chief Justice Roberts both seemed willing to allow states an ability to restrict the sale of violent video games. The Chief Justice seemed to miss the point that Postal 2, the game in question in the case, appears designed specifically to make white middle-aged conservative fathers like him angry. Justice Alito’s concurrence, with which the Chief agreed (bringing the two additional votes in the 7-2 vote), argues that some other law that better defines “violent” could pass constitutional muster.

Justice Thomas wrote a dissent in which he continues to take the position that kids really don’t have any free speech rights as an originalist matter. The flip side being that game creators have no right to sell to them if they’re under 18 (and as an original matter, probably under 21). Justice Scalia rightly points out in the majority opinion that Justice Thomas’s theory may support a system where parents could put their kids on a state-wide “do not sell video games to” list, but Scalia asserted that game makers’ free speech rights are violated when all kids are banned from buying their games.

Justice Breyer continues simply to believe that everything is a balancing test, regardless of the fundamental enumerated right in question, and that therefore judges should be allowed to use political arguments about what is best for society to balance laws against their harms. I’m reminded of Justice Scalia in another recent opinion replying to an almost identical Breyer argument with, “the very enumeration of the right takes out of the hands of government—even the Third Branch of Government—the power to decide on a case-by-case basis whether the right is really worth insisting upon.”

Today’s decision is good news in that the Supreme Court has found that states attempting to severely restrict the sales of video games have been going about it using unconstitutional methods. What’s still frightening is that we appear to be only one vote away from a state finding a way to restrict sales of video games to minors. Luckily, most of the methods that legislatures who really just don’t like video games would want to use would fail other constitutional tests. However, the “do not sell” list concept combined with the existing rating system does leave open a path for legislation that may not burden video game makers much. (That concept, however, faces the difficulty of the changes the digital revolution is bringing to the game industry’s business models, as we outlined in our Amicus brief.)

For adults, this opinion reaffirms something many of us knew. The fact that some people don’t like the content of video games is no basis for curtailing or choking them off at what many consider to be the beginning of a revolution in creativity, realism, and storytelling.

The ascent of smartphones and tablets is causing a seismic shift in the way media companies reach consumers. As an iPad and iPhone owner, I now consume the bulk of my media online. Whether it’s the Kindle App, Netflix, HBO Go, or Hulu, media companies have rapidly realized that they can use the new platforms to increase engagement with their existing audiences while also reaching new consumers who have grown up with Internet-based media as the norm rather than the exception.

Yet the advent of these new platforms and the services around them also raise the challenge of disintermediation. To be specific, look at the subscription initiatives recently launched by Apple, and to a lesser extent Google, governing how media companies can sell their digital wares via mobile app stores. In the iTunes App Store, media companies can now sell subscriptions, with Apple taking a 30 percent fee. Additionally, the original set of rules stipulated that a media company using the App Store could not sell that same digital subscription at a different price on their own or on any other store—though very recent reports suggest that Apple is backing down from that provision.

As the founder and CEO of both eMusic and Vindicia, which provides subscription billing services, I’ve learned a lot about subscription business models and how best to compete against free (especially when free is illegal). For me, this experience reaffirmed the central role that relationship management plays in the relative success of media companies.

As a backdrop for this discussion, it’s useful to understand a couple of basic media business concepts. First, media companies succeed not just because of great content, but because of the compelling experience they provide consumers. Netflix, for example, has set out to make the task of being entertained with video content dramatically easier. The Netflix Prize, designed to encourage the creation of better recommendation algorithms, was just the beginning of Netflix’s effort to solve the “I have access to everything—now what?” problem. In the newspaper and magazine world, publishers are realizing that they must make the experience of consuming their content more enjoyable if they want to compete with services like Twitter, Facebook, Flipboard, Instapaper, and Google Reader that intermix their stories with those from other sources. The positive experience is what creates long-term customer stickiness.

Second, owning the customer relationship is critical to a media company’s long-term success. Engaging directly with customers can shape and improve the overall experience (see the point above), but it also provides media companies with the means to cross-sell and up-sell as appropriate.

So, while there is plenty to like about Apple and Google’s subscription initiatives, not least the rapid and broad market penetration of iOS (and Android) devices with compelling and convenient single-click payment options, it’s not hard to understand why media companies would have questions about the role Apple and Google are assuming as self-appointed middlemen.

Media and content companies realize that successful consumption of their content and services via these devices is partially driven by the platform itself—whether a byproduct of the curation capabilities of the storefront/device or the pricing policies of the platform. Media companies need to explicitly take these factors into account as they build their acquisition strategy on these different devices.

And whenever a third party enters the scene, it raises the question of who owns the customer relationship. Independent of whether the publishers believe that a 30 percent fee is appropriate or whether forced price parity violates the notion of true competition, the question is whether Apple’s terms are detrimental to media companies seeking to own that business relationship. According to reports confirmed by Apple executives, about 50 percent of App Store subscribers choose to share their information with publishers. The collective wisdom is that publishers should be excited about this number, since it’s far greater than any other Internet-based opt-in rate. My take is that a number of larger publishers believe that they normally would obtain a much higher rate if they had a direct relationships with these subscribers.

The reaction among media companies to the Apple’s subscription requirements has been predictably varied. Companies like Next Issue Media, the joint venture formed by Hearst, Conde Nast, Time, Meredith, and News Corporation, have explicitly decided to start with the Android platform to sidestep a confrontation with Apple. But other companies like Bonnier, the publisher of Popular Science, and even some of Next Issue Media’s parents have gone full bore with subscriptions on the Apple platform. Finally, the Financial Times, which has an extremely successful digital model, has been very explicit about their desire to own the customer relationship, and remains “in negotiations” with Apple to sort out this critical issue.

While the focus of the App Store subscription plan has been very specific to media and content companies, the same issues and challenges around subscription and content control exist within other areas in our new cloud-centric world—especially when it comes to cloud services delivered via and to mobile devices. We’ve already seen Steve Jobs apparently claim that the most onerous parts of his attempted remediation wouldn’t affect SaaS companies. In this case it remains particularly hard for Apple to remain a middleman. The value of the iPad is heavily based on the content and services that I can access. If content companies choose not to support the iPad because of the underlying subscription terms, then as a consumer I have to wonder about the value of the device itself. One of the major value propositions of the iPad for me, for example, is not having to also own an e-book reader. If I have to move to Android to continue to enjoy my excellent relationship with Amazon (Prime is brilliant!) then all of a sudden the Galaxy Tab 10.1 begins to look very compelling indeed.

My prediction is that these economies will move closer to the world we’ve seen in pay for performance advertising. Media companies will happily write a check to Apple for even 30 percent of the first year net value of the subscriber that Apple sends the companies’ way, but those subscribers will have their primary relationship with the service.

This story has many chapters left, but the central theme around customer ownership will continue to influence and drive the relationship between the media and content markets and the platform companies. In the second half of 2011, more light will be shed on how these relationships evolve to the mutual benefit of consumers, media companies and the platform players.

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While this piece was being edited and posted at Xconomy, Apple changed track to allow Apps to be available to subscribers via iTunes without the "must carry iTunes account" rule. It remains to be seen how the Facebook Credits story plays out.

Late last year, Nick Denton posted a preview on Gizmodo of the now-known-to-be-controversial redesign of the Gawker family of sites. His overview highlighted a lot of hard-learned wisdom about the state of news and information delivered via the Internet.

Nick explains that the underlying trends include the fact that the advertising model is under pressure from ad networks and Facebook. Ad networks have allowed garbage inventory from garbage aggregators to lead to garbage click-throughs that make the media buyer look good by driving down the cost per click. Add in Twitter and Facebook creating a new paradigm of personal blogging that leads to improved news aggregation, and the pinch of the two is strong considering the dollars that can be generated per page view and the attention that can be wrestled from the social networks by a content aggregation and editorial site.

These issues amongst others have lead Nick to state that micro-targeted content is dead. "The power of the scoop, rediscovered," is how he put it. How the world saw it was Gawker going after the "gutter" stories that other outlets wouldn't touch. Whether it was angering Steve Jobs over making public the iPhone 4 prototype or airing Brett Farve's dirty ahem "laundry," the Gawker properties were able to use these sensational scoops to build a new base of readership an order of magnitude higher than their previous daily audiences.

Challenges With Today's Advertising Model

This is the fundamental problem with the present-day advertising model. To build the necessary scalability to attract and retain advertisers who support the underlying business, online media companies have to forgo niches. These are the business imperatives for advertising-supported media businesses.

When eMusic owned and managed RollingStone.com, I loved it when we had an in-depth review of some great new indie rock band that explored their artistic vision and influences and added to our understanding of the popular history of rock. But I knew that my ad sales team could easily make their number when Britney Spears was on the cover, even though a Big Star retrospective would be more engaging for the audience.

Advertising drives content creators to create mass markets by publishing for the lowest common denominator. This effect is one of the major reasons we founded Vindicia. Much human thought doesn't involve audiences of 20 million Internet viewers. The services around compelling human thought require a sustainable business model – allowing those "smaller" communities and services to thrive.

Today much economic discussion happens on a few blogs, and we should be thankful that the tenure system in higher education supports the time and infrastructure necessary to let Tyler Cowen debate economic thought with Paul Krugman in public, with Russ Roberts chiming in via text and podcasts. However, pity the content category that can't live off the largess of academia.

That's why services like deviantART, Boxee, Star Trek Online, and Next Issue Media look to premium services to create an experience that doesn't cater to the lowest common denominator. How exactly would the Star Trek Experience be believable via the corporate sponsorship of 'Thunder Bolt by HTC on Verizon" (to borrow a recent Gizmodo advertiser)?

Premium content providers face twin challenges: the understandable consumer perception that the digitization of a product should lead to a lower-priced version, and the effect of piracy on such content. I've often referred to this as the "Napsterization" of digital content and services.

The Market for Premium Digital Content and Services

We all like a good deal and it's hard to feel bad in the short term about the free lunch (ads ignored!) that we all get at Gawker, Huffington Post, or Instapundit.com. However, that masks a longer-term issue in that the best engine for the creation of intelligence, wisdom, and wealth that we've found so far is the underlying profit motive. We, as consumers of thoughts, ideas, and entertainment, have to want a lot of that experience to be far from the lowest common denominator. We have to ask entrepreneurs and visionaries to fight the battle royale between the ad model and premium digital service model.

The good news is that a simple survey of the landscape shows that the evolution of valuable premium services is occurring. Netflix is driving the conversation about how premium video will be used. Boxee is now a significant part of the conversation about what the day-to-day experience of the home media environment will be.

The math is extremely relevant here. Advertising businesses need 10's of millions of daily viewers to support a $10M annual business. Subscription and virtual currency businesses need but 100,000 subscribers paying an average of $10 a month to reach the same revenue. Lost is the other part of, for example, the traditional newspaper business. Advertisers, just like online daters, tend to prefer those audiences who have shown they can afford their products by paying for something in the first place.

We're in the early days of the growth of premium digital services. I often think about the parallel to the Internet advertising market in 2003. Subscription and virtual goods/currency services are going to begin to scale as broadband has penetrated worldwide. And as the last recession is easing, people begin to accept as conventional wisdom that many digital services are worth paying good money to keep them above the lowest common denominator.

ABOUT THE AUTHOR
Gene Hoffman is chairman and CEO of Vindicia, which provides an on-demand subscription billing solution for digital merchants. Prior to Vindicia, he co-founded eMusic, and led the acquisition of the company by Vivendi/Universal in June 2001.

The data he was citing at Statemaster.com cites StateHealthFacts.org as it's source. Kaiser, who sponsors that site, has an understandably epidemiological point of view as health organizations don't make much of a distinction of treating the gun shot wounds of a victim, a criminal, or a suicide victim. Sure enough, when you pull the data for Suicides per capita from StateHealthFacts you find that almost all of the states at the top of the chart for per capita death rates from firearms are the states with the highest per capita suicide rates. Here is a quick top 10:

California thrown in for reference. The interesting outliers are Washington D.C. (how'd that gun ban work out in 2007?) and Louisiana. Something tells me that lack of gun laws don't lead to the endemic corruption in the Big Easy...

Bill Gurley recently wrote an in depth blog post lamenting the overly anxious technologists who were foretelling the demise of cable and satellite TV.

Bill makes a host of very good points about the $32 billion at risk and the depth of the channel conflict. I had this point repeated to me by someone who has long been a part of the television business and he added how the even more widely split rights packages would lead to even more stickiness in the coming video channel transition.

However, the Services Tsunami is not going to spare television and movies.

I reminded the individual in question that I heard every single head of the major recording companies tell me how dis-intermediation was not going to happen on their watch. At the end of the day, the only senior record people gone from the industry left because their company was sold to someone else because of the consolidation caused by the Services Tsunami.

I think the item missing from Mr. Gurley’s analysis is the base practical argument. Today, when the television goes down in my home, as a DVR hard disk crash recently caused, there is no real panic. We move comfortably to either the Wii or Roku and Netflix to offset toddler television demands. However, when the internet is down for as little as an hour, for whatever reason, there is a sense of panic.

Most consumers will scream far more about a DSL or cable modem outage than a video satellite out of alignment outage. Once IP connectivity is superior in each consumer’s life, then the tsunami is pulling the tide far past mean low water.

There is an Average Revenue Per User (ARPU) argument of which I’m suspicious. The argument goes something like this: IP is subsidized by television content or Plain Old Telephone Service (POTS) and thus the current cost of broadband is artificially low. That may be true, but everything I see shows that actually quick (5Mbp+ or 1080p capable) broadband is worth more than $30 to consumers. Turning off POTS and satellite/cable is a wonderful proposition to many of the folks with the most disposable income. I’d rather buy a UPS and a generator for when the power goes out.

Add in the demographic shift – my children have a hard time understanding why the TV in a hotel isn’t on demand – and the consumer pull really doesn’t care at the end of the day what the $32 billion reasons against adoption of television over the internet to PC equivalent means to them. To those consumers it means easy access to the DVDs or Blu-Rays they ripped so the kids don’t scratch them up. It means on-demand access to sports, movies and their few favorite brands (Mythbusters, Top Gear, American Experience, NOVA, and The Pacific are some of mine – No Reservations, Simpsons and agreement on American Experience and NOVA are my wife’s.). Excluding the indirect subscription business of HBO, I care little about what channel those brands use to get to my HDTV. My DVR has taught me not to care and I can’t wait to not have to think about using a DVR to mimic what Boxee.tv will deliver me. Further, don’t get me started on how hard it is to immediately move that which I find on the web to my HDTV to watch with my wife or my whole family.

Boxee Boxes, iPads, and a storage system are far more functional for my whole family. Why would I keep paying $60 to $100 for less functional video? MLB and NHL have made the switch. Boxee was a superior NCAA Basketball Tournament experience this past spring . I’m not the only one thinking about cutting off my DirecTV soon and I’m more than happy to spend more on a faster link. Too bad no one wants to offer me that, but luckily my neighborhood DSLAM will get me to 720p comfortably and usually 1080p as well.

$32 billion is a wonderful market to cut in half while enhancing the consumer experience. Viva the Internet TV revolution.

Wonder how long until it becomes ironic parody.

From the UK Daily Mail about Phil Jones of University of East Anglia:

Professor Jones also conceded the possibility that the world was warmer in medieval times than now – suggesting global warming may not be a man-made phenomenon.

And he said that for the past 15 years there has been no ‘statistically significant’ warming.

And now, some IPCC scientists are finally agreeing that the surface stations aren't reliable due to significant issues with how and where the stations are cited and how urban heat island effects have grown up around them.

It's good to see some actual science occurring which here is invalidation of incorrect conclusions based on further testing and study. All that said, can we build a bunch more nuclear power plants and slow down admitting C02, and much worse things like radioactivity from coal?

Alan's reply brief and NRA's reply brief are available from Chicagoguncase.com. The Chicago Tribune also ran a profile on Otis McDonald this weeked.

Like Josh Blackman, I find it odd that NRA, who worried that Alan wasn't making a vigorous due process argument, then didn't include the modern due process cases like Nordyke...

I'm proud to have been part of the Secret Cadre on this in a couple of small ways. I'm hopeful that we can put a final end to the last battle of the Civil War and Reconstruction.

Hat tip to GigaOM as well.

Really?

Here is my disclosure from here on out. Mr. James Madison made sure that I received a free copy of The United States Constitution which includes a gratis (but hard won) copy of the Bill of Rights. In it, I find that my opinion of products or services, as well as my absolute right to speak either anonymously or even with ill or deceitful intent (but probably not fraud if someone is paying me to create commercial speech directly) was explained where it says that "Congress shall make no law ... abridging the freedom of speech, or of the press."

As a matter of principle, every reader of this blog or any social media updates of mine should know that my ongoing disclosure is that I refuse to disclose. I will back up that refusal with a good old fashioned Bivens case if pressed.

I don't support illegal activities, but there is a very odd moral equivalence going on. Scientists can lie in public in an attempt to alter global politics and economics and break laws to avoid legally required disclosure of much if not all of these documents, and we should feel sorry for them that their privacy was violated? If they didn't wish to be public figures this way they could easily:

a) not disseminate false and misleading information in an attempt to beggar economic growth as the new malthusians, or

b) practice the simple policy that most scientists do of making their underlying data and methods available to others publicly for debate and analysis.

Transparency does suck when you have something to hide...

What might this have to do with toddlers? Our youngest has started to enjoy Sponge Bob. During the commercials I just heard Mattel using "Barbie Girl" to advertise... Barbie. Aqua and Universal are getting paid by Mattel...

Truth is stranger than fiction.

What I find eyebrow raising is this line:

Any Supreme Court ruling should explicitly recognize the authority of state and local governments to craft regulations to best protect their communities. Gun laws that make sense in a densely populated urban area may be unreasonable or unnecessary to protect the public safety of rural residents.

Would the Post agree that state or local restrictions on the publishing of newspapers may make sense in urban areas while not making sense in rural areas? How about state restrictions on which religion you can practice? Maybe the right to be free from unreasonable searches doesn't apply in D.C.? (D.C. actually tried that one.)

One of these days, even staunch First Amendment advocates will realize that their fear of firearms leads them to support the undermining of all civil liberties. It's not unlike the right's fear of sexual autonomy makes them attempt to undermine the Fourteenth Amendment - something we all need revitalized to protect life, liberty, and the pursuit of happiness.