"The user is more important than the advertiser, more important than the developer, more important than anyone else. At the end of the day, it's the user who's going to drive the advertising dollars."

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Excerpts:

VH1 and a long line of cable channels — including USA Network, Bravo, TBS and E! — are enjoying their highest ratings ever, while their broadcast network brethren look back on their worst year ever.

But as the ratings for broadcast decline and the ratings for cable increase, the two types of television are gradually becoming more alike. Breaking with tradition this month, Turner Entertainment decided to hold its upfront presentation for advertisers during the same week as the broadcasters’.

For a general description of the technological cross-fertilization between entertainment and defense please read the January 2008 post: Military Entertainment Complex - the U.S. Entertainment Superpower or my June 2006 post, Creatonomics.

For a look at the cultural significance and asset of U.S. economic dominance in content production and distribution, see the March 2007 entry  The Arab Media Revolution - War of Ideas.  As I wrote then, "Lest we forget, creative content has a social impact as well as an economic value. I have always argued on this site, that media and entertainment sectors are undervalued assets in the American consciousness (both in terms of the economy and in terms of their social benefit in a global war of ideas)."  In another August 2006 post,  Why the fractured Chinese Market will never Buy your Movie?: The cultural and geo-political benefit of U.S. dominance in content creation and distribution "reminds me of what Simon Cowell remarked to Larry King in March this year [2006] when asked about the prohibition of "American Idol" like shows in China.  Says Cowell:

"Well, because it's a democracy, isn't it? You know, I mean, it's the public voting. So you can understand why they're getting slightly nervous about it. Because it wasn't our show in China, it was the laughing cow, so-and-so, so-and-so competition. And the public got to vote. And suddenly there were demos, and it was democracy. And I think the government went, we don't want this. So then they put out a stupid comment like that. You know? It's that we must control the public. Crazy."

What is the nature of the so called 'military entertainment complex' (also known as 'miltary nintendo complex') and what drives its organization?  The answer to the latter question is found in the maintenance of U.S. global military hegemony.  If the U.S. military is the primary global military power, and this hegemony is based on the ability of the U.S. Navy to dominate the world's oceans, then the condition of hegemony is partially based on the superior numbers and technology of U.S. naval vessels and augmented significantly by U.S. dominance in space-based reconnaissance technology, made possible by entertainment software consumers and movie goers world-wide.  In other words, the mainenance of U.S. global military hegemony, requires the continued militarization of outer and cyberspace; and the pentagon's organizational evolution and strategic positioning against asymmetric threats. 

We are focusing in the next few weeks on cyberwarefare.  Cyberwarefare encompasses a lot of terrain: “from posting misinformation on a blog to crashing a national stock exchange." That means cyberwarefare also encompasses media strategy (the production, distribution, and marketing of cultural content and propoganda) along the organs of communication from traditional media and their hybrids to the internet. 

For example, in a 2006 analysis, Stratfor, a private intelligence service, posted that al Qaeda’s relationship with the media was evolving so that it increasingly relied on the internet to accomplish organizational objectives, including communication and recruitment.  Whereas bin Laden and al-Zawahiri relied on traditional Arabic media outlets to distribute message, al-Zarqawi use of the internet shows the evolving ‘informational wing’ and philosophy of the new generation of al Qaeda:

Within this vein, al Qaeda in Iraq has used the Internet in two very significant ways: to disseminate propaganda in real time, and to shape public perceptions and debate in both the Islamic and Western spheres. In other words, the Web has been a timely, efficient and effective tool for conducting information warfare, which is key for breaking the will of the enemy and in motivating one’s own forces.

Another parallel that Stratfor posits in the same 2006 report is how this newer generation of ‘dot com’ terrorists compares in operational efficiency to their silicone valley counterparts of a decade prior.

It is not yet clear what the future will hold for al-Zarqawi’s organization in, but for the evolving generation of jihadists as a whole, past could be prologue. Ultimately, the dot-com terrorists might learn the same lessons as the dot-com entrepreneurs of the 1990s: There is no “new paradigm” in their industry. The most successful militants have recognized all along that certain basic rules — and operational practices — still apply. And for those who fail to grasp that reality, there will be a painful winnowing.

Cyberwarefare's conspicuity in the minds of Pentagon and intelligence strategists is evident by their acknowledgement of its threat in the 2008 Annual Threat Assessment [Download PDF.]

The US information infrastructure—including telecommunications and computer networks and systems, and the data that reside on them—is critical to virtually every aspect of modern life. Therefore, threats to our IT infrastructure are an important focus of the Intelligence Community. As government, private sector, and personal activities continue to move to networked operations, as our digital systems add ever more capabilities, as wireless systems become even more ubiquitous, and as the design, manufacture, and service of information technology has moved overseas, our vulnerabilities will continue to grow.

Our information infrastructure—including the internet, telecommunications networks, computer systems, and embedded processors and controllers in critical industries—increasingly is being targeted for exploitation and potentially for disruption or destruction, by a growing array of state and non-state adversaries. Over the past year, cyber exploitation activity has grown more sophisticated, more targeted, and more serious. The Intelligence Community expects these trends to continue in the coming year.

We assess that nations, including Russia and China, have the technical capabilities to target and disrupt elements of the US information infrastructure and for intelligence collection.  Nation states and criminals target our government and private sector information networks to gain competitive advantage in the commercial sector. Terrorist groups—including al-Qa’ida, HAMAS, and Hizballah—have expressed the desire to use cyber means to target the United States. Criminal elements continue to show growing sophistication in technical capability and targeting, and today operate a pervasive, mature on-line service economy in illicit cyber capabilities and services available to anyone willing to pay.

Each of these actors has different levels of skill and different intentions; therefore, we must develop flexible capabilities to counter each. It is no longer sufficient for the US Government to discover cyber intrusions in its networks, clean up the damage, and take legal or political steps to deter further intrusions. We must take proactive measures to detect and prevent intrusions from whatever source, as they happen, and before they can do significant damage. (p. 16)

As did the Pentagon’s 2008 Annual Report to Congress on the Military Power of the People’s Republic of China [Download PDF].

In the past year, numerous computer networks around the world including those owned by the U.S. Government were subject to intrusions that appear to have originated within the PRC. These intrusions require many of the skills and capabilities that would also be required for computer network attack. Although it is unclear if these intrusions were conducted by, or with the endorsement of, the PLA or other elements of the PRC government, developing capabilities for cyberwarfare is consistent with authoritative PLA writings on this subject.

In 2007, the Department of Defense, other U.S. Government agencies and departments, and defense-related think tanks and contractors experienced multiple computer network intrusions, many of which appeared to originate in the PRC (Sec 1:4)

"Non-Contact” Warfare: An example of China’s current thinking on asymmetric warfare is encapsulated by a military theory termed ”non-contact” which seeks to attain a political goal by looking for auxiliary means beyond military boundaries or limits. Examples include: cyberwarfare against civilian and military networks – especially against communications and logistics nodes; fifth column attacks, including sabotage and subversion, attacks on financial infrastructure; and, information operations. (Sec 1:21)

According to Stratfor, “The United States has a very impressive ability to function in and command cyberspace. But by no means does it enjoy the unquestioned military dominance it enjoys in so many other domains." Hence the creation of the Air Force Cyber Command and the organizational shift this asymmetric threat precipitates:

Mastery of cyberspace is essential to America’s national security. Controlling cyberspace is the prerequisite to effective operations across all strategic and operational domains—securing freedom from attack and freedom to attack.  (Air Force Cyber Threat Vision Statement [Download PDF], Sec 2: II)

Arab satellite news network Al Jazeera and an Islamist Web site aired previously unseen footage Sept. 7 of Osama bin Laden and other high-ranking al Qaeda leaders apparently planning the 9/11 attacks. The video, like most other recent ones of al Qaeda leaders, was produced by the jihadist network's As-Sahab media branch, the fairly new organization behind the network's latest media blitz. In fact, banner ads appearing on extremist Web sites claim the video is a trailer for an upcoming As-Sahab documentary on the 9/11 attacks.

The post goes on to explain the logistic challenges of media production for a jihadist organization shooting in remote locations with peculiar below the line security concerns for cameramen and other technicians who have close access to the core leadership. 

For example, on the service end:

"Decades of experience, creativity, and growth have made film production and distribution one of the most economically important industries in the United States," notes the 2001 U.S. Department of Commerce Report on Runaway Production, "[u]nfortunately, our official statistics are woefully deficient." Current available data does not offer a precise picture of employment numbers for the full rage of professions involved in motion picture production or, for that matter, consistent measures of the industry's economic impact both regionally and nationally. Data available for production days and budgets is primarily collected by local film commissions and prone to irregularities and inaccuracies by default of naturally occurring idiosyncrasies in the measures and classifications used by those organizations.

In the absence of incentives or common effective measures, figures used are often volunteered by production companies and, therefore, in-auditable or even suspect. According to one film commissioner I spoke with, volunteered figures do not necessarily reflect actual monies spent in one's own region, especially when a production crosses state lines. In those cases, revenues accounted for in one state may be simultaneously accounted for in another state's revenue totals. Obtaining aggregate data at the national level is even more difficult.

In terms of overall economic model:

Outside the specificity of film production, we may have begun to rectify our overall fiscal vagueness about the creative industries with the recent adoption of the North American Industry Classification System (NAICS) that replaces the U.S. Standard Industrial Classification (SIC) system originally devised in the 1930s. The SIC system, although periodically updated throughout the last century, structured our economy on an obsolete industrially driven model. The NAICS identifies hundreds of new, emerging, and advanced technology industries, while reorganizing industry into more meaningful sectors--especially in the service-producing segments of the economy.

Then in terms of advertising:

The growing price and waning influence of advertising expenditure on mainstream television channels is a serious issue for many advertisers today. Intolerance about wasted ad spending is mounting. ROI is the today's advertising catch phrase. The linkage gap between producers and consumers of non-subscription broadcast content amounts to failure of means for assessing consumer preference with suppliers and network television was chosen by thirty-two percent of respondents as the worst medium for proving ROI, according to a study by Advertising Age.

Advertising, long the main revenue source for much of the media industry, is rapidly moving to the Internet, and shown by the financial success of sites like Yahoo! and Google. This is part of the trend in advertising from "mass" marketing to "measurable" marketing. The interactivity of the Internet is driving the process of fragmentation for broadcasters, but has the potential to provide advertisers with information about the taste, preferences, and habits of consuming audiences. So the Internet offers advertisers a valuable advantage that mass media cannot provide.

Entertainment financials:

Many commentators have noted how inefficiently Hollywood does business. A studio will spend millions of dollars marketing a particular star in lieu of having its own brand only to toss that brand away at conclusion of a project. There is no question that media and entertainment are by nature risky. What I am suggesting is that there is a slow evolution towards efficiency measures in the media firm and entertainment firm business models. So for example, gaming firms reuse code from failed titles instead of starting from scratch with every title. Digital technology allows for greater fluidity and quantification in distribution, for example: In d-cinema the ticketing systems are integrated into the pre-show systems and concession stands, so business can see clearly what is working and what does not.

In the social consciousness:

Americans are generally oblivious to the economic benefit of media and entertainment. The industry is often viewed as glamorous when in fact it is also anything but that. So much of the discussion, in my view, is overly politicized by both the left and right: "Hollywood is destroying America!" or "Advertising is destroying art by commodifying it." What I aim to do is open up a space for discussion that looks at these matters in context.

“There is a lot more randomness in biotechnology and any form of medical discovery. The role of design is overestimated. Every time we plan on trying to find a drug we don’t because it closes our mind. How are we discovering drugs? From the side-effects of other drugs.” Researchers very often “change their story” when they discover something by accident to give the impression it was by design.

"Traditionally game advertisements, whether in print or on screen, have focused, naturally, on showing the game. But as it introduced the Wii, Nintendo devised a marketing breakthrough: Rather than show the game, show the players. In an entirely counterintuitive, brilliant move, most of Nintendo’s ads are now shot from the perspective of the television back out at the audience, showing families and groups of friends having fun together. Nintendo realized that emphasizing the communal experience of sharing interactive entertainment can be more captivating than the image of some monster, gangster or footballer on the screen."

"Last season, FRONTLINE/World ran a story from the Middle East that introduced viewers to the fastest selling comic book in the Arab world, The 99. The comic features characters with super powers based on the concept of Allah's 99 attributes, including wisdom and generosity, as taught in the Koran. Its creator, Naif al-Mutawa, is a 36-year-old from Kuwait who was educated in the United States and who, as a boy, devoured Marvel comics and the Hardy Boys mysteries."

More provocative is how Hollywood and video games drive the development of high-speed, high-resolution digital image capture, management, transmission, and display that have implications for fields where these advanced technological applications would be economically unviable to develop on their own. Entertainment software has lead to faster introduction and deployment of processors, broadband networks, and high definition disks like HD-DVD and Blu-Ray. But, "IBM places value on chips made for entertainment software that goes beyond revenue and profits," says Dr. John Kelly, senior vice president and group executive for IBM Technology Group: "These chips help drive technology in other areas." The Mercury Computer's CELL based blade server, for example, can handle the requirements of sonar and radar computation for military or scientific applications, because of its ability to process real time data streams. "The Cell BE processor was originally designed for the volume home entertainment market," says Craig Lund, chief technology officer of Mercury Computer Systems, "but its architecture of nine heterogeneous on-chip cores is well-suited to the type of distributed, real-time processing that will power tomorrow's digital battlefield."

If the U.S. military is the primary global military power, and this hegemony is based on the ability of the U.S. Navy to dominate the world's oceans, then the condition of hegemony is partially based on the superior numbers and technology of U.S. naval vessels and augmented significantly by U.S. dominance in space-based reconnaissance technology, made possible by entertainment software consumers and movie goers world-wide.

Most Americans, however, are oblivious to the considerable role that content industries play in job and wealth creation - not only in terms of regional economic development and growing high-tech industry, but also in terms of U.S. global economic competitiveness:

• In fact, the media, entertainment, and cultural copyright sectors create new jobs at a rate three times faster than the remaining economy. In 2002, these sectors employed 5.48 million workers and accounted for six percent of U.S. gross domestic product. These sectors also generated $89.26 billion in export revenue - surpassing every other category including automotive, aviation, agricultural, as well as chemical and allied products.

• Foreign sales of motion pictures alone totaled $17 billion in 2002. The motion picture industry is the only U.S. sector that boasts a surplus balance of trade with every other country in the world; and the international sale of filmed entertainment plays a significant role in our nation's overall trade surplus in services.

• U.S. sales of entertainment software also totaled $8.2 billion in 2004, and U.S. game designers exported an additional $2.1 billion the same year. Deutsche Bank forecasts that global revenue for game software will grow at thirteen percent annually over the next four years, while PricewaterhouseCooper projects that the U.S. media and entertainment industries will be worth $690 billion by 2009.

This development has hastened the transformation of the U.S. economy from one based largely on information and knowledge to one driven principally by creativity. John Howkins categorizes the creative economy to include fifteen creative sectors - such as research and development, software, design, and content industries like film, music, and video games - that produce intellectual property in the form of patents, copyrights, trademarks and proprietary designs. The annual global revenue for Howkin's fifteen identified sectors was $2.24 trillion in 1999. The U.S. share represents forty percent of the market with revenue totaling $960 billion. The U.S. share also accounts for more than forty percent of research and development, forty percent of television and radio, and thirty percent of film. Howkins calculates that core copyright industries will be worth $6.1 trillion internationally in fifteen years. U.S. dominance in these segments - more than productivity improvements related to new technology and new manufacturing methods - is responsible for much of the nation's global economic competitiveness since the nineteen-eighties.

The Second Sight Podcast, © 2007 Alexa D. O'Brien, (27:52)

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The Second Sight offers insight and analysis on the media and entertainment industry - an often misunderstood or mischaracterized sector of the American economic and cultural landscape in the midst of its own technological and cultural shifts - from globalization and the emerging creative economy; to digital technology and the evolving aesthetic and nature of content; to the growing technological cross fertilization between media, defense, and medicine.

My name is Alexa D. O'Brien Gault. For the next two months, we will focus our attention towards understanding the evolving nature of the below-the-line training cycle for motion picture technicians, in the face of both digital technologies and newer end to end digital workflows; and the coming of age, so to speak, of the game generation - the older cusp of which, now in their mid thirties, having finally entered their productive years as journeymen technicians and content creators.

Jendra Jarnagin is one of a handful of New York based directors of photography who has shot with the Viper. She has over thirteen years of professional shooting and lighting experience, and her cinematography credits include numerous commercials and over thirty short films. She also worked as a lighting technician on major Hollywood films and episodic television, such as "Sex and the City" and "Law and Order". Jendra recently collaborated on the recent Alexis Krasilovsky documentary, Women Behind the Camera, featuring interviews with camerawomen from all over the world. Jendra Jarnagin, shot, field produced, and directed the projects New York interviews: including Ellen Kuras, ASC; Sandi Sissel, ASC; Lisa Rinzler; and Giselle Chamma. I am pleased to have Jendra Jarnagin for a Second Sight Podcast interview. Welcome.

Jendra Jarnagin

Thank you.

Alexa D. O'Brien

Tell me about Women Behind the Camera.

Jendra Jarnagin

Women Behind the Camera is a feature length documentary that has interviews...I think they interviewed over eighty women from all over the world. I am not sure the final count in the edit. Cinematographers, documentarians, journalists, camera operators, even some camera assistants...about their jobs in different countries and partly of course some of it deals with being a woman in that job.

August 3, 2007 - Mayor’s Office of Film, Theatre and Broadcasting (MOFTB) Commissioner Katherine Oliver today announced that MOFTB will redraft proposed Charter-mandated rules for issuing permits to film or photograph on public property. The revision of the rules will take into account feedback MOFTB has received over the past two months. Public comment, which is scheduled to end today, will be re-opened for another 30-day period after the redrafted rules are published.

The decision to codify procedures came as part of a settlement from a recent lawsuit brought by the New York Civil Liberties Union (NYCLU). By reflecting existing procedures in City rules, MOFTB has endeavored to meet the challenge of identifying a threshold level of activity which necessitates a film permit, while at the same time substantially mirroring its current practices. The goal is to maintain a safe environment for the public, while balancing the needs of filmmakers whose work may have a significant impact on pedestrian or vehicular use of public space. A copy of the rules that were initially proposed is available on the MOFTB website at www.nyc.gov/film.

Social enterprises are diverse. They include local community enterprises, social firms, mutual organisations such as co-operatives, and large-scale organisations operating nationally or internationally. There is no single legal model for social enterprise. They include companies limited by guarantee, industrial and provident societies, and companies limited by shares; some organisations are unincorporated and others are registered charities." from ' Social Enterprise - a strategy for success'

A CIC is a new type of company, designed for social enterprises that want to use their profits and assets for the public good. CICs will be easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community.

"A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

Social enterprises are an exciting and fast-growing sector. Yet some of the legal forms were originally designed for completely different types of organisation. The Government wants to support the sector by creating a modern and appropriate legal vehicle and to help raise their profile.

What are the differences between community interest companies and charities?

• Charities must be established exclusively for charitable purposes, but a CICs can be established for any lawful purpose, as long as their activities are carried on for the benefit of the community


• Charities have certain tax advantages that CICs do not have


• In return for those advantages, charities are subject to more onerous regulation than CICs


• The CIC legal form was specifically designed to provide a purpose-built legal framework and a “brand” identity for social enterprises that want to adopt the limited company form


• CICs will be free to operate more “commercially” than charities (e.g. CICs limited by shares can pay dividends to individual shareholders, subject to a cap), but stakeholders in CICs will still have the assurance of community benefit provided by the asset lock and transparency about their activities ability through the community interest report

Why be a community interest company rather than a charity?

There is no doubt that charitable status is exactly right for many who wish to further charitable objectives and it is likely that most organisations operating for the public benefit (and who are eligible for charity status) will choose to be charities, not least for the fiscal advantages.

The sort of people who will want to set up a CIC will typically be entrepreneurs who want to do good in a form other than charity. This may be because:

• They are looking to work for community benefit with the relative freedom of the non-charitable company form to identify and adapt to circumstances, but with a clear assurance of not-for-profit distribution status.


• Members of the board of a charity may only be paid where the constitution contains such a power and it can be considered to be in the best interests of the charity. It means that, in general, the founder of a charity who wishes to be paid cannot be on the board and must give up strategic control of the organisation to a volunteer board, which is often unacceptable.


• The definition of community interest that will apply to CICs will be wider than the public interest test for charity.


• CICs will be specifically identified with social enterprise. Some organisations may feel that consequently this is a more suitable than charitable status.

"Playing on the plural word for "Forum" this new web video network's goal is to bring thoughtful discourse, discussion and debate on a variety of political, social and cultural topics to an online audience. From speeches to book readings, this is not bite-sized infotainment. Not surprisingly, founder Brian Gruber is a former executive at C-SPAN. Still in beta, the site is a loud answer to those looking for substance with their interweb styles." (from AdCritic.com)

AOL is now officially a TV network.

In a network-style upfront presentation Tuesday, the Web giant announced a slate of programming with a full lineup of content from Hollywood vets.

The slate announcement, coming at the start of the upfront season for ad buyers, is meant to position AOL as an ad player along the lines of a TV outlet.

Slate will include projects from reality giant Endemol USA, production shingle Telepictures and a continued relationship with Mark Burnett Prods., which produced AOL's "Gold Rush" skein.

Many of the programs skirt the line between interactive gaming and nonscripted programming; they can be categorized as either reality television with consumer participation or an online game with video components.

AOL believes it can sell spots within the programming as well as peddle extensive product placement.

Though studies show most online viewers gravitate to programming and services more than corporate brands, Wilson said he believed programming would funnel users to Moviefone and other AOL services.

He and others are also acting as a kind a quasi-market test for the corporate entities that they have contact with.

Renetto is a "normal" guy from Ohio, who apparently came on to YouTube as one of the mass, but has built a kind of brand identity as the un-official spokesman for YouTube users - with the accompanied scorn and support of YouTubers.

He obviously leverages this to establish relationships with corporate entities as well as other users. This is for his own advantage, and that has a negative connotation for some on YouTube. So there is an aspect of "credibility”, that is unique and complicated in this format of distribution. YouTubers tend to poo poo polished content, or content that is not "real" as much as they tend to go into a frenzied delight over the controversy. It is a distribution channel with its own content expectation and delivery style tensions. How credible serialized content is depends on a delicate interplay of reality and verisimilitude.