I Less-Than Three Nate Silver

I have a bit of a crush on Nate Silver. No, despite the graphic, it's strictly platonic. ;-) But a headline that read "I Highly Admire Nate Silver" just didn't carry the same impact.

If you are unfamiliar with Nate Silver, odds are that you weren't following this past election cycle. Silver garnered a lot of publicity for his coverage of polling through his website, fivethirtyeight.com. (The website is named such as there are 538 votes in the electoral college.) Of course, there was TONS of coverage on presidential polling; Silver stood out against his competitors for three reasons. First, he did not conduct any polls himself--he compiled the results of other parties' polls, and he has a complex model for weighting each poll. Some sites compile others' polls as well, but fivethirtyeight compensates for the pollster's historical accuracy, the recentness of the poll, the size of the poll, and other factors. Second, his were incredibly accurate. And finally, Silver's background is actually not in political science--it's in baseball. More specifically: in analyzing baseball statistics (aka sabermetrics). I'm sure he was proficient at his old job, but I find it uncanny how successfully he took the skills from his job and applied them to his hobby--to the point of usurping established professionals. And now that he's become an established authority through the popularity of the 2008 elections, it looks as though he's going to become a full-time political pundit. Very impressive, Mr. Silver.

Tolerating Digital Rights Management

Apple made a huge announcement today: it is drastically overhauling its popular iTunes service. First, the pricing of songs will change from the flat $0.99/song to three price points $0.69, $0.99, and $1.29--where music labels get to chose which price to charge their songs at. Second, they will begin a process of totally removing DRM from all their songs. Finally, they will allow iPhone users to download directly over their 3G network.

There are a few interesting implications of the above. First off, there will be a direct (yet subtle) price variance for song buyers. Furthermore, the prices are set by the music labels and not by iTunes themselves, which encourages competition. Up until now, MP3s have been valued very consistently at $1/song. Will they be encouraged to drop the price of a particular artist by $0.30/song in hopes of they could take market share away from a competitor? Or conversely, will they raise the price $0.30/song and assume loyal fans will pay a premium? Even though I am leery of the latter, I do find the prospect of a more free market for MP3s mildly enticing.

Second, and probably of greater consequence, is the fact iTunes is dropping Digital Rights Management. As a rule, I despise DRM and oppose its application almost entirely. Besides the principle that consumers are basically being forced to purchase features that hinder the use of the product, DRM locks consumers into specific hardware/services. For example, I cannot (legally) play any of my current iTunes purchases on anything other than an Apple iPod/iPhone or a computer with the iTunes software installed. If I want to switch to a Microsoft Zone (which would be a bad idea, but I digress), my purchases would be nontransferable. If I want to upgrade to Windows 7 and iTunes doesn't work for some unknown reason, my purchases will be nontransferable. In effect, there is coerced customer loyalty and planned obsolesce in all DRM-locked purchases. In fact, I would argue that it's not so much of a purchase as it is a lease. Now don't get me wrong--when I bought episodes of "Heroes" to download to my iPod and watch on my plane trip later this month, I did so accepting that their usage would be highly constrained. I decided those were worth their $2/episode price even if I only watched them once or twice. For music, though, I (as well as most people, I'd presume) have a much greater expectation of what they should get for a $1/song.

For bonus happy-fun DRM-bashing, check out Defective By Design's website.

Is A La Carte Cable Viable?

Yesterday, Viacom (who owns MTV, VH1, Comedy Central, Spike, and a 15 other cable channels) threatened to pull all its content from my cable provider (Time Warner) unless TW increased its subscription fees to Viacom by roughly $0.25. Viacom's spokespeople argue that Viacom stations combine for roughly 20% of viewership but that their fees only make up 2.5% of TW's cable bill, so their subscription fees should be increased. It sounds reasonable when they put it like that. Of course, if you put it the opposite way--that all other aspects of TW take up 97.5% of the bill but only account for 80% of viewership, so their fees should be slashed and my bill should be decreased--it still sounds reasonable.

The whole matter rises the question: why don't we have a la carte cable television yet? I did some quick research (read: google-searched) on the subject and found several people claiming to have good reasons; however, all of them seem extremely shallow in my book.

• One person argued that it was techonologically prohibitive because special hardware would need to be installed at each subscriber's home; however, looking at my current cable box, it already seems quite capable of determining which additional channels (premium, on-demand, sports packages, etc) I have subscription to and which I don't. At the very least, urban networks based off similar cable boxes should be able to handle such an innovation.
• Another person argued that, once viewers would drop less-popular channels if allowed, leading to those channels losing subscribers and revenue. There are two major flaws with this line: 1.) it assumes these channels won't bundle with other channels to become more compelling, 2.) it assumes these channels won't be able to raise their stand-alone fee to compensate for the lost subscribers. For example, currently The Sci Fi channel receives about $0.50 of my $60 monthly cable bill. Since the Sci Fi channel is one of the few channels I do regularly watch, I would be willing to pay as much as $4/month for it individually. Assume most other fans are like me, that means Sci Fi could handle up to a 87.5% loss in subscribers and still survive.
• Another argument was that such a change would drastically alter the cable channel market, causing "the demise of cable television as we know it". I like this argument because its not really an argument at all--it's claiming cable television would be radically restructured, which is actually a good thing (assuming you believe in free markets). Forcing the cable market to accept a la carte pricing would essentially make it a free market, where good services are rewarded and bad services are punished. I'm sure the transition would be unpleasant, but the end result would be customer-driven and should be much more efficient than the current provider-driven "take-it-or-leave-it" approach.
• Finally, my favorite bogus argument was that, because subscribers would presumably own less channels, they would be less flipping through channels, which would mean they would see less commercials, so there would be a huge fallout in ad revenue. There are so many things wrong with this argument. First off, no one flips through channels to watch commercials--in fact, usually it is because they don't want to watch whatever commercial came on the show they were just watching. Second, most people don't aimlessly flip through channels anymore--they use either the Favorites button or the TV Guide functions, so by the aforementioned logic ad revenue is already at a minimum and the fallout from removing unwatched channels entirely should be negligible. Finally, subscribers would (presumably) spend JUST AS MUCH time watching TV with a la carte bill as with their current bills. (Possibly more, if you consider people who don't have any cable now but would if it was cheaper.) The value of a television ad shouldn't be affected at all--if it is, then people buying television ads are doing something horribly wrong right now.

Unfortunately, I think the REAL reason we don't have a la carte cable television is entirely political. Some organizations (the cable company, the channel providers that are collecting unjustifiably large fees, and their lobbyists) are benefiting from the current implementation, and they are heavily resisting any change to the contrary because they don't want to lose revenue. Fortunately, Good Mother Internet is providing some alternatives to cable to us (Hula, IPTV, etc). One of the articles I read suggested that it would be pointless to create any regulation for a la carte television because so many alternatives already exist via the internet. I just might call his bluff and start working on my MythTV box this weekend.