Recently in Justin Hilley Category

Guess what? I finally learned what Skype really is! Do you know what Skype is? What is it then? Okay, Okay.

I first heard about Skype several months ago. And up until now, I had always thought Skype was just a video-conference application that Oprah used a lot. I see her use it a lot on her show to interview people - I mean, I read about it a lot in her newsletter - I mean, I...screw it.

Skype is actually a software application that allows users to make telephone calls over the internet; other features include instant messaging and file transfer. It has more than 400 million users around the world.

I have noticed a lot of hubbub recently in newspapers concerning Skype. Skype has announced that it will unveil a free application this week for Apple's iPhone and iPod Touch, and, beginning in May, for various Blackberry phones. AT&T, however, is blocking the free app from working on the cellular or 3G network; it only works on Wi-Fi. By using Skype on the iPhone, consumers can sidestep AT&T, allowing them to get by, potentially, with cheaper voice plans. Consumers can also save a bundle on international calls.

Public policy-makers and consumer advocates say it's an example of AT&T, the sole carrier of iPhone in the U.S., trying to handicap a direct competitor. "Consumers will pay the price for AT&T's blocking," they say.

I understand why we, the consumers, would want cellular or 3G network access for Skype, but I gotta be on the side of AT&T on this one - at least at this stage in the game.

AT&T is the only authorized iPhone carrier in the United States; why the hell would they promote the services of a direct wireless rival? Why would AT&T allow Skype to use its data network? That would be like allowing your wife's younger, tanner coworker to have sex with your wife, who is also your coworker. You can talk to my wife and have lunch with her like I do, but you will not make the sex with her!

Technically, the limitation on Skype ( tan coworker) and other Internet phone companies is imposed by Apple (marriage contract), which has similar arrangements (don't touch my wife) with other carriers.

Skype should be happy - and I think it is, despite its frustration with Apple - that it even has a spot on the iPhone. Wi-Fi is so common now that the limitations of not being able to us AT&T's cellular or 3G network can't be that much of a drawback for Skype users.

The overall message is that now that millions of consumers are going wireless, the largely unregulated wireless industry will have to realize its day of FCC regulation will come. Oh it will come.

Walter Isaacson, former managing editor of TIME magazine and president of The Aspen Institute, was a guest on The Daily Show with Jon Stewart last month. The following is an interesting excerpt from the show:

Stewart:  I love newspapers. It is not satisfying to look at newspapers on the internet. I don't find that a satisfying experience.

Isaacson:  And by the way, if we had been getting our news for the past 400 years from guys sort of talking on some sort of electronic box or on some computer, and somebody finally said, "hey I can take all of that, I can put it on paper, I'll deliver it to your doorstep, and you can bring it to the back yard or the bathtub or the bus", you'd say, "wow, this paper, that's a great technology. That's gonna replace t.v. and the internet."

At which point, the audience broke out in sustained laughter. So did I!

Stewart:  I think you're really wrong about that one.

Yup, Isaacson was serious, and nope, I do not agree with him. I am referencing this exchange for three reasons: (1) It is hilarious (2) Stewart's first and last point is correct and (3) Isaacson is not totally insane.

Isaacson feels that newspapers should come up with an iTunes-easy method of micropayment where a newspaper would charge a nickel for an article or a dime for that day's full edition or $2 for a month's worth of web access. I agree with him.

But in doing so, I think that local newspapers need to become more specialized in print and online. The problem with newspapers is that they do not differentiate themselves from other publications; they are not completely unique. They need to hold on to and expand the content that gives them their natural community brand. Readers would be more likely to pay for this content.

Newspapers' most important service is community influence. They are still the most trusted source for local news and analysis, which makes them attractive to advertisers. Professional news organizations can process and contextualize information because they have the resources to produce the evidence. Bloggers are not nearly as well-equipped.

Philip Meyer, professor emeritus in Journalism at the University of North Carolina says that "the newspapers that survive will probably do so with some kind of hybrid content: analysis, interpretation and investigative reporting in a print product that appears less than daily, combined with constant updating and reader interaction on the Web."

Meyer is right in that the print newspapers will become less-than-daily publications. This may not occur for another 10 or 20 years or beyond, but it will happen. And those newspapers that survive will understand that the web-newspaper relationship is one of complimentary content and not replacement theory.

Local newspapers must create brand value on the web by becoming more specialized in their content. This will attract advertisers and help readers see that they are paying for something more valuable to them, not something they used to get for free.

I have been listening to them since 1994. I have well over 100 Pearl Jam CDs; I have Pearl Jam books, shirts, posters and DVDs (even VHSs); and I have been to several live shows. They are, quite frankly, the greatest American rock band ever!

Recent national news concerning a proposed merger between the world's #1 ticket seller Ticketmaster and the world's #1 concert promoter Live Nation has transported me back to the summer of 1994, when Pearl Jam brought forth before the U.S. Congress an antitrust complaint against Ticketmaster. I remember it vividly:

"It has been no secret that since Ticketmaster acquired Ticketron, the only other nationwide computer ticket service, service charges have been on the rise. It is today virtually impossible for a band to do a tour of...significant venues in major cities and not deal with Ticketmaster" - Pearl Jam guitarist Stone Gossard

Ticketmaster's business deals then, now and just over the past couple of years are eerily similar to the to the vertical integration moves by Viacom and to previous monopolistic practices by Microsoft. Microsoft was found guilty in April 2000 of violating antitrust laws.

The merger of Ticketmaster and Live Nation is a direct violation of antitrust law; it is one that should not be allowed. This potential monopoly is a threat to basic market dynamics.

In the Microsoft case, the court stated the three characteristics of monopoly: it has a very large share of the market for a give product; a high barrier to entry for competitors protects its market share; and customers do not have a viable alternative to its product.

Anyone who regularly attends concerts can see that the first and third traits apply to Ticketmaster. And Pearl Jam's Congressional testimony illuminated Ticketmaster's protected market share:

"By locking up all the suitable venues and promoters with [exclusive contracts], Ticketmaster has effectively thwarted competition and left most bands without any meaningful alternative for distributing tickets...The result, for our fans, has been higher service charges, meaning effectively that they pay higher prices for their tickets" - Gossard

The new merger would make it nearly impossible for competitors to enter the concert promoting and ticket selling market.

Pearl Jam's case was dismissed in 1995. Attorney General Janet Reno said new enterprises were entering the ticketing business . Ticketmaster is still the behemoth it was back then.

Ticketmaster and Live Nation are not direct competitors. Therefore, according to market theory, a merger would not violate antitrust laws because competition has not substantially decreased. In other words, no rivalry is suffering. This has been a widely used defense.

A-ha! But a rivalry would suffer; in fact, it would cease to be born. Live Nation ended a long-term contract with Ticketmaster last year. The massive concert promoter launched its own ticketing service for its 140+ venues in January 2009 and has touring deals with very high-profile music artists such as Madonna, Jay-Z and U2.

I wonder why Ticketmaster would want to merge.

Vertical Integration involves owning assets in the exhibition, distribution, production and sale of a single type of media product, and, in a Viacom-like fashion, that is what Ticketmaster is attempting to accomplish. It has already partnered up with a leading artist-management company (exhibition); it is already the #1 ticket seller (distribution); and now it wishes to form a new $6 billion company that would own 80% of all U.S. venues where live events are held (production).

Arriving late to the party, Ticketmaster is now doing its best to conquer the secondary market for online sports and entertainment tickets, which includes websites such as StubHub and RazorGator.

The synergy created would render the new company, Live Nation Entertainment, untouchable; it would hold significant control in every aspect of the industry and deter competition. Conversely, having another strong competitor will give the market an incentive to operate efficiently, resulting in technological innovation and reduced ticket prices for consumers.

Something Seattle's finest once fought for.