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August 2017
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Tech Journalists Keep Completely Missing The Point Of Cord Cutting

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It has become the laziest "hot take" in technology media. Once a month or so, a writer decides to subscribe to as many streaming video services as possible. They then proudly declare that this whole cord cutting thing (ditching traditional cable TV for streaming video) is a waste of time. Why? For whatever reason, these writers feel compelled to try and use streaming alternatives to perfectly mirror the existing, bloated cable bundle consumers have spent two decades complaining about, only to shockingly wind up disappointed by the cost (gosh, it's almost as if broadcasters dictate the pricing for both services!).Each time one of these stories pops up (from Gizmodo to USAToday,) we note how these writers are completely missing the point. Cord cutters aren't trying to precisely mirror traditional cable bundle, they're simply looking for greater flexibility. Cord cutting provides just that, in that if you don't like sports -- for example -- you don't have to subscribe to any services that offer it. As such, "cord cutting is really expensive when I subscribe to every streaming service in the known universe" is just an odd narrative that just keeps bubbling up across various media outlets despite not really making much sense.The latest culprit is the New York Post, which recently penned a missive declaring that "streaming TV is getting as bad as cable." Why? Again, it's apparently because when you sign up for every streaming service imaginable, it starts to get somewhat expensive:

"Home entertainment is really starting to add up. Want to watch The Crown, The Handmaid's Tale, Transparent, Game of Thrones and Homeland? Prepare to drop $51 a month minimum. And that number doesn't even include your Internet package or basic options such as Food Network, Travel Channel and Syfy.And just when we thought we'd reached maximum capacity, in September, CBS will resurrect Star Trek for a new series called Discovery. Fans rejoiced at the announcement they'd been without a Trek series for 12 years until they made a rude discovery of their own: The new show would only be available on the CBS All Access app. That's $5.99 a month to basically watch one show. Absolutely nobody is signing up for the NCIS reruns. So now we're at $57 a month.
So, several things. One, $57 a month is still significantly less money that what many people pay for cable. Two, writers like this ignore a number of obvious realities that can lower your costs further, including the fact that countless people share streaming service passwords (something most streaming companies don't care about because they see it as free advertising). You also need to factor in things like over the air antennas (and the rising number of solutions that let you record this content to DVR), which provide additional options for less money -- or free.Writers like this also hysterically like to avoid so much as mentioning piracy. Too many writers bizarrely act as if you're not allowed to even acknowledge piracy exists because it's naughty. But if you're "analyzing" how much it costs for an ordinary consumer to get TV content and you're not factoring in piracy, you're missing a fairly massive part of the overall picture. It doesn't really matter if you or your publisher don't like it, or don't think people should be doing it. It's happening, it's part of the overall cost-saving picture, and it's something companies have to compete with. Yet it's never even mentioned in these reports.That said, journalists pushing the "if I buy everything in the store it gets expensive" narrative are missing the most important point: actual consumers repeatedly say cord cutting saves them significant sums of money each and every month. And if any of these writers had actually bothered to, say, talk to actual cord cutters, they would tell them the same thing.Every time a story like this pops up I enjoy heading over to Reddit where users quickly point out how cord cutting is saving them plenty of money. Why? Because it provides something most traditional cable providers aren't willing to: flexibility and choice. With cord cutting, the end user gets to decide how to best balance their viewing options to build a content package that works for them and their budget. That's in contrast to your cable provider, who'll consistently pay empty lip service to choice and flexibility, right before it raises both your cable bill and set top box rental fee.Yet somehow the reality that consumers are truly saving money escapes these pearl-clutching authors. Like in this recent story at Wired pushing the same, stale narrative. One user at Reddit put their objection to these reports rather succinctly:
"I don't know why every article like this dives into recreating cable, and then laments that it's not that much cheaper than cable. He's way more concerned with watching channels than watching shows or entertainment."
Look, if you really like paying a significant sum of money for 500 channels to a company with a worse customer service rating than the IRS nobody's stopping you. In fact, if you truly need to access every shred of programming imaginable and have oodles of disposable income, cable remains your best bet. But the idea that cord cutting is somehow "failing" just because it's not good at mirroring the abysmal value presented by the traditional cable bundle makes no coherent sense. At the very least, the next time you proudly declare that cord cutting doesn't save consumers money -- perhaps talk to some actual consumers first?

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posted at: 12:00am on 22-Aug-2017
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A Google Tax Isn't Going To Give Publishers The Payout They Think It Will

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Somehow newspaper publishers -- especially those located in Europe -- believe the road to recovery is paved with income siphoned off Google. There have been plenty of proposed "snippet taxes" and other demands Google pay online publications for sending traffic their way. So far, nothing has panned out as the papers had hoped. In extreme cases, Google has offered to just stop sending any traffic their way by pulling out of the snippet-taxed market.The newspapers claim Google would be nothing without them, which is, at best, extremely dubious. There's a wealth of news and information out there that doesn't come from legacy newspaper publishers. The internet isn't going to be bereft of news services if certain papers decide to pull the plug because Google isn't propping them up.But even if they were right about this, there's a very good chance Google can't save them from drying up and blowing away. Media consultant Thomas Baekdal has done the math on proposed snippet taxes. Even with Google serving up more than a trillion search results a year, there's no money in taxing clicks.Baekdal's back-of-the-envelope math starts out big -- the only thing publications see when they start demanding link/snippet taxes:

First of all, Google is big, in fact, the current estimate is that Google is serving up between 1.5 to 2 trillion searches per year.That amounts to 125 billion searches per month.Google also makes a lot of money. In the last quarter, it made a stunning $26 billion, of which $4.1 billion was profit.
This is where most publications stop when griping about Google's billions in comparison to their declining net worths. Assuming the equation is zero sum is only part of the problem. The rest of it's the math they don't feel like doing. But Baekdal follows through. Not all of this profit is related to Google's searches. Alphabet -- Google's parent company -- has a lot of irons in the internet fire, some of them actually profitable. Stripping everything out but search revenue, we end up with this:
Google Search has a revenue of $4.65 billion per month, of which about $700 million (not billion) is profit per month.
Smaller, but still hundreds of millions more in profit than most papers make. Again, these are dollar signs in publications' eyes, each of them apparently believing a revenue-"sharing" plan forcibly applied to Google with net thousands of dollars in new revenue for each participant.Not so:
Now, we can take the $700 million in profit and divide that by the 125 billion searches to get the profit per search query.The result is that Google makes... $0.0056 per search query.
That's almost nothing, even for a publication receiving millions of hits via Google every month. As Baekdal does the math, the revenue per month is obviously nothing compared to what publications believe it should be. Even with every search monetized by Google's ad placement (which nets higher revenue for Google and more to "share" with publications), the total payout for a site receiving 3 million hits per month (Baekdal uses Denmark's largest paper as an example) would be between $930-1000/month. Not exactly business model-saving $$$. And not every search is monetized, so the payout would likely be even less.Nate Hoffelder of the Digital Reader points out Baekdal's math is slightly off, thanks to a misconception about how the snippet tax would be collected.
Baekdal made a couple goofs in his calculations (he thought Google would be paying for clicks rather than for impressions)...
But even so, there's no money there:
Google is making under 4 cents per search, and turning a profit of around a half a cent per search.Of course, that is an average across all of Google's search results, and it includes search terms and even whole verticals which are not monetized (Google News, for example). And that is also a global average and not based on EU revenues, so it is not 100% applicable. (And those calculations are based on a bunch of unsupported assumptions.)Leaving those caveats aside, the point that matters is that news publishers want Google to pay for the use of their links and snippets. This means that Google would need to take that 3.7 cents and divide it between all of the relevant links returned with each click of the search button (after taking a cut for itself).
That money is not going to go nearly as far as the news publishers think.Would having this math in front them cause publishers to rethink their plans to divert Google's "billions" into their own pockets? Probably not. Not understanding how this all actually works is extremely helpful when demanding a billion-dollar tech company start handing over cash for directing more traffic to the publications' sites. The very premise is beyond stupid, but it gets even more stupid when each publisher acts like the biggest cut of an apparently minuscule payout won't have to be shared with every other publisher whose sites end up in the same search results.If these publications are dying, it's not because of Google. And they apparently have enough cash flow to pay lawyers and lobbyists to keep pushing local governments to craft anti-internet legislation on their behalf.

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posted at: 12:00am on 22-Aug-2017
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