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I am a bit puzzled by Authors Guild President Roy Blount Jr.’s op-ed piece in the NYTimes today.  He is up in arms over the ’s new text-to-speech feature, defending the Authors Guild claim that it violates authors and publishers audio rights because they are not specifically compensated for them.

While this may be technically true given current IP laws (disclaimer: I haven’t spent enough time digging through the archane statutes to know for sure), I don’t understand the rational behind it.  Unless a Kindle book purchaser would have separately purchased a full price audio book, there is absolutely no cannibalization taking place here. I’d frankly be very surprised if there was much overlap at all between individual’s purchases of printed and audio versions of the same book.  In fact, I would bet that folks will buy books they otherwise wouldn’t have (in either printed or audio form) because of the Kindle’s additional text-to-speech benefit.  I certainly will.

The larger point this highlights is the unecessary complexity embedded in our intellectual property system.  This is largely a legacy effect, as technology has moved far faster than IP law has adapted.  As Larry Lessig has been preaching for years, we must simplify the way intellectual property works or we will cripple our ability to effectively disseminate and monetize it in this new age.

As far as literature is concerned, I would posit that there should be one price for a digital copy of a book and a slightly higher price for a printed one to compensate for the cost of printing and publishing.  With either purchase, one should get access to a digital copy as well as an audio copy so it can be enjoyed anytime, anywhere, anyhow.  And the industry should price accordingly to ensure there is aporopriate margin for all involved.

At the end of the day, the IP is the IP.  What form it gets consumed in is irrelevant.  This approach will likely increase the overall sale of books as it will make it easier for people to actually read them.

Nielsen and LRG released their latest media consumption reports yesterday, with some very encouraging results for the traditional media business.

The money stat from the Nielsen Q4 report:

The average American watches more than 151 hours of TV per month, an all-time high.

The key conclusion drawn in the LRG study:

The impact [of online viewing] on traditional TV viewing and multi-channel video subscriptions [cable and satellite] has been “negligible.”

Further, according to the LRG study:

Among all adults online, [only] 3% strongly agree that they would consider disconnecting their TV service to just watch video online – compared to 4% last year.

These results are certainly great news for an industry increasingly besieged by  forces of change, perhaps still more ‘vocal’ than 'real’ as confirmed by the latest research.  And they are even more welcome as we face perhaps the worst economic downturn in our history.

I fear though that these results, as they often tend to do, may breed complacency in a media industry that should be bracing for change.  Granted, with all the talk of convergence, the consumer is still not there.  But mark my words he’s coming quicker than you realize.

Peeling back the onion on these two reports, a number of the secondary stats point to clearly shifting behavior:

• 74 million people watch time-shifted television vs. 54 million people in the fourth quarter of 2007, a 37% y-o-y jump.
• 31% of Internet activity occurs while consumers are also watching television.
• Young viewers (18-24) watch video on the Internet and on a DVR at the same rate: about 5 hours per month.

Simultaneous web surfing and TV viewing, the increasing move to time shifting and the growth in online video consumption, especially amongst the younger generation, are harbingers of what is to come – a largely on-demand, networked, social, lean-back viewing experience.  It’s simply a matter of time.

So how should the media industry, and specifically the cable companies (where most of the value in the chain is consolidated) respond?

It is precisely at these times that they should use their existing power with consumers to lead innovation, rather than stifle it.  The cable industry should act from a position of strength, ensuring that they emerge in the wake of disruption as a powerful force rather than a regulated utility.

This will involve some tough decisions and some serious wrangling between content creators/owners and distributors.  But in the end, it’ll likely require some variation of the following (with many specifics of course to be worked out):

• Full embrace of the Internet as the platform for content delivery.
• Charge consumers for tangible usage rather than opaque bundling.
• Redesign content packaging to be useful for consumers rather than to protect sub-par programmers.  Feed the good networks, kill the bad.
• Embrace third-party innovators and new technologies, such as Boxee (a Spark portfolio company) and others, leading the charge on the consumer front.
• A potential shrinking of overall revenue.  To protect and grow margins in this new reality will require, in addition to the aforementioned 'killing of bad networks,’ a reworking of the inflated content creation model and an end to inefficient uses of marketing dollars.

Admittedly this reality is a long way off, perhaps 10+ years before it comes to full fruition.  But the time to act is now, and all parties will be better off when that day comes – cable companies, content creators, innovators and, most importantly, consumers.

I ordered the new this week, and I’m super psyched about it.  Being on the move so much, it should make my reading life a lot easier.  I’m especially excited to see how the speech to text feature works.

But one thing still gives me pause.  Call me old school, but I am a serious lover of the book form factor.  I simply adore books – how they look, what they represent, building my library – and I don’t want to give them up.  Maybe I’ll laugh at this notion one day, but for now I’m not ready to part with them so easily.

I would think I’m not the only one that feels this way, so I was surprised to find that does not offer a reasonably priced bundled purchase option for the print and kindle versions.  I’m buying the book already.  How much can it cost to beam me a digital copy at the same time?

I hope Amazon offers this package soon.  Otherwise, I may end up paying twice for my favorite books.

My friend Jeremy Philips penned a timely review in today’s WSJ of ’s new book, .  The book chronicles the precipitous decline of the once mighty music business.

Jeremy sums up the music industry’s grievous error and the subject of the book’s investigation pretty succinctly:

The music industry’s big mistake was trying to protect a business model that no longer worked. Litigation would not keep music consumers offline.

Broadening the point to the more pressing issue of the day for media companies, Jeremy notes:

Consumers will not wait for businesses to catch up. Media companies have to reinvent their old models while continuing to harvest (but not blindly protect) their core businesses. Television networks, for example, are now selectively providing shows to free Web sites, despite the risk of undermining the networks’ own ratings and revenues. The companies’ long-term success depends on their ability to find a model that will give consumers what they want and earn some money, too.

Refreshing to hear from an EVP at News Corp.  And nowhere is this more true than in the video world.  Consumers want to get video content where they want it and when they want it.  Like the music business, this evolution is inevitable.

Young, nimble technology companies such as Boxee (a Spark portfolio company) are helping lead the charge on the consumer experience front.  It is incumbent on the existing distributors and content creators to recognize the inevitability of this change and work together with innovative technology upstarts to help consumers get what they want, while allowing everyone to “earn some money, too.”

Otherwise, we will see what we saw in the music business – value destroyed not just for the the existing players, but for the entire industry…including the artists we rely on to make all the great stuff we want to watch.

This time, let’s harness innovation to create value rather than destroy it.

Watching the recent “ARoid” situation unfold has me sick to my stomach.  Not so much as a Yankee fan or even over his use of steroids.  What bothers me so much is that we let him do it.  Baseball let him do it.

The MLB Players Association has gotten out of hand.  Rather than a body that protects players from mistreatment by powerful, wealthy team owners, they have become just the opposite – a cartel whose sole purpose is to enrich its members through whatever means necessary.  And if that means aiding and abetting cheating, shielding steroid use to juice homers and holding up the league to do so, so be it.

Even more troubling is that the powers that be in baseball allowed this to go on.  Equally drunk with ‘green’ ambition, the league turned a blind eye to indiscretions ruining the game in its chase of the immediate, almighty dollar.

There are some parallels to what has been going on for years in the auto industry given the strength of the United Autoworkers Union.  No matter how green we make our cars, we’ll never compete while fielding a higher paid, less productive workforce than our competitors.  Against this impossible backdrop, the auto companies chased whatever they could make work – namely, short-sighted gas guzzling cars that drove near-term profits.  At least in baseball our hitters were hitting and everyone was making real money!

Enough is enough.  I’m all for worker protection, but not at the expense of true competitiveness and accountability.  The repercussions go beyond the labor implications to the ultimate integrity and sustainability of the industries themselves.

We must get back to fair pay and treatment, in exchange for real standards and responsibility.  We must always act with our long-term interests in mind rather than merely short-term gains.  Otherwise we’ll completely sully the rest of our institutions beyond our financial ones.

Chris Anderson’s piece in this weekend’s WSJ, The Economics of Giving it Away, has sparked a lot of digital conversation over the past few days.

As I’ve stated previously on this blog, I fundamentally agree with Chris’ notion that in order for online businesses to create big profitable companies they will have to start charging for great (making them great is not trivial of course) services.  Advertising alone will not be able to fill the void.

This is not a new concept for consumers, even on the web.  For years, consumers have paid for dating sites, listings sites, gaming sites and others.

Keying off Chris’ piece, Fred Wilson wrote a provocative post extolling the virtues of Internet business models that drive cash flow through a rigorous focus on scalability and cost minimization.  There is of course truth to Fred’s point that revenue and cost have a 1:1 relationship and a dollar lost of one is as good as a dollar gained of the other.

But, as I commented on A VC, in order for a company to be both big and profitable I believe they need to do both – maximize revenue and minimize cost.

Part of the distinction here is simply a stage thing – earlier-stage companies benefit tremendously from lean teams and nimble operations that can move quickly to build product and adapt it to market needs.  But over the life-cycle of a great company, without investing to grow the top-line there is a fundamental cap imposed on profit and value.

So how do great companies manage to effectively do both?  I believe it all comes down to great leadership.  This may sound trite or obvious, but I don’t think it can be emphasized enough.  This is a CEO’s fundamental challenge – maximizing revenue while minimizing costs, investing in the strategically important and positive ROI projects while maintaining a relentless focus on efficiency that always has the organization feeling one person short of fully staffed.

How do great leaders do this?  They hire and empower incredibly talented people in all key functional areas, and those people in turn do the same all the way down the line.  They focus almost all of their attention on capital allocation, to make sure money is always spent prudently and in the right places balancing all of the company’s short-term and long-term interests.  And they create a culture of performance and accountability that permeates the entirety of the organization.

And that’s why the right leader is so critically important to the success of a company.  If there’s anything that’s been confirmed for me in my early days in the venture business, it’s that great people best great ideas any day of the week.