Dana Blankenhorn

The Streaming Crash of 2019

For the last several years, a lot of companies have been trying to fit through a very narrow door.

That door is streaming.

The success of Netflix, and of podcast stars like Marc Maron, has caused a heart attack in the entertainment world. Suddenly everyone, and every company, is aiming for a taste of this action.

They can’t all get it.

There aren’t enough hours in the day to listen to a fraction of the podcasts available now. I have a half-dozen in my phone, and I can’t get to all of them. Long-haul truck drivers can get to a lot, and people who work as security guards may listen for 8 hours per day. But a single Joe Rogan podcast can run 4 hours. Maron does 3 hours every week.

CBS, NPR, the BBC and others are hitching their wagon to podcasts. Spotify plans to spend $500 million on podcasts, an industry that generates $700 million in annual revenue.

These numbers make no sense.

The Elite Web

A lot of people like to complain about the lack of online freedom in China.

It’s true. The government there decides what people can and can’t see, what they can and can’t say. The social conditioning is impressive and made more impressive by the constantly-growing economy.

But if Jack Ma, or anyone in his Alibaba executive team, wants to learn something from the online world, or say something online, it’s not a problem. The same at a thousand other large enterprises. Freedom is doled out with an eye dropper, but for those who need it the firehose is available.

Is the situation better in our country?

What Comes Next

After the market falls, when everyone is in despair, is when I get the most excited about the future.

That’s because recessions aren’t so much an ending as a beginning.

A recession means the old games no longer work. The oldest business processes disappear entirely. WE have seen this during every recession of my working lifetime.

Small towns fell under the onslaught of Walmart in the 1980s. Big boxes replaced department stores in the 1990s. In the 2000s, whole layers of middle management disappeared. In this decade, gatekeepers like insurance agents have gotten the boot.

Common Carriers

A key to understanding 2019 will be the issue of common carriers.

In just one decade the “Cloud Czars” – Apple, Microsoft, Google, Amazon and Facebook – have replaced the telecommunications and broadcast industries with a new system, using their infrastructure.

We don’t make overseas calls anymore. We Skype. We don’t watch TV. We stream.

The cloud was built without government subsidy or interference, in a competitive free for all in which the winners invested while the losers did not. The industries replaced by this infrastructure were built as monopolies, under systems of regulation controlled by the Federal Communications Commission and, when necessary, courts.

This made sense, in terms of both capital preservation and technology, at the time.

The Rebirth of Journalism

The business of journalism is to organize and advocate for a defined audience. (To the right, a business journalist as a young man.)

A place, an industry, a lifestyle. That means aggregating a collection of people around a common cause or interest and interpreting the world through their eyes, for their benefit.

Thanks to Google and Facebook, but also thanks to the lack of vision on the part of people running the business, journalism has suffered grievously in the 25 years since the Web was spun. I once asked, in the 1990s, “how hungry are you,” suggesting that newspapers could offer more than billboards along the information highway. They could lead people down the sales funnel, even transact business and help with support, I wrote.

Being a writer, I was ignored. Probably would have been ignored if I were on the business side. Because journalism was divided along functional lines – newspapers, magazines, radio, TV. They had no idea how to deal with this Internet thing.

What journalists still don’t understand today is that the cloud has broken down all the functional lines. There are no more newspapers, no TV stations. Yet web sites run by these companies still act like they are. The New York Times still pretends to be a newspaper covering New York and its suburbs. CNN.Com still pretends it is a cable television network.

The Rebirth of Journalism

The business of journalism is to organize and advocate for a defined audience. (To the right, a business journalist as a young man.)

A place, an industry, a lifestyle. That means aggregating a collection of people around a common cause or interest and interpreting the world through their eyes, for their benefit.

Thanks to Google and Facebook, but also thanks to the lack of vision on the part of people running the business, journalism has suffered grievously in the 25 years since the Web was spun. I once asked, in the 1990s, “how hungry are you,” suggesting that newspapers could offer more than billboards along the information highway. They could lead people down the sales funnel, even transact business and help with support, I wrote.

Being a writer, I was ignored. Probably would have been ignored if I were on the business side. Because journalism was divided along functional lines – newspapers, magazines, radio, TV. They had no idea how to deal with this Internet thing.

What journalists still don’t understand today is that the cloud has broken down all the functional lines. There are no more newspapers, no TV stations. Yet web sites run by these companies still act like they are. The New York Times still pretends to be a newspaper covering New York and its suburbs. CNN.Com still pretends it is a cable television network.

Look Around, Look Around

At times like this, when it seems the political world’s going to hell in a handbasket, it helps to take the long view.

My life is infinitely more comfortable, and will likely be longer, than that of my parents or (especially) my grandparents. I have a large, air-conditioned house, next to a train that will get me to an Airport in under an hour and from which, for under $5,000 round-trip, I can travel to anywhere in the world.

The medicines I take prevented the heart attack that began claiming my father in his 40s. The miracles of our time saved my wife from cancer. The technology I began covering in its infancy, this Internet, has given us both fulfilling and independent careers. Our kids are taking this to the next level, studying ecology and the mechanics of life, so their children’s lives will be even richer than our own.

It’s especially important, at times like this, to understand American history and what drives our politics.

Business drives our politics.

The business of America is business.

The industry, or industries, that provide the most added-value to each generation inevitably winds up controlling our politics. What they do, in their own self-interest, is filtered through the actions of each generation into the genie we call progress.

The Medical Oilpatch

One of the first business stories I covered was the Houston oilpatch, in the late 1970s.

The oilpatch, or the oil exploration industry, has always lived in a boom-and-bust cycle. When I was in my early 20s it boomed, and so did Houston. We were Dubai before Dubai was cool. Then prices busted in 1981 and the city followed.

The oilpatch had another boom early in this decade, with the rise of fracking. The idea is credited to George Mitchell, a man I interviewed while at the Houston Business Journal, and involves shooting water, sand and chemicals down a wellhead to break apart the rock, allowing oil and gas to seep out of the new cracks.

Trump’s War

I’ve been guilty of this myself.

I’ve said that George W. Bush had to have been a worse President than Donald Trump because he lied us into war and Trump didn’t.

Well, Trump did. Trump has. Trump has unilaterally declared a trade war, based on nonsense, and a lot of people are going to be hurt by it.

And it’s all based on lies. (Sculpture by Kimber Fiebiger.)

First. A trade deficit isn’t money you have to borrow. It lowers your cost of goods sold. It’s deflationary and allows you to sell finished products for less than before. It makes the whole global economy more productive and efficient. This idea that we “owe” China for its trade surpluses is, simply, a lie.

Second. Trump is going to war on behalf of industries that deserve to fail. Coal hasn’t been a growth driver since the 19^th century. Steel hasn’t been vital since World War II. Supporting failing industries is bad industrial policy.

Third. Trump is going after China in precisely the wrong way. If he did want to hurt China economically, he would open the H-1B visa floodgates and encourage every Chinese student coming here to remain. What drives economic growth in the 21^st century, as I’ve said many times, is human capital, trained and willing minds. Freedom is our trump card in any conflict with China. Sending them down the demographic cliff while we stay above it, remaining youthful by bringing in the world’s best and brightest, is the only way we’re going to stay in the economic game.

Peak Trump, Peak Carter II: The Health Care Rebellion

Only old reporters and historians now remember the Sagebrush Rebellion, which may have been more decisive in setting our current political course than any other event of the late 1970s.

The Sagebrush Rebellion was a rural revolt on behalf of private property, against the government that still controls most of the land. Before it got going the West was represented by people like Frank Church in Idaho, a liberal firebrand whose name lives today in a 1973 amendment against the Vietnam War.  Mike Mansfield, a Montana Democrat, was the Senate Majority Leader in the 1970s, and even Alaska was represented by Democrat Mike Gravel.

Today, the only Democrats in the Intermountain West and High Plains are “yeah-but” Democrats, people like Heidi Heitkamp of North Dakota, who generally agrees with the principles of the rebellion but argues that, sometimes, like in her election, the Republican is just a little too radical for local tastes.

The modern equivalent of the Sagebrush Rebellion is health care. Democrats use the shorthand Medicare for All.