Content. Measured.

By Jennifer Valenti, CEO and Founder of Four Elements Media, Inc.

In less than five minutes, I can teach you how to speak Contentology.  At first it may seem intimidating learning a new language, but when you grasp the basics it can be empowering.

So let’s start with a definition.  What is contentology?  Contentology is a new language that professionals in the region of film and television making (content) and professionals in the region of technology can use to form a new way of speaking (to each other).  What was once thought of as two totally separate entities, are in fact, quite similar. 

Let’s examine the roots:

Content people: How many times have you done the following: Googled something, promoted something on facebook, tweeted about your project, shared files via dropbox, raised money for something you were passionate about?

All of you.  Excellent. 

Technology People: How many times have you said the following sentences in your life: May the force be with you, You can’t handle the truth, If you build it, they will come, I see dead people, Show me the money!

All of you.  Excellent.

So you see, there are already lots of similarities in the way these two regions work. 

Now imagine both of your lives without those technologies and without the movies and television shows you love so much.  No, really.. go ahead. I’ll wait.  (Jeopardy music playing.  Oh no, wait, there wouldn’t be any jeopardy music playing because Jeopardy wouldn’t exist. Carry on in silence.)

Scary, wasn’t it?

Now that I have your attention, let’s get down to the main point.

Content doesn’t grow on trees.  Technology doesn’t grow on trees.  It takes money, talent, resources, blood, sweat, tears and possibly some bone marrow to cover marketing costs to make your dreams a reality.  

To put it into perspective for Technologists: It takes an average of around 300 people to make ONE low-budget, independent, $1 million feature film.  It takes an average of 5 (FIVE!) people to create one piece of marketable software… often times less than five.  And that software gets to change and grow over time as the customer comes into the market.  That film?  You get one shot, baby.  Either it works or it doesn’t.  There are no bug fixes, no new features, no customer support to hold your hand because you didn’t like it.  It just fails.

So, why do it? Why put that much time and energy into something so risky?  Well, why do anything that we love?  Why dream? Why take a risk?  Why believe in anything at all? Stop asking that question, because it’s a terrible question.  

Dreaming is all people have.  And, when the film is the perfect, bug free solution to a world of people’s pain… well, that makes it all worth it.  

Napoleon Dynamite was made for $500K. It made $130 million. Enough said.

Now, it may appear that I am playing favorites here, but not so fast Content makers. We’ve got some perspective for you, too.

While it is true that content making is hard work and it definitely takes a village (sometimes literally) to make a film or a television show, if it wasn’t for technology you would be celebrating Charlie Chaplin’s grandkids on Vaudeville (and you’d be relatively homeless). 

Technology has changed and shaped your work to such an impactful degree that your audiences don’t even know what’s real or what isn’t any more thanks to Computer-Generated Imagery (CGI).

In 1968, a group of Russian mathematicians and physicists headed by Nikolay Konstantinov created a mathematic model of a moving cat, which is credited as the first real instance of CGI.  I am willing to bet money that none of them acted in or directed any blockbuster films.

You have more of a platform than ever before to promote your projects, raise awareness about your charities or clothing line, or make fun of natural disasters that get you kicked off lucrative ad campaigns.

The point is, you’re not that special anymore. A man shooting his daughter’s laptop had more views than John Carter.  And still, you insist on not listening to your audience or to over listen to them or to just simply dismiss your brothers in tech out of superiority or willful ignorance. Either way, it’s killing you.  

The ironic part is, your audiences are still out there.  They still believe in you. They still need that escape.  They need the obligatory movie night on the second date. They need a place to take the kids so they will JUST BE QUIET FOR AN HOUR.  They need a dark room to cry in away from the house and their problems.  But, like Fredo.. you’re breaking their hearts.

We all still need you.  All of you. 

So, put down your arms and embrace and respect what you could truly have together.  Learn to speak to each other and with each other to create amazing changes in this world.  Contentology is a beautiful language filled with hope, love and admiration, and above all respect.  Respect for each other, for your goals, for your needs and for the equal parts love and dream that are in each of us.. in whatever we do.

My final words of wisdom: When the broken hearted people living in the world agree.  There will be an answer. Let it be.

The Rosetta Stone company does not make an actual language product for Contentology, but they do help you to learn all real languages with amazing ease and efficiency.  Image used for point purposes only. 

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

By Jennifer Valenti, CEO and Founder of Four Elements Media, Inc.

Besides the fact that winning is really cool, and the fact that my team *cough* TriviaWars *cough* slammed the competition by creating a from-scratch mobile game for iOS in less than 2 days is this: Winning is awesome.  Did I mention we won?  No seriously.  The title of this blog is completely misleading. Here is a text convo between me and my CTO the night Startup Weekend began:

Ladies.. WTH? You moan all day long about not getting the attention or the investment money you are looking for, but you’re not even showing up to the places you need to be to get all that recognition.  In the end, there were 5 women on teams that weekend. 5 women on 15 teams. There were literally hundreds of participants, and out of 15 teams there were FIVE WOMEN. What is that?

Not only did I show up, but I won. My team. My end of weekend pitch (with the awesome Deuce Bradshaw demo-ing our product, which btw is an awesome mobile gaming app for iOS and soon to be on Android.  For now the name is TriviaWars, but we’ll be changing that soon. Check it out when it’s live. It’s totally awesome.) Eh- hem. 

COME ON! WHERE MY GIRLS AT?  And I don’t want to hear anything about geography and concentrated talent pools or any of that B.S. because we had some sick talent on my team, and they were all Floridians.  ALL OF THEM. And we beat out teams and talent from ALL over the state, country and even some guy from Argentina. 

At the end of the day, you can’t whine about not being picked prom queen when you skip the dance all together.  Ladies, I’m all about equality.  But it’s hard to be equal when you’re not putting yourself in the odds pool to begin with. You want to be recognized? You want to win? You want to get investment for your idea?  Show. Up. 

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

By Jennifer Valenti, CEO Four Elements Media

Yesterday, as I was arguing with Verizon about the charges on my bill, a funny thought came into my mind: ‘Do you know my Klout score?  Are you really going to mess with me? ’ I was kidding of course, but it got me thinking: What if Klout scores really had that kind of leverage over brands?  Well, they already do, we just haven’t made the phrase “don’t make me use my Klout score on you” mainstream yet.

But influencers are out there, and brands know who they are.  And, right now they are trying to figure out how to target them, leverage them and use them to create more influence.  At first it was strong word of mouth that damaged or increased a brand’s equity.  That was hard to control. Then came the Internet, and the rate at which we shared ideas and opinions skyrocketed, and brands really fell behind. But, they eventually caught up. 

Then came Facebook and Twitter and other social networks, which allows a modicum of direct advertising, but little real understanding of how to calculate ROI beyond click through rates.  

So, brands are starting to go around the CTR metric and target the people that are brand influencers. They are using Klout to some degree and Social Chorus to zero in on that mom that’s chatting away about x product on Facebook, and they reach out to her.  You know, kind of like Men in Black style.  And, they incentivize her for her kind words.  And, you know, if she could keep that up, maybe there would be more rewards.  But, let’s keep this between us.  And, no pressure.

This new type of brand mafia could be a hit show on HBO, if only it were less real.  But, what happens when we wake up and we all see the matrix and see what we are being used for? When will a Klout score stop being a number and start being a weapon?

As funny as it might be to say “Don’t make me use my Klout score on you.” It’s actually a pretty scary thought and makes me wonder how long brands will leverage a Klout or a social chorus to try to gain influencers’ loyalty.  When does a number go from a possibility to a problem?

By the way, my Klout score is 52.  Apparently I am very influential with 726 people. I could potentially start my own Jonestown with this information, but other than that, I haven’t quite figured out how to use it effectively for my own business.  Thankfully, Klout hasn’t either.  Yet.

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

As the war rages on to see who is best at collecting the most awesome behavioral aspects of your online and mobile journey, Facebook and Google (the two biggest players in the game), should take a step back and look at where their current strategy is taking them. 

There are lots of opinions related to privacy, and lots of covert ways to try to piece-meal data together to create a person of interest.  But, what it really ends up looking like is a ransom note.

While you may be collecting some pretty impressive data passively, it’s not quite giving you the complete picture.  Here’s an example:  I am pretty detailed in my information on Facebook.  I am also very candid on Facebook.  I have a no holds barred approach to sharing information with my friends and loved ones, and some unfortunate souls that dared to friend me.  So, why.. why I ask.. do I still get ads for Gout Study?  Do I have gout?  Have I ever talked about gout?  Have I ever talked to someone who talked about gout?  I can guarantee you, the answers to all of these questions is: No.

So why are you still showing me these ads? I’ll tell you why: because you’re collecting my social behavior online passively, and apparently, incorrectly (Did I misspell ‘out’ and write ‘gout’ on a post once? Who knows?!).  While that strategy is OK, and it will give you some useful information, it really isn’t giving you an advertising strategy that is in any way compelling. 

When I was engaged, I got served up all kinds of wedding ads on Facebook.  That’s better.  When I was married, I still got wedding ads.  I changed my status to Married.  I still got wedding ads.  Maybe you just don’t care that I got married, or maybe you have less faith in my marriage than I do.  Regardless, why don’t you just ask me from time to time: IS THIS AD STILL RELEVANT TO YOU? I wouldn’t mind saying no (or even-gasp!-yes.)

Hulu already asks their viewers if the ad they just saw was relevant, and they’ve been doing it for a while now, so they set the bar for that being totally acceptable.  Now, in my opinion they have significantly sub par ad targeting because right now they work on volume and CPM, but I suspect they’ll be changing that soon, and who knows: maybe I’ll get ads from them on retirement planning, or buying a house (neither of those I need, but at the very least they’re better targeted to me.)

My CTO gets the same Credit Card commercial over and over again.  It drives him insane.  It makes him hate the product along with the service that is serving up this recycled ad over and over.  So what you’re doing is you’re actually hurting the brands.  And, furthermore, annoying the consumer.  Why are measurement professionals so afraid to be active?

In my case, I give you full permission to come out from behind the curtain and ask me a question every now and then.  Maybe then, just maybe, I’ll stop getting gout ads. 

This blog is a continuation from Part 1, which was posted Friday, February 17, 2012.  

Disclaimer: Some of the topics I go into in this post are my own opinions of where I think this business is headed.  I do not have a crystal ball to tell the future.  If I did, I’d be playing lotto and not writing this blog.

Part 2 of this article is going to get a bit complex, so stick with me.  Like I said to my CTO the other day, trying to explain this business is like trying to draw a design for cold fusion on a cocktail napkin.  Even those that have spent their whole lives in this business still don’t fully get it.  I have been very fortunate to be in all areas of the camp, for the most part, and have seen the argument from all sides.  Yet, even I still don’t have the full picture of this industry, and because of the closed nature of this business and the fierce competition that still exists, I don’t really think you could find any one on Earth that does.  

For now I’ll just stick with telling you what I know.  I’m going to go into some of the attacks that Nielsen has faced, and how well they have rebounded from them.  They are the Teflon-dons in their industry, and they have AC Nielsen to thank for his initial staging of how they would measure audiences (and Susan Whiting for being the ballsiest chick I know).

Let’s return to the whole concept of “the currency”.  On paper, Nielsen is not a monopoly. There are plenty of other companies in the audience measurement business (including mine).  However, because they are the currency, meaning they are often times the only data that their clients use to set the price for traditional ad spending, they own and operate a monopolistic product.  Sunbeam sued Nielsen in 2008 citing antitrust laws when Nielsen installed their Local People Meter (LPMs for short) in the Miami/Ft. Lauderdale market.  A people meter is installed in addition to the Active/Passive meter to tell exactly who watched a particular program (further refining their demographic data).  You know, like you or your spouse or your son or daughter instead of just the whole household.  It was Nielsen’s attempt at retiring the paper diary.

Sunbeam claimed that Nielsen knew there were fundamental problems with the methodology behind the People Meter, and therefore, provided inaccurate ratings.  The problem, they argued, stemmed from the sample being inaccurately recruited as to the number of individuals in a household. And therefore, the local affiliates (i.e., your local ABC station), felt they were not getting an accurate picture of their audience.  But the problem is, that only some of the clients felt this way.  As I note below, the LPM’s have come under fire every now and then at the will of whomever is on the losing end of the data (or perceived to be on the losing end).

The networks whose ratings stayed up or went up with the Local People Meter in the panel were more than happy to keep that method of measurement in the sample.  Therefore, it’s client versus client.  If you’re Nielsen, who do you try to make happy when they are both multi-million dollar clients? I have sat in rooms where Client A wanted X and Client B wanted Z, and neither of them could come to a compromise. In the end, they both lost to some degree, which only further fueled their animosity toward each other.

I often hear and read about Nielsen’s credibility of data being the problem with low ratings, or the Networks’ quality of programming being the problem with low ratings.  But, the truth is, it’s a collective problem.  Plus, we’re just not watching TV the way we used to.  And, I don’t even mean in the 1950s past, but the 2008 past. The Networks are just starting to gain insight from a more macrocosmic census of their audience, and they are trying to make sense of that noise.  Sometimes they ignore it because of egos, or commitments, and when they gamble like that and fail, their jobs are on the line.  

As for Nielsen, they are trying to make their clients happy and at the same time remain impartial.  Their credibility is vital in their fight to remain the currency.  Speaking of credibility, the Nielsen Company has been audited since the 1960s by the MRC, which is the Media Ratings Council.  The MRC was established in the 1960s, at the behest of the FCC, as a way to ensure that the ratings were in fact correct and credible. 

The MRC is an independent, not-for-profit auditing agency that collectively make up the representatives of every network in the Nielsen measurement panel. It is important to understand that Nielsen is not just driving out data blindly to their clients.  They have to be accredited by the MRC, meaning the MRC has to have full access via a third party auditing group (in this case, Ernst and Young specifically) to pour over every single method, business rule, technical spec, etc. to ensure everything Nielsen does is on the up and up.  And make no mistake about it, the MRC is on Nielsen every day of the week.  But sh*t happens, and sometimes mistakes get made or technology fails or simple human error erodes the data.  This isn’t a perfect science, it’s statistics. When you use statistics you make inferences.  Statistics can only provide an estimate of the minimal error that might be in the measurement.

Back to Sunbeam vs. Nielsen.  After three years of litigation, Sunbeam failed to convince the court that Nielsen had committed any antitrust violations. A key element of this decision was the recognition that the mere possession of monopololistic power is not illegal. Everyone — including Nielsen — agreed in this case that the company is a monopoly, at least in the Miami-Ft. Lauderdale TV ratings market.  However, the threshold that needs to be met in an antitrust lawsuit such as this one is whether Nielsen engaged in predatory or exclusionary practices that prevented or excluded competition.  According to the court, Sunbeam failed to prove that such a threshold had been reached.

That being said, to the victor went the spoils.  Though I applaud any competitor trying to force out an illegal monopoly (which technically Nielsen is not, as their product is only perceived to be by the very clients that rely on them), they will have a much harder time changing a person’s opinion of the monopolistic product.  In other words, if Android sued iPhone for the same issues (not saying there is any reason to do this, just citing a hypothetical), and they won, but it didn’t disrupt Apple’s ability to serve their customers or provide iPhones, then what’s the big whoop?  You can sue Nielsen all day long, but it’s not going to stop their clients from using them.  They have been drinking the Kool-Aid for far too long.

In 2004, the NAACP and several New York business and political leaders (including then Senator Hillary Clinton) formed an actual coalition called “Don’t Count Us Out” to protest the use of the Local People Meter instead of the diary in the New York market.  They alleged that the new LPMs would cause the ratings to go down, and Hispanic and African Americans to be undercounted since the coalition wasn’t convinced the new technology was going to be as reliable and accurate as the paper diary.  The freaking paper diary!! The one where you write in what you watched on any given day, instead of the new technology of the LPMs: simply pushing a button that has been assigned to you as a distinct member of a household. 

Susan Whiting, the then President & CEO of Nielsen Media, fought hard against this claim.  And, wouldn’t you know it, two months later after it was clearly demonstrated that the ratings among Hispanics and African Americans went up after the LPMs were installed, the NAACP decided to “enthusiastically support” the new LPM installation, calling it “a vastly improved way of measuring television viewership.”  As you can imagine, this only further fueled the Network’s reliance on and loyalty to Nielsen.  And so far, no business remarkable enough has come along to truly challenge it.  They are amazingly resilient.

But the Networks aren’t the only shot-callers at Nielsen.  There is another dimension to the ratings business, which is equally as difficult to manage, and unlike the Networks, are much more cohesive and organized (and a WHOLE LOT bigger).

Enter, the Advertisers.  There is yet another currency rating for advertisers.  Those are called the C3 ratings, which is the same way of saying Live + 3, with the “C” standing for Commercial.  While, the networks need the ratings to sell advertising, the advertisers need network and cable distribution to enhance their brand.  The advertisers need insight into how their commercial performed, what the level of brand recall was among the panelists, even going into detail as to whether or not being first, second or third in pod position made a difference. Pod position refers to where the commercials air in the break.  So, the first commercial to air in the first break is pod 1.1.

It’s worth noting that of all the advertising dollars spent in this country, the majority still goes into TV ad buys.  Not to mention branded content, like Ikea sponsored “Fix this kitchen” on A&E, and Product Placement (you know, when you see someone from Top Chef washing their hands with Dawn soap).  Advertising is big, big business to content producers and networks.  Unlike a simple 30 second commercial, a program like Top Chef can be syndicated and sold in multiple territories, making the shelf life for that product placement or branded content remain long after their initial investment.  Branded content is king, and advertisers sometimes spend more money on hit shows just to get the star to use their product in the show than they do on the actual commercial that rests in a pod.

So now we have two very distinct levels of commerce here: The Networks, that need high ratings to drive up ad costs and their price for syndication, and The Advertisers, who need high ratings for their commercials and need to make the right ad buys for their brands in order to increase the sales of their product. 

And right now, you only have one currency measurement: Nielsen. 

But, times – they are a changin’.  Enter everyone’s favorite game-changer: Google.  Google’s business is run on revenue primarily from Ads.  So, it should be assumed they want to grow more of that business. In order to do this, I presume they are going to need to measure everything the way that Nielsen does, and the way Facebook does, and service the consumer (and particularly their advertising clients) all at the same time.

And here is how they are doing it:  Go to Google right now and click on their new privacy policy, which takes effect March 1, 2012. 

Every one that uses a Google login for anything will be consolidated into one DNA fingerprint across the world.  I can only assume they are hoping privacy won’t be an issue because you can opt out of being part of the measurement they are collecting.  This new policy gives Google the ability to aggregate and dissect data in a way that advertisers have only dreamed of.  Consider the massive user reach that Google has. Consider that they get 4 billion views on YouTube every day.  Consider their incredible algorithm that changed the way we search and discover content as we know it.  Now, link that all to your TV through Google TV. 

It may have taken a bit of time (and it will still take a bit of muscle), but they have created the most massive advertising and content servicing platform on the planet, and now they are taking big steps to consolidate and conquer. 

Google appears to be quite brilliantly focusing their success in ad revenue growth on the ability to give advertisers what they have been longing for since the beginning of time: true insight into consumer behavior (psychographics, specifically), target-ability and scale of audiences – all in one place.  Now that is the real threat to Nielsen.  

Aside from Nielsen’s ~$1 billion dollar media business, what makes up the other ~$3 billion is a vertical called “Consumer.” That business focuses squarely on consumer packaged goods and advertisers, no Networks need apply.  So, to put it into mathematical terms, of the roughly $4.5 Billion in total Nielsen revenue, Advertisers and Retailers make up about 85% of that.  

But, with Google’s recent denouncing of Artists’ Unions via their NetCoalition lobby in Washington, and their recent Q&A with Rupert Murdoch on the situation involving serving up pirated sites for content that is not licensed via Google TV, and the need for Advertisers to get into content at the ground level with their brands, they are going to have a bit of an uphill battle.  

For now, if you really want to get your TV everywhere experience (including live TV as its broadcast), instead of paying $12 a month for a service that hasn’t proven themselves yet (and quite frankly in my eyes is completely unethical), and only offers you already-free broadcast channels, I would say try out the Sling Box.  It’s only $60 or so more of an investment (compared to a yearly cost of $144 for Aereo), which is a one time cost, and with depreciation built in, ends up being even less over time.

They are in the Nielsen panel, do not interfere with final distributor credit, and you can fire it up any where in the world via your wifi enabled iPad, laptop, desktop, phone, or seashell that has internet access and never miss a thing.  It’s attached to your set top box (so yes, you’re still going to pay for cable), and it works by placeshifting your content to whatever internet device you are using to watch the programming, and it’s all in real time (depending on the lag of your ISP, it could be a minute or two off).  

And, if you also have a Logitech Set Top Box, now included with your Sling Box is, you guessed it, Google TV.  I’m not here to offer an advertisement for Sling Box, or go into the various patent infringement laws they are currently fighting in various states.  But, as far as getting your Broadcast and Cable TV everywhere experience, this is probably the best way for now.

Finally, aside from the advertising revenue that we mentioned, and how the ratings are used to calculate the prices for that commodity, there is another major line of revenue that is also calculated based on that data: Syndication.

Remember in Part 1 when I mentioned that as a whole The United States is the largest syndicator of content in the world? Well welcome to major reason number 2 for the Networks to protect their content: Domestic and Foreign Syndication and Licensing.

Syndication can mean hundreds of millions of additional revenue to even ONE major broadcast network. Networks start negotiating syndication sales as soon as they green light a project.  In order to maintain the level of revenue they receive through syndication they have to control where that content goes at all times.  This includes where it goes in the ancillary market as well, meaning Boxed DVD sets and downloads on retail sites like iTunes and Amazon, etc.  Licensing brings in hundreds of millions of dollars in revenue as well with content licensed to Hulu, Roku, Netflix, etc. and with merchandising (think Star Wars lunch boxes).  If their content is freely accessible anywhere, anytime without control, their revenue goes down, the value of their product goes down, they cease to exist. 

So, you like content, right?  You like watching your favorite shows?  Who doesn’t?  But, what most consumers don’t realize is that these seemingly small rocks of the boat, are actually huge, gigantic 20-foot waves to the Networks.  And, the content you know and love is at risk. If they can’t bring in the revenue they need to make these shows, then your entertainment is going to go away.  Not today, but eventually.   We are already losing a sizable portion of our GDP of film and television to Canada and other countries, and we have ourselves to blame for that.  (I’ll get into why state incentives, rather than country-wide incentives, for film and television are the worst idea ever in another blog).

The Networks and Studios are trying to protect not only their revenue, but their business as a whole.  These folks are artists in addition to businessmen and women.  They worked hard to get where they are.  

They live and die by the ratings, and even a .1 up or down means a job or no job; show renewed or show canceled; syndication money, or no syndication money. They cry (literal tears) when a show fails, when they lose their jobs because their ratings were sh*t, when they lose sponsors because they aren’t brand-worthy (Skins is a great example of a hit show with no advertisers to call home, and was therefore cancelled.)

These failures are taken personally, and collectively. The Television and the Entertainment industry in general are vast, complicated and contingent.  It’s competitive, it’s unforgiving, it’s big and it’s scary.  And, every one has their own agenda, their own goals and their own challenges, and especially their own fears.   So, who can blame them for wanting to protect something they have poured so much time and energy and sacrifice into creating?  They don’t see this as a “disruption”, they see it as bullsh*t.

And so far, Nielsen has been the only company that could find a way to get all of these clients to accept one piece of data as their trading currency. That in and of itself is remarkable, and whether that changes any time soon will remain to be seen.  Until then, set your DVRs to record.  You don’t want to miss the next two years in television. 

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

This blog is Part 1 of a two-part post.  Please tune in next Tuesday at 10:30am for Part 2

By Jennifer Valenti, CEO and Founder of Four Elements Media, Inc.

February 17, 2012

Every other month or so it seems, I read another article on TechCrunch or some other fast breaking tech site that showcases a company like Aereo (formerly Bamboom) that has just launched their idea to deliver live over-the-air TV to your computer, through the cloud, over a dime size antenna, blah blah blah.

While I applaud any amount of entrepreneurship, regardless of its shortsightedness, their powers and ingenuity would be best used on something else.  You see, over-the-air broadcast is already free (well, you have to pay for a TV and at the very least a digital tuner, if not a cable subscription).  And yes, it’s only available on your TV.  That frustrates people because since the rise of YouTube, Hulu and Netflix, we have been sold on the idea of “on demand”.

But what most consumers (and by most I mean well over 90%) don’t realize is how the business of TV works.  I am going to attempt to give you an overview of the history of television that will bring us all the way up to the very second I end this article.  Here’s a quick market view of television in the US: 99% of American households have at least one television and the majority of households have more than one.  As a whole, the television networks of the United States are the largest and most syndicated (licensed for rebroadcast in other countries) in the world. (This bit will be important later, so file it for recall.)

In the 1940s, the US started to transmit television programs via coaxial cable laid by AT&T.  The only stations in existence at the time were CBS and NBC.  Television as we would come to know it, was born.  Programs like 1984, which aired in 1953 took the country by storm.  We were hooked.  So hooked in fact, that advertisers were starting to flock to television hand over fist to sponsor programs in order to create brand awareness for their products.

Another entrepreneur was already deeply invested in measuring products for the advertisers prior to television: a man named Arthur C. Nielsen.  He had started his company, the AC Nielsen Company, in 1923 as a way to sell engineering performance surveys.  As his flagship idea grew, so did the things he measured.  In the 1940s he began creating a retail index that tracked the flow of food and drug purchases.  In 1942, he began measuring radio as a way to give his advertisers insight into who was listening to radio.  In 1950, he moved into television measurement, and the Nielsen ratings system was born.  Television was just getting off the ground, and Arthur C. Nielsen, one of America’s finest, and largely unrecognized entrepreneurs, saw it all coming.  With his experience in radio and tracking food and drug purchases, he knew there would be as great, if not greater a need, to do the same thing for television. And to this day, 62 years later, the Nielsen Company is still the currency for television ratings.

What do I mean by currency?  The Nielsen ratings, and only the Nielsen ratings, are used as the “commodity price” on the cost of advertising dollars on TV and cable. That $3.5 million per 30 second commercial during the Super Bowl?  That price is set according to the number of viewers that program receives according to the Nielsen ratings data from the year before, and therefore, since it is always, always the highest rated program on TV every year, the advertising prices are steep.  It’s the one time of the year that advertisers can cover the most eyeballs at once, and because the ads have become an event all on their own, the television networks sell ad spots based on the Nielsen ratings’ currency.

Now, let’s go into how the Nielsen Company acquires the measurement that becomes ratings (at least for North America).  Across the US, in 125 Designated Market Areas (major cities and suburbs in every state), the Nielsen Company has a group of panelists.  There are several different types of panelists, but I will go into just the two most prevalent ones for now: Metered Households and Diary Panelists. They also do some set top box data as well, but there are some differences to that, which I am not going to go into here.  Suffice it to say the metered households and to some extent, the diary panelists, are the main currency.

Across the U.S. in ~140,000 homes (which equates to ~220,000 individuals) the Nielsen Company installs a meter on each television in the home.  Those meters collect signatures (audio clips) and codes (a special code that tells Nielsen who the distributor of that program is and what the program itself is) from every program the household is watching on any given day.  That information is sent to Nielsen every night at 3am, where the data is up-sampled, cleaned and business ruled to death until it becomes what we call ratings.

Another type of panelist is the Diary panelist.  These are homes that are recruited in the same fashion as the metered households.  However, what they receive instead of an installed meter is a paper diary, which allows them to write what they watched at any given time.  For myself, a person who can’t even write a complete shopping list once a week, you can imagine how useful and accurate this measurement is.  Here is a picture of a diary that was “completed” by one of the panelists, which is one of the better ones I’ve seen:

Sometimes Nielsen gets them mailed back, and sometimes they don’t.  Sometimes they can use the data that they receive and sometimes they can’t.  In any case, it’s the most ridiculous form of measurement in this day and age… Ever.  And, Nielsen knows this, and has been trying to retire the diary for quite some time.  But, the diary provides ratings just like the metered households, and when the diary was removed from the sample, many networks’ ratings went down, which didn’t go over well with Nielsen’s clients.  So, alas, for now, the diary remains.

Let’s get back to the meters.  Now ~220,000 people across the United States are the representative sample for the rest of the country.  Yes, approximately 220,000 people, we’ll call them the delegates, are regarded as the representatives of the rest of the country’s viewing habits on any given day.  And for the most part, the Networks are still cool with that.  The methodology behind how these delegates are selected and recruited is very complex.  I can’t even go into a short version here in this blog, but suffice it to say, it’s pretty amazing. We’ll get into the difference between a rating and a share of HUT (Households Using Television) another time.  For now, let’s just stick with what the ratings mean to those that use them: networks, cable nets, advertisers, media planners, retailers, syndicators, producers, etc.  A really big, giant network of people, quite frankly.

Let’s start with the broadcast networks, collectively ABC, CBS, NBC and FOX.  The networks are not here to provide you with free television.  They’re here to provide you with an emergency broadcast system.  The rest of the sh*t they send down to you is how they make money.  Let me be clear: They are here to make money.  Do you want to turn on your TV every day to watch a test of the emergency broadcast system?  Nope, me neither.  So as a way to incentivize you to make yourself available to the possibility of an emergency, and the need for an actual emergency broadcast, the networks devised programs back in the late 1940s that would entice more people to buy a television (instead of relying on radio), and the whole TV show thing snowballed from there.  PBS?  They are here to provide you with free television, which still isn’t free because the viewer sends in donations to keep it “free.”  This all sounds ridiculous, doesn’t it?

Well, welcome to the television industry my friends!  The oldest, strangest, least innovative industry in America.  Right now Ford is finding ways to make their 2025 Escort fly.  The networks, on the other hand, are listening to pitches from well-known showrunners, agents and producers on shows they think will be a hit for the networks, drive up ratings, and therefore make money for the them.  How, you ask?  This is how the networks make money:

First, there was advertising.  That did well, and still is a huge (multi-billion dollar) line of revenue for them.  Then came cable – hey, that’s new.  We can have more than four channels?  Now we have subscribers!  Next comes syndication.  Wait, there’s a cable channel that wants to buy all these episodes of the Honeymooners we have lying around?  Sweet!  Then came foreign syndication.  Holy sh*t, they love us in Japan.  Let’s license this episode of Friends everywhere!

Now I am going to deconstruct this web just to make it seem at all plausible.

Here’s the reason you can’t get broadcast online or via the cloud or a special signal sent down from Mars: because Nielsen hasn’t figured out how to measure that yet in a way that wouldn’t completely devastate and cannibalize their business (or their clients’ business).  The way they measure television is antiquated and invasive.  I know this, because I spent two days as an executive at Nielsen installing a meter onto a television just so I could understand how it worked. I got a certificate and I got to solder and everything.  It was awesome.

The currency rating is called Live + SD.  There are several subsets of ratings data that are considered by the Networks.   First let me explain LIVE:  It’s any program you are watching at the same time it is broadcast for the first time.  It has nothing to do with the program being live.  So if you’re watching the season premier of Glee at the same time and day it first premiered, that’s live.  Then there is Live + SD, which is Live plus same day.  That is the rating that is given when a program has been DVR’ed and watched sometime in the same day it originally aired before 3am.

Let’s say Glee aired at 9pm, and you DVR’ed it, but didn’t watch it until 11pm on that same night.  Congratulations, you are part of Live + SD ratings.  Then there is Live + 3, which is Live plus 3 days.  If you DVR’ed Glee and didn’t watch it until the next day or the day after that. –boom, you are Live + 3.  Finally, we come to Live + 7, which I am sure you have already figured out.  Live plus 7 days out.  Live + SD is considered the “Trading Currency” that advertisers and networks use to set prices.  Any other data is informational only. 

Now, we’re getting into the super tricky part: How Nielsen has basically strong-armed the networks into not being able to split their signals off.  I have three words for you: Final. Distributor. Credit.

Companies like Ivi (now out of the live major broadcast business), FilmOn and Aereo, while awesome for the consumer, are not so awesome for the networks.  Do you really think that the networks couldn’t “figure out” how to make their broadcast available live online?  They can, have and sometime in the future, will.  But because they are bound, gagged and tied by the Nielsen ratings, they can’t do it today.  Why?  Because part of those “beaten to death” business rules is that Nielsen can only give credit (i.e. a rating point) to one final distributor.  So, how do they know where that signal is coming from unless it is encoded properly and given credit to the right distributor?  Even signatures (sound clips) aren’t going to tell them that because who knows where that program was coming from if you have multiple distributors of the same content.  With one distributor they have nothing to fear.  With multiple, unmeasured distributors, they are in chaos, and their ratings are in chaos.

So right now, they’re screwed.  And until a time where they no longer need to worry about the current iteration of the ratings system, they will put everything they have into protecting their business.  Let me reiterate: the networks are not here to provide you with free TV.  They are here to make money.

Part 2 Here

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

By Jennifer Valenti, CEO and Founder of Four Elements Media, Inc. 

Ok, to be fair, most start-ups fail because of a lack of - or mismanagement of funding, period.  But besides that, here are the six most common reasons many start-ups fail in the first year:

1. No clear leadership.  This reason assumes there are at least two or more individuals involved in the formation of the company. Have you ever heard the term “Too many chefs spoil the broth”?  Well, at least they made a broth.  Without clear, concise leadership to define and execute the business’ strategy, all you’re going to have is a bunch of cut up vegetables all over the place and an empty pot.  If you have no one that is qualified (or afraid of this role), then I recommend recruiting a CEO that can get the job done.  Just be sure you don’t end up with reason number 2..

2. Can’t we all just get along? Productive conflict is good. Necessary, even.  Fighting, grudge-holding and blatant disrespect? Not so much. Let’s face it, we’re not always going to agree. But, that doesn’t mean that we have to get nasty and take it all personal-like. It’s going to take all of you to bring this company into the world, and constantly arguing, undermining or slashing your co-founder’s tires isn’t solving anything, no matter how temporarily satisfying it may feel. Life is too short to work with people who suck.  Isn’t that why you left your cushy 9 to 5 job with the steady paycheck and the ability to afford the GI Joe with the kung fu grip on a whim in the first place? OK, now go play nice.

3. Too many chefs spoil the… OK, I’m not going to go there again. You get the idea.  Just as important as having one clear leader is also not having too many chiefs and not enough Native Americans. Everyone has their place in a start-up, and you have to respect that.  That’s not to say your input shouldn’t be heard, valued and implemented.  But, sometimes it won’t be.  Get over it. Know when to stand your ground and when you need to back down. As Kenny Rogers once crooned: You have to know when to hold em, know when to fold em, know when to walk away, know when to shut-up-and-get-off-the-soap-box.  OK, I added that last one, but you get the point.

4. Goals, Shmoals.  Not having clear goals with direct lines of accountability only works for trust fund babies and most politicians. But, for start-ups, this is a certified fail. Each member of the team needs to have well-defined responsibilities and checks and balances within the company eco-system to ensure every one is pulling their weight.  In basic terms.. there ain’t no free rides. Which brings me to number 5:

5. That’s not in my job description. Oh yes it bloody is! Make copies? Yup. Find investors? Double Yup. There is no shame in this game, friends. You are now your own boss, assistant, dry clean picker-uper, and coffee maker. I don’t care what you were in a previous life, you are now starting at zero. So, if you find yourself uttering the lines “that’s not my job” I give your co-founders permission to punch you in the face.

6. What’s a budget? What’s a business plan? It always amazes me when I consult with any new entrepreneur and they have absolutely NO idea how to put together a budget or business plan, or even the fact that they need one.  Seriously, people? I’m going to give you the super secret code to putting together a budget: If x costs y to make, and x will produce z in revenue, then a is the difference, which makes up your profit or loss depending on what y is valued at and what z is valued at. Here’s a few more gems: You’re probably going to lose money in the first (second and even maybe the third) year. That’s completely normal. But, the idea is to decrease the numbers year over year until the company is profitable. But, you’re not going to get there without knowing your costs and your revenue potential which will also answer the question of how much money you will need to raise. This will take some investigation on your part, but whether you’re making the next best tech gadget, or a more exciting way to make toast, the formula is still the same. In order to set the magic curve trending upwards, you’re going to need a business plan. A business plan outlines what your company is going to do (make toast more exciting), who the major players are (that’s you), what the toast market is like now, how your awesome toast-ness will change this market and how you plan to deploy your new toast genius.  I promise, it’s not rocket science, and there are plenty of free resources on the interweb to help you along. OK, that last jab was uncalled for. But, seriously.. no budget? For reals?

Over the last 18 months I have had the privilege of starting my own business, and I am very happy to say that I lucked out and inherited a pretty kick ass team to help me out. But, it hasn’t been without its wins, losses (mostly our hair) and moments of uncertainty.  I can tell you with absolute confidence that the worst and most frustrating part of starting your own gig is raising money.  As my CFO likes to say “It’s a religious experience” meaning most of the time, we do a lot of praying, and begging. We ain’t too proud for that. But, even though this year and a half has had a lot of ups and downs, I wouldn’t change a thing.  Every morning I get to wake up and go to work at a job that I love. And that makes it all worth it.

Jennifer Valenti is CEO and Founder of Four Elements Media, Inc. and a veteran film and television professional and former Nielsen Ratings executive. For more information on Four Elements Media, Inc. go here: http://www.fourelementsmedia.com. 

Our Chief of Communications, Cole Pepper, sat down with our CEO, Jennifer Valenti, to discuss her thoughts on how Four Elements Media is changing the world of television acquisitions and how online media will evolve in the coming years.

CP: It’s been quite a year with dozens of new shows cancelled this season, some with production costs in the double digit millions per episode.  How do you think the networks are handling this much risk in our current economy?

JV: It’s certainly been a tough few years for the Networks as they struggle with shrinking advertising budgets and more and more shows failing to hit the mark.  For every Lost there are dozens of Charlie’s Angels [2011 reboot], The Events, Whole Truths and No Ordinary Families.  Before Four Elements Media, there were only so many avenues a Network or Studio could take to boost the possibility of a show becoming a hit.  The general public opinion of quality entertainment changes from season to season and even month to month.  It’s interesting to see shows that have relatively similar formats and concepts like ER and Chicago Hope and see one last for six seasons and the other last for fifteen. What made ER so different and so sticky with a generation and a half of turnover in demographic?  Some may say it was the story lines or the cast, etc., but in the end, it’s really not that black and white.  So, the Networks are doing their best to find the formula that works, and each one has a different way of hedging their bets.

CP: How do you think Four Elements Media can help Networks better ‘hedge their bets’ as you say?

JV: What a great question! Four Elements Media has found a great way for Networks to source content and gauge a potential show’s success before they ever spend a single dollar producing it.  Through our team of production and ratings professionals, we have created a great way to customize concepts for a specific network, develop and produce the concept and then distribute it to our online users via our online pilot television site, Debuit.com, as a census-based testing ground for pilot television.  Basically we are creating a farm system for the Networks where we create and customize compelling television concepts in every genre. We lay a foundation for each concept and then develop a track record for success starting with our own online audiences.  We do this by measuring the viewership of each of our show titles through our proprietary audience measurement software, Platform Brands, which tracks the success and popularity of each show in a demographically congruent way to television ratings.

CP: So, in a way, Four Elements Media is carving a new path to the future of television acquisitions?

JV: Absolutely.  The traditional way of sourcing and packaging television properties is changing rapidly with the TV Everywhere initiative and the popularity of new media platforms and new Over-The-Top (OTT) content providers.  Audiences have more choices than ever and more ways to access their entertainment. Four Elements Media is riding the wave of that change and leveraging our years and years of experience in production and audience measurement to fill a huge gap in the way we conduct entertainment acquisitions. We are excited to partner with our network and studio clients as well as our independent content producers to change the way entertainment is consumed across the globe.

CP: Why do you think the Networks haven’t done this already? 

JV: Quite simply, the networks are in the television business, not the online business.  That’s not to say they devalue the online platform, quite the contrary.  But, the traditional television broadcast model is still the most popular way to consume our entertainment. There is no major or exclusive abandonment to that on the horizon any time soon.  Nevertheless, there is still a major interest on the part of the networks to get into online distribution, but there is no reliable way to measure and monetize content the way they do for traditional television today with the Nielsen ratings.  So, they have been reluctant to cannibalize their TV audiences by distributing a massive portion of their programming online at the same time as broadcast.  We definitely see more and more shows turning over into Hulu after their initial broadcast, and that model works because it’s another major line of revenue through advertising based on a bulk number of views and subscribers, but they are only just now starting to put out original, first run content through Hulu because major networks and cable nets are not quite ready to jump head first into original content on the web.  That’s where we come in.  We do all the heavy lifting, and they get to see if it really works before they invest in it.

CP: The last question I am going to ask is a fun one: What’s your favorite show on TV right now?

JV: Oh my, I will have to confess that I have a few guilty pleasures: The Amazing Race, Chopped and the Real Housewives series on Bravo. I can’t get enough of them!

CP: Which Housewives’ show in particular do you like?

JV: All of them! Every night it’s a new drama in a new city.  How can you go wrong?

Jennifer Valenti is the CEO and Founder of Four Elements Media, Inc.  She is a veteran film and television professional and former Nielsen Rating’s executive.