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Posts Tagged ‘Competition’

Free At Last: Inside the Legals Victory in Ohio

In Competition, Legal Advertising, Uncategorized on August 3, 2011 at 6:18 pm

Years of persistence — what some have called blind optimism and others, insanity — paid off when Ohio Governor John Kasich signed the biennial Budget into law on June 30, 2011. Contained in the 3,264 page document were 420 pages of provisions that bring the legal advertising process into the 21st Century. It is a model of comprehensive compromise in both policy and politics, so much so that the key stakeholders locked in perennial antagonism all declared victory at the end of the day.

Local Government cheered the very real cost savings on otherwise unfunded mandates. The pay-to-read press heralded the preservation of legal advertising in print, which was not entirely a given this time around — and their enthusiasm spilled into an historical whitewash of relentless opposition great and small.

And for the free community paper industry: We’re finally legal in Ohio.

All of which is best for the people — as better informed citizens and as taxpayers footing the bill. But this legislated outcome didn’t happen by itself. It didn’t happen overnight or with a Hail Mary as time ran out. Nor because any major stakeholder suddenly abandoned self-interst for altruism. Columbus Messenger publisher, Phil Daubel, began his personal crusade over twenty years ago with some very near misses along the way. Guess which influential lobby always managed to pull the plug?

From our rise as an industry generations ago, free community papers have fought for the right to publish legal advertising. For at least the last decade and a half, measures have been introduced across state legislatures that would take that public notice out of print and place it all online. During this latter span of time, both alternatives to subscription newspapers made advances at the margins of select types of official notice. But neither vision became the model of wholesale reform of any state’s legal advertising regime since our industry’s victory in Minnesota last century.

What I call the Buckeye Compromise embraces both the realities of the digital age — and the time-tested power of papers without paywalls. Progress was methodically paved over the last half-decade through the legal establishment of a Task Force charged with making change, constructively engaging that commission, having hands in the direct process turning an eight page report into nearly five hundred pages of legislative sausage, and advocating the ultimate provisions as bills and amendments. That is the essence of the long, slow process where all parties were held to their bottom-line gives and takes. Which is not to say that even the agreed-to framework wasn’t subject to backpedalling and covert obstruction.

The publicly endorsed nuts and bolts — legalizing free community papers with audited circulations, capping rates at lowest earned commercial, allowing for internet posting in lieu of second paper for same notice and for summarized descriptions on second consecutive print publication — cemented the fallback position, a mousetrap of sorts. Our peers with the monopoly, and the license to print money, still hoped to stall any movement. While our friends — and soon to be advertisers — would have much preferred doing away with print altogether. That was basically Governor Kasich’s original proposal, and that worst-case scenario feeling quite real drove home, finally, the wisdom of expanding print to save it.

I don’t have enough fingers and toes to count the number of prominent free community paper veterans that have told me these last few years that our Legals ambitions were doomed to the internet. But I, along with enough equally stubborn folks, continued to believe that we could finally achieve reform because of the internet. Ohio can and should become the first state domino in this still-new century. To do so we must leverage the larger fear of the incumbent monopoly — total migration to the internet — and continue working with Local Government to quantify the very real savings we will bring. This won’t change the underlying competing ambitions — to stall just one more legislative session and otherwise to push web-only or bust — but having our fallback option on the table at the beginning increases the odds should process approach endgame. As we now see in Ohio, not only can this be done but all sides can even feel like they won when the dust finally settles.

We Can’t Afford To Be Neutral on Net Neutrality

In Competition, Do-Not-Deliver, Do-Not-Mail, FCC, FTC & DOJ, Network Neutrality, Uncategorized on August 12, 2010 at 11:55 am

From my column in the upcoming edition of INK, the national trade journal of the Association of Free Community Papers:

The Google-Verizon “internet pact” — or “joint policy announcement” on “guiding principles” or self-serving internet carve-up or whatever it’s being called by the time this article goes to press — is a fundamental game changer. The good news is that the canaries have finally escaped from the mines and they’re flapping in the light of day. The exposure and reclarifications of private negotiations and agreements between two giants on the provider and search-video-advertising sides of the internet, put a fresh public face on all the back-room deal-making and denials of the substance of same. Their joint, “this is not a business arrangement” plan for a new parallel, pay-to-play fast-lane internet, with corresponding application blocking, content discrimination and toll booths for mobile broadband, has finally focused policy and jurisdiction where it needs to be.

The Google-Verizon scheme may change endgame in a way that Comcast’s actions — blocking lawful data, denial of blocking, subsequent admission of and reprimand for same, and then major court victory to do it again anytime without consequence — should have already transformed the policy debate on the uncertain future of the internet.

I’ve been preaching about preserving an Open Internet for several years now. During that time, the structural need for clear and fair rules on the information superhighway had smoldered on the back burners of regulators and Congress. Most discussion and analysis had been limited to passionate geeks, much of it buried in tech mags and blogs. All the while, our industry was legitimately more concerned with the pressing need to embrace immediate digital realities and seize opportunities to monetize our online offerings. In a presentation a couple years back on defending threats to distribution — including rack theft and fees, local litter laws and do-not-mail — I detailed the need to begin fighting against new toll booths that providers were quietly preparing to place on data over broadband. It has long been clear that if the major cable-telcos had their way, they would operate much like Dominion and DistribuTech do with print, in their practice of monopolizing high traffic locations and then extorting those using the demand distribution model.

Similar analogies could be made to local delivery laws favoring certain publications over others, or the USPS jacking rates disproportionately on Saturation or relegating our class to a new 14-day delivery window. Major difference here is options: With our print products, each scenario could be fought separately through numerous channels. Outcomes could be challenged and even failing that, each model of distribution still serves as a next-best fallback option. But in the digital world, a handful of companies control the pipes and 97% of our readers get their broadband at home — if they get it — from either a monopoly or duopoly provider. Putting that back in Dominion and DistribuTech context, applied to internet there’s no 2nd Option so we’d basically be held hostage.

Until the landmark Comcast decision in April, most ISPs kept any blocking and traffic tampering limited and discreet enough to keep public attention away. Collectively, the handful of major cable-telcos abided by the concept of Open, Nondiscriminatory Networks and the notion that the Federal Communications Commission had at least marginal authority to serve as cop on that beat. That tenuous power to enforce was actually a matter of faith written in Crayon when the FCC enacted rules between 2002 and 2005 that classified broadband as a magically bundled, fluffy information service. Abandoning sight of the critical communications component — the end to end transmission of digital data — shifted the FCC’s regulatory authorities onto quicksand. And it simultaneously put thousands of independent ISPs on the short end of the competitive stick and ultimately out of business.

The anything-but-Comcastic court ruling was bound to happen at some point. The Commission had finally begun a formal, public process to preserve an Open, Nondiscriminatory Internet when the legitimate authority they gave away mid-decade led to crushing defeat in the D.C. Circuit. To get out of the quicksand and onto solid ground, the FCC recently began seeking public input on ways to reclassify the transmission of data component of broadband as a communications service, among ways that it could legitimately regain authority to preserve the principles of Network Neutrality. It is important to note that the Communications Act gives the Commission this Rulemaking authority and the Courts have upheld the preeminence of expert agencies generally. And on the critical issue of end to end transmission of digital data, Supreme Court Justice Scalia has already opined that the Commission could separate the delivery from the pizza.

We have been actively participating in the public sausage-making at the FCC, filing comments and educating senior advisors on the competitive threats we’ll face on a web of arbitrary, capricious and pay-to-play fast and slow lanes. As the major ISPs have gone to Congress seeking to block and otherwise stall the transparent process at the FCC, we’ve made our case on the Hill, stopping procedural games like attempts at agency defunding. Through our collaboration in broader coalitions, we were represented on the seat speaking for small businesses and consumers at private stakeholder meetings. The Google-Verizon private deal-making put the final straw on top of mounting frustration over broader, but still limited private deal-making, leading the FCC to scrap private talks and get back in earnest to the open, public process well underway.

Meanwhile, the substance of the Google-Verizon scheme has helped immensely in cutting through the smoke screens crafted by the cable-telco lobby on the Hill, as well as poke major holes in their aggressive public relations campaign. The next couple of months will be critical in the fight for fair competition through an enforceable framework that preserves the openness and freedom of the internet. While most activity will take place in D.C., publishers can still help in a few productive ways. Editorials explaining what’s at stake and debunking common myths would be great, and if a public hearing or Commissioner-attended forum comes to a town near you, promoting and attending would be most helpful. Efforts will continue to be made by major ISPs to try to get Congress to stall the FCC, and here publishers could let their members know that the Commission should instead be encouraged to move their open, public proceeding towards a timely, favorable conclusion.

Ad Tax Could Result in Net Loss to PA

In Ad Tax, Competition, Rules&Regs on March 2, 2010 at 6:44 pm

In my last post on the perils of Taxing Advertising, I touched on the “multiplier effect” of advertising: Each dollar invested yields a compounded return in economic activity. It can be four-fold, it can be ten-fold and more, but most importantly: It can be quantified. And it has, in robust analysis.

It is critical to understand the commerce-driving function of advertising before looking at it as just another piggy bank to raid. Unfortunately, the Governor’s proposed budget treats it like a static line item on the revenue wish list. Blissfully ignored are projections for decreased spending on advertising, the resulting cascade of lost sales across the economic spectrum and the jobs lost due to imploding revenues at already struggling employers.

So far, even the credible Think Tank analysis of the proposed Expansion of Sales and Use Tax (SUT) to 74 NEW Goods and Services — including competing PA-based heavyweights Commonwealth Foundation and The Pennsylvania Budget and Policy Center, as well as D.C. based Tax Foundation — all seem to swallow the zero-sum fallacy of a New Ad Tax. Meanwhile, the revenue gaps between projected and reality were just released by the Pennsylvania Revenue Department. The farthest off the mark? Sales tax receipts: Year-to-date collections slumped to $265.3 million “less than anticipated.”

We can and must to do a better job “anticipating” the very predictable series of unintended fiscal consequences that would be triggered by a New Advertising Tax. Our Commonwealth’s sluggish sales tax receipts have been driven by numerous interrelated forces in this Great Recession. One of which has been the vicious cycle of declining sales leading to reduced advertising, which have further reduced the volume of goods and services sold. And Taxed. Correspondingly, spending on advertising fell across the media landscape for the sixth consecutive quarter, and the total decline for 2009 was 9% nationally.

These mutually reinforcing trends are finally beginning to reverse. But a New Ad Tax would push commerce, jobs and even the hoped-for tax receipts off the cliff. Projections for Lost Sales across sectors run as high as $14.8 billion. The corresponding Job Loss: A staggering 64,040. Which will mean substantially “less than anticipated” Personal Income Tax (PIT) Receipts and a spike in demand for cash-strapped social services. As for the actual SUT Projections: Lost Sales, even at 4%, will blow a $600 million hole in the happy math on that zero-sum spreadsheet. Factoring these unintended consequences, we clearly won’t raise $534 million in “new” revenue. Just the opposite, a New Ad Tax would likely lead to a Net Loss, all things considered.

Proposed Pennsylvania Ad Tax Would Be a Dubious First in Nation

In Ad Tax, Competition, Rules&Regs on February 23, 2010 at 4:05 pm

Pennsylvania would make history if the Ad Tax — part of the Governor’s 74 count hit list on current, so-called “non-essential” goods and services — were to pass. And stay on the books. That’s because Florida, searching for “soft targets” to tax, actually passed such a measure several years ago. But the economic fallout was immediate and the devastation spilled beyond the imagination of the budget makers.

As a result, the Ad Tax was swiftly repealed. But in dire budgetary times, states succumb to collective amnesia or willfully ignore the critical Florida Ad Tax Lessons: Advertising has a demonstrable multiplier effect in the economy. Each dollar spent on advertising compounds activity across multiple direct and indirect tiers of the economy, in some cases ten-fold and more. The analysis is a Must Read.

The flip side of that complex equation is the chain reaction that follows decreased spending on Advertising: Lost Sales and Lost Jobs. And as we’ve learned from our Community Paper Publishers here in Pennsylvania, an Ad Tax will lead to steep reductions in Advertising from the Mom & Pop merchants already struggling on Main Street.

Saving Newspapers, or…

In Competition, FCC, FTC & DOJ, Rules&Regs, Testimony on October 15, 2009 at 8:07 pm

…Corporate Bailouts. As I wrote before, there’s no shortage of voices on topic. Professors, Think Tanks, Foundations, Advocacy Groups, Big Media…and Us. We’re still at the beginning of this national debate, and we had a seat at the last House Committee Dog & Pony Show. There’s lots more to come and lots at stake. Next up are the Federal Trade Commission and the Federal Communications Commission, and we need to step up our united efforts immediately — Season starts in earnest next month!

Here’s what we can expect from Big Media: On display before a Senate subcommittee this summer, NAA’s reps got softballs on “competition” and hit them over the Sherman, Clayton and Cross-ownership walls, i.e. tear down the last legal barriers to total local market domination for “our survival.” Go figure, their reporters don’t spell it out that nakedly. And recently before the latest House Show, the voice for Gannett, Tribune, NewsCorp & Fortune 500 asked for Tax & Pension Relief.

Sounds good? Here’s my caution on NAA’s ask: Fails to note that businesses with revenue under $15 million got the 5 yr operating loss carryover (v. current 2 yr) as part of the stimulus package that passed. Those above a part of a fairly select group enjoying multiple other perks, loopholes and other advantages we don’t have. Factoring offshore havens, goodwill impairment write-offs and a host of other “savings” that come from complex organization and the ability to hire the very best accountants and tax attorneys, many of these folks already pay proportionately much less than we on gross revenues. (NOTE: They also have better access to cheaper capital, pay 20% less on health insurance not trapped in small group market, and on…)

And on deferred payment to defined benefit plans, just know that we’re all ultimately on the hook. At USPS this makes sense, where H.R. 22 tackles the double funding concession they made to get the Military’s rightful obligations off the Postal books. By contrast, USPS is multiples better funded than the private sector — and my real concern is the fall-back for Fortune 500 pensions is the Pension Benefit Guarantee Corporation (PBGC), which is so disastrously underfunded that over the last yrs they’ve redefined “underfunded” and “at-risk liabilities” a few times to make the looming Armageddon only look like Hiroshima. Big Biz’ underfunded pensions are backed by the underfunded PBGC, which is backed by we taxpaying citizens and small businesses.