>> it never will be true, but i challenge anybody to protect the position that that is not the goal we should be shooting for and stop talking about how far we've come and start talking about how close we are. >> and with that thought, we have a minute left for your comments on the brown v. board decision in 1954 and really what its significance has been on american society. >> well, i think it is a decision that was important in constitutional law. it's generally considered the most important constitutional law case of the 20th century and that's rightly so. and it's a paradox, though, because of all the things that we talked about. brown was not considered to be a con-law case that was actually based in law. there are many questions about the method that the court uses

to reach its decision, but over time it is accepted as the right principle. the court did the right thing. that's important. it sets a high bar, high aspirations for us. and as justice marshall said, at so many times we're still climbing toward its goals. >> jefferson in the declaration of independence promised that all men are created equal, yet he took slaves. the civil war the amendments tried to enshrine that in the constitution, but it took a century after that for brown to make the promise of the declaration of the reconstruction amendments a reality, but we certainly have not come close to achieving that promise for the reasons we've been discussing.

>> thanks to you for being part of our audience.

our series continues next week with the supreme court's 1961 decision in mapp versus ohio. in that case justices strengthened the fourth amendment protection against unreasonable search and seizures. find out more next monday live at 9:00 p.m. eastern on c-span, c-span 3, and c-span radio. you can learn more about c-span's landmark cases series online. go to c-span.org/landmarkcases. you can order c-span's landmark cases book, featuring background, highlights, and the legal impact of each case written by tony morrow and published by c-span in cooperation with cq press. "landmark cases" is available for 8.95, plus shipping. coming up here on c-span 3,

a conference from the technology policy institute. first a conversation on technology and entertainment and from the same conference, executives with google and twitter on government regulation. later a look at online privacy with former officials with the justice department, homeland security, and amazon. the technology policy institute is a think tank that looks for free market approaches to technology and communications policy. the group's annual forum in aspen this year focused on government regulation. this discussion with executives from spotify and the independent film and television alliance is on innovation in entertainment and the creative industry. >> all right. we'll get started with the last panel of the day and of the conference. so technology has effected almost every aspect of the

entertainment industries. it's reduced costs to produce some kind of content and introduced new distribution channels as we heard some of that last night. while much discussion is focused on the extent to new distribution methods might display ndi -- that might not have succeeded on other platforms. artists have the ability to select to pull work from particular platforms. to discuss these, we have a good panel. we have michael herring, who is cfo at pandora, laura martin, jean pruitt, mark silverstein at

spotify, and we'll start with mike because he is just about to release a new book on many of these issues. so i would like to hear your take to start us off. >> thanks. so i wanted to start by saying -- i asked scott if i could go first because i have an awkward and somewhat embarrassing confession to make. i figured this is the perfect place to do it because we're all friends here. it is not like this is being recorded or anything, but the awkward confession is -- can be summed up in three words and that is i don't know. and the reason that's awkward as an academic is i'm trained to know. i'm trained to ask questions, go out and get data, and come back and say the answer is 17.3 plus

or minus 2.5. and we've been doing that with some great partners in the publishing industry and the motion picture industry on things like how much consumer value is created when consumers can access all 3 million books in print as opposed to the 100,000 books in a typical bookstore or does unbundling of singles hurt overall music sales or can you use site blocking in the u.k. to change consumer behavior around piracy. ironically, the answer to all these questions is 17.2 plus or minus 2.5. my main co-author and i started to ask a bigger question, which is could technological change change the market power in these

industries. and just first blush at this the answer to this question is almost certainly no from a historical perspective. if you look at the history of these industries for the last 100 years, they've been dominated by a set of three to six really powerful companies who have very strong economies of scale and have maintained their power in spite of massive shifts in the technologies associated with creating, distributing, and consuming content. so on the surface of it the answer to this is almost certainly no, that a single technological change like the internet is not going to change power in these industries. then we started to think whether the internet is a single technological change or is it a series of technological changes where the presence of digital pira piracy, which we have talked about in past tppi conferences,

is causing havoc with all the revenue models of these industries and sort of it is possible that the stuff that kelly talked about last night, where we're moving from a model where you have a scarce set of broadcast slots and scarcity associated with shelf space to a world where that isn't scarce anymore, where what's scarce is customer attention. and companies that are starting to rise up, get global scale, and starting to collect customer data and use that to manage and mediate customer attention. could that sort of series of changes be enough to change 100 years of structure in this city?

and like i say, the correct answer is i don't know, but the longer i look at this the more i start to wonder whether the answer could be yes and whether there might be specific things that people in the industry could do to respond to that as well. and with that, given that my answer is i didn't know -- i guess the other thing is we were talking this morning with lauren. she said something that i thought was very insightful and kind -- >> that's so rare. i'm glad you're bringing it up now. >> which part? >> definitely the kind part. very rare. >> as i was moaning about not knowing the answer, she said maybe it's best at this point in the industry if we ask the right questions instead of have the right answers to those questions, so i hope that's what we can do on this panel is ask

some of these questions and play around with it. >> do i have to read all 59,000 words in the upcoming book? >> no, that's the summary. >> part of the thesis is the way that data is changing, the way that data may be changing the business model. so i would like to ask mike with pando pandora how this has begun to change -- information and analytics might be beginning to change their model. pandora has given artists and managers data to make decisions. pandora purchased next big sound, which describes itself as the leading provider of online music, analytics, and insights. pandora started with the music genome project. it was sort of based on some kind of algorithms from the

start. how has big data and all this information affecting the way you look at the business? >> well, so pandora is largely known as an internet radio service, personalized radio service. and that's how we deliver music to listeners. 80 million listeners a month just in the united states. we've been doing this now for ten years. the launch of pandora radio is next month, the anniversary. people think about us in context of the music genome project. the reality is the 50 billion times in the last ten years the 120 million americans have thumbed up or thumbed down a

song whether it fits into these listening preferences. that data has tremendous richness in understanding that person, about their musical preferences. we have combined that with demographic data. we know age, gender, location. how your musical preferences change during the day, if you have a john mayer station and a wiggles situation. you have a kid at home and you're a young mother. that's a simple example of how all these data points can be pulled together, so pandora is largely a data company. we have massive amounts of data we've been working on for years. when we talk about engagement with listeners, we're talking about getting them to listen longer and playing the right music. that engagement has gone from

12, 15 hours per month to 18 hours per user last year. that's 22 hours per user per month across 80 million. over 5 billion hours of music streamed every quarter. more media streams than youtube streams in the united states in terms of time. that is interesting from a radio music service perspective. that data we're starting to really tap into what that potential is. and we've been using it the last two or three years now to target advertising effective. we'll do $1.2 billion in revenue this year. 80% of that is advertising with a small fraction of the ads that traditional radio has. we can play specific ads for people that are catered to them based on their listening

preferences and based upon their demonstrate graphi demographics. now we're taking that data and saying how can we apply that to improve the overall music industry ecosystem, add to existing revenue streams, but also create new ones. pandora would like to participate in those revenue stream. we're still a business. we're a public company. i have a i feel we have a duty that we need a healthy ecosystem across the songwriters and the distributors and artists in order for the industry to survive and thrive. finding that balance is something the industry has been stumbling through the past few years. using the data to drive ticket sales -- we sold 10% of all the

rolling stone tickets for their last tour, which was a massive success. it was touted all over billboard. pandora did that quiet in a matter of hours, days. we've been doing live streaming promotions that have driven real album purchases. yes, people actually buy albums and downloads. we take it down to small edm artists like odessa. we identified them through looking through data fluctuat n fluctuations and edm. >> better tell them what edm is. >> electronic dance music. it's a new jgenre that applies o

millennials. that's what next week's sound is about. next week's sound connects music listening data from a variety of listening services to social data. what's being talked about in the various social media outlets and how is that connected to listening and can you draw connections there to help an artist to promote a new song, to help a label promote a new artist, or to plan a tour or an actual concert event, a festival? that's the way we're thinking about applying data to problem. >> i wasn't anticipating asking this question. when you said you were responsible for selling 10% of tickets to all rolling stones

concerts, was that with ticket master or without them? >> we didn't run the transaction. we promoted it directly. they linked through an ad on our site to the ticket purchaser. >> it was still ticketmaster, who still has complete control over all ticket sales in the entire world? >> yes. one of the problems with things like ticketing is is the profits that are shared back to promotional outlets like pandora are really thin. we're not focused on it as much as a revenue stream today as in understanding the data that can move selling those tickets. all the profi we drive the sellout. we drive the last mile. i think that's where it's going to be really interesting from a ticket perspective. >> mark, i'm interested in the

same things for spotify, but also spotify has been moving into video. could you talk about that a little bit? why the decision to do that when it seems like a pretty crowded market? >> sure. i'll get into -- i think we have a very nuanced approach to video, but i'll get there. i think it's helpful to take a step back and look at the development of spotify and a lot of what the decisions we've made and how we've gone about what content we're providing when has to do exactly with our user data. we, as mike said, look deep into our users' data to give them the best experience possible. if you look at the development of spotify over time, it started as we had 25 million tracks and we had the search box. you had to know exactly what you wanted to listen to. quickly realized that's a

daunting task for a lot of people. you know a few artists you want to listen to, but just having an open search box is not the best way to consume music. we started to genres, r&b, pop, et cetera, but we always testing different ways of experiencing music, and we found very quickly when we put a genre such as focus next to r&b or hip-hop or even pop music, we found that more and more people were actually graph taiting to a moment in time or an experience, so folk, studying, sleep, running, and we saw that activity also occurring in our play listing activity, because we have many active users. some are on our service, veeming music 16 hours per day. they're creating play lists and maiming play lists, and what we were finding over time is that people were not creating the '9

os hip-hop list, it was my running list, my cooking list. there are moments in time when we can deliver a great music experience to people. and we said, okay, how can we do this? we can curate music. we can have a music programming function. but we can also, are there sirn parts of the day where music is actually not the only thing you want to listen to? so morning commute is one hypothesis ha wothat we're test right now. if you're on the subway or in your car, et cetera, maybe you don't want only music. maybe you want news, weather report, if you're on the subway, not while you're driving, like a clip of jimmy fallon or something like that. there's some other content you want to experience during that time. and that's kind of the hypothesis we're testing right now to see if people are interested in experiencing that. now at core, we're a music company. and that's where our best

innovations aren hai ehappening. so on the running, we've seen millions and millions if not billions of running play lists. we said to ourselves, look, we're a software company. why does our app always have to look the same for all use cases? so we did some research with olympic runners, and we partnered with nike and saw that, one, people were, like, well, my phone's on my shoulder here, your button's all the way down here, like that's not a good experience. so we created a running experience where we only have three buttons, forward, back and play. on that, and software can adjust that way. but we also did research about do runners perform better if the music, the beats match your feet, right? >> that's cool. that's cool. >> so it could be every, if you're running at 18 o beats per

minute, if the music actually matches that, do you run better? and the answer is both quantitatively and qualitatively yes. and we've found runners like that experience. so we've created a portion of the app that once you set the beats per minute, we only deliver music based on your taste profile that has that beats per minute. but we took that further, because we said wait a second, at the higher beats per minute, there aren't enough songs that fit people's taste profiles, so what can we do? so we worked with a deejay and some orchestras throughout the world where we have created tracks that the beats per minute will move up or down, but the track will stay the same. okay? so, so if you speed up or slow down or you want to run fast for 20 minutes and run slow, the

same track will adjust the beats per minute but otherwise will stay the same. so we've completed a completely new music format, whether this is wildly popular or not remains to be seen. but these are the types of things that we start with our user data and rye to take the innovations as far as possible and running is our first step into that. so that, that's a long-winded explanation on the video part, where i is a small part of our music innovation. last thing i'd say, we're hyperfocussed on our users and artists and providing artists with opportunities very similar to what pandora's doing to prioritize recorded music as well as other opportunities. so we just worked with country star hunter hayes. and he said to us, help route my tour in the united states. so we did statistical analyses on where he was overindexing these other artists that are

similar to him and help him choose college towns he otherwise would not have picked to go there. and there'll be opportunities for his best, his biggest fans in those areas to have meet and greets with him, et cetera, but those are the types of things that we want to use our data, not only to drive users to like but also continue to drive the business for musicians and songwrite songwriters. >> gene, mike's ahal sis and also, i'd say kelly's talk last night with the idea of these increasing number of distribution channels or implication that there are so many more producers of content now seems to suggest that we should be seeing sort of more independence than ever before. but from what you've said, i don't think, that doesn't seem right, right? i mean, what's your sense of how one goes about sort of producing content, especially video these days? >> i think you have to lock at

what i think now is becoming an increasingly bifurcated or tri fur kated marketplace. the group that i'm most familiar with and that i actually represent are the professionals. their product costs at the low end, $1 million or $2 million, at the upper end, $200 million. and they have one set of issues and are under one set of each us as the marketplace evolves. because the new online distribution services are bringing nothing new to the table. the other set are people who are quite successfully using youtube or other similar services to create what we used to always call your calling card.

there are always, there's always film. usually supported on credit cards and your grandfather's pension fund. and the challenge, even once you make it is how do you get people to see it, to recognize your talent and to begin to help you move into the more professional arema. and i think there's no question that between what technology gives you today in terms of ease of production and what you can do with the internet and with youtube, et cetera, makes it much, much easier to create ha calling card. and so you're seeing people come in to the field in a much better way, i think. the other thing, and it's an issue that people haven't explored as much, again, because it's not clear where it's going is the extent to which technology is letting you create content, which is just a different type of content. it's just not content we ever saw before.

and some of it does involve the youtube celebrities. it involves people doing what used to be stand-up comedy in our homes. and it involves creating a community where the audience simply didn't exist before. and that's another phenomena. and there's largely a free marketplace. i think what we showed last night was the woman with her quilting videos. now i happen to know a little bit about this because i have a cousin in fayetteville, arkansas who is a weaver, and she posts those videos on facebook. so i know that that's a real thing, and it's not just two people out hear. it is an entire community, and it is an entire audience that at some point may support a different type of content. but if you move back to the professional group and the group with this very heavy production cost, i think that from their standpoint at this moment, the promise that we all saw came with the internet simply hasn't

proven out. it's just ill lusry. and what everyone assumed was that as that developed, it would develop in the same way that let's say the video marketplace or the dvd marketplace, which was an almost unlimited appetite for content and ability to put it out there through video stores in fact where consumers would come into contact with titles that they really had never seen before, but they'll pick it up. it's saturday night. you don't know what that is. you're walking down the blockbuster isle. you pick it up, take it home, there's a price attached to it. none of that has really developed on the internet side. 201 again, most of my members couldn't get the pictures onto the online services if they tried. they're not able to get those services to come to the table in any way that guarantees a return. so while on the one hand you

have this sort of huge arena developing of distributors. on the other hand, the actual task of funding the product, marketing it, making an audience where it exists is completely in the hands of the traditional distributors, because they're the only people who will actually become partners. in constant creation. and frankly, they're the only people who are bankable. and i'm not sure how many people in the room know how content normally is funded. but for independents, nobody is writing a check. what you do is you go into the market. you talk to the major distributors worldwide. you say, this is what i've got. in the good old days, it used to be a poster. you say here's my poster, and here's what the story's going to be about, and here are the two stories i think are sort of going to be in it and here's my director. so how much will you give me as

a guarantee against my royalties on all the rights that can be exploited in your territory. and now you have to have little more than a poster and more guarantees, but ultimately you are doing pre-internet kickstarter if you will. if nobody comes to the table and nobody signs a contract, you're not go being to make that film. today you know which distributors, let's say, in france will hopefully sign a contract. you know france should be where 15% of his budget. but he's saying how am i going to pay myself back. i'm giving you $7.5 million on expendables three. i have theatrical. i don't have any video, because that's been wiped out. i may or hey nmay not have a tv. and in france, online isn't paying up anything.

so now i've 20got to do my deal differently. i'm no longer worth 15%. i'm worth 7%. now you go to your bank, your bank loans you money, your gap, you have to fund through dentists, russian old garks. you laugh. there are jokes around about whose russian ole gark got stolen by who. in that process where you wanted online to come in, either because they should take up the slack on dvd or because they in their own right felt they wanted to be part of the content creation process, they're really still absent. so when we look at the pressure, the pressure is much more about a marketplace that now consists almost completely on television and theatrical. it doesn't yet offer the promise

that we wanted for content that could be slotted toward video on demand or a, if you will, a netflix release. >> and that's true, thinking about the original content from netflix and amazon prime, are they sticking with more traditional actor and producers than -- >> most of my members are sticking with very traditional actors, and when we get into the balance of power we should talk about that. no. i think a lot of the netflix content is very television oriented, not long form. but they are also turning themselves into a studio. and if you want to go work there as an employee, producer, you might find a way to get on there. if you produce a film like some of our members have done things like "twilight", "the hung er games", et cetera. but they are much less interested in films that haven't

had a theatrical release and a theatrical marketing campaign, because in the same way that they don't come to the table on production costs, they're not marketing. they're marketing their service, but they're not marketing most of the content. so are there opportunities there? yes. do we believe that this will evolve in a way where, you know, we all meet somewhere in the middle? yes, that's where we all want it to be. we want to be able to reach the broadest audience, but at the moment, the pressure is really coming from the fact that we've lost some channels of distribution and the new ones aren't stepping in. >> laura, i think this is a good time -- >> let's talk about money. i think the best question for anybody spending an hour with us is why should you care about this panel. so i wanted to start by economically framing what we're talking about up here. and the answer is, in the u.s. only, last year, basically, the content industry is represented

on this panel is worth $500 billion of revenue and television was by far the biggest piece at $150 billion in 2014, of which about half, $75 billion was advertising on television. and the other half was subscription fees, payable to comcast, satellite and telecos. next was motion pictures. and music was 15, of which $5 billion round numbers was recorded music, down from much higher levels before steve jobs unbundled the album. so we're talking about half of the $5 billion when we're talking about tv, film and music. music is the smallest, but in my opinion it leads. so, as we've watched, and the experience looks very much like what happened in newspapers and yellow pages, which was massive value destruction at the hands of digital platforms. so we're talking about things that matter in the u.s.

if you want to look at global numbers, take the u.s. figures i gave you and multiply by three. because the u.s. is typically a dollar and the other countries are $2. i want to build on gene's point. i think the biggest surprise today, and i think it is answered, so it is not a question. i think the biggest surprise to date has been that while consumption has moved at triple digit rates to the internet and specifically internet video, money has not. and the best example is youtube. right? so the number she put on, kelly put up last night is 1 billion vo views on youtube. it's a ten-year-old asset. they did $3 billion of revenue. i just told you the u.s. alone is $150 billion in television and globally, that number is three times that. so to do $3 billion after ten

years with a billion views is telling you the money isn't following time. so i think that's been a conundrum, and i think one of the big questions going on in my world, which is the capital allocation world, is there is a bunch of investors that believe to their core that money follows consumers. and there's another set saying, but it's been ten years, but, by the way, you probably saw last week that all of my content guys' stocks fell, sort of 9% to 12%. $43 billion of market cap was wiped out because disney came in and said guys, espn isn't going to grow at high digits, it's going to grow at sickle digits, because people are cutting the chord. which is equivalent of $75

billion to cellco. a birpgs unch of people last wek money out and said we're going to energy, health care, we don't need to sit here. this has become a bigger question, because all of the numbers in the second quarter were weak. vie yeah come was down. that was bad. disney says espn, which is the juggernaut for the most expensive live content on planet earth is saying they're going to grow half the rate they thought. so this concept of money follows consumers is a really big question, and therefore the cost of capital. and then going back to data, which is where we started. you introduce data, you guys use data, you guys use data. it's a fool's errand if you don't use data, because if anybody you're going against is using data to make your product

faster, because the internet allows globally scaled connected competitors, if you don't use data, do so at your paeril. so data's becoming more important because it's available, and you'd be silly not to listen to it, i think. >> really quickly. is the money following consumers? >> yep. >> i wouldn't totally disafry, b but it takes time. in the context of pandora, this is a very small piece of the numbers you're talking about. we have about 10% of all radio listening in the united states. that would seem to confirm your thesis. that the money's not following the time span. we've been selling radio advertising budgets for lthree years. we' up against incumbents.

it takes a while for these markets, for advertisers to get their dollars to move. i wouldn't make that conclusion too steadfastly. we're three years into it. we believe at pandora that over the next few years our percentage of those advertising dollars, maybe a greater percentage of that will be equal to are o greater than our advertising share, but at the pace face of it you'd think pandora validates that thesis. we're a new thing selling into a market that's been buying advertising the same way for 50 years, and now you're telling this market, oh, by the way, the distribution channels are changing and you need to change the way you reach out and find consumers. by the way, it's way better. you can target better. the return's higher. the promise is there. i just think it takes a while for the dollars to move. so i hope it's mott destruction. i hope it's just time delay.

>> yeah. i agree. i think it's an open question. >> um -- [ laughter ] >> you've been studying this for a while. and you've talked with the newcomers and the established studios and so on. how does this, how does this thesis fit with your research? >> let me go back to something laura said about data. so i was in class waxing fill solvic as i frequently do about parallels between money ball and the experience of the oakland a's and the entertainment industry. and one of my students, and i wish i remembered his name because i'd love to cite him. but one of my students raised his hand and said something really interesting, which is in baseball, the oakland a's got about a year and a half of

competitive advantage and pretty quickly everybody else in the league figured out how to use the data. >> they gave away the secret. >> so his question was, why would it be any different in the entertainment industry. and the answer, again, is i don't know. i'm not sure i got tenured, by the way. [ laughter ] but i think one difference in major league baseball everybody had access to the same data. you could go to stats inc. and buy the same data that oak rand was using. and the difference in entertainment is netflix and amazon and the nice people on this panel have that data. >> that's true. >> and it's really hard to get access. >> that's true, and they use it for their own -- >> they use it for their own purposes. >> their own shareholders, woo-hoo! yay. >> with money ball, the money, it worked. they won. and. >> well -- >> but we're also hearing here

that you have all this data, but it's not actually changing the balance of power in the industry. and i just made that assertion. so say that i'm not wrong. >> well, we should talk about balance of power, because i think there's real disagreement on this panel about this. gene you sort of brought it up. why don't you talk about what's going on with balance of power. >> i don't think the overallel balance of power has shifted in favor of one set of players or another. i think it has shifted in terms of consumer taste. it's shifted thin terms of abily to target an audience and are you successfully delivering for that audience. for you, the most interesting issue is really the question of movie stars versus tv stars. that historically, those were two different categories, and never between the two shall meet, you know? and that's no longer true. you credit netflix with doing that, but there are other things

going on in the traditional cable and tv world. and what does that translate to for the rest of us? what it translates to is their actual business practices have had to change. for example, if you take matthew mcconaughey out of play on the film circuit and put him on the tv side, his agent isn't going to let him stand around and let you do a pilot and then spend a month and a half deciding whether or not to go to series. that's not the way his timetable works. so all of a sudden, if you talk to the networks, there aren't pilots anymore on those kinds of series. they're making full orders, because they can't do a deal with them. equally, on the field side, whereas, i've been to -- we run the american film market. and i've been to markets where people were selling nine, count them, not yet made bruce willis

movies. now, you knew that they weren't all going to get made. and frankly, you didn't really know which ones he was going to turn up for. it's much harder to do that now. it's much harder to pull people out of the agencies, to put them on a spec, you know, film deal when you also have television and the networks and to a lesser extent netflix or amazon bidding for them. so you are changing the way that whole world works. and merging a lot of it into, there's one single marketplace. and hethere is a handful of abo 20 people that can carry either a tv series or a film internationally. and there's massive competition for their time. a lot of the other people may well, you know, build up into that, but at the moment, looking at data, we're all looking at the same thing, which is, okay, i've got a genre film, a really, really have got to get my

numbers out of china and prance. who, who can i pull out of this equation? and the competition for those people is now massive. >> mike actually, so, in your, you talk about this example of netflix and "house of cards," and that they were able to use data to know that this show would be successful with their viewers, and they signed a two-year deal for however much money, nobody knows. you want kevin spacey and robin wright, you better sign them up or they're not going to do it. >> i think one of the areas where we've seen shifts in power, and none of these is absolute, but i think we've seen a shift of power towards the consumer. the consumer now has a whole lot more choices and a whole lot more power, and part of that is from piracy to great ill, i would argue. we've also seen a shift in power towards big, important, powerful

artists, including, including kn newbies who have gotten large advances to write books. and we've also seen, i would argue, a shift towards some of these distributors. one of the things we talked about in the book is an example where a record label discovered that apple was selling their content at the wrong price. the price they didn't agree to, and they called apple to complain, and apple says, do you want us to take it down? and that sort of take it or leave it power is really scary. >> one way in the music industry, you talk about the shift of power to the consumer, it's really manifested in how stars are being made these days. in the old days, you know, the record labels, their job was to discover talent, develop that talent, they would put them on, develop than album, they went o and promoted them through radio

stations, so it was a controlled pathway to be successful. and labels owned it from beginning to end. and that shift to consumer is manifested in the context of the cost of producing has dropped significantly, much more so than in long-form content. you know, that music can be distributed for free on youtube or on sound cloud, sound cloud's massive usage. you just upload your music and people can listen to it. that's a lot of it. they got huge followings before any label paid any attention to them. that means the consumer's determining what music they want to hear. instead of the labels developing that music, then they're watching to see who's popping social and who's popping on sound cloud and all these distribution channels that are out of their control. radio isn't defining who's going to be successful anymore. these social sites and music sites are now determining who's going to be successful. in the old days labels, you

know, taylor swift pitched her label maker successful. now taylor builds her own audience first. and then the label comes begging. she ends up owning more of the label and more of the economics. that is trickling all the way down to artists. they're taking more control, we're getting more variety. one of the big growths has been in live music. the money being made in live music, concerts, has grown a lot, to a large extent because lots of variety has popped up in music. all the growth in live vents have be -- events has been in 1,000 to 5,000 seat venues. we're doing the same number of stadium shows, but we're doing ten times as many small-venue shows, because it's so much easier to build an audience of that size and reach them and get

out and hit the road. i think that's an important part of that shift to the consumer. we think about that a lot. because we think our data allows us to tap into some of those things. how that manifests in some shift of power is hard. because in music, catalog matters a lot. which is maybe a little different than long-form as well. the music you listen to your whole life is what you listen to between 15 and 25. so there's a swath of the population that cares about catalog. so there's issues in the music industry that are very backward looking, so it will take longer, i think, to shift. you won't see the original content come out as aggressively on the music side from distributors, like netflix did, because of that dependence on the back catalog. >> i think both of you are raising a point that i think is really interesting. because chris anderson had this theory that the long tail was going to generate all this extra

revenue. and what the internet did is make all the economics concentrate at the top half of o 1%. it did exactly the opposite. what they're both saying now, the skill sets now to be at the top of your game is a global skill set. prince couldn't make a living in this world. you would have to have a fan base that you curate that's yours of super fans. they could run fortune a hundred compa -- 500 companies at 25, which is basically what they are. >> the only thing i push back on that, we talked about this last night. >> we did. >> is that all the economic research shows that while there isn't a whole lot of revenue in the long tail, consumers get a whole lot of value from being able to access the long tail.

and, again, i think that goes back to some of the things we've been talking about here in terms of where's all this nice revenue gone. consumers are getting, according to all the economic studies, great benefit from access to obscure artists. >> pandora plays 120,000 artists a month. we're paying $500 million in royalties, but we're not getting pace, because the people at the top, the top 1% are used to being paid all the money, and now it's spread out over a much larger group, and that's causing a lot of problems in terms of as we transition into a market that plays a lot more niche music, those are some of the pain points that we're going to see. >> go ahead. >> i think it's also the other

issue with the long tail on the video side is there isn't anyplace to put it. there really isn't complete capacity. there's certainly not complete capacity if you expect to get some money. >> i see. >> and today most video on demand services have very limited service space. they have very limited follow rans pour anything that has to sit there for any period of time. and unfortunately, when you go overseas, there are relatively few online service providers outside of china, frankly, that can actually just keep that content up and available. and they're pretty rudementry. it's hard for people to find things except by reference to the same x number of artists and names that are familiar, a lot like the concept of if you have to fill in the search bar and that limits what you get.

so i think there would be great consumer value in the video long tail if you could get to it, but frankly, it's more of it on cable tv than you do on netflix or amazon because of capacity issues. >> for the professional couldnt. and, again, anecdotes are a lousy way to start an argument. but i see my kids watching a lot of long-tail content. streaming. >> we all spend a lot of time on youtube. and most of us do watch a lot of katz videos. we have been trained to appreciate a whole lot of content that privately, i try not to show anybody when i watch the video of their dog. i don't disagree with that. when i talk about long tail,

what i talk about is the original theory is that there's going to be economic value down at the lower end. and we just haven't figured out a way to flip that. >> is it fair to say, putting it together that on the one hand, there is this very long tail, especially in music. they can have a distributor. the very small number that are getting the bulk of returns are able to try to take more of those returns. like taylor swift if she pulled her stuff on spotify because she wasn't happy. or is that too simplistic? >> i think taylor swift is rightfully, has got and lot of press, but i think she's maybe kine of kind of an outlier. we respect her decisions and

hope that she'll come back. but one way we think about it is can you move someone from who's traditionally been in the long tail, they're a small artist, an independent artist, and without all the machinery that is the major labels, are there, are he there opportunities for them to hit it big? or can we be a participant in that? and we've seen that over and over again. and we think there's room for everyone, especially on our service, when you have the major-label-produced content, which is high quality and consumed consistently throughout the globe, really. but then we've seen these nuggets, like hosier is an irish artist, very few spins on spotify early in his career. and some of our content teams recognized him as just good

music, right? so we identified him as a spotlight artist for us. he started, he went from 15,000 streams a day to 200,000 streams a day. and then he, because of positive reaction by our user base and that people were putting him on play lists, when we curated and put him on certain ones of our play lists, they were never skipped. they were then taken from our curated play lists to other play lists. we saw that the user feedback was there, so then we moved him to a different play list. he went from 200,000 streams a day to 2 million a day. then that rolled into top 40. and he was on normal physical charts. and then he popped to the number one global streamed artist on our service. and to date, he has over 400 million streams. so this is a place where kind of

previously unknown irish artist, who is a fantastic musician, and people should hear, had an opportunity to move from, probably i eternity on the long tail to one of the best-selling artists kind of over the last two years. and we see, we feel, both as a service and as an obligation as part of the music industry, to create those opportunities as much as possible. and i could give you, you know, six or seven of those today, but the point is, can we not only create spins so recorded music revenue, but can we actually create new, mu linew listeners, fans. that's a big part of how we think about it as well. how many people discovered your music that had never heard your music before. and you know, that's a really powerful piece. because you have, with the reach that we're growing to, you have

a base of fans that you can reach, and you'll be able to, whether it's touring, other income streams, we're going to give those opportunities to artists as well. so the long way of saying, i think there are many opportunities to move people along that kind of long-tail curve. >> did you use the word spins and streams interchangeably? >> yeah. i'm just -- >> are we still spinning? >> that's just. >> i like spins. >> it's, yeah, streams, spin, whatever. >> and we're running out of time, but it would be amis if we didn't address piracy a little bit. so distributors and row deucers, everybody has lots of data, better target, but piracy is still ram pant and also gets, i don't know what the right word is, but really gets slick. popcorn time is just as easy to use as netflix.

and you know, how is this still affecting these industries, and how are they adjusting? and is it always just going to be a game of cat and mouse? >> i can jump in a little bit on that. we've talked a lot at tpi and in a variety of other contexts that all of the, the vast majority of the academic papers that have looked at this have found exactly what you'd expect to find, which is piracy earns sales. there was lots of talk about that. i think what's less talked about is that piracy screws with all of the existing business models in the industry. all the business models, and this is exactly what the e-context books tell you you should do is to use strategies to maximize your revenue, but they all depend on the quality and the usability of the content and piracy makes it harder to execute each and every one of those strategies. there are a bunch of things you

can do to help with piracy, and it turns out that making legal content easier to consume works, and making pirated content harder to consume also works, but it's still an incredibly, incredibly hard problem to solve. and if i know that the content i'm getting ready to buy for $10 on itunes is available for free somewhere, there are a lot of people who are going to use that to make the wrong decision. >> you know, when we look at piracy from the standpoint of independents putting the big-ticket pictures off to one side, what we're really looking at is all the instances in which piracy has destroyed the infrastructure of third-party distributors that we count on to put our films out. and the big example that we all give is sting, where kurtzcourtf the desire to have u pick wit us

broad brand, it destroyed the dvd market. there is no dvd market left in spain. so when you go back to the who's paying for content, you go to spain. you want pre-sell to spain in most instances anymore, and that was 7% to 10%, 8% of your budget. that's a set of circumstances, for most of those numbers, it was not their films that were stolen. it was an overall problem of training the population to expect online content for free, with the net result that all you're left with, really, is theatrical release. that phenomena has got to be put back under control, in part because what's really hurting is the ability to integrate legitimate online into the overall distribution and marketing plan. the nirvana for all of us would

be able to say i have this film here. a precious little film. it should best go to this kind of audience, probably not in a vast, 3,000-print run across the country. it should really be taken care of this way. and to do that, i'd really like to put it on video on demand or netflix first for a couple weeks, then i'd like to move it over to the theaters and do this broader kind of testing to see if i can find my market. you can't do that if a, there's no online service, or, b, there is an online service, but it's ripped the day it goes to video on demand. >> or ten days before. >> or ten days before, which, of course, is the worse of all possible worlds. and that, i think, is also part of the explanation for why our industry desperate as we for new distributors, and we are

desperate as people have gone out of business and the economics have changed, have not been able to embrace the online distributors in the way we would have liked to. because people don't know, haven't been able to figure out a way to control the risk of destroying their entire global market in order to get the benefits of this one channel. and so, you know, frankly, though, there are no remedies, really. the remedies we're all pursuing is this whole series of voluntary plans to rtry to cut off the credit cards, cut offer the legitimate advertising, figure out a way ideally automated to notify a consumer online that they're watching an illegal copy, and hopefully shift them to a legitimate outlet, but at the end of the day, again, what we're really trying to go after are all the big money-making operations. to not to, at least as an

independent not have the resources to go after individual file sharers or anything else, even if you thought that was politically the best thing to do. and our efforts, other than what happens in the public arena have been on, again, trying to teach people what the beth security methods are, developing terms of, you know, standard operating principles that mean your lab is secure, this is secure, et cetera. but, of course, expendables, it was stolen from a lab by a hacked-in effort. >> and it's really hard. if the nsa can't figure out this problem, it's really hard. >> mm-hm. >> can i jump in with one? >> yeah. >> the p stands for policy. this, to me, and this is my little soapbox, so i apologize. but this, to me, is the really important policy question. for a long time, we looked at piracy, and we said, yeah, we've got a lot of piracy, but there' on. is policy hurting creation?

that's the wrong question to ask. the question we should be asking is would we get even more creation if the nice people making this content were getting paid. it's not my paper, it's my colleague's paper, but he did a really nice paper where they looked at piracy in bollywood around the time the vcr around the time piracy became prevalent. by the time the vcr went into bollywood, the number of movies produced by bollywood went way down. and the quality of the movies that were getting made went way down. if that's try and that's reue ay what's going on, that's a problem for everybody in this room that we need to solve. >> questions? yes. right there. wait for the mic, which is on its way. >> thank you.

yeah, first off, this is great. i kind of want this panel to go on forever. so you guys feel free to stay up there as long as you want. >> you can bring us lunch. >> can any of you comment on the investment of new entertainment ip, whether the trends that we're seeing with netflix and amazon prime video are going to expand into other areas of creative marketplace, like, say, music, and, you know, to me, i think about the empowerment of creators with data, that's very, very important for certain disciplines where that data can be exploited for answer larry revenue and other areas. they're interested in partnerships with platform that could involve investment maybe without a 35 year transfer of copyright, who knows. but ideas in the creation of entertainment ip and what would that look like in terms of flexibility in revenue splits

and terms. >> i'll start. after about the first ten words i stopped listening. three points i want to make off the bat. first, this is a land of giants. that hasn't changed. when you look at the new entrance for content, they amazon, google. these are people who have $50 billion of cash sitting on their books. they are apple with $150 billion of cash. so the new entrants playing in these spaces are as big as the old entrants. so that hasn't changed. the second point i'd make is that these are, you're trying to get at whether more content -- what's your goal in the sg question? >> whether creative ip -- [ inaudible ] >> okay. so here's what the capital allocation conundrum is.

in my world where we have liquidity, public markets, i have the choice to invest in facebook which wreaks 1 billion people. and every time facebook gives us an estimate of what their capital spending's going to grow to and how fast they're going to hire employees, they can't hit them, because there is no capital intensity, but yet they have globally streamed revenue streams. content doesn't travel. as you know, comedy doesn't leave national boundaries. movies. big budget movies with lots of action and not too much fluff travel great. that's why we're seeing all time highs for "frozen", for ""furious 7," for ""jurassic world."" everyone goes to the theater for the i max screen other the 3d

experience, that's how the industry has solved that problem. so, you know, i think these are industries that are iterative. they understand the lproblems, but my world which has liquidity are much morel interested in allocating to snapchat. they're employee based to facebook which has $270 billion. they employ nobody. comcast is 150,000 people for half the market cap. so it's really hard to get my guys to fund a film. or to fund a portfolio of films, which is one of the reasons you end up with juggernauts, like amazon dabling in the contentlelelelelelele area. the big space in the internet space is engagement length. guess what it is, 20, po 30, 40

minutes. average video minutes are 3 minutes a day, 6 minutes a day. >> what you'd like to see is the amazons investing in the way other distributors do. but at the end of the day, this is all about risk. and it's about ultimately making your case, whether you use the data we've always all relied on or the new data or whatever data you happen to have to any distributor that he's going to get his money back. that you're going to produce the film you say you were going to produce, and that they'll derive whatever ancillary benefit they're in the market to do. if it happens to be amazon, they may have slightly more tolerance for not getting their money back, because they may feel they're developing consumer stickiness. but the majority of platforms are all looking very much toward

have you identified an audience you think we can reach? what's your evidence that this can go overseas, and while big data's all very attractive, they're all these data paces out there that we've all used, now automated, but in my prior life, we had it on backup on an envelope that says, gee, this particular actress has made this much money. movies she's been in with this genre have generated this much money in the following 17 countries. that's a pretty good bet if you want to go to those 17 countries. so-and-so wouldn't be. people use that data all the time. and i think what's difficult in the aim smazon and netflix worl they haven't yet really identified themselves as content creators. they're doing a bit of it to, you know, spearhead what they're doing. but, when you do start to look at other distributors, and frankly look at more localized

platforms in other countries where they're very specifically geared toward their local content, you may well see a different set of economics arising. >> can i say something provocati provocative? ted serrandos spends more time talking about how valuable his data is. >> he's pretty much in love with it. >> he's made some very interesting comments about funding films where he talks about how the movie i have as a whole is a single-digit return business but a huge amount of risk. but if i understood his comments correctly, what he was saying was he thinks that netflix could internalize that risk and give a standard rate of return back to the film maker, and i'm not saying that's a good idea or a

flawed idea, but i think what that says is he believes -- >> he said that in kacannes. >> i don't know whether i believe that or not, but i really think he believes it. >> two points. one of which is -- i think he does believe it. as has every single solitary overseas firm that came in and bought a u.s. studio believed it. and i think they're sort of a couple of points. one of which is for the creator, if what you want is a mangd return and you'd like to turn over your copyright, that's not a bad deal. and there's some films where you may choose to do that. most creators don't want to do that. that's not the deal they're angling for. they want more control. but i think the other thing is, all the data in the world didn't save the studios from whatever it was, fantastic four the other

day or the submarine film. and none of the data would have predicted once again a guilty little secret, many of us tuned in to watch "sharknado 3 -- hell no " the other night. there's something about the creative process and the execution that just isn't captured in a database, and you can, you can come up with a lot of guesses. i mean, frankly, at a minimum, you can't guess whether or not one of the stars is going to get arrested. >> that's true. >> for something. i mean, you just can't do it. so there's a point where he can internalize as much risk as he wants, but i bet you it will take three failed films before he stops doing it. >> and i would just note that all of the netflix, they don't have a better hit rate with all of their wonderful data. you've heard about all the great

things ever they hathey've done. but there's lots of other things like "hemlock." content is so difficult to make. >> i think we're going to have to wrap up. it's past lunch time. i really appreciate you participating. join me in thanking them, and tom leonard will come up and make some closing statements. journalist maziar bahari tells his story on c-span 2. here's a brief preview. >> when i was in prison, and when i was being interrogated, my interrogator somehow became my muse, because to start with, when i got into prison, i thought i'm going to be in and out in ten days, and i'm going to write an article, "ten days

in an iranian jail." and every time he would say something stupid or making a presumption about my life or about life in the west, i was saying, okay. i'll have that in my book and that in my book. so i was just trying to add color to it as i was asking my question. so basically, he did not have any other human contact besides me. because he has spent all his time in the interrogation room. he was tired of talking to his buddies, other revolutionaries. so sometimes he was confiding in me. he was telling me about his personal life. i could hear his conversations with his wife. even sometimes when he was beating me, he was talking to his wife. i remember one day he was holding my ear in his hand, and he was just twisting my ear, it was really, really painful. then his phone rang, and he kept on twisting my ear, and while he

was talking on the phone, could you let go of my ear while you're talking? and then he hit my head, and he said, i'm talking on the phone, be quiet. it was just really ridiculous. >> you can see this entire conversation tuesday night on c-span 2 at 8:00 eastern. john hingely, of course, was the person who shot president reagan. and president reagan was not wearing a bulletproof vest that day. it was a short trip from the white house. the thing is john hingely was stalking another. >> it talks about various assassination attempts and physical threats made against presidents and presidential candidates throughout american history. >> there have been 16 presidents who have faced assassination

threats, although none directly eyeball to eyeball since president reagan. >> i also cover three presidential candidates, i talk about huey long who in 1935 was assassinated. and robert kennedy in 1968 who was assassinated and george wallace who was shot and pair li lized for life in 197 it 2. >> sunday night at 8:00 eastern and pacific on c-span's q&a. c-span has the best access to congress with live coverage of the house on c-span and the senate on c-span 2. overtha over thanksgiving, the only pharmacist serving in congress. donald nor cross, a new jersey democrat and long time union electrician. friday at 10:00, a california

democrat and restaurant owner. mark walker, a baptist minister. and saturday morning, it's mimi walters, republican from california, former state senator who interned in d.c. as a college student of the and at 10:30, seth moulton, harvard graduate. your best access to congress is on c-span, c-span radio and c-span.org. up next on c-span 3, google's chief economist, twitter's former chief counsel talk about electronics privacy and security. this is from the forum in aspen, colorado. >> thank you, thank you.

well, this is the panel on the internet of things, privacy and big data. they're all very hot issues. a recent mckinzie report stated that the ebts net of things has the potential to fundamentally shift the way we interact with our surroundings, and that statement can certainly be extended to include the effects of big data, and there are, of course differing views as to whether this is a good thing or a bad thing. nevertheless, virtually everything, transportation, energy, health care, medicine, policy and content, virtually every business is being affected. we have a great panel to discuss these issues. i'll introduce them alphabetically, shawn dubrovoc, the author, recently of a book

called "digital destiny." to his left is alex mcgillverey, and his portfolio is the folk on internet property and the ich intersection of big data. he served as head of public policy at twitter. carol mcsweeney from the federal trade commission since 2014, and prior to that served in the anti-trust division and as deputy assistant to the president and domestic policy adviser to joe biden. paul nagle is the chief counsel for the sub committee house committee which has jurisdiction

over data security-related issues and hal is from google. he is also a professor emeritus at uc berkley and the school of information, and is a 2015 distinguished fellow of the american economics association. so let me just start out with some kind of basic questions. go down the panel everybody can give me one example, at the most, two of developments in the information of things area or the big data that you find most exciting and positive. maybe some things that people

haven't heard of. shawn? >> yeah, so asking me to name my favorite i.t. device is like asking me to name my favorite child. there is so much going on in this space. the real interesting developments are where you are starting to see things get pulled together. so i would say, for the most part, two years ago these devices operated in isolation, and they would connect, but they would connect in isolation. right now we're starting to see data move across devices. so, and i think that's where the real potential will start to open up, whether it's in health and fitness where you're starting to be able to pull a variety of streams of data together, whether it's in the home, within the enterprise, so there's a lot of different areas that this technology is playing out, but we're seeing things start to come together now is an important piece. and i think really the fundamental question that we ask when we look at iot is does the internet make sense there. so when we look at something

like a smart watch, i think right now we tend to look at it as a device. and we say, oh, is this an interesting device for us to have, but really the fun amountal question we are asking is does the internet make sense on the wrist. and if it does make sense on the wrist, then what's the user case scenario, what's the applications that make sense when we have the internet on our wrist. when you look at iot, that's the fundamental question, does the internet make sense deploying it here, and if so, what will become that use case scenario. >> alex in. >> so i think shawn did a great job of framing the broader question, what excites me most, which was the question as honestly the way all of this stuff can be a place to allow regulation to be more streamlined. it's the shift from regulating things to regulating relatively smart things that are communicating with each other over space and time.

and that shift gives us the opportunity to take things that might have been a straightforward regulation and move it into a more efficient regulation. to give a couple examples, one which is not really an internet of things example is what the fcc has done in terms of taking a technology that used to be very, very straightforward in terms of bands of spectrum and moving it into white spaces and spaces where could you have spectrum because of this change from things relatively dumb to things that are intelligent. you look at the change from wind turbines that used to be these huge, massive things, and swroe to have regulations to make sure they're nowhere near airports. changing that as your concept in your mind of what a wind turbine is, what a wind-powered generator is, to these small airplanes that can go up in the air, come down anytime, communicate with land stations, communicate with an air traffic

controller, and now all of a sudden we have a way of saying, okay, it's fine to have those types of things near airports. we have to make sure they go up and down at the right time and communicate effectively. so that change from something relatively stupid to a regulation of something relatively smart is exciting. and the huge jobs disruption because of this, i think your report said the internet of things would be a market that was bigger than the entire economy of the world, i think, was their prediction. that, that's really exciting, because it means that you could have new entrance in space, companies that are dominant become less dominant. you could have a new way for individual makers to have more impact within their work. that's definitely things that are exciting. >> i agree. it's tough to take what's most

exciting about this space right now. obviously the space is enormous and we're at the beginning of something transformative. i have followed carefully a lot of developments in the health care and education space, i think the potential there is incredible. i'm the federal trade commissioner on the panel. so i'm going to flag that consumer trust is vital to adoption and success of this space. and trust is going to require security, data sharing and privacy to be a part of this discussion. which i know we're going to get to. >> yeah. paul? >> we have auto safety under our jurisdiction, and automobiles is i think a prime example where are' going to see great societal benefits from all this feedback from connected cars, be better informed about the roads they're on, huge benefits there. we need to make sure we realize those. but what's awesome about it and, you know, it gets me excited is putting all that aside, you know, there are things that you

don't get mentioned a lot. every business, health care, everything everybody's already mentioned will have huge benefits, but little things like food, when we did our showcase and our hearing, one of the folks we had actually had a very simple device that was tracking the freshness of beer at bars. so if you are, you know, popping into aspen for a wonderful tech summit and you have a favorite beer, can you log onto their app, see which bars have it, see how fresh it is and get the freshist pint that you want. so that personalization is going to be another aspect of this, which is going to be very transformative and really fun. >> hal? >> yes, so i think one of the most interesting things from an economic point of view is contractual innovation that these devices enable, so i'll give you kind of an example from everybody's favorite poster boy, which is uber. think about a taxi, a one-time

transaction, ripe for abuse. the driver could cheat the customer. the customer could cheat the driver. you know, it's not a very good system, so we built up this whole regulatory system to try to make these transactions more reliable. now along comes uber.