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The Boston Globe

Opinion

John E. Sununu

Wild West for digital content: Enjoy it while you can

As an institution, Congress hates unscripted moments. Everything from committee hearings to floor speeches is laboriously planned. Moments of unpredictability are rare gems. On the few occasions each year when the outcome of a vote in the House was genuinely unknown, I would try to get the floor early to observe. From the brass rail at the back of the chamber, you could watch the intensity of a close vote bring out the full range of human emotion — anticipation, fear, confusion, and more.

On a far larger scale, most of the economy operates in much the same way. In good times or bad, the activity within mature business sectors — shipping, construction, auto manufacturing — is easily understood. Even as competitors rise and fall, succeed or fail, the products and their delivery change very slowly over time. So when moments of genuine uncertainty arise, they are worth watching, because they are both revealing and entertaining.

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Today, nothing fits that description better than the world of digital content distribution. From 140-character tweets to streaming high-definition movies, competition and innovation in this realm bring to mind the Wild West — not for the gunslingers and shootouts, but because there are a thousand different stories to tell. Products, companies, and business models are trying to succeed in today’s boomtown, even as they know the city will look a whole lot different in just a few years.

Consider the changing game plan at Hulu, the well-known content site. Just five years old, the company has moved from offering “free” content of older TV shows (with revenues generated from advertising) to a premium subscription package ($8 per month to access more recent content) to recent announcements that it would produce its own original shows. Should the effort prove successful, it would compete with the programming at Fox and NBC, two of Hulu’s owners.

Meanwhile, firms like Netflix and Apple have created billions in market value by building platforms that generate stable revenues from movie and music downloads. Other companies like Twitter and Pandora have created popular platforms, but with revenue streams that have yet to fully develop. Hovering over all, Facebook will become a $100 billion public company next month with a user base approaching 800 million people and myriad opportunities to participate in the content market still untapped.

But all of these businesses will continue to be buffeted by the relentless evolution of technology. The impossible becomes the conventional in a matter of months. Meanwhile, innovation changes consumer behavior — more content consumed online and on demand, and less through traditional television; more consumers cutting the cord of traditional land line telephones, or even cable TV. Many of today’s business models won’t work tomorrow; think AOL.

As a member of the board of directors of a major cable company, I see both sides of this competitive dynamic: Our broadband business grows, while at the same time creating a path for over-the-Internet video to compete with traditional cable packages. The cable voice business remains steady, while deployment of 4G wireless creates a mobile alternative to cable’s residential broadband service.

In technology, the impossible becomes the conventional in a matter of months.

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But some of the most intense competition is among digital entrepreneurs themselves. Speaking to the Guardian in Britain last week, Google founder Sergei Brin assailed the worldview of Apple and Facebook, which represent not just competitors to his company but also a different philosophy of how the digital world should function. Brin sees these competing models as “walled gardens.” The content within them, a wealth of information about products, news, culture, and consumer preferences, isn’t accessible to search engines like Google.

We don’t know which view of the future will win out. Ultimately, that’s the strongest possible argument for the government to pursue a light regulatory touch. The second best argument is capital. It’s flowing to all sides, and consumers are better off for it. The value of digital icons like Google, Facebook, and Netflix are off the charts. Apple and Microsoft remain two of the world’s most profitable tech firms, and infrastructure providers like cable, wireless, and satellite continue to perform well.

When someone knows the most likely outcome, they can prepare for it — even write a script around it. Uncertainty forces a more natural, and honest, reaction. It reveals true human nature, and it’s much more fun. Enjoy it. It happens much less often than you think.

John E. Sununu, a regular Globe contributor, is a former US senator from New Hampshire. He is a member of the board of directors at Time Warner Cable.
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