Created as aan was Public Service by americas Cable Television companies and is brought to you today by your cable or satellite provider. In your new book, streaming, sharing, stealing, big data and the future of entertainment, you open with the creative industries, music, film, and publishing. These are the best of times in these of the worst of times. What do you mean by this. Ahul a lot of people are interested in watching a variety of media. The International Market is like never before. The worst of the time is that technology is disseminating all sorts of that also means that you are facing unprecedented competition be have never faced before. Especially from some of the chain that same Technology Firms that are good at technology. Want tocided what get into the content business and they have some Significant Competitive advantages traditional firms do not have. Now it is a combination of both. You have clear opportunities and you have to navigate all this competition as well. Peter what are advantages. Rahul think about amazon, netflix, or google. Netflix started as a distributor. It was in the business of shipping dvds to people. It was able to the navigate the andrnet and broadband world it can be a big player in streaming so it started streaming movies and content and Television Shows into the user homes and your tablet. It has enormous amounts of customer data. It does exactly what their customers want, what they dont like, and not only that they have a Large Customer base. I think now netflix is close to 80 million subscribers. All of these are Technology Firms. Affinity built up an to data if you think about it. The main amount of data driven decisions. These companies say, i have always user information. I can now use and exploit this both had aation in price, promote, distribute the contents to an individual user versus a collection of users. And then maybe use that information now to actually start thinking about reducing the content and produce the content that might users are going to like. Think about netflix from an online distributor to becoming a pretty major player and content production. They have access to the data that a Traditional Television networks or studios do not have. We believe it provides them with a Significant Competitive advantage. That is the sort of disruption i think the book talks a little bit about. Peter how do you use that data and collect it . Rahul for netflix it is a oneonone relationship with the user and the socalled server. Every time you log into the netflix account, every time you watch a particular show, every time you click the like button, every time you even quit a particular show, all of that is information that netflix has. Is example we given the book house of cards. When house of cards was pitched the netflix television, theyhad data about had 30 or 35 million customers. They had a good idea of county people like david fincher. How many people might like kevin spacey. How many people like political drama, or even some combination of that. Now you have all these intelligent all this intelligence. You feel good about making predictions on whether the show is likely to be successful with my subscriber base. Compare that with maybe firmhing in a traditional that has aggregate information. You get ratings from nielsen. Who is essentially watching the show from 9 00 to 9 45. Compared to such an aggregate data now you have netflix which knows exactly who watches what. Then he can even promote that content appropriately. Had sixf cards different trailers, which they could use to promote or utilize this sort of thing. Let me highlight this part of house of cards. You like these things, so let me highlight that in house of cards. You can see having access to the detailed user information and having the skills and willingness to use the data, you would think that would give them an advantage and you can see where things are now going. Peter wouldnt it comcast or a cox have data through settop boxes, knowing if someone is watching cspan or a Football Game or renting a certain series . Rahul some of it is possible. Nbc or for cbs, i think that would be hard to get. They would know my show was watched by 1830yearold during prime time, but most of the Television Industry has sort of been driven by the standardized ratings like nielsen for example, which are based on aggregate statistics. That is hader ad revenues are generated. That is how your ad revenues are generated. Beyond having the data, which i think some of these studios dont have, maybe comcast might. The second part also comes in whether you have the culture and the skills in the organization to use the data in a meaningful way. When you have an industry which has operated based on its gut feeling or instinct to define which private project is likely to work or not likely to worldnow you move to a where there is an enormous amount of big data. Sometimes there is no culture to use that data. Sometimes there is no willingness to use that data. Sometimes there is no skill to use the data. Having data itself is a challenge, then consolidating the data and using it in a meaningful way is also a very significant challenge, in my view. One of the matters in the not only do you have a difficulty getting access to some of this data, you dont have the right sort of culture and people to make decisions based on that. Peter what does that mean for the Legacy Corporation in publishing and movies . Paramount, simon schuster, comcast . What is a longterm trend in your field . Rahul one of the things we try to reject is the future. It is hard to do that. One think i think we cannot discount is these people are good at whatever they do, which is creating content. They have a deep experience in creating content and able to sell it to the endusers. What i feel is going on, and i think michael and i talk about that in the book is the realities are peoples Consumption Patterns have changed significantly. The Linear Television from 9 00 that45 primetime slot, pattern is rapidly changing were now netflix offers the opportunity for you to do a binge watch. A lot of people dont want to wait every week for the show to come on. Changes that is what is already happening. There is a lot of data being utilized by the amazon and netflixs of the world. Especially for pricing, promoting and distribute the content. You might have not to wear the netflix have this recommendation challenge a few years ago. We will give you 1 million if you can design and recommend of moving to its customer which will delight them. You can see these companies are very much into the space where they want to provide the content to the user and know it will be liked by the user and will offer it at a price the customers enjoy and are willing to pay for. This is the reality. We are already in this space. Now, whether the traditional firms will be able to adapt to this reality, whether they will be able to exploit and be willing to use some of this data in their decisionmaking is probably going to play a longficant role in how they keep sustaining the advantages they have. They have been dominant for a and howiod of time, dominant it remain is their ability to change to the new reality. Both on the consumers consuming the content and how this information can be utilized into making content that is appealing to the endusers. Peter what if the cost of providers sibley pulled their product of Digital Services saying you can only get it here . Rahul that is a very good point. In fact michael and i were teaching a class and we had a Senior Executive from one of the studios come in and discuss give a guest lecture. His argument was somewhere similar. We are the content creators. These guys are basically distributors. They rely on our content. If we choose to provide content to them, what is going to be the future for those Online Platforms . There are two challenges to it, and one we provide an example in the book. Providers to control the content itself has been kind of degraded a little bit in the world of internet and broadband, especially with Online Privacy in infringement. You say we have this example where nbc, i think this is 2007 and 2008, they had a dispute with itunes. Nbc said i will take all the content away from itunes and put it out on the nbc website. In the hope that maybe trying to influence apple into signing a more favorable deal. Our research at the time we were collecting data. Interestingly what we found is what people did as the content was removed from itunes, they started blocking the privacy networks. Vacy for imaging content nbc content the next a shot at by 15 to 20 . On one hand it is very hard for you to control the content. Secondly, the amazons and netflixs are now powerful. Like one of the book poster said us the best thing that happened to Book Publishing was amazon came, and the worst thing that amazon kaine. Came. Amazon makes it so easy for you to distribute and promote your book around the world, but at the same time amazon has tremendous power in negotiating with the authors the terms that are much more favorable to amazon. And finally i think these Online Platforms also now realize they cannot rely on content through studios alone. What is netflix doing . We all are reading the stories of the budget for conservatorship is like five first 5 billion to 6 billion. Why do we have to rely on studios . I can hire similar talent. I have a Customer Base and i know i have the data inability much more than anybody else . Why not me produce the content and direct the compete with these traditional players rather than they dictating what sort of content can be and cannot be available . Reality is a lot more complex. Professor ate a Carnegie Mellon university in pittsburgh, codirector of the initiative for Digital Media analytics which is what . Rahul again, the book is a culmination of the research we have been doing for the last maybe 10 or 12 years. In the process we get a variety questions at the level in the policy level. We have done a lot of work on copyright and infringement and how effective it is. These are in the process of establishing the center. The purpose of the center is to hire faculty and students who will come in at times and do research for the media industry. Peter professor, has the legislators and regulators here in washington kept up with the changes in this world . Rahul so, i think much of the focus over the last maybe 10 years when it comes to regulation was for protecting content. How to stop the infringement of the content. 1998 when napster came in, the Music Industry is not what it was 10 years ago. Obviously the content is definitely what they want to protect, the intellectual property and copyright. It gets very challenging because now it is the individual users who are indulging in infringement. It is hard to go after them and stop them. Sometimes we are playing this technology clackum all whack amole. A lot of the regulation has focused more towards had a remake sure the content production is protected and not misused . I dont know whether there is a lot of discussion on the Market Structure and who gets what. I think that is something for the future. We will see if one becomes too dominant and starts losing its power in some ways. Maybe that will happen. Peter do you think the focus has been right with the legislators . Rahul i think so. Policy is not always beneficial. In the long run it hurts everybody and it affects the content creators ability to create content. Which we export to the rest of the world. I think that focus is probably relevant. Its an issue that needs some attention. You cant leave it to the market sometimes. The Media Companies sometimes cannot do anything. Once they create the content it is like the cat is out of the bag. Some sort of legislative action, or some sort of attention to details is relevant. What exactly the form of regulation has to come about is a was contentious because there are different parties involved. But for the rest of the park which is who is going to reduce what content and distribute what, i think its a reasonable thing to say let the market play out. I dont think somebody needs to tell somebody you should be doing this or shouldnt be doing that, except as long as its a fair competition. That seems reasonable. Peter will we look back in 10 or 15, 20, 40 years and see napster is a real seminal point in our history . Rahul i believe so. Napster probably already has become like the seminal point. Now when people talk about Music Industry, it is usually before napster and after napster. Definitely i think it was a culmination of both the growth of the internet, the culmination of the content providers may be controlled the content too much. That led to all this proliferation off the various websites following napster. Yes, i think napster was a very important in my view for the media industry. Peter has the napster generation come to expect things for free . Rahul i feel like a lot of people are gravitating towards legal channels, as long as it delights them. In the sense you offer product at a reasonable price and a platform and channel of their choosing that is highquality. I think people are migrating towards that. Some of the legislative action also has been to degrade the quality of privacy products, which has been helpful when people have to choose between getting the content from a bit Torrent Network which is an significantly degraded because versus going to netflix or amazon or hulu in getting it at a re a reasonable price point. At least in the u. S. I would say it is a fair its a reasonable fight. You make the content available at a reasonable price, there is a chance you can be in the fight. Peter chapter nine of your book is called money ball. Rahul this goes back to the discussion earlier about how do you use the Data Information for making decisions. Baseball is a perfect example. If you look at the history of baseball, they are the scouts in the managers. They look at a picture pitcher, some aggregate statistics and a side of this pitcher or batter has potential or not. Oakland and billy being, a small market team. They did not have the 100 million budget. He said what can i do . How can i make my team better . I think the book and the movie make it clear. Is word i think he used misjudgment. There is this echo chamber where everyone starts believing what they see. He said that is not the right thing to do. There was a better way to evaluate people. He started working with i forget the name of the person, a statistician who is deeply interested in looking at the data and the statistics and cher isthis pit actually excellent because look, when you give them the right defense in the right ballpark in the right environment, he is outstanding. It does not matter whether he is going under arm or this way or that way. And really b billy bean money ball did his use the data to find out which ones are overrated and which are underrated and then make the decision based on that. Obviously they were successful. Money ball was the moment in sports where analytics became an important component. I think now it is very widely used. I feel in the entertainment industry, the netflix and always on amazons are going to look at data to make scientific decisions rather than make decisions based on our gut or instincts and so one. Peter professor, what is this big data look like . Netflix collects it all. Apple with music collects this data. What does it look like and how do you parse it out . Well, it is truly big data. Imagine if i had information about every users activity on my website. And i have the ability to codify and store that data, and then extract the data in a some meaningful use of it. Amazons recommendations. Amazon says people who like this it is exploiting big data. I dont know whether you heard of this story that came out on the discovery list or discover playlist. What spotify has been doing is if youre a customer, it recommends you every week a list of songs that they believe you are going to like. The story was it became so popular with people. I was reading about how spotify does it. I wont go into technical details, but its a big data exercise. Who is listening to what. People like you listening to what. They use this very sophisticated program to figure out recommendations. What im talking about big data we are literally talking about the scale and scope of the data. On a micro level it is so enormous. Theyiven technology, figure out how to use it more and more effectively. That is really were the trend is going. Peter a statement you write in your book and then you answer it. You cant use data to make creative decisions. If you do, you will interfere with the Creative Process and destroy it. Probably one of the criticisms sometimes you hear from people in the creative industry. They say, gee, are you going to tell me i should put money in because your big data predicts people like bunnies, and that you going to destroy our creative ability to create content . I think it is a little bit of hyperbole when someone says it Something Like that. I dont think we will see how things go, but i dont think this is how this thing is going to play out. Many times the data is essentially used for green leading successful projects. You are using detailed data to figure out what sorts of shows and what type of content is likely to be successful with my audience. That helps in green lighting which is an uncertain decision. Then you let the constant reader created content. There was also probably this element that somehow when the big data was not there people have this unfettered readability creativity that any commercial aspect in mind. Probably never true. The commercial nature of the mrs. Of the businessman it was always treated with the mindset of if it would be successful with my customers. But it was a gut feeling versus hard data. Havewe feel is when you good information, when you use the good information to make appropriate decisions, especially if he can make make a more successful product, i feel the creators are more likely to be successful because they are working on projects that are more likely and have a higher potential of being successful. I feel whether big data will kill creativity, i dont think that is where we are going. It will complement the creativity. Look at the awards for the netflix shows. Or some of the statements kevin spacey made. Creatively the most wonderful experience working on the house of cards. You will see how the world will look 10 years down the line. Right now i feel all of this information just like baseball informatics is not teach the pitcher how to pitch, but similarly this is meaningful and useful for the content creators. Peter how big is the big data industry . Word. There is no such there was a big data in health and