MediaBytes with Shelly Palmer will return on Monday, July 6, 2009. Have a wonderful holiday weekend.

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In less than a week since he passed away, Michael Jackson has sold over 2.6 million digital songs. Digital sale of Jackson’s song in the past week shattered the old record, making Jackson the first artist to sell more than a million downloads in a week. Jackson also currently holds twenty-five spots on Billboard’s Hot Digital Songs chart of 74.

Yesterday afternoon the Obama administration unveiled its financial plan for broadband expansion. Companies interested in investing in America’s broadband grid will have until July 14th to apply, however, Verizon, AT&T and Comcast, the nation’s largest telecommunications company’s, have yet to express interest in investing in the venture. While VP Joe Biden noted that “nation can’t compete in the 21st century — without an immediate, high-quality access for everything from streaming video to information overline”, the current plan is expected to roll out low quality DSL speed.

Facebook is set to launch new privacy controls that will let users select “friends” who can and can’t see specific information. For instance, if a user wanted friends to know that he/she is having a party on Friday, but not his/her boss, the new privacy controls would allow for that. Chief Privacy Officer Chris Kelly noted that Facebook wants “people to be able to share with as narrow or as broad of an audience as they choose.”

In the latest turn in the Pirate Bay saga, Global Gaming Factory X announced that it plans to increase earnings by selling users spare bandwidth back to ISPs. Business Week noted that the company will resell “broadband capacity on an ad hoc basis to Internet service providers—companies like Comcast (CMCSA) or AT&T (T)—that are in need of a quick injection of cheap bandwidth.” Is this a 21st century solution or merely just another problem for the Pirate Bay? Most likely, another problem.

Apple has run into a major obstacle in trying to sell the iPhone in China. While Apple registered the iPhone in China under the hardware and software categories, it did not register the smartphone in the phone category. Unfortunately for Apple. Hanwang Technology Co. trademarked the iPhone in the phone category and Chinese law will not allow the trademark to be immediately purchased by Apple.

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AEG will offer ticket holders for Michael Jackson’s sold-out This Is It tour a full refund. The concert promoter was responsible for the 50 sold out shows Jackson was to perform at London’s O2 Arena. While AEG sold approximately one million tickets, valued at a total of $85, it is giving ticketholders the option of receiving the physical tickets, designed by Jackson, rather than the refund.

The Pirate Bay torrent-sharing network has been acquired by Global Gaming Factory X for $7.8 million. The acquisition comes after the Pirate Bay’s chief officers were ordered to pay a $3.6 million copyright violation. While Global Gaming Factory X noted that it will re-structure the file-sharing sites business plan, the Pirate Bay founders will probably use the buyout money to pay legal fee’s and the RIAA.

The Sony Walkman turns 30 this year. Sony has sold over 385 million Walkman units since its introduction in 1979. It is responsible for introducing and defining the personal music space. However, in the last 8 years, Apple has sold over 210 million iPods, which pretty much tells the story. Sony has some serious reinventing to do.

The Chinese Government have pushed back the starting date of its new web filtering law. Many Chinese tech advocates gathered in Beijing to for what was supposed to be the beginning of a 24-hour Internet boycott, but it turned into a day-long, anti-censorship party. It is unclear when China will adopt the new censorship laws.

Joost, a streaming video service whose name you have probably forgotten, is cutting jobs, killing its consumer products and losing its chief executive. The company will now concentrate on white-label, business-to-business video distribution. The main reason for Joost’s rapid decline has been Hulu, which has all but dominated the full-length, long form streaming content business.

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Comcast has teamed up with Clearwire to offer one of the first 4G wireless data networks. Comcast High-Speed 2go will go live today in Portland and with offerings in Atlanta, Chicago and Philadelphia planned by the end of the year. This system is WiMax-based and features download speeds approaching 4 Mbps, that’s about four times faster than current 3G data networks. When Verizon and AT&T get in the game with their LTE-based 4G networks, this is really going to get interesting.

Amazon is pulling the plug on their associates program in Rhode Island just a week after killing the program in North Carolina. The reason being that Amazon is unhappy about pending sales tax legislation in states. Sources say California may be next.

Julius Genachowski, was sworn in as the new chairman of the Federal Communications Commission on Monday. The new FCC will be dominated by Democrats who will focus on empowering consumers and deploying nationwide high-speed Internet access. The FCC regulates telephone and cable companies, oversees radio and television and manages the public airwaves, including wireless data networks.

The Supreme Court has decided not to hear the case between TV studios and Cablevision over networked DVR service. While studios, including Paramount, Disney, NBC and CBS, believed a remote storage DVR would infringe on copyright law, the Supreme Court decided to back a District Court ruling which found that networked DVR did not violate copyright law. The decision is a big win for Cablevision, who will begin launching remote-storage DVR service later this summer.

MSNBC will finally broadcast in high definition. While MSNBC HD debuted yesterday on Cablevision, it will take the network at least two months to get the high definition broadcast to most markets. MSNBC President Phil Griffin noted that “If you want to be competitive in this game, it’s the price of entry.”

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Michael Jackson’s death increased Internet usage by more than 4.2 million worldwide users per minute, in comparison to the normal 2 million visitors a minute. Web usage was so massive that AOL’s AIM messaging service crashed for 40 minutes, the LA Times went down, and TMZ’s traffic was more than 33% higher than its previous record high. The strain put on servers is important to note, as how much can the Internet infrastructure really take.

Transformers: Revenge of the Fallen took in $201.2 million to top the domestic box office. The summer blockbuster took in an additional $186 million internationally, for a global earning of $387.3 million. In its course, Michael Bay’s Transformers sequel demolished the record for a Wednesday opening, previously held by Spider-Man 2 with $152.4 million.

Microsoft has hired Morgan Staney to explore the sale of Razorfish. Razorfish, the digital ad agency Microsoft acquired when it purchased aQuantive, is currently valued between $600-700 million. Razorfish, which boasted sales of roughly $400 million last year, is the digital agency for companies like Nike, Kraft and Audi, and may come in conflict with Microsoft’s own agency Microsoft Advertising.

Informercial legend Billy Mays died yesterday at home in Florida. News of Mays death, famous for the OxiClean commercial, as well as Discovery Channel’s Pitchmen, spread on Twitter. His son Billy Mays III tweeted at “My dad didn’t wake up this morning.. I’m sure you’ll all hear about it. It hasn’t yet hit me but it’s about to” on Sunday morning.

I am very sad that Michael Jackson is gone. He was gifted with talents that enabled him to accomplish things that no one in history has ever accomplished and, based upon the fragmented nature of consumer media, will never be able to accomplish again. Everything about Michael Jackson was extraordinary: his music, his dancing, his lifestyle, his wealth, his health and his problems.

During the 80’s, Michael Jackson “was” the music business. I remember when the certified numbers for Bad were announced. The 1987 album had sold about 23 million copies and, because it did not top the number for his world changing 1982 release, Thriller, it was considered a failure. Just to put this in perspective, go count up the number of albums that have ever sold 23 million copies … by anyone. During his time, there was Michael Jackson and then there was everybody else - none of his contemporaries even came close to his level of success. But the business side of the music business was only one part of the story.

While listening to his music this weekend, I was reminded how important Michael was to the musical side of the music business. For me, the Michael Jackson inspired transition of the pop music business started with “Shake Your Body Down to the Ground,” one of the singles from the Jackson 5’s 1978 album, Destiny. Although it was more of a mix of disco and funk, to me it stood out musically and foreshadowed Michael’s upcoming solo effort Off The Wall. I will never forget the first time I heard it. In fact, “Blame it on the Boogie,” the other single from that album had a super-solid rhythm arrangement by Greg Phillinganes that gave Michael a remarkable pocket to interact with. This early synthesis of pop, funk and R&B combined with Tom Tom 84’s semi-jazz-fusion horn and string arrangements truly set the stage for the world’s biggest crossover pop star to emerge. Anyone in the world who has ever heard an audio recording knows what happened next.

I hope that everyone can get past the theater of the moment and spend some time listening to Michael Jackson’s work. If you listen closely, you will hear him explain everything to you — in a profoundly personal way. May he rest in peace.

That being said, the long-term viability of big budget television is the cause of much angst. If audiences continue to atomize, can any given show make enough money to justify producing it? If consumers continue to transcode things they want to watch, edit out the commercials and make them available for free over the public Internet, will sponsors be willing to pay? If the most popular productions are the most pirated productions, is there any real future in production? Can free, advertiser-supported, Internet television continue with a fraction of the advertising avails and audiences of its broadcast counterpart?

One of the underlying issues is scarcity vs. ubiquity. On a closed network, any moment of time is a scarce resource. On an open network, no moment of time is a scarce resource. The immutable law of supply and demand tells us that we will never be able to charge for anything that is ubiquitously available. At least, that’s what the rulebook says.

However, I think the solution to almost all the problems related to consumer control of personal media consumption has been staring back at us from our television sets - we just didn’t see it.

Most people schooled-in-the-art will tell you that live programming such as news, weather, sports and events are, for all practical purposes, TiVo-proof. This isn’t strictly true, but if something is emergent, and the results are important, people tend to consume the media in real time. This almost always includes the associated commercial messaging. You can, of course, leave the room, talk to someone, play with your computer or do anything else you might think of during the commercial breaks — but this has been true since the ’50s. So, like I said, for all practical purposes, the commercials will play out.

Until consumers started to record television, TV was a real time device. No matter when the programming was created, it is always broadcast at specific times in a linear fashion. DVRs have changed that. When Jeff Zucker says, “The number one show at 10pm is TiVo,” he’s not kidding. This is the current state of the art — but it doesn’t have to be.

We have entered the super-digital age and now all television is digital. So why are we still broadcasting combined, fully finished, masters in real time? We don’t have to. It would be much, much better to serve individual streams of data that could be combined by the receiving technology to create custom formatted, device-specific pieces of content.

What?

Let’s walk it backwards for a second:

Problem 1: There are far too many devices that can play back video for anyone to deal with. I produce MediaBytes, my daily news feed, in 46 different formats and I don’t cover even a tiny fraction of the consumer electronics devices that are out there.

Problem 2: There are far too many places to obtain copies of any piece of video.

Problem 3: It is very difficult to measure who is watching, where they are and what else they may be doing.

Problem 4: Location and time of day are critical data points for the proper contextualization of message management.

The Real Time Data-based Digital Television Solution:

Break the data down to its component parts and broadcast them separately. So, text, graphics, music, script, metadata, voice-over, picture elements would all be packaged as individual data streams and made available in real time.

Next, the industry adopts the “Tom Sawyer Paint The Fence Paradigm.” This calls for the creation of a database (for the content), APIs (application programming interface) so third party developers can get at the data, an SDK (software development kit) so third party developers can license (and pay for) their use of the content, and some modifications to the current commercial trafficking networks and measurement tools.

The immediate result would be thousands of passionate, interested parties jumping on the opportunity to create thousands of virtual DMAs with virtual networks that could all be advertiser supported at scale.

Of course, anyone could still record a finished piece and have their way with it. But, imagine a broadcast world where television stations were broadcasting digital data feeds and economically motivated third party developers were crafting consumer interfaces that our industry simply will never be able to afford to create. Consumers who can obtain an emotionally satisfying media experience are far less likely to spend their valuable time looking for workarounds.

The concepts of “relevance,” “engagement” and “conversations” all become meaningless when developers with enlightened self-interest are your partners. The business rules surrounding this kind of data-based, content distribution would require developers to build measurable messaging into the platforms they support. Partners who make money when you make money and lose money when you lose money make great partners! Stations and Networks would transmogrify into their true digital counterparts — platforms.

You can think of it as a real time Apple App store. Throw in a little real time web (like Twitter, Facebook, LinkedIn, etc.) and you’ve got a serious media offering.

Studios have been wholesalers for years. They sell their programs to Networks who, in turn, package the shows for consumer consumption. It is abundantly obvious that Networks cannot afford to create all of the packaging that consumers now require (or are willing to pay for). We need a better, more cost-effective way to serve audiences that are growing in diversity and getting harder and harder to aggregate.

Problem 1: Too Many Devices — get third-party partners to pay you to modify your content to work with them.

Problem 2: There are far too many places to get video — turn the weakness into strength by getting third parties to pay you from all of the nooks and crannies of the media consumption world.

Problem 3: It is very difficult to measure who is watching, where they are and what else they may be doing — computers love data, build this functionality into the platform and the SDK.

Problem 4: Context is king — yes it is, and what could be more contextual than having a passionate partner create an application that is specific to a consumption form factor?

Real Time Data-based Digital Television is a viable solution. Broadcasting real time data in component parts can be achieved today with just a little bit of political will. Steve Jobs and a zillion other Silicon Valley companies have demonstrated how easy it is to create a passionate, motivated army of third party developers. To me, the answer to the television industry’s marginal cost, marginal gain problem has been staring us in the face since the transition to digital was announced. I just didn’t see it until now.

Shelly Palmer is a consultant and the host of MediaBytes a daily show featuring news you can use about technology, media & entertainment. He is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted: The Transition from Network to Networked TV (2008, York House Press). Shelly is also President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy Awards). You can join the MediaBytes mailing list here. Shelly can be reached at shelly@palmer.netFor information visit www.shellypalmer.com

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Yesterday we lost two of our dearest pop-culture icons. Farah Fawcett, the subject of the best selling poster of all time and Michael Jackson, the musical force behind the best selling album of all time. Their untimely passings brought their extraordinary achievements into focus, and made me wonder, will anyone ever sell 12 million posters or 45 million albums ever again? It seems unlikely.

Taiwanese smartphone manufacturer HTC unveiled the third Google Android based phone yesterday. Dubbed the Hero, the phone is similar to the iPhone and includes a 3.2 inch touchscreen and GPS. The phone will also support Adobe’s Flash, which is currently not offered by Apple’s iPhone.

The Professional Golf Association and Turner Sports have agreed to a contract extension that will give Turner broadcast rights for the PGA until 2019. In addition, Turner, which has access to early round PGA tour coverage, will continue to manage PGA.com. As part of the agreement, Turner will launch mobile and new media services to extend the PGA’s digital footprint.

Transformers: Revenge of the Fallen earned $60.6 million at the box office on its opening day. The sequel broke Harry Potter and the Order of the Phoenix’s previous record of $44.2 million for a Wednesday opening by over $15 million. At its current rate, Transformers: Revenge of the Fallen could surpass Spiderman 2’s $152.4 million record for a five day opening.

Microsoft announced that the Windows 7 will be significantly cheaper than its failed Vista OS. Windows 7 packages will run between $199.99 and $319.99, while upgrades will start at $119.99. To make up for Vista, a product which truly hurt the Windows brand, Microsoft will give customers who purchase a new PC before Windows 7 is released a free upgrade in October when it is released.

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The Academy Awards announced that they will increase the amount of best picture nominees from five to ten. The move comes in an attempt to boost ratings for the broadcast of the Oscars, as well as to shed light on more films. Many believe that increased attention to more films during Oscar season may increase box office earnings.

Wired Editor Chris Anderson, known for his book “The Long Tail”, admitted to plagiarizing in his new book “Free: The Future of a Radical Price.” Material in Anderson’s book, which highlights free products of the digital age, features sections that closely resembled passages from WikiPedia. In his apology, Anderson said, “This is entirely my own screwup, and will be corrected.”

The YES Network, Cablevision and MLBAM have reached an agreement to let Cablevision subscribers live stream Yankees games free of charge. The aggreement comes as YES moves into the live-streaming market, and shows in-market opposition to Major League Baseball’s MLB.TV streaming service. However, the contract stipulates that only Cablevision customers who subscribe to the YES Network and have high speed broadband from Cablevision will be able to access games online.

Former Yahoo EVP and current LinkedIn President Jeff Weiner has been named the social networks CEO. Weiner will replace Reid Hoffman, founder of LinkedIn. Hoffman, confident in the move, said Weiner “has been doing a lot of what a CEO does for months now.”

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Comcast and Time Warner have scheduled a press conference to announce that the two companies will partner to roll out TV Everywhere. TW CEO Jeff Bewkes and Comcast CEO Brian Roberts are expected to note that Time Warner and Comcast will work together to make programming available on television, online and on mobile phones.

Nielsen is reporting that Twitter usage has grown 1,444% year over year. The micro-blogging network was the fastest growing web site in 2008-2009, with average users spending 17 minutes and 21 second on Twitter this year, opposed to 6 minutes and 19 seconds last year. In addition, Nielsen noted that, with more than 144.3 million uniques, Facebook is the #1 social network in the world.

The Pentagon has approved the creation of a Cyber Command to oversee the U.S. military’s efforts to protect its computer networks, but not other U.S. government or private networks. When asked if the new command would also be developing offensive weapons, a spokesman declined to answer.

TiVo and Quantcast have partnered to launch a TV-viewing stats platform that measures the efficacy of cross-platform ad campaigns. The service, expected to launch this summer, will give clients access to data from a sample of 35,000 households. TiVo and Quantcast note that unlike a similar offering from Nielsen, their data will bundle click-thru’s, and unique visits along with data collected fro set-top boxes.

The season finale of Jon & Kate Plus 8 averaged approximately 10.6 million viewers. Monday’s edition of the hit reality show, which has been aided by unparalleled tabloid coverage, was not only the highest rated show that night, but the highest rated episode in the show’s history. During the episode, Jon and Kate Gosselin announced that they would separate and will get divorced.