Asymmetrical Information

Maybe. In the long run, perhaps.

I have some doubts about it taking off anytime soon though. Folks who use Tivo swear up and down by it, they love it, but I don't know anybody who has one. This is a clever idea but their target market is the cross-section of TV lovers and computerphiles. I don't watch enough TV to care about this and I suspect most TV junkies are not going to fork over the big $$$ for something like this either.

Also, the demise of free TV doesn't sound all bad to me. For a long time I predicted that cable would bring a la carte channel shopping. Which is what I really want from TV. I was wrong about that then but I see this as another force pushing in that direction. I would be pretty happy to pay for a handful of decent, commercial-free channels and just not have the brain-suckers on the box at all.

Megan, I think you're overlooking the possibility of product placement as a means of funding TV series. It'll mean that the stuff on free TV will be much more cheaply produced, and SAG minimum salaries may no longer be possible, but most of what's on TV today could survive on that revenue stream, especially since digital recording has also lowered the fixed costs of producing televised entertainment.

In any case, my understanding of Fair Use law is that it doesn't matter which parts of a program users choose to watch. If recording a commercial so you can watch it later is legal (and it is), then opting to not watch that commercial is also legal. That this destroys the "free TV" business model is sad, but so far as I can tell, legally irrelevant. But I'm not a lawyer, so I could be wrong.

While Tivo may be a threat to free television, I think the greater theat is content on demand. The greatest benefit that commercial TV has given us is a limited selection. This limited selection permits the total costs of creation and distribution over the largest number of eyeballs.

Now consider a future state in which all movie/television content is available on demand.

The choice that any individual viewer makes at a particular moment is no longer bounded by what is broadcast. You may elect to view the BBC's mid 70s prodution of "Julius Ceasar" while I kick back with the classic 80s show from NBC, "Manimal". In either case, our individual optimal choices lead us away from current production to our optimal preference. As a result, the ability to gain sufficient share to cover the costs of production and distribution are greatly reduced.

This is a classic case of new product competing not just with current product but prior product. It is even now profoundly affecting new recording of classical music. Why do I want another copy of the 9th Symphony when I have a copy of it recorded by the Berlin under Von Karijan?

In these cases, high barriers to entry (only a limited number of companies have the ability to record and promote and distribute the recordings of a new rock band) coupled with limited product life span (LPs) has been replaced with new technology with low barriers to entry (garage studio technology and the internet) and extended life span (digital media).

This to me seems a far greater threat to TV than Tivo and to the recording industry than file sharing.

PBS has the most resilient business model for this; HBO has another one. And QVC is simply brilliant at it.
I agree; selling Consumers to advertisers with programs as bait isn't sustainable when viewers have a choice.

Most Americans pay for cable already; there is a nascent revenue model there too.

And does anyone really watch TV news who has discovered the blogoshpere? I cna get the entire contents of an hour TV news and more from news.google.com in the time it takes them to play their self-important title music and smirk at each other.

Free TV? When was it ever free? "Free TV" is the vaudeville of the modern media world, and thats being generous. Wondering about the future of free TV is about like the people who used to decry the loss of the art of the silent movie when "talkies" arrived.

The market has spoken, and its time to move on.

But enough about that, Tivo and DVR's are not going away, infact they are being imbedded into more and more items, as they should. So called 'free tv' stations are now solving the problem by placing ads in the 'bugs' in the lower right hand corner of the picture, or in some cases broadcasting in a narrow format and reclaiming the black stripe at the bottom of the screen for advertisement.

Im not opposed to commercials, and I even make a point of watching the good ones, but I am violently opposed to stations like TNN who broadcast 5 minutes of show, with 10 minutes of commercials ( and heres the kicker) and each commercial break they have the same commericals IN THE EXACT SAME ORDER EVERY TIME.

Its my belief that in the near future, you will order your tv shows and download them ( via satellite or cable) to your DVR. the idea of watching live "appointment" tv comedy/drama/music has a very short lifetime in my opinion.

I dont think I could ever go back to TV without a Tivo. For those in the tech world, look into the ATI All-in-wonder card. Its a tivo without the license fee.

Megan -

I may be demonstrating a profound ignorance here, but I doubt that many people receive their TV shows for free anymore. The vast majority of us pay a cable or satellite service provider and so the mental hurdle of "paying for TV" has long been cleared.
I would say that due to the expanded choices now offered by those service providers, we are in a true golden age of television. Of my 4 favorite TV shows, only '24' is on an old network - Buffy's on UPN, Angel's on WB, and Samurai Jack is on Cartoon Network.
I don't know how the TV distribution ecology will change if advertisers don't think they are getting their money's worth. Perhaps networks die, and we go to production companies creating shows for cable/satellite service providers. I've seen demos for MPEG-4 services where a viewer can ask for more information about an item in a show, "What's that knife Jack Bauer's using? Ooh, Microtech..." That might be how advertisers get their messages out once they yuckiness of the MPEG-4 royalty model is changed. I've heard of countries (can't name 'em) where there is a particular time set aside for ads. Maybe that will result in a golden age for TV ads as well as shows.
I will trust that companies will find ways to send me their advertisements at no cost to me. I also have the contradictory trust that my cable bill will only increase. Paging Winston Smith.

I would also suggest that news shows will be the last to feel this pressure from advertisers. I don't have a TiVo, so perhaps my usage would change, but I can't imagine recording a news broadcast to watch later, then FF'ing through the ads.

Is that something you do? I'd just click on CNN Headline News and mute the commercials.

Mike

On the rare ocassion that I actually watch TV these days I ignore the commercials anyway; it's a good time to use the restroom or steam a latte.

1. A lot of people channel surf during commercial breaks.

2. TiVo popularity will be limited for a while yet. Until now the only person I've EVER heard mention owning one was Lileks, in his Bleats. A competent does-everything 4-Head VCR can be had for, what, USD $70 these days?

3. TV advertising is (a) reportedly not extremely effective and (b) even less so during sexual or violent programs. Are advertisers really going to dump money into it forever, or look for new means anyway?

The cable networks have already begun adding pop-up style ads during programming, so will the broadcast guys. Beyond CBS/NBC/ABC/Fox - tv channels are already making money on subscriber revenue via cable/satellite.

I watch very little TV, but I buy products that (I assume) are advertised on TV. So, in a sense, I am paying for your "free" TV. If the manufacturers of the products that I buy decide to give up on TV advertising, and network television sinks into a morass of infomercials, why should I have any regrets?

I suspect that's mostly true. But, Tivo or others will not be wide use untill the prise is around $100 or perhaps less, that's still a bit away. I guess it's inevitable, probably lead to higher subscription prices on sattelite and cable. I always wondered how much it really costs to run tv. I pay around $90 a month for sattelite, most people pay around $50 for cable, does it really all go to the providers and not the networks? Seems strange.

Btw, USA Networks is doing a pretty good job at original series and films, some of that is also on Sci-fi channel. On NBC I think their most popular shows are done by Time Warner, 'friends' and 'west wing' as well.

I still think that there are different issues as far as digital media content goes, access to it and what the user does afterwards. Raise subscription fees to compensate for the lost revenue. Obviously not all of it. Maybe have different systems set up, lower fees for ad-based subscriptions or something like that.

It would be fascinating if someone were interested in putting together a model representing the transactional interactions of a world dominated by tivo devices and mp3 sharing.

Today a significant amount of entertainment revenue is generated by services that consumers either don't want or resent having to pay for. Assuming there aren't abitrary limits on the growth of technology that allows consumers to opt-out of services they don't want, what does the economic world of entertainment look like? What could companies do to fill the gap that was once filled with commercials, over-priced CD's, etc?

I've got a conceptual model for how to do this over at mediAgora. Did you mean a simulation model? sounds like an interesting project.

People seem to be forgetting that the extended basic cable channels are supported by advertising, not subscription revenues. . . are people really willing to pay for each of their channels what you pay for HBO, Showtime, etc?

I for one would be much, much happier if there was a mechanism to directly pay the creators the few cents per hour per viewer (at best) that they are receiving, and get commercial-free shows when I want them. Or (what is technically feasible right now) buying the good shows on DVD at a reasonable price (E.g., Buffy season collections at about $2 per episode). If that kills off the networks, well I don't feel sorry for the dinosaurs either.

But if paid-for commercial-free video really takes off, where will the advertisers insert their propaganda? Will the economy come to a halt as people buy only what they actually want, not what about thirty ads an hour tell them they should want? (Which leads to the question of whether advertising was ever all that effective, and if so, what the effect actually was. Do McDonald's ads sell Big Macs to people who were going to Burger King, or do they mainly sell more fast food? Or do they just get laughed at, because I know what McD's food tastes like?)

Hmm. New technology is threatening old buisness models. This is a crisis why?

Yes, things are going to change. It happens.

are people really willing to pay for each of their channels what you pay for HBO, Showtime, etc?

I pay $12/mo to watch HBO on my DirecTivo, but I wouldn't pay more than $1 for ABC. High-end TV will move to a subscription model eventually, as more people get DVRs (probably when a company with better marketing than Tivo comes along) and the poor people will be stuck with broadcast, which will then be supported by ads for malt liquor and cigarettes.

The trouble with free TV is that it's too expensive.

Au contraire, Richard. . . it's illegal to advertise malt liquor and cigarettes.

The public so far has been conditioned to tolerate ads. If the TiVo technology and the Microsoft Media Center detailed in yesterday's Salon gets to the point of a 59$ 4-head VCR, for the advertisers it'll be Katie bar the door.
One possible solution: Have "cookies" that when enabled give a little credit that goes towards your subscription service if you play a commercial and answer a question about it.

I have a ReplayTV 4000 (with autoskip), and it has changed my life. My son no longer clamors after every toy in sight. My wife and I can watch shows together, instead of trying to juggle dinner, tv, work and chores. Yeah, $700 was a lot of money to spend, but it was _so_ worth it. I can't recommend it enough - and it is trivial to use, far easier than a VCR.

And as far as the free TV model, I don't feel any pity at all. Technological pain is good for an industry - it weeds out the stupid coasting companies. Media-style distribution is an anomaly - it didn't exist 100 years ago, and I suspect it won't exist substantially 100 years from now. The cost of production is plummeting, to the point that individuals can produce fairly high quality content as a hobby. Blogs are a great example of this - people are posting and creating great content for free, because they can afford to. You wouldn't do this if it cost you money for every sheet you published, but since it is free, it is rewarding for you, and for your readers as well. There is no earthly reason why that same logic doesn't apply to TV and radio.

And where is the money? In commercial redistribution. In editing and separating the good from the bad. In personalizing otherwise mass-market content as a professional service (personalization is probably the only p2p-resistant technique I've thought of). In time-shifting, to allow paying customers first access. In product placement and ubiquitous sponsorships, which can't be edited out. Plus a thousand other techniques that I haven't thought of. I know I sound like a hippy, but I sincerely believe that these technologies are going to destroy the media hegemonies, and replace them with a much more distributed, small-scale infrastructure, where individuals will have many more choices, and a lot more influence than they have today. It's a good thing.

Repeat after me: technology is good. Technology is good. Technology is good.

Thank you.

This message has been brought to you by Duff beer, the beer with a kick.

are people really willing to pay for each of their channels what you pay for HBO, Showtime, etc?

I already pay about $16/month for the non-pay cable channels. For that $200/year I get a total of 22 Buffy episodes and 22 Angel episodes. So, yeah, in my case I'd be saving money if the cable company just directly billed me $3 or $4 an episode.

There were a few new shows this year that I liked, and briefly watched, such as Firefly and Birds of Prey (a guilty pleasure), but the latter is cancelled and the former is on its way out -- due to poor ratings and poor advertising revenue. A subscription-based model could let shows like that survive.

Also bear in mind that the fixed costs of producing a TV show aren't very high, and are dropping thanks to technological improvements in recording and editting. A show like "Friends" may cost millions of dollars an episode to produce today, but you could make one just like it for a tiny fraction of that amount. When the ad revenue goes, the amount of money talent can demand will crash. It'll be more like stage acting, I'd imagine.

It sounds like free TV's doomed.

But since I've never owned a TV in my entire life, and have been damn glad of it, it's hard to get very worked up about this.

I'm *such* a doubleplusungood consumer-unit.

More like the end of the commercial break as we know it.

There's no law saying that the advertising and the programme have to be separated into time chunks. Perfectly possible to have the ad and the progamme on-screen at the same time in different frames or something.

Why assume that technological progress will result in a better and less annoying experience for the consumer? A quick glance through Walter Benjamin suggests that this has hardly been the experience of the rest of the history of art in the age of mass reproducibility?

I don't think TiVo is the death of free teevee since, in the U.S. anyway, more people have outhouses instead of indoor plumbing than have Tivo (source: AdAge http://www.adage.com/news.cms?newsId=36471).

In general, though, I'm firmly of the opinion that improving technologies, even disruptive ones, lead to a general betterment more often than not. Nobody here is complaining that the poor farriers and livery stables lost their business model and we should all voluntarily not purchase automobiles, after all. Free teevee goes away? Something else will replace it. Barring a complete reversal of human nature, people will still want to purchase their entertainment and have it delivered into their living rooms, and somebody somewhere will figure out a way to do exactly that. Hooray for capitalism!

Interesting point, D-Squared. But would people watch it? It would make one's appreciation of both the ad and the show less, I think.

For a quick look at the world to be, rent "Blade Runner". Ignore the part about the symbiants/clones and look at the _backgrounds_.

1. Free TV? I pay for my TV. Even the damned channel guide has ads on it. If advertisers start buying fewer ads my cable will start costing more and I'll either pay it or drop it. Market forces at work.

2. We're already seeing product placement in shows. That will no doubt continue.

3. I recently read an article where cable and TV producers were all hopping mad about "theft" and crap. Like the RIAA and the MPAA, they don't get that they can't sell something people don't want. Copyright laws, tragedy of the commons and other such factors aside, if people don't want it, they won't get it. If some new technology renders a business model non-viable, it's time to move on. Every industry feels entitled to continue on forever, but they don't.

4. Like the MPAA and RIAA, we're talking about entertainment. A diversion that is not necessary. If mass distribution of music, movies, and television becomes impossible, so what? People will find ways to entertain themselves.

Bolie IV

I look forward to the day I get to hear college students making the argument that their rips of popular TV shows aren't piracy because they left the commercials in.

More seriously, if bandwidth became cheap enough, media corporations could simply release their shows completely over the net in specialised video formats with proprietary readers, put commercials in here and there, and let them all be freely traded. People would still crack the codes and remove the commercials, but in current encoding schemes, there is a loss of quality with each re-encode (and usually, a jump in filesize), so the modified data would be inferior and more inconvenient. So I think that few people would bother to go seeking out altered versions, unless the adverts were simply unbearable. And television adverts generally are not (unlike popups). Furthermore, people go for what is easily available. If the version with the adverts is what is easily available, they'll go for that. Only connoisseurs will go for the mods. In this way, media corporations would preserve advertising revenue.

OTOH, they would lose revenue from reruns and from broadcast rights in foreign markets (since fansubs would proliferate, as they have with Japanese cartoons and dramas). And it's all dependent on bandwidth becoming dirt cheap (or huge decentralised filesharing networks). BUT, something on these lines might be a way out for visual media, at least.

Or maybe not. I can dream . . .

". . . are people really willing to pay for each of their channels what you pay for HBO, Showtime, etc?"

A little searching suggests that networks are getting 10-30 cents /viewer/hour. I'd pay that. Of course if the meter was running like that, a lot of people would watch less.

"But HBO only has to produce two or three shows a week; ABC has to fill four hours a night, whether or not they have anything compelling to put up there."

If ABC can't produce four hours of new programming per day, then they could buy more from other video publishing houses or show more stuff from their backlist.

"If ABC can't produce four hours of new programming per day, then they could buy more from other video publishing houses or show more stuff from their backlist."

That's a great point. Lawrence Lessig has a post up about an e-mail someone sent him detailing some research on imdb -- less than 7% of all films produced between 1927 and 1946 are currently available in any format. While many more recent movies are available (if sometimes hard to find) on VHS or DVD, there's still a massive backlog (the years I indicated comprise about 37,000 films) of stuff that noone sees these days; ABC could probably reshow these for pennies on the dollar. 37,000 films would take a long time to work through, even for multiple channels (and most markets only have a handful of network channels anyway).

I forgot to post the URL for Lessig's post: http://cyberlaw.stanford.edu/lessig/blog/archives/2002_12.shtml#000670

Quite possibly. But that's sort of disturbing, isn't it -- the idea that we as a society will stop producing large creative endeavors, because they can't be paid for, and stick with watching and re-watching the creations of the past?

I should also point out that there's a reason most of that stuff isn't available. While possibly of interest to a small segment of film buffs, it's generally the low quality schlock ground out by studios as filler. Now hopelessly dated and with unnervingly low production values. Not necessarily an improvement in general, although personally I love watching old schlock.

Considering that 90% of what's on the networks these days also qualifies as low-quality schlock, I don't see a problem. :)

Seriously, though, from what I remember a lot of daytime network TV consists of a) old movies and b) soaps. Considering that soaps don't exactly need huge budgets and that old movies could be gotten very cheaply if the Bono CTEA gets struck down (at least the retroactive portion of it), there seems to be some opportunity there.

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