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Thursday, April 07, 2005

Television, Cringley & The Long Tail

Chris Anderson points to Bob Cringley's recent article on the state of the changing Television industry.
Robert X. Cringely works for PBS – and has an insider perspective about the changing television industry. Excerpts with edist and comments added:
Ted Turner became a billionaire by stealing intellectual property rights. He'd buy re-run rights for the TV market, then throw his WTBS signal up on a satellite where it could be viewed over cable systems all over America. The contract didn't specifically say he couldn't do this, but that was just because the program sellers hadn't thought of it. They didn't see the value. Turner also realized the value of re-runs, not just of TV shows but also movies. He bought the MGM movie studio primarily for its library of old films, realizing long before most of the rest of us that there was gold in that dusty celluloid.
These are oft-told stories of Turner, but now let's place the ideas in a more modern and relevant context -- pbs.org. Some of the most popular pages on this web site are for shows that PBS no longer even has the right to air. My own "Triumph of the Nerds" is in that category. Though PBS no longer shows the documentary, thousands of people from all over the world still visit its mangy old web site. They find the site useful, even if it isn't the show, itself. And I find it fascinating that there is this audience for material that was never thought to have enduring value. There is an audience, however small, for just about every show ever made. What we need to do is to find a way to make the cost of keeping those shows available less than the benefit derived from people seeing them. And that brings us to the economics of Blockbuster Video.
Blockbuster, or any video rental store, works on the same business model. The cost of keeping a movie on the rental shelf is $10 per week for the first 3 to 4 weeks, then $0.50 per week thereafter. Most customers rent new releases, but those are no longer new after the first month. At that point, extra copies are sold off and a few archival copies remain to serve the few renters per week who are looking for them. The new release and archival rental businesses are very different, but they complement each other. Television industry is not nearly as efficient. PBS typically buys the right to air shows for five years, which ought to support both the new release and archival models, but most shows are played a lot at first and then hardly at all for the rest of the time. That's because the broadcast distribution network isn't efficient for small audiences.
He then goes on to describe exactly how a TV broadcaster like a PBS affiliate might actually act on this.
Cringley highlights the value and potential of exactly what we all want - but can't find in the regular mass media channels today: giant on-demand libraries of vast digital content. DRM seems to be the bugbear here – with bittorrents and kaaza dominating the internet market – building a global digital library seems a workable proposition with pay per usage facilities built along.

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