May 17th, 2006
TV Industry Will Be Downsized Online
Michael Rogers argues that the TV industry will be able to avoid the mistakes that the music and print industries made when they went online and digital. How sweetly naive:
While many magazines and newspapers are attracting a large Web audience and lots of advertising, the revenue may never match what they made in the real world. Print’s future on the Web: downsizing.
The truth is that Michael is half-right — the Web will indeed “downsize” ad-supported media industries, but to say that TV will somehow be immune is wishful thinking at best. For years, TV networks have held advertisers hostage with their extortionist “upfront” market practices. When advertisers start shifting their buckets of money online, TV will face the same fierce competition for ad dollars:
But it turned out there is enormous competition for ad dollars on the Web  community sites, games, search engines, and soon even application software, all competitors that print never had to face in the real world.
These are also competitors that TV never had to face in the “real world.”
Micheal thinks the TV industry will reap the rewards of first trying to figure out which business models work online:
When you step back, it almost looks like an industry-wide research project, throwing a half-dozen business models at the wall to see which ones stick. As soon as winners emerge, you can bet the rest will follow  television executives are, if nothing else, very good at copying each other.
Even if they do find the most successful model, that doesn’t mean they will end up with a larger slice of the pie once the lion’s share of the dollars are flowing online. TV is taking a sledgehammer to the dam, and they better hold their breath when it bursts.
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I agree - one of the big advantages that TV companies have had is having such a big control over their own market - exclusive access to the medium. But IPTV is going to lead to a big explosion in the market for user-generated content, IMO, and in a medium with free access - the internet. That means a movement of control from the media empires to the consumer crowds, and that can only be a threat to revenue models based on exclusive access. 2c.
its great to see the major tv networks as well as smaller online television networks broadcasting programs over the net. check out these links for more similar news:
http://www.usatoday.com/money/media/2006-04-07-ethnic-media-usat_x.htm
http://www.nytimes.com/2006/03/12/business/yourmoney/12sliver.html?ex=1299819600en=b93a73a9426aeb16ei=5088partner=rssnytemc=rss&pagewanted=all
http://www.variety.com/article/VR1117934602?categoryid=1009&cs=1
I made a post about this on Mark Cuban’s blog saying that no matter what the portability/quality (that’s the differentiated product, not the content), the shift is towards brands and individual entities. With sites like YouTube and others eventually hoping to monetize “user-created content,” I think we’ll see that the positives of “consumer choice” will be greatly reduced. Just because everybody creates content doesn’t mean anybody wants to watch it … let alone SEEK IT OUT before they know what it is. Eventually, even if this idea of giving content producers a cut of ad revenue pans out, the talent will rise to the top. That being said, they’re going to make the demands about what they’re worth. The small guys will have an opportunity, but that doesn’t mean anybody is changing the framework of the entertainment industry any time soon.
networks are in another. The money is just not there. The market is much closer to negative than people think.†Scott has made many predictions foretelling radical change to media and advertising economics (here - “Consumers Are The New Medium”,here - “TV Industry Will be Downsized Online”, here - “The Death Of The Intermediary” and here - “What If Media 2.0 Is less Profitable Than Media 1.0 ?”, for example). Social Media Sites Start Snagging Big-Name Marketers
networks are in another. The money is just not there. The market is much closer to negative than people think.†Scott has made many predictions foretelling radical change to media and advertising economics (here - “Consumers Are The New Medium”,here - “TV Industry Will be Downsized Online”, here - “The Death Of The Intermediary” and here - “What If Media 2.0 Is less Profitable Than Media 1.0 ?”, for example). Social Media Sites Start Snagging Big-Name Marketers