December 05, 2003

There, There Jonah, TV Will Come Back

The problem of TV heading into a persistent slump is the subject of Jonah Goldberg's latest NRO column. He's concerned that TV's business model is killing off good shows. As he puts it "But the networks can't let go, because every time they cancel an established show, the viewers, particularly the younger ones, vanish. No one thinks it's worth investing in a new show."

This is a function of the extremely high costs that TV networks have to carry. They only have a certain number of advertising slots that produce revenue and if a show doesn't produce enough eyeballs watching that ad, the value of all your ad slots drops and your high fixed costs for maintaining a building, a tower, a legal department and all the other necessary compliance measures you have to do to maintain this thing called a TV network means you can quickly go bust.

This business model is traditional for advertising supported TV but new technical developments mean that it doesn't have to remain so. What if you could could stream programming over the Internet? You could charge for each individual download and the fixed portion of your distribution costs could drop down to almost zero, with the variable cost of each viewer seeing the program being covered by advertising revenue or a very small pay per view fee (at the discretion of the viewer).

Some entertainment content will remain completely free as artist advertising. It worked quite well for South Park (whose spirit of christmas original is still floating around the net) and will likely work well for others.

The best part of it is that with a switch to TVoIP (TV over IP) there are few choke points for ideologically minded censors to keep you out of the distribution channel as long as the Internet remains unfiltered and free. This is the broadband world that we're approaching.

Check out the ifilm site for a preview of how close we're getting to this with present technology. The most interesting part for nonsubscribers is the shorts section.

Posted by TMLutas at December 5, 2003 09:59 AM