TV’s Last Gasp

If you haven’t noticed yet, the TV industry is in a bit of trouble.

Between the writers’ strike, Arbitron’s delay of the Portable People Meter system, and ongoing doubts about ratings systems in general — not to mention a global increase in TV “piracy” — it’s tough to see a happy future for the traditional television business.

Like any giant industry in its death throes, the TV folks aren’t taking the end of their business model very well. Bristling with such armaments as lawyers, lobbying, and the federal government itself, the entertainment biz has been fighting what it sees as piracy tooth and nail since video-sharing services, DVRs, and other forms of repurposed digital media starting gaining popularity with consumers. What they don’t realize is that they’ve already lost.

A recent Nielsen study provides some stark insights into the real situation the TV industry is facing today. The study show that 56 percent of 18-34 year olds aren’t watching TV on TV. They catch up on missed episodes online and with DVRs. In fact, the same study shows that 80 percent of study participants used DVRs frequently to watch their programs. What do people do when they watch TV using a DVR? That’s right: they don’t watch commercials.

As we all know, commercial TV’s business model depends on people watching ads. When they don’t watch, advertisers won’t buy spots, and networks, production companies, writers, and actors don’t get paid. The whole system has worked thus far because the television industry has controlled the means of distribution. It owned the airwaves (or the cable channel feeds) and decided what played, and when and what commercials we had to sit through to enjoy that content. Sure, people could watch those shows without commercials by recording them on their VCRs, but mass distribution of those tapes was a practical impossibility for most people. The TV industry may not have liked the fact that people could record what they produced, but TV “piracy” by home users didn’t have any demonstrable impact.

Then came the Internet and online video. That changed everything.

Why? Because all of a sudden the TV industry (just like the movie and music industries) lost control of distribution. Now anyone can copy a TV show and broadcast it to the world through the networked digital media distribution system we call the Internet. Once this happened the game was over for the big media companies.

It’s hard to overestimate the impact that online video has had on most people’s television viewing. Forty-five percent of Europeans watch TV online. And as I stated earlier, over half of the 18-34 demographic doesn’t watch TV on TV. Over 81 million Americans watch TV online at least part of the time, according to Nielsen. A huge chunk of teens and tweens get their TV over the Internet. And this is all just after a couple of years of online video technology reaching the mainstream. Imagine where we’ll be in another five years.

Yet though all those studies show that many folks watch their online TV content via network Web sites (rather than through services such as YouTube), the industry still keeps fighting the tide and — witness the current writers’ strike flap over getting paid for online content — simultaneously wanting things to stay the same while cashing in with their own online content. It’s a kind of digital schizophrenia, a disconnection from reality.

What’s the answer? Here’s a radical proposal to the TV industry: give up. Yup, give up. No matter what you do — sue infringers, concoct fancy new digital watermarking schemes, or use law enforcement to take down people found running “pirate” Web sites — now that the digital content genie is out of the bottle, he ain’t going back in.

Crack down on one form of file sharing and another will pop up to replace it. Witness the new streaming technologies being used to send TV programs from untraceable offshore servers. Fighting a world of users determined to share digital content makes taking on the Hydra look like squashing a bug.

I can hear the cries now: “How are writers going to get paid? Who’s going to produce content if they can’t make money from it? You’re making excuses for piracy! You support stealing!”

Good grief. Look, I’m a writer. And I like to get paid for my work. Nobody’s disputing that. I’m not disputing that the TV networks should get paid for what they do. What I’m saying is a radical problem requires a radical solution and a radical rethinking of the business model.

People do go to TV sites to watch programs they’ve missed. They’re not all queuing up their BitTorrent clients to pirate content. And if you’ve ever used BitTorrent to try to download some sort of digital content (legal, of course), you probably know why: it’s a pain. Given the choice, people would much rather get their content legitimately, especially if it’s surrounded by goodies, such as show transcripts, behind-the-scenes content, star bios, and the like. We’re not a nation of thieves and pirates, regardless of what the MPAA seems to think.

We’re entering a new age of digital content and need new thinking. Some businesses have already begun to think differently, and there are proven successes. Amazon.com now has DRM (define) free MP3 files for sale. EMusic.com is by some measures the largest online music seller after iTunes, and all of its content is DRM-free MP3 files. Selling noncrippled, easily sharable content can work when the cost-benefit ratio to consumers is tipped in their favor.

Instead of fighting a rearguard action against the inevitable, perhaps the TV industry needs to take a lesson from Al Neuharth of “USA Today.” When faced with the theft of some of his newspaper boxes by rambunctious college students, Neuharth refused to sue them. Instead, he found the thieves and made them his distributors. It worked. The same thing could work for the television industry. If they embraced the facts, worked with those who were already volunteering their own time to share files to get them to place ads, and cut them in on the proceeds, everyone would make money and the lawyers could go home.

And who wouldn’t like that to happen?

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