Television Executives Stilll Don’t Get It, How Greed Trumps Innovation and Why Their New Downloadable TV Services Suck

Like a deer caught in the headlights, so are the days of our lives.

Om Malik’s Broadband Blog — The TV Show Download Bunkum Om Malik is out with a post on the recent CBS and NBC download announcements.

“They want to allow downloads of their popular television shows like CSI and Law and Order:SVU. For 99 cents they will make these shows available for replays on (CBS) Comcast/ (NBC) DirecTV. CBS will allow you to have the privilege of paying a buck for watching the shows with commercials after they have aired. No you cannot take it to go like ABC shows on Video iPod. No it won’t playback on your PC. So in essence you are paying for something you can currently do for free if you own a TiVo/DVR, or even use one of the DVR set-top boxes sold by either Comcast or DirecTV.”

As Om correctly points out CBS and NBC are at least trying to say, “we are doing something.” They are doing this in the same way that the music executives said “at least we are doing something,” when they launched their initial totally worthless download services. When we had the original Napster, they were giving us Pressplay and MusicMatch full of restrictions and limitations. Funny thing. Nobody used these services. Everybody used Napster. And when Napster was shut down, everybody used Kaaza, and now that Grokster has been shut down we have open source P2P software where no company exists to be sued, and after they sue all of their customers… well, you get the idea.

The reason that the record industry executives did not give us a compelling legal download offering was that the money to made on CDs was just too lucrative at the time. For $1 to $2 million they could release a CD that in many cases would return them revenues in excess of $100 million. The money was just too good. And even as Napster ate into their business, there was still just too much good money to make on CD sales to risk cannibalizing this lucrative business. So rather than join the revolution, they offered crappy lip service alternatives and fought the revolution legally and with PR for the minds of consumers — if for no other reason than to slow it down and let this impressive revenue stream from CD sales linger yet a moment longer.

Eventually, of course, as digital music reached critical mass they were forced into embracing it. Hence the deal with the devil with Steve Jobs who said I’ll give you all the profit on music sales if you’ll do a deal with me. Of course iTunes was merely a Trojan Horse to sell iPods and the service not only cannibalized the music industry’s revenues but Job’s “keep your eye on the monkey profit trick (he gave them 70% of the money and then spent his 30% basically running and marketing the service)” in turned lined Apples coffers through truckloads of iPod sales.

So the music executives kind of received the short end of the stick — and serves them right for being such greedy pigs all those years.

This is what is going on with downloadable television at the moment. Although PVR ownership is growing there is still far too much money on the table for television executives to offer us anything compelling. Why innovate when there is still tons of dough to make in commercials and DVD sales? To offer us a truly compelling service would mean disrupting their current rich, but declining, revenue streams and they are still too lucrative at this point for them to do this. Unfortunately.

So what do they do instead? They offer us a bunch of very limited crap alternatives that people won’t end up using to pay lip service to the idea of video on demand. And whether it’s the crappy “start over” service from Time Warner (hey, it’s great, people can’t skip the ads) or a download service from Apple (but with expensive sucky low res versions of shows) or these two latest offerings from NBC (NBC’s service will only work with DirecTV DVRs, uh hello McFly) and CBS (their service will contain commercials), these are all stupid offerings that have no or limited appeal at best.

Perhaps Jobs will get a chance to eat the television executives’ lunch in the same way that he ate the music executives’ lunch, but my guess is that these guys are a little smarter the second time around. By the way, the music suit guys are pissed about this and are trying to figure out a way to jack the price up on Jobs and his customers as we speak.

Meanwhile Hollywood stumbles along trying to eek out the last cent that they can get from their advertising empire and uses the same tactics that the music industry did to try and stall development of things like the CableCARD and other technological advances in PVR technology while utilizing the MPAA to wage political, PR and legal fights with consumers and hardware and software manufacturers.

Like we had our taste of free downloadable mp3s, we now too have our taste of free bittorent and PVRs (and it tastes damn good). The alternatives from Hollywood will be largely unsuccessful but will sit in place until at some point the last remaining nickel is eked out of the advertising commercials model. Only then might things get better — and in the meantime get ready for more of their stall tactics and political lobbying and PR fighting.

By the way, much of my thought in writing this article came from a podcast that I listened to yesterday on Inside Digital Media where Phil Leigh interviewed music industry attorney Steve Gordon. The podcast is a fascinating tour of the history of downloadable music from an industry insider’s perspective and I’d highly recommend it. Oh and I forgot to mention, I downloaded the podcast for free with no restrictions.

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  1. Anonymous says:

    You hit the proverbial nail on the head.

  2. Anonymous says:

    That was very well written! Things will be so much better once the music and TV industries realize you can’t make bits un-copyable, and that a new business model is needed.

    One thing’s for sure: a lot of middle-men and lawyers are going to be out of jobs, and they’re going to fight in the meantime to keep the status quo.

    Paul