[opendtv] Re: Analysis: The Ala Carte Part
- From: Tom Barry <trbarry@xxxxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 25 Apr 2007 08:04:11 -0400
Craig -
Cable companies are often a monopoly that can overcharge a bit. And we
certainly need more disclosure and more choice (of what we purchase, not
just more channels).
But if the price was right I'm not sure why it would be so bad to pay
for advertiser supported channels if we chose to subscribe to them.
IOW, to me it is not an either-or proposition. Any advertising (incl
product placement) is revenue that can offset the cost of the channel.
So it is the total cost that is important to me. That is, how much
advertising I am forced to endure (not watch) and how much I have to pay
for the channel or package.
But it is easy to imagine I might pay a little for a channel that had a
little advertising. If it had less than half the advertising burden and
less than half the cost you might think it a better value than either
separately.
So I think a market supports the full spectrum and don't care if they
mix & match the two.
- Tom
Craig Birkmaier wrote:
At 11:57 PM -0400 4/24/07, Richard C. Ramsden wrote:
If ala carte is actually regulated. Most carry contracts will either
be exposed to the public, or voided. Neither benefits the content
providers. Given the Rat's ability to manipulate congress count on
neither happening.
It's NOT the cable companies that are fighting ala carte.
Richard is on the right track here. The real issue is whether content
producers can live WITHOUT subscriber fees for advertiser supported
channels.
We already know that OTA broadcasters can do it, as they are only now
getting this extra revenue over the transom. The whole concept of
subscriber fees was introduced by the cable industry to help them launch
cable only networks - back in the early days they could not generate
enough advertising revenue to survive, so they went direct to the
consumer to get additional revenues. Unfortunately the consumer did not
know this, as the fees were buried in their cable bills. Most of these
networks are now sustainable without the fees, as are the OTA channels.
The threat with ala carte is that people will choose only the channels
they watch, and not pay the fees for the channels they do not watch. If
this happens there are four possibilities:
1. Subscriber fees go UP to compensate for the lost revenue - this will
in turn cause more people to drop that channel causing fees to spiral
upwards out of control.
2. Subscriber fees are dropped, as channels fear that they will lose
their existing audience. Any channel that depends on channel surfers
will likely drop their fees so that they will not be dropped from the
line-up by consumers. Some channels that are in high demand by a core
audience, like ESPN, may retain or even increase fees, knowing that the
core audience will pay, and that the rest don't ever watch.
3. Hybrid channel packages may be created with one in the free and clear
to promote the content on the other channels that one must pay a fee for.
4. Some networks move to a "commercial free," subscriber fee basis like
HBO.Thiis assumes that consumers will pay more to buy content WITHOUT
commercials.
The bottom line is that FREE TV exists in most parts of the world based
entirely on the revenues that are generated from advertising. These
subscriber fees are somewhat unique to the USA, and only exist today
because most people don't even realize they are paying them. COngress
does not need to legislate ala carte. All they need to do is to
legislate DISCLOSURE, If consumers know what they are paying, the uproar
will be deafening and the double dipping will likely come to an end.
Regards
Craig
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Tom Barry trbarry@xxxxxxxxxxx
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