[opendtv] Re: Broadcasters, Cable Spar over Retrans

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 20 Jun 2011 07:33:37 -0400

At 5:03 PM -0500 6/19/11, Manfredi, Albert E wrote:
*If* we assume the existence of a neutral Internet access model, either because we will have adequate competition in broadband offerings, or because the FCC will succeed in establishing neutrality mandates, then I have no idea why you would think the congloms need any self-appointed middlemen, like Google, like Apple, or even Netflix. The congloms are plenty big enough all by themselves to create their own sites, to charge customers on their own terms. Or the congloms can themselves create Hulu-like joint sites.
I think it is safe to assume that we will have a neutral Internet access model if there is real competition.
I am far more concerned that the politicians/regulators are going to try to "protect us." Which is just the code words for introducing a regulatory scheme that will favor those who protect/enrich the politicians. For example, look at what is happening now with Senator Franken and his crusade to protect us with respect to location data. Neither Google nor Apple have been tracking the location of their phones, but they got hauled in front of Congress to explain why they are mapping locations of WiFi hot spots and cell towers to make the products work better.
I am always concerned when the government gets involved in the regulation of ANY market.
If we assume this neutral Internet access, I would instead predict that multiple sites will exist, each with its own focus, and that content owners like the congloms will simply block their content from any of the sites they don't like. Or not, if it suits them not to. Oh, they have already done this!
The historic value of the congloms has been in the perception that they add value to content through promotion, which leads to "discovery." Without discovery, content is worthless - you need audiences to make money off of content.
There was a time when the broadcast networks programmed blocks that often kept viewers tuned to their networks for hours at a time. There was a time when people talked about the shows they watched the previous night around the water cooler. There was a time when the ONLY way to reach the consumer was via one of three broadcast networks. This was viewed as being so powerful that the regulators would not let the networks own the content they delivered. 

But those days are long over.
IF the congloms want to operate their own portals and eliminate all other forms of distribution, I say go for it! It won't affect me since I don't watch this stuff anyway.
BUT. That is not what is happening. The congloms are smart enough to know that their programs need to be widely available. This is especially true with the new medium of the Internet, where discovery is just a quick search away.
Why do the music congloms WANT to be on iTunes? Because Apple is the largest seller of music in the world and they provide an ecosystem that makes discovery EASY.
Even more important, Apple has more than 200,000,000 million customers with credit cards on file that allow them to make small impulse buying decisions. Which helps to illustrate why the congloms have had a cozy relationship with the MVPDs. The MVPDs have the ability to collect small amounts of money for many content owners from about 100,000,000 homes in the U.S. 

Even Netflix now has more than 20 million PAYING subscribers.

Hulu Plus is hoping to have 1 million subscribers this year.
What this suggests is that a real marketplace is starting to get some traction via the Internet. Companies that try to restrict access to their content are less likely to attract large audiences to monetize their content. Instead of forcing viewers to subscribe to an MVPD to gain access to the content they desire, the congloms (and independent producers) will need to make their content available through the electronic storefronts that people prefer. The stores that can offer the best choice and competitive pricing are most likely to prosper. 

That's the way a real marketplace is supposed to work.
If we cannot have adequately neutral Internet access, for whatever set of reasons (e.g. just not enough bandwidth in the wireless options), then I would predict a rebirth of the MVPD model, with Internet Protocols.
We are already seeing the MVPDs trying to extend their bundling techniques to the Internet. The question is whether the congloms will continue to give the MVPDs exclusive distribution rights. The noise we have witnessed lately, as the MVPDs try to use the Internet to extend their franchise to mobile screens, suggests that the congloms want to sell their content to anyone willing to pay enough. 

Regards
Craig


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