Steve Gillmor writes that “TV is Dead.” Clearly the concept of broadcast television as an event-based, time-anchored schedule is dead. The VCR, DVD Player and the DVR took care of that. YouTube ends up being a TiVo that just records everything and you find your programs through search. But I’d contend that Television is a social activity, many people to one viewport. The computer tends to be one person to one viewport.
Television isn’t dead, centralized broadcast schedule programming is dead. The user now decides today’s line up of shows, and does it fresh everyday. The business of televsion is aggregating audiences around popular shows and attaching advertising for a fee. When a clip becomes a big hit on YouTube, it’s potentially a powerful advertising vehicle. But will an advertiser want to attach its message to the 2 million viewers of LonelyGirl15?
As the number of content modules explodes, the individual’s capacity to consume such content remains the same. There are still 24 hours in the day, we can talk multi-tasking all we want, but we aren’t going to be watching 10 Web videos at once. With the cost of production going down, it’s possible for niche audiences to support the creation and distribution of digital media products.
The interesting economics emerging out of this have to do with scale. Spending tens of millions of dollars to produce a media product and then selling it to the masses has been a fine business model. But it requires the product be sold to large audiences, preferably audiences that will buy more than one viewing and the attendant merchandise. It’s a business with normal margins. But what happens when a cheaply produced digital media product becomes a hit with a mass audience? If it has the business model and monitization schema in place it becomes an incredibly high margin business.
Oddly enough, that’s the way the software business works. Once the software has been produced — if you can get everyone to use it, the margins are incredible. See Microsoft.
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