. .


Understanding the Value

October 1, 2010 6:41:29.611

Some TV Execs don't like Apple's new rental model:

"How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?" Bewkes recently asked, joining the now growing chorus of executives to decry the new scheme. Jeff Zucker recently said he thought Apple's 99-cent rentals "devalue" the content, while Viacom CEO Philippe Dauman said the rental model was "not good."

You have to consider how people use media though. Consider music, where 99 cents is now the agreed upon standard for purchasing. How many times will I listen to a song I like? Who knows, but it's a lot. People will go back to the same song over and over again over time.

TV shows aren't like that. With rare exceptions, individual episodes are a "one and done" thing. Which means this: to the end consumer of media, the typical tv episode has a lower value than most songs. Since songs have arrived at an agreed upon value of 99 cents, that's providing a ceiling on the value of tv shows.

Now, you can argue about production costs and such, but that doesn't really matter to the end buyer. It matters a lot to the producers, of course - which argues for fewer people in the value extraction chain, I think. Over time, I expect online sales to start whittling away the plethora of middle men who add cost - but no real value - to the creation of tv (and movies). I wouldn't be surprised to see tv shows go the way of video games: you buy a few episodes, and then subscribe to a "feed" for DLC. The entire model for show distribution and production would have to change for that to happen, and I think that's what the execs quoted above fear most. In that world, they have no place at the feeding trough.

Technorati Tags:

posted by James Robertson

 Share Tweet This