Wednesday, September 1, 2010

Content v Distribution - Another Channel Dropped

Sorry, the news today isn't about ABC and Time Warner as that deal appears to be done; no, in this case it is between an independent network, Hallmark, and a telco, AT&T U-Verse. And as a renewal couldn't be reached before expiration of the contract, the channels of Hallmark were taken off the air. "For its part, the programmer said the telco had dropped Hallmark Channel and Hallmark Movie Channel from its channel lineup at 12:01 due to an inability to reach a new carriage agreement."

AT&T did replace Hallmark with two other channels, but is dropping channels the expected choice of action. What of the consumer. Are negotiations always so acrimonious that the last resort, dropping signals, becomes the first choice of action. Couldn't they at least agree to keep on air for the sake of the consumer as a sign of good faith negotiation. Unfortunately, in this case, and a majority of others, the consumer comes last.

I do understand the negotiation process and I respect both sides; but this drama is bigger than both the two current combatants. it seems to be replayed with each negotiation as part of the playbook. At some point content creators will get tired of this dance and reach out directly to the consumer. And if they do that distributors will have a harder time getting linear and on demand product. It will simply be streamed directly to the viewer's device from Hallmark and others.

Distributors and Content have a symbiotic relationship that relies on each other to be successful. Aggregated content enables costs to be shared and provides more choice (hopefully) for a better price. Thus the argument against a la carte pricing. But technology shifts also lower the barrier to entry so that the content company can bypass distribution and talk directly to a customer. At the same time, Distribution can control the flow of streams and could favor one stream over another. Hence the argument for net neutrality. And so these content and distribution negotiations are all impacting a slippery slope. Better to work together than to push forward potential distribution alternatives.

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