Thomson Reuters Builds A Web-Only TV Network

Why are TV broadcasters losing money? As the internet opens up distribution and lowers the barriers to enable more content to be created and disbursed, revenue growth has not kept pace. Clearly cable advertising growth has come at the expense of broadcasters, but now web shows provide an alternative to cable. Plainly, the result is that our viewing choices have gone from a few to infinite.

Where the few UHF stations once offered an alternative to the big broadcasters, today cable and web programming has truly fragmented the market. But for how long? Marketing theory indicates that eventually fragmentation must return to segmentation. Want some examples, just look at the accounting industry, the airline industry, and even with cable operators. Where once there were many, now there are few. How quickly will content distribution consolidation occur is anyone's guess. But for the health of the marketplace, given a recessionary climate where fewer advertising dollars are available, sooner may be better than later.

Not to pick on any particular genre or network, but let's look at the abundance of choices. With Thomson Reuters Web Network now competing in a business news space currently occupied by CNBC, Bloomberg, and Fox Business News. How long can that last? Looking for a movie on TV, there is ABC Family, AMC, Bravo, Disney, FMC, FX, Hallmark, Lifetime, TBS, TNT,TCM, WE, and broadcast and premium networks like HBO and Showtime, and others. And now we can access movies on the web through Amazon and Netflix. The same holds true for sports, kids, cultural, lifestyle, and every other niche. Niche networks become general interest in an attempt to capture more advertising dollars, and new niche networks arise attempting to reach the purer interest feeling abandoned as their previous network becomes too general. A network once considered the place for culture and fine arts must broaden its appeal to grow its viewership base. How many do we really need?

The problem remains, not enough advertising dollars to support these fragments. Already magazines are beginning to shutter, some newspapers are going bankrupt, others are closing. Web content may see the loss of some of these cable channels or some consolidation must occur. This fragmentation of content cannot survive. Those managing their bottom line may win out, some others will not.

Why Media Must Charge For Web Content

The Wall Street Journal charges for it's online content, and Newsday wants to. While free content continues to exist, the premium content depends on revenue to support its business model. In the broadcast model, networks depended on advertising fees, and TV shows built in syndication as a means to further profit. In the cable model, networks depended on both subscription fees and advertising to prosper. Broadcast liked this model so much, they bought cable networks. Local stations came up with retransmission consent to get subscription fees from cable affiliates as well. And then the web showed up.

The barriers of digital distribution dropped away and content could be shared freely, copied for networks and web pages, and share with the click of a button. Why pay for content if it can found for free in alternate locations. Why pay for the chicken if the eggs are free. But eventually someone has to feed the chicken or it will die and there will be no more eggs.

Content creators and distributors are recognizing the value of their content and how it needs to be shared, as either promotional vehicles or to build brand preference. But eventually, the online viewer will have to pay. Content can't be free forever and advertising revenue may not be enough by itself to maintain the current model. Either costs have to drop or more revenues have to be found. At the moment, content companies are cutting costs, but if it is too much, the content will suffer.

WIll consumers pay. Some are already. Apple has built the iPhone that makes it too easy to buy applications and view content. Perhaps it is that simplicity and a pricing structure deemed reasonable by consumers that will build an online subscription model. Will the cable companies be able to control the pipeline enough to limit only purchased content to come through to the device? Will free content be pulled and limited to subscriptions like Netflix? The model must change to enable a real business to develop; what it eventually looks like is still to be determined.

Hearst Building A Kindle For Magazines

Sure print media is declining as consumers prefer multimedia functionality. And Hearst has built a tremendous variety of content that can and must adapt to new technologies. Production of print content as well as its distribution is a labor intensive, expensive cost line on the budget and transitioning to electronic distribution can be very cost effective. Per Fortune, "According to industry insiders, Hearst, which publishes magazines ranging from Cosmopolitan to Esquire and newspapers including the financially imperiled San Francisco Chronicle, has developed a wireless e-reader with a large-format screen suited to the reading and advertising requirements of newspapers and magazines. The device and underlying technology, which other publishers will be allowed to adapt, is likely to debut this year."

For me, I don't think that Hearst should move away from its core competencies and become a manufacturer of an e-reader. And making a product that merely duplicates the Kindle does not seem the way to go. Yes a bigger screen would make sense, but can Hearst build it at a price point that would cause consumers to take notice. And a black and white e-reader is not how glossy magazines are meant to be viewed. Readers need to be in full color.

Hearst should instead partner with either Sony, who could use some help competing with the Kindle, or with Apple, who definitely understands what a product needs to do to gain market share. Heck, its an iPod on steroids! Or simply remain neutral and allow subscriptions regardless of the reader the consumer chooses to use. For content creators like Hearst, that is perhaps the best solution of them all.

Netflix Is Really Serious About Streaming-Only Subscription

Should cable operators and pay TV programmers like HBO and Showtime be worried about Netflix. At a monthly subscription rate at half what cable charges, a Netflix subscription could be economically better and equally as enjoyable for the movie fan. Currently, "Netflix passed the 10 million subscriber mark earlier this month and during its last earnings call Hastings said “millions” (emphasis on the “s” there) of subscribers had used the service." I wonder during that same period if HBO and Showtime have grown or seen attrition. As Netflix creates pricing options for the casual to heavy user, it can be a welcome change to the high price of premium content.

So how should HBO and Showtime compete. Competing with their own streaming content is one option. Adding mobility to the mix so that a subscriber can access their premium stream away from the home is another. Pushing its original and exclusive content is a third means. And revisiting its pricing models in the face of competition is another. Otherwise, Netflix is bound to take business away from HBO, Showtime, and other movie networks. I mean would you rather watch a movie on TV with commercials or streamed through Netflix without.

10 reasons to buy a Kindle 2… and 10 reasons not to

Boy the Kindle sure looks like a great product and Jeff Bezos is everywhere talking up its virtues. This article provides compelling reasons why to buy one and compelling reasons why not. For those early adopters, the Kindle represents the next device that will be a must have for anyone who reads books, magazines, and newspapers. And it is very green, saving our trees.

At the same time, it is at a price point that will slow down that adoption. At just under $400, it will take quite a lot of e-book purchases to offset the cost of the printed product. If an average e-book is $10 and an average hard cover book is $18, the incremental $8 savings means that you have to buy 50 books to break even. Before I do, I expect at least to see a Kindle 3 or Kindle 4 released!

Will function beat cost; will customers flock to the Kindle because it is futuristic and despite the cost. We will soon find out. For me, at this high price point, I may still wait another generation. I too like the feel of the printed material in my hand.

Why Do So Many People Still Search for Hula

Is Hulu really a great brand name for the NBC Fox online venture. It would be fascinating to see how many times it is mistyped in the search as Hula instead of Hulu. Google rightly asks if you really mean Hulu. If I had only bought the Hula.com web site, I could have made a small fortune. Hulu has quickly grown and certainly more people are becoming familiar with its name. One day it may make for an interesting case study. A great aggregator of content, a crazy name.

If Cable Companies Start Streaming...

Except cable companies are already streaming web content, today, to our computers. If cable companies negotiate rights with programmers to stream content to the TV set, what really does that mean? Today ESPN sells a web based product called ESPN 360 that is only available through cable companies that license it for web access. Verizon customers get it, Comcast customers do not.

Will an internet stream of a linear network be superior to the current headend stream that consumers access today through their set top box. Will it bring better picture and sound, will it improve navigation and trick features, will it better enable interactive capabilities? Will an internet capable set top box be superior to the current assortment of boxes that connect today to the TV set?

Or does an authorized internet stream of a linear cable channel enable me to watch my TV on my laptop away from my home as well as inside it. Is it meant to compete with Slingbox so that your primary cable subscription can travel with you out of home through the web.

I am intrigued that cable is exploring internet carriage of linear networks, I just don't see how it prevents customers from still bypassing their cable box and just maintain a broadband stream to watch content through the web. Will content companies create exclusive content, like ESPN 360, that makes the cable stream of content more preferable and easier to view than the current means? And will it be done as a means to stop defection from cable service or as a means to incremental revenue. In today's economic climate, the latter may not be reasonable to consider.

SAG and AMPTP Still Can't Agree On A Deal

An agreement that should have been approved still seems bitter and antagonistic. It seems that SAG would have agreed to the terms presented had the AMPTP left the terms at three years. But a four year deal caused the SAG deal to vote 73% - 27% against approval. Clearly, a four year term puts the SAG union a year after the term expires on the other union contracts. To AMPTP credit, they are trying to avoid giving the unions the leverage of having all their terms expire simultaneously in order to present a more unified block the next go around. Could this deal be concluded with a three year term; unfortunately, "no new meetings are scheduled. It would take 75% assent from voting SAG members to authorize a strike vote."

The unmistakable truth is that advertising revenues are declining and new media has not created a model that presents that much incremental revenue. With so much uncertainty ahead, a shorter term deal makes sense for SAG. AMPTP clearly does not want all its deals expiring in the same year. It is time for all actors to unite under one union as a means to the end. SAG and AFTRA are jointly negotiating with the advertising industry; a taste of what a combined union might be like.

The Cable Companies' Plan To Take Down Hulu

A little more information on how cable will keep customers. One opportunity is hi def streams via cable instead of standard stream through the computer. Another potential means to keep customers, only measure streams of non-cable content. And a third means may be in building a library that is much more diversified and easier to search and navigate. Can cable do it? It certainly is in content companies best interest if their is more revenue opportunities available.