Futurology 4

While neither Somali nor seaborne, many people around the world are nevertheless pirates. Internet users outside the United States are absurdly unable to access American television shows through the networks’ websites directly or via Hulu. Left with little choice, they master the murky world of link compilers such as sidereel.com and surfthechannel.com, conduits for illegal videos hosted by such sites as megavideo.com and others. Even in America, distribution of cable shows is so inefficient that domestic viewers resort to piracy. The networks’ shocking response to such desperate demand for their products has been not to expand accessibility and profit, but to clamp down on it. Consider Viacom’s legal showdown with YouTube. And has Disney confused itself with DeBeers? The profound shortage of common sense in such moves—given that the fundamental driver of a content creator’s success is the size of its audience—is reflected in the black market’s vibrancy: Not more than half an hour after their original broadcast on the East Coast, most shows are uploaded across the Internet.

Consumers of television programs often have only one or two price points to choose from if they want a full television season: either free, if they download illegally, or more than $20 if they choose iTunes, DVD, or Blu-ray. There are far more consumers at $0 than at $20, even though consuming at $0 takes on a criminal hue. Those willing to buy at some price in between are completely ignored. Abroad, where a viewer can only consume at $0, the choice is obvious. The television industry risks annihilation in the near future, but the enterprise certainly should not be in this position.

Hollywood produces our most competitive exports by a long shot; its creative capacity and production quality are unmatched anywhere in the world. NBC Universal would as soon relocate its studios to Shenzhen as Nike would build a new factory in Malibu. This type of competitive advantage is rare and extraordinarily valuable. It is completely bewildering, therefore, that networks are unable to translate it into profits, as explained in a recent article in The Economist. These are the types of businesses, after all, that ought to flourish in the economy of the future.

Unlike newspapers, TV shows are not competing against new technologies such as blogs. The television show’s only competitor is itself, a Sisyphean punishment for an indefensibly retarded response to the Internet. A show on fox.com is competing with the exact same show on youku.com and tudou.com, Chinese versions of YouTube. Foreigners pine for a taste of the gold standard of entertainment and will find a way to get it. Rather than play a fruitless game of cat and mouse with a billion Chinese, networks and producers ought to harness the potential of this vast audience. Admittedly, there have been efforts to do so as recently as last year through acquisitions of international media outlets and distributors, but the efforts have been halfhearted. Our brothers in the United Kingdom—so loyal in times of war—still cannot watch the most recent episode of 30 Rock without breaking the law.

Online advertising revenue may not soon supplant DVD sales in developed countries. But, where legal, high-quality DVDs are either unavailable or have simply lost out to cheap, low-quality pirated ones, whatever little revenue may come in from the Web is worth it. American viewership is accelerating its decades-long flight to cable channels. In the short term, networks need whatever revenue they can get. Internet broadcasts point the way forward. Active experimentation on a global scale is the only way to refine the current model of online advertising and distribution into something that can support the costly day-to-day operations of the networks without an extreme dropoff in the quality of their products. This experimentation does not require staggering investments and must begin in earnest.

In the future, one way forward for the broadcast networks is to capitalize on certain Internet websites as fee-paying distributors. Just as cable providers and satellite-television companies pay carry fees to producers of content, Internet entrepreneurs could arrange local advertising or subscription services that would allow them to pay content creators for certain programming. Websites with a -large number of active users, such as Facebook, would become the new Comcast. Networks would thus pass the problem of garnering advertising revenue on to the new websites, who are already actively struggling to find a solution. With such alluring content, even that problem may evaporate more quickly. Other websites would cater to certain niches, such as gathering subscriptions and advertising for shows about doctors. This type of surgical precision in targeting high-quality viewers may allow for sustainable business models to crop up.

We in America watch on average 151 hours of television programming a month, more than ever. The rest of the world is fast catching up. With the right moves, the American businesses behind this enormously successful set of products stand to reap a veritable bonanza. I understand that change in Hollywood, that iconic land of individual wheeler-dealers, comes slow, but the pussyfooting must end now.


Kiran R. Pendri ’11 is a chemical and physical biology concentrator in Lowell House. His column appears on alternate Mondays.