Monday, November 21, 2005

Are you listening, Steve?

On Friday, Leon Long, the president of the association representing ABC’s affiliate stations, expressed misgivings about the partnership, which was announced publicly by Apple Chief Executive Steve Jobs and Disney CEO Robert Iger at an event last Wednesday.

For TV affiliates, Apple’s new offering “is really bad,” says Josh Bernoff, an analyst at Forrester Research in Cambridge, Mass. “You don’t get anything. You get a smaller audience,” he says.

Wall Street Journal October 17, 2005

Well Steve, better wake up and smell the iPod. Those hundreds of small town network affiliates are not just going to roll over and die. They represent a big obstacle in the race to deploy the next video distribution paradigm. And why not? Millions of dollars of their money is at stake. To say nothing of the billions of dollars of local advertising money that needs an outlet. You cannot upset the apple cart and tell the apple industry “You don’t get anything”.

It is absolutely imperative for the “paradigm shifting” video distribution systems of tomorrow to address these issues. If they don’t, it cold take several decades, maybe generations, more to transition to Internet downloads. Entrenched systems and players are not overthrown easily unless they are given an alternative. And yes, Apple’s brand is powerful, and when combined with Disney and a few other video content owners could dominate this industry. But, and it is a big BUT (no crude jokes here please), if and only if they take care of their current partners and the current players.

So what are the issues and how can they be addressed?

First, lets examine why there are local network affiliate TV stations. Simple – Local Advertising. Yes, local news too, and some local programming in the larger markets. But the raison d’etre of the local affiliates is their ability to bring local advertising dollars to the mix. Let us pretend for a moment that you could pull the rug out from under the feet of the local affiliates – which by the way would be another step on the road to total globalization and one world government. What would happen to the local advertising? Not many choices, with newspapers on the ropes and Satellite radio cannibalizing local radio stations. Yes, there is a huge opportunity there too, but that is a separate discussion (perhaps two) with its own special twists. Perhaps local advertising would die, and along with it local businesses. “Not bloody likely!” as my father would say in his best British-Indian accent.

The answer lies in a system that would separate the transmission of advertising from the transmission of content. In a sense that is what the local stations are doing by inserting local ads into a stream received from the parent brand. And that is exactly what is needed on the net. Needless to say, the system I have filed patents for does exactly that.

Second, what is it about pay-per-view that blinds even the smartest pundits to the fact that pay-per-view is a nice concept that most people don’t want? People will not suddenly switch to a new paradigm of paying for TV. Ask yourself this question - would you switch to a system that requires you to pay to watch every single video you want to watch? I hope you were thinking “Not bloody likely!”. Yes, pay-per-view is a very sexy concept, especially from the point of view of the content-owner. But how come, whenever the discussion swings around to the Pay-per-view paradigm the intelligence level of Wall Street analysts suddenly sinks to that of a not too active jellyfish (apologies to P.G. Wodehouse)? Perhaps it is a leftover bit of the myopia that infected them in the great dot-com boom.

The point is, people want to watch free TV because they are used to it – their behavioral patterns are reflexively tied to that concept. Yes, they will occasionally pay overtly for premium content or if they simply want a special experience (i.e. without ads). The research indicates that even though Pay-per-view has been available for years, the percentage of ad supported TV is still over 98%. Duh!

Again, this is connected to advertising. The solution is to give people a choice between watching content by paying for it directly or watching it subsidized by ads. Perhaps they could even choose how much they would be willing to pay for it, and thereby choose how many ads they would be willing to watch. Dreaming? Not at all – another patent I have filed deals with exactly that.

This brings us to the third issue – how much advertising will people be willing to watch? Lets go back to my first point for a moment. I think I made my point that local advertising is important and that it is not only going away, it is desirable. But what is “local” advertising? What kind of advertising, if any, is “desirable”? How about advertising that is so local, it knows who you are, what you like and what time of day you are watching? Scary? Not really, not if you selected the advertising yourself or it was selected by a “bot”. And it was not reported to big brother (whoever he may be). Or if it were reported, the information would be sufficiently aggregated that individuals or even small groups of individuals could not be identified...

Yes, I have patents pending that address all the issues I have discussed above – that is why I am hoping Steve will stumble across this page or someone who knows him will....
Copyright (c) Anil Gupte 2005, All rights reserved.