An Essay On Subscription Television

dpu writes "Who would pay $1.99 to download a television episode that only costs about $0.0014 to see on cable? This is a short essay on the current and past state of subscription television, and a hope for the future. It skips a lot of points that the thinkers among us might care about, but it does the math and drives a nail into Big Content's pinky toe."

when did we start paying for advertising?

I remember a time when having 'cable' meant that we didn't have to watch commercials. It seems difficult to avoid them these days.

Re:when did we start paying for advertising?

How about- just not get *any* advertising.

Uh huh

Pickpockets, spammers, and con artists are "just trying to scrape together a buck" too.

In any case... I can watch my boxset of Firefly DVDs without seeing any ads, and there are several episodes in it which were never aired. I own several other series on DVD as well.
Fun fact: the most expensive DVD boxset I own costs less than (the hours of time I would have lost watching ads) * (my hourly wage).

Re:when did we start paying for advertising?

"We don't pay for content. The advertisers do."

My cable bill begs to differ.

Re:when did we start paying for advertising?

"when did we start paying for advertising?"

Ironically, you've always paid for advertising. So now you're both paying for the advertising (if you buy the product), and then you get to pay to watch the advertising (on TV).

So basically you're paying to watch something you dont want to watch, which you yourself paid to get produced, just so you can watch something else you didnt pay to get produced (well, except you did pay to get it produced when you paid for the advertising by buying the advertised product...).

Somehow I suspect that this may not be the most optimal method of funding the things you do want to watch... (which might be a tangent to the articles point...)

Well, when you put it that way...

Who would pay $1.99 to download a television episode that only costs about $0.0014 to see on cable?

Why pay $14.99 for a novel when you can walk out of the library with it for free?

Content creators need to be assured of recompense for their work. Until someone comes up with a better way of assuring payment for digitally-reproduced work, the system we have is...all we have.

Re:Well, when you put it that way...

"Who would pay $1.99 to download a television episode that only costs about $0.0014 to see on cable?

If someone were to watch TV for 18 hrs/day, 7 days/week, that's ~540 hours/month. Skipping commercials, that's about 800 hrs/month of programming, or 1600 episodes. At $0.0014 per episode, this guy must be paying only $1.12 per month for cable. He would be nuts to pay $1.99 for a single show.

Meanwhile, in the real world, someone who is paying $60/month for cable and watching TV for 40hrs/month, might find $1.99 for a show quite reasonable.

Three reasons

I haven't RTFA, but I could give three reasons.

1. You're paying not to see commercials
2. You're paying for the convenience of seeing whenever you want
3. You're paying for the infrastructure needed

The prices are high as they are with any "new tech". As I see it, this is still an "early adopter" price.

I also question the maths involved here. Is he watching cable 24/7 to get those prices?

Re:Three reasons

No, he's counting on the fact that "thousands" of programs a month are potentially "available". Of course, if you watched TV 24/7 you could only watch 720 hours worth, assuming, of course, you never slept, went to the bathroom, etc..

Apparently he can't do the math either.

Fundamentally, it's yet another "I want it my way at my price" rant, and since the "content providers" don't see it his way, becomes a rationalization for piracy.

Re:Three reasons

"Of course, if you watched TV 24/7 you could only watch 720 hours worth, assuming, of course, you never slept, went to the bathroom, etc.."

I have yet to see my MythTV infrastructure sleep, go to the bathroom, etc. And, in fact, it has no trouble 'watching' half a dozen channels at the same time. Or more, should I want it to.

Get into the digital age. There is no longer any real difference between broadcast, streamed or stored material. It's all just various incarnations of transmission bandwidth, multiplexing, caching and storage.

Cable can be viewed as simply a linearly transmitted archive.

So the original article is entirely reasonable in counting all available programming; what he's getting is access to that number of terabytes of archive data. Wether he views any particular amount of it or not, he's perfectly able to store, and later view, it all.

Re:Three reasons

> I have yet to see my MythTV infrastructure sleep, go to the bathroom, etc.

You still have to watch the content you have recorded, and you still have a limited ammount of time to do that.

Sorry to break it to you but you are never going to watch tv 24/7 even with added help, it just aint possible.

Re:Three reasons

Assuming that on average a new episode is available for 20 of those shows in a typical week, that is $40 per week. My satellite bill is about $40/month for two tuners. $2/show is just way too much.

The math changes again when you take into account the following:

1) A full season of a TV show is $35 on iTunes, not $2/episode.
2) With satellite, you're paying for the 6 months of the year when the networks are only playing re-runs.

Assume your family watches 20 different shows over the course of the year.
iTunes: 20*35 = $700/year
Satellite: 40*12 = $480/year

iTunes is still more expensive, but not "way more expensive." Plus, you don't have to skip around commercials or leave a computer on 24/7.

Re:Three reasons

"$2/show is just way too much."

Apple's sold 500 million of them at that price, so apparently a few people don't share your viewpoint.

And as long as you doing the math with myth you probably should deduct the price of a dedicated PC with tuner cards. With Tivo you should factor in the $15/month service and initial purchase. Heck, even with Comcast's HD DVR box you're adding $9.95 a month.

There's also the fact that a lot of older content on iTMS, that's not currently on TV and available to be recorded. Example, about a month ago I bought the "shimmer" episode of SNL, along with the pilot episode of Land of the Giants. No particluar reason, just nostalgia. If those hadn't been available at $2 each I'd never have gotten them, since I wans't going to pay $40-50 for the set of DVD's. I was interested, but just not THAT interested.

Although, looking at the top seller's on iTMS, it seems that most are popular programming, like Galactica or The Office, which leads me to believe that they don't have myth or a DVR, and probable that many are simply picking up "missed" shows.

Re:Three reasons

Well let's assume you have a four-person household, and each person watches an average of 30 hours a week of TV. That's 6240 hours a year. If your cable bill is $720 a year, then that's about 11c per hour, or 6c for a half-hour show. It's effectively a 1700% markup.

Skipping commercials or viewing whenever you want can be done with a Tivo.

The main problem with pay per view is that you have to be dead sure you want to watch something before you watch it. You can't channel surf, you can't browse, you can't tune into the middle of a show to see if it's any good. You're pretty much restricted to watching shows you really like.

Re:Three reasons

So, why not make the pilot or the first episode of the season free to hook people on shows.

Why stop there? Why not provide the latest episode online for free in case you missed it or prioritized something else (or two something elses if you have a dual-tuner PVR, or three something elses if you recorded two shows and watched a third already-recorded show)? That's what NBC does with Heroes [nbc.com]. But why not go even further? NBC provides all episodes of the current season of Friday Night Lights [nbc.com] online for free. CBS has done the same thing with Jericho [cbs.com]. There are probably other such shows out there provided online for free by the parent company that I just haven't stumbled across (I watch and enjoy Heroes and Jericho, and though I haven't watched it yet I ran across Friday Night Lights by accident).

Yes, these videos are streaming-online-only. Yes, it sucks to have to watch them in a browser rather than on your big screen TV. However this does bring up an interesting question -- if time-shifting is legal, as the courts have held up, and if time-shifting could imply a necessary format-shifting (from broadcast format to tape or disk, for example), might not this new behavior by CBS and NBC actually allow you to time-shift and format-shift not by watching the videos online but by downloading them in a more big screen-friendly format (say, DivX, playable on any HTPC) from a bittorrent tracker somewhere? Seems like a gray area to me. Obviously it would only apply to shows where the full episodes are available for free from the parent company, so shows like Battlestar Galactica or 24 are out. But for the shows I mentioned and others like them, it's definitely an interesting question, unfortunately probably only answerable by a court somewhere.

It does make you wonder how CBS can justify selling Jericho on Xbox Live Video Marketplace for $2/episode when they provide the exact same content online free of charge. Just food for thought ...

PT Barnum

There's one born every minute

Re:PT Barnum

Yikes! That's over 1/2 million PT Barnums born per year!

I'd have thought the number would be much smaller...

Bogus calculations

If average person watches TV for 4 hours a day, that is 120 hours a month. With $60 a month to Comcast that means it 50c per hour of TV, with ads. If you consider that ads run anywhere from 15 to 30 minutes out of hour, lets say at average 20 minutes, you get about 80 minutes of TV for a dollar, which is subsidized by ads. I don't know how much Comcast pays to the content providers and how much ads will pay. But you are willing to pay at average 50c per TV show episode, while watching ads. So you are paying 4 times as much for no ads. Now for the author of the article and for me, if you watch about 4 shows at average, that is 20 episodes a month at the $60 for Comcast this makes $3 per episode. I think that looking at it this way, iTunes pricing is a steal. Not counting the fact that there are off-season periods when you still pay subscription to Comcast, but don't pay anything on iTunes.

Pay per view

Isn't this basicly pay per view, just for television series instead of movies and sports events?

Also, as another poster mentioned previously, not having to watch commercials is a BIG thing for me.

Well, let's see

If I could pay $2 per episode for content that was guaranteed to be ad-free, DRM-free (or free enough that it doesn't hinder my fair use efforts), persistent (meaning it doesn't get deleted out from under me), and included added-value content like commentaries and behind-the-scenes features, I would.

Oh wait, it's called buying it on DVD.

And until these newfangled methods of obtaining TV can provide what those shiny coasters can provide, I'll stick with buying the shows I want to watch repeatedly on DVD, and PVRing the ones I only want to see once.

Re:Well, let's see

With the notable exception of the BBC's hillarious expensive $10 per episode Dr Who DVDs, very rarely can you get the DVD the morning after the show airs if you missed it. On download, you can.

Re:Well, let's see

If I could pay $2 per episode for content that was guaranteed to be ad-free, DRM-free (or free enough that it doesn't hinder my fair use efforts), persistent (meaning it doesn't get deleted out from under me), and included added-value content like commentaries and behind-the-scenes features, I would.

Oh wait, it's called buying it on DVD.

Yeah, if only DVD's didn't come with annoying ads, trailers and "do-not-pirate-shit infomercials" that I can't skip, that'd make what you say true.

Not that difficult

The same reason people are willing to pay 99 cents for a music file they could download free from Kazaa, or willing to pay $3.99 for a gallon of milk at the gas station they could buy for $2.50 at the grocery store just a few blocks away.

It's shocking news to both content providers and pirates, but most people have money in their pocket and they don't mind spending it on things that they like when it is made convenient to do so. They are particularly happy to spend more when it saves them time and gives them a guarantee of quality, both of which are major motivators of buying songs/TV shows rather than simply getting a radio or cable hookup.

Keep in mind that if you want to watch particular shows and don't have an infinitely flexible schedule, you'll need to include the price of a TiVo or something similar to make sure you're recording all those "cheap" shows. And you'll have to wait for a rerun or a DVD to be released if you missed an episode.

Math?

The current revenue of a company like Comcast comes mainly from the money paid by subscribers, that is true. However, only a fraction of that money goes to the TV networks, most of it goes to pay for infrastructure and such. The reason that the TV networks get none of the money is, quite simply, because they get their finance from commercials. Another model for delivery, like the one suggested in the article, would give no reasons for networks to give the low/nonexistent prices that they currently do to Comcast. Although I do believe that the subscription television probably is something that we might see in the future, I hardly think the article is slashdot-worthy. Slow news-day anyone?

missing options

"Who would pay $1.99 to download a television episode that only costs about $0.0014 to see on cable?" Who would pay $0.0014 to see it on cable while you can download it on your favorite torrent site for free?

Me!

I'm happy to pay a dollar or two if I can download an episode of 24 straight after it airs. The only reason I don't do this at the moment is because Apple (Apple fanboys: note that Apple has refused to sell songs without DRM when requested by the artist - Apple loves DRM) and Fox have decided that they will only sell me encrypted media.

I think there's a huge market for "put your CC details into this website and we'll give you an unencrypted file download link". The iTunes Store was around by the time AllofMP3 started getting popular, but enough people use AllofMP3 for it to bother the RIAA significantly. Why don't these people just use iTunes? Because AllofMP3 give their customers exactly what they want.

We Bitch But Prefer Commercials

Of course a big part of the reason that cable is so cheap per show is that they show advertising. To answer all those people who are bitching about having to pay for cable when it has commercials I want to point out that you pay a relatively small amount for quality (and many not so quality) cable shows because of these commercials. Sure you can argue that the locally inserted commercials by the cable company are a needless waste (but remember cable has far fewer customers than phone so they must split up the cost of their network over fewer people) but if you want big budget shows with high production values you either need to charge the way HBO does (10-15 bucks per channel per month) or fund them with commercials.

I suspect others will point out that the amount the advertiser is paying per viewer is much smaller than the cost of say an iTunes download hence it should be economical to have relatively cheap commercial free download, e.g., each downloader just needs to cover the total amount an advertiser would have paid to get commercials to you. From my quick google research [everyonecounts.tv] it seems likely that the cost per impression in the male 18-34 age group (also the download group) it is about .2c. Given a 30minute program has 6 minutes of commercials that means about $1.20 of commercials (I suspect this might be a hit high but still roughly on target). Throw in the costs of the lost commercials from reruns (how frequently have you seen the same program a second time?) and the $1.99 price begins to seem relatively reasonable. Remember the viewers that are being lost to download aren't the people who are leaving their TV on while they do something else, they are the valuable viewers who are watching closely.

If you are willing to watch commercials in your download then it's a different story but if you aren't you have to ay to replace the money the commercials would have brought in.

Also these sort of pay per show model is only ever going to be an alternative to the normal model never a replacement. Sure we will pay for commercial free versions of our favorite shows we follow but most TV watching is done casually (I wonder if there is anything on) and no matter how much you bitch about commercials I doubt you would pay to watch a show just because you had 30minutes to kill but you will watch a show with commercials for that reason. We vote with our actions and those say we want a flat rate model that lets us watch shows for no extra cost when we feel like it.

It's just the same way that people bitch about ads at the start of movies but no matter how much people bitch they never go spend an extra $2 to go to the theater with less ads.

Changing the business model of television

Whether you agree that $1.99 or $2.99 per show is a good deal, directly paying for shows allows something amazing to happen. * It allows audiences to pass money DIRECTLY to television creators. * And that model is more honest and fairer than the advertising model which currently dominates broadcasting. It is a way better model, and better TV would be the outcome. It has the power to transform the type of shows being made because it makes television-makers directly accountable to their audience. Program makers would not have to pander to the needs of the network or the advertisers, but would put the audience first. Shows which have a small enthusiastic audience would not be dropped. Reality shows would have to stick in advertising land, because no-one would pay for that crap. Of course the networks and advertisers are fearful of being cut-out of the market. So while they still have power, they'll attempt to drive the prices of download TV ever higher. This is going to get interesting. C

Numbers are stupid.

Between my wife and I, we watch the following shows on a regular basis: (Winter): - Battlestar Galactica (Sci Fi, 1 hour, 26 hours per year with commercials) - Rome (HBO, 1 hour, 26 hours per year with no commercials) - The Office (NBC 1/2 hour, 12 hours per year with commercials) (Spring): - The Sopranos (HBO, 1 hour, 26 hours per year with no commercials) - Big Love (HBO, 1 hour, 26 hours per year with no commercials) (Year round): - The daily Show (Comedy Central, 1/2 hour, 150 episodes per year with commercials) - The colbert report (Comedy Central, 1/2 hour, 150 episodes per year with commercials) All told, that adds up to 416 hours that we actually care about per year. I'd estimate that we also watch about 100 hours or so of miscellaneous stuff (discovery health and the occasional sci fi miniseries). We'll round here and say 550 hours of programming per year, total. This would cost us $1100 from iTunes or whatnot, but it costs us $720 from comcast. In my case, the numbers are highly skewed because I watch the daily show and the colbert report; if I didn't, iTunes would be a much better deal (assuming that there was a really great way to get the content to my television set, of course). "Season passes" to most of the shows I listed above can be bought from iTunes for $30-50 each. I'd gladly pay $350 a year for the 7 shows over what I pay for comcast. -

How to compete with free

Competing with free means two things. First, you need to provide a quality product. No commercials, high definition, good bit rate, no DRM. Then, you have a product that is as good or better than free. The reason I don't buy DVDs is that when I want to watch a film, I want to watch a film and not commercials etc. 99 hours of "bonus content" generally does not add any value for anyone except hard core fans. I don't really care how they made the trees in LOTR.

The second thing big content needs to do is get the price right. People pay for their internet connection, cable TV, maybe a premium Usenet account etc. because they want to download content. So, like it or not, they already paid and can get TV for no extra cost. If you want more money out of them, it had better not be too much and you had better make the buying experience damn good (i.e. very high speed downloads, no special software required). It has to be simultanious with the first showing on TV too.

Oh, and never forget, just because you spent a lot of money making it doesn't mean it's worth a lot. Your content has to be good, not expensive. Make old BBC Horizon programs from the 80s available for 20p, and I'll bite.

An Essay On Blog Advertisement

Writing an essay that proposes a plan for a more fine-grained payment structure for big content providers: +4, Interesting

Writing an article that uses hard math to show how $1.99 generates more revenue for content providers than subscription/advertising currently does: +5, Informative

Writing your 3rd blog post about how you feel you should pay less for television because of bogus math and then posting it to slashdot with a tagline so awe-inspiring that the editors put it on the front page without even reading the article: Priceless

My two cents

For the same reason people pay $8 or more to buy a movie that's 4 times the length of a t.v. show.

'nuf said.

"I watch about four different television shows on a regular basis - Lost, Battlestar Galactica, Heroes, and typically a current reality show (which is Grease: You're The One That I Want right now)"

*blink*

OK - of all the content on a full menu of cable or sat, this is the sum total of what you find compelling?

I know there's no accounting for taste, but you're hardly their typical demo.

Most of us are paying full price for a house and really only using three rooms and reallly only for a half the day at best. What's up with that raw deal?

You pay the $1 or 2 to listen or watch whenever you want, as often as you want. No one's holding a gun to your head, and it's an alternative to buying DVR etc. This is a vaguely similar argument to the music sedction, usually pointed at Apple - thet they're "forcing" you to adopt their model. Wrong. There are many music providers. being the market leader is not the same as being an unregulated monopoly.

Which leads us to the cable company. They deregulated cable AFTER the wires were laid down, and unlike the local telcos who are merely the custodian of the infrastructure and must let anyone send their info over the copper, the cable companies have no established way of letting anyone else down the coax. The satellite system is similar - as long as the financial agent owns the pipe, it's their ball and they can go home.

About the only thing I'd change about any video delivery model is make sure it's a la carte, for the sake of scaling down rising cost. The industry is claiming that it will cost a bajillion dollars per person to do this, but that's what they said about seat belts, air bags, ABS, flying car^H^H^H^H^H^H^H^H^H^H personal cell phones and DVD players.

What about contrasting TV DVD Prices?

Exactly, Im not really sure why this is news... From a buisness point of view its obvious. They get ad revenue when you watch TV. If you download an episode not only are you NOT seeing ads, you are potentially 1 less person watching the episode live, and thus generate less revenue from the live air. You can't really look at this from a consumer point of view and work out some outlandish calculations and say "Im getting ripped off by buying online."

This brings up another point I found odd about the article. The guy is bitching about paying too much for cable (because he only likes 4 shows) and paying too much to download. If he feels TV is such a ripoff wait for the DVD's! DVD's in my opinion are decent deals (many will argue this) but when you compare minute to minute/dollar to dollar TV DVD releases are cheaper. You can get 24 Season 5 for 40dollars CND NEW, which is roughly 18hours of TV + any extras (the box didn't say how many mins, but there is the standard cut scenes, making of etc.) I have seen DVD's which are upwards of 35dollars CND that brag about 6-8hours of extra footage on top of the 3 hour movie. 11 hours 18+. If this guy is so concerned with saving money why doesn't he contrast the DVD costs of his shows. Usually you pay extra to see something right away ;)

Some thoughts...

I worked in cable advertising for ten years, and there are a few things being overlooked here. Production companies make the shows. They sell them to the networks, who pay for them by running ads. The cable companies buy networks in packages. That's why there was the huge drama when Disney/ABC content was getting dropped from Time Warner systems. The argument was over Disney channels, not ABC affiliates. Because they're sold to TW as a package, when they pull one, they pull all of them. When a cable company buys a package of networks, they negotiate for slots to run local and regional ads. That ad revenue offsets the subscription fees. For example, a package of networks like CNN and its sister networks costs the cable company money to offer in their lineup. They recover part of the cost by selling ad slots, the rest comes from a portion of subscription fees, determined by the number of people in the market territory. All cable fees, and infrastructure decisions, are based on the number of subscribers in a market territory. They add up all of the per sub fees, tack on a percentage so they can make a profit, and that's how your billing amount is determined for must carry + ad supported channels.

For those of you who would see the end of the cable companies, consider a few more points... Cable companies have to pay a franchise fee to the territory they cover. Your local government soaks them for huge fees, just to be there. Then, the phone companies frequently rent pole space to them, so they don't have to double the number of poles. They pay insane amounts of taxes to local, state, and federal governments, provide jobs, and maintain a fair amount of internet infrastructure as well. I have no love for the cable advertising world, but it drives a fair amount of commerce.

If you're such a delicate genius that you can't possibly spare the time it takes to skip commercials, perhaps you should get your ass back into the lab and finish curing cancer.

Just Say "No."

Whenever these topics come up many of us seem to agree that TV sucks, yet somehow the issue remains worthy of debate. Why hand over more money for rights-handicapped mediocrity? Do we for some reason feel we require television in order to fit into our culture?

Personally, I'm saying "to hell with it!" I just stripped my cable package down to nothing but Internet, and I can't imagine regretting it. While it's true that I may not be hip to the latest watercooler joke, but I bet I'll survive the trauma.

TV needs me more than I need TV. Let them sweeten the deal before I come back.

DVD/VHS comparison?

I stopped reading when he claimed VHS looked better than DVD.

Math is wrong.

I watch about 3 shows a week. That's about $6 a week which equates to $24 a month versus my cable bill which is $45. If I buy them through iTunes I also don't have to watch the ads.

Obviously this is a DEAL for me.

It depend son how many shows you really care about

If you only really care to watch 1 or 2 shows, then even the basic cable subscription (say, $20) is going to be more expensive than paying $1.99 / episode to download the show ( 2 bucks * 4 new shows a month = 8 bucks, 16 bucks for two shows ).

And on top of that, no commercials to wate time on, no schedule to keep or PVR to buy, etc etc.

Cable is only a better value for people who watch a lot of TV. I have digital cable, and the movies package, several other packages, etc etc. I pay over $90 a month for my cable. I love it, and think I get good value (I watch a lot of movies), but I can easily see the other side as well. I have friends and relatives who haven't had cable TV in years and are perfectly content to watch their 1-2 shows a week downloaded.

To each his own. There is never going to be a pricing model that fits everything. It's the same reason there is both subscription cell phone coverage, and PayGo cell phone coverage.

Both cable and pay-to-download are here to stay IMO.

box set vs download price

this really irritates me. if you download a full season of a show (itunes for example) you sometimes pay 40 - 60 dollars for a season. the prices on downloads are a rip off. if they (they meaning all of them, itunes, microsoft, and all the content providers) cut their prices in half, people (especially me) would download 3 times the content. i liked macgyver when i was a kid, and i wouldn't mind downloading a season and watching it, but not for $60. am i wrong??? do you all think that season 1 of macgyver should cost as much as a brand new episode of 24??? or another example is battlestar galactaca. the original episodes are as much as the NEW scifi channel episodes. it's about sqeezing as much money as they can out of every consumer.

in the words of dave chapelle........ "greedy bastards!!!"

al a carte subs

Cable providers have sophisticated enough two-way networks that it shouldn't be that difficult to charge exactly how much people want, to the tune of $2/month per channel, if you don't want that many.

The channels I would watch on cable or satellite are ones that are only available on the higher tiers of programming. But, in order to get them, it means I'm saddled with a dozen "family" and "kids" channels, two dozen "news" channels, numerous channels akin to "lifetime" and mtv, mtv2, mtx, vh1 and its sisters, etc. As well as literally between 4-5 Spanish stations I am not interested in on cable, all the way up over a dozen on satellite. This means that in order to watch IFC and Fuse (i do occasionally watch Fox and USA also) I'm using about 1% of what I'd be receiving, and paying full price for it. Effectively, those channels are costing me $25/month each.

One satellite subscription service (selling 4DTV subscriptions over C-Band) does offer al a carte programming but they have less than 100k subscribers nationwide and many of the networks aren't renewing contracts with them, because it isn't worth their time. They charge a very small fee monthly. But, you need a 10 foot dish...

I understand programming bundles exist to subsidize the foreign-language channels and special-interest channels that nobody would ever pay for in their own time, but that's why I'm not a subscriber. I get enough channels (even in HD) with a good rabbit-ears antenna and that's how it is going to stay.

Content producers don't want a per-episode model

Here's why I think what the content producers (Viacom, Sci-Fi, etc) don't want a per-episode model. Currently they get you to subscribe to the whole she-bang. You find new content through their promos and advertising. The content producers like this model because they can keep you around (and they get guaranteed income) even if they produce stuff you really don't like that much. Basically they keep you "hooked" (an admittedly divisive term) paying every month to watch some stuff you REALLY want to see, but keep you interested with other stuff you might not be willing to pay for, but will watch anyway because there's nothing else on.

With a pay-per-episode model, they'd lose the market of people that aren't willing to pay for junk movies and other stuff people aren't willing to pay for. They make a bit of money off the advertising of the junk, so losing you as a viewer is bad for them. Plus, they might suddenly not have some shows that you REALLY want to pay for, so they lose the ability to keep you on as a customer. They'd also have a lesser ability to advertise new shows to you, since a lot of finding a new show to watch is to just turn on the TV and see what you like (plus advertising when you're watching something else and think "hey, I should try that show". If you have to PAY to try some new show.. you're going to be a lot less adventurous. My point is a lot of the marketing of TV is centered around it being "free" to try something new.

So why do the cable channels allow per-episode content at all? Because they've seen the whole "download individual episodes over the internet" phenomenon, and realized there's this large market of people that only want to watch one show, but don't want to pay the $40 a month for basic cable. So they want to tap this market, but not let it affect the market of loyal cable subscribers. Thus they set the per-episode cost high to try to get the downloaders and potential downloaders, but the loyal subscribers would never want to pay such a high fee. They also figure it might be a way to get new subscribers. Set the fee high enough that if you like the content enough and buy enough of it, you might eventually just decide to subscribe to basic cable instead because it's cheaper, or the same price.

VHS == high quality???

He lost me when he thought VHS was higher quality than DVD because if he looked real close, he could see occasional compression artifacts. To me, VHS *is* a compression artifact, and a pretty huge one.

I would happily pay $2/episode for downloadable episodes of my favorite shows I could play when, where and how I choose, especially if it allowed niche market shows to continue and not be destroyed by stupid distributors (any number shows and Fox, for example). That's basically what the DVDs cost...

I will not watch, even for free, postage stamp, streaming in fits, enforced commercial crap as NBC is presenting. I haven't watched commercials in shows since I got a TV with a remote and a mute button, and I'm not going to start now. If they want me to watch commercials, they can make creative ones like the current Apple ads, and many superbowl ads. I'll happily go watch them. Just not in the middle of other shows.

The key to fighting piracy is making legitimate viewing easier than pirating and charging reasonable prices. I believe that most people actually do want the shows they like to continue and will willingly support them if they can and it's not painful to do so. Right now, it's painful to do so. When that's fixed, piracy will resume its place as a nuisance, instead of being the showstopper.

UK has always been doing this

UK residents have been paying television fees since TV started. First, most of the original TV broadcast channels were governement run. Second, the population has grown up used to this.

Lies, damn lies, and statistics

What a stupid statistic. It costs $50+/month to get cable. That's only cheap if you watch a lot of it. Some of us have lives.

DitchingCable.com

Wow, such heated debate. Not a lot that I can add to the conversation except that I'm running a blog about ditching cable for a combination of recording over the air television and using iTunes, called ditchingcable.com [ditchingcable.com].

For me, while I'm recording OTA television, I do supplement the recordings with an occasional download and a subscription to the Daily Show.

A few things to consider
1. Do you watch reruns?
I don't. So, that really throws off the numbers. Networks and cable channels alike tend to run their repeats at the same time (summer time, holidays, etc). When I'm not paying for cable, I'm not paying for those times of year.

2. Do you watch sports?
I don't, but if you do, you're kind of screwed without cable television. Monday Night Football isn't even on broadcast television anymore. And good luck finding hockey or basketball at all.

For folks like me, who like television but can't be bothered with ads, reruns, sports, schedule conflicts, and appointment television, I can't imagine life before PVRs, but now, I'm really wondering why I paid those high cable bills for something that I used so little.

Cheers,
Randy Stewart
Ditching Cable [ditchingcable.com]

An alternative model

A while ago, a friend pointed out an article to me which dealt with exactly this topic. If I still had the link, I'd post it, but it's been lost in the ether.

The basic premise is this: The author puts forth a new sales model for TV viewing: Sponsorship. He came upon the idea while watching a show and noticing all the "empty space" at the top and bottom of his screen. He realized that this space could be sold. So, for example, Pepsi could sponsor this week's episode of Battlestar Galactica. They'd get to put their logo on the screen for the entire show (like the "bugs" that TV stations currently have). Viewers could subscribe to a show (or set of shows) and get the content via P2P, direct download, or DVD mailed to their homes.

I can't remember all the particulars of the economics, but the article was rather specific on how and why this would work. Advertisers would only pay for actual downloads/discs mailed, and producers could charge more because it's guaranteed that every instance being paid for is an actual viewing of the advertising content.

The one major problem the author points out is that this model would eliminate TV stations, since they're little more than advertising middle-men (they produce almost nothing--a local news show or two--and spend the rest of their time matching advertisers to content).

In a way, it's going back to the original model for television: Companies sponsor a show, and viewers watch them for free.

The author even mentions that P2P would be the *preferred* method of distribution, since the producers don't have to pay for all of the bandwidth (or shipping in the case of mailed DVDs). And since the ads are integral to the image, there's no worries about commercial-skipping, etc.

The industries involved would have to change their business models, but in the end, almost everyone comes out ahead.

higher cost

While I agree that iTunes over charges, programs on TV, Cable or Sat Cable cost more than the annual subscription fees.

Each and every one of the ads that runs, contributes some revenue to the show.

Advertisers pay for each and every viewer as ads are based on CPM (Cost per thousand).

Typical TV shows have CPM prices of $5 to $20 per thousand viewers. Or 0.005 to .020 cents per ad. Typical shows have more than 20 ads, hour long shows even more.

In fact the cost of the TV shows on iTunes should be => the total cost of the ad (for 1 viewer) + the cost of transmission + some reasonable fee to apple; which IMHO is $2

This guy is an idiot.

This guy is an idiot but I basically agree with him. He's an idiot for complaining about digital broadcasts and then demanding that his one show be delivered in high def. He also blames the content providers for digital broadcasting but it is a law brought in that even the content proiders have to live with. It's costing them money too.

Having said that I can see an all on demand micropayment world for TV viewing in the future. What will the charges be? That's easy; whatever the market will bear.

$0.12 per episode won't work

I RTFA, and the guy is doing the math from the consumer side, not the production side. Consider the ramifications of paying $0.12 per episode for television. Since people here seem to like Battle Star Galactica, and the article's author mentioned is specifically as something he watches, we'll use that as the example. Here we go:

1.) Assume that an average episode of BSG attracts 10 million viewers.

2.) Each viewer pays $0.12 per episode.

10 million X $0.12 = $1.2 million per episode.

Now I'm guessing that the average episode of BSG costs much more than $1.2 million to produce. Therefore, if we use the $0.12/episode cost the author is asking for, BSG could not be made. At $0.12/episode, we will only be producing crappy sitcoms that can appeal to a wide enough audience, and only a few of these total so as not to distribute the viewer pool too widely. So you can pay $100/month to watch the 4 shows you like with the option to watch hundreds more at no extra charge, or $10 a month for maybe 10 shows you don't like and will only watch because nothing good gets made anymore.

Now the numbers above are completely fictional, I have no idea what the average viewership of BSG is, or the average cost per episode. If anyone can find these two items of information, we can calculate the minimum cost per episode to a viewer for BSG to be produced. I'm guessing it'll be closer to $1.99/episode than $0.12/episode.

Re:i would pay

since most shows come out with an episode every week that would mean you
would only see one show for a whole month!
seriously name me a decent show that only airs once a month?

Re:Turn it OFF and tune in the world

You're throwing out the baby with the bath water. Some of us don't want to give up Discovery Channel, PBS or other educational shows.

TV is not the problem. People have a natural desire to be entertained, and to "communicate" across great distances. Lack of self control, discipline, parenting, and maturity is the problem. Treat the cause, not the sympotom.

But I agree, if everyone would shut the stupid boob toob off an extra 1 hr an week, it would be a good start.

Re:Turn it OFF and tune in the world

You could say the same and even more about the internet.

Tying of cable Internet to cable TV

Also you can download all that from torrent for free. (Well you have to pay for your connection)

In many geographic areas in North America, residential customers who do not already subscribe to cable TV cannot get an Internet connection faster than 48000 bits per second down, 24000 up. How useful can you be to a torrent if you are stuck on dial-up?