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Will Apple kill national TV broadcasters?

Written by Petteri Pyyny @ 12 Oct 2005 11:19 User comments (15)

Will Apple kill national TV broadcasters? Now that Apple has finally entered into business of selling TV shows, one of the ideas that I originally penned down to one already-folded e-zine seven years ago is closer to reality than ever. Surely, this point has been mostly forgotten in recent media coverage, probably because everybody in media is looking at the new TV show distribution model only from the U.S. -centric point.
It was back in 90s when I got frustrated to the traditional way how TV shows were distributed globally. To understand the concept fully, you first of all need to accept the fact that most of the Western world watches Hollywood-made TV shows -- they are extremely popular across the globe. But the production companies who make the shows, sell the country-specific TV rights typically at earliest, a year after the show has hit the U.S. TV. This means that the national broadcasters bid for the rights for TV shows, without making any guarantees on when they will air the shows and whether they do air them at all (shows are typically sold as "lumps" where national broadcasters have to buy several TV series -- the "lump" might contain one or two hit shows and 20 unpopular ones).

What this means is that most of the world will see the hit shows about 1-3 years after they air in the U.S. and in some cases, never. Consider our home country, Finland -- thanks to Internet, everybody knows about the upcoming hit shows, but we simply have to wait. As an example, thousands of people already wait for the mega-popular show "Lost", but even though its rights have already been sold to one Finnish TV broadcaster, they still haven't announced when the first episode will air, though they say it will be most likely in 2006. And in the U.S., the second season is already being shown.

Now, if Apple could persuade TV production companies, like Disney to allow them full worldwide distribution rights a day after the episode airs in the U.S., it would -- in the long run -- effectively cut the national broadcasters out of the picture. Surely, this would be most likely scenario only in countries where the national language is English, like in the UK, Ireland and Australia. But it would be relatively easy to do it also in the countries where subtitles are the preferred option over dubbing, like in Sweden, Finland and Norway, as the subtitling doesn't require that much resources to localize the show as dubbing does.

It would also quite effectively cut down the TV show piracy that has boomed lately, especially in Europe and Australia, where it has boomed mostly because of the fact that people want to see their favourite shows as soon as possible. If there was a legal option to do that rather than wait for years for some local broadcasting company to air the show, it would most likely prove to be a winning concept.

Rather than fighting over the country-specific broadcasting royalties, Hollywood TV companies (and to some extend, other TV production houses as well. After all, British, German, etc TV shows are quite popular across Europe as well) would make their core audiences, those who really want to see the series, happy and would later negotiate for "secondary" broadcasting rights with national broadcasters in order to earn "a couple" of extra dollars and air the show also for people who aren't willing to pay per episode and are happy to wait for few years in order to see the show.

Surely, national broadcasters wont die -- the fact that international mega shows would have another distribution format might provide more opportunities for local entertainment companies to come up with new and unique shows, tailor-made for their own local audiences as the channels would have more available free slots now that the Hollywood-made shows wouldn't take up all the prime time slots. On the other hand the current streaming technologies aren't easy enough to use for the "Joe Average", who wants to watch TV the same way he always has.

In the end it comes down to the studios to decide whether they really want to change the decades-old global distribution model and fight global TV piracy or not.

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15 user comments

113.10.2005 01:23

Well, if TV broadcasters are anything like the RIAA (hopelessly greedy), I see one of two things happening: They will (A) try to make the selling of TV shows on these new devices illegal, or (B) try to get about 90% of Apple's profit.

213.10.2005 03:34

I agree for the most part. Luckily I am in the US but I have a similar problem. Why are we waiting until right before the next season to release the DVD season sets? This is also a problem. So many people download the shows over P2P because of this. As they did with music files, they need to do with video files. Develop a quick release of the DVD, perhaps as singles of show by show, or have a site where you can download the show onto your own computer and then burn yourself. If they would allow people more choices like this, at a reasonable cost, illegal file sharing would not be as big a problem, and all thes eblack market video copies you get from Taiwan for 1/4 the price would not be needed.

313.10.2005 06:33

Yeah, I am not the biggest fan of Apple, but in this particular case Apple is doing a semi-good job. Apple still refuses to sell wma file format so I despise them for that (they should sell at least both), but they are at least standing up for the .99/song price. Let's be honest, producers shouldn't even be in the picture. Apple should market directly with singers/writers so that the artists can get a bigger chunk and apple can keep the prices low--it's the middle man (the producers) screwing us over with all this. Afterall, what do you need from the producers? NADA. Advertisers/marketers would be needed to distribute copies to radio stations and commercials perhaps, but besides that, Apple should be in direct communicado with the artists and continue to sell for AT MOST .99--perhaps even less when you take the producers out!

413.10.2005 10:42

It is a two way street. Doctor Who with Christopher Eccleston has had its first season on BBC in the UK. I get BBC America but they do not show it here .

513.10.2005 11:33

Nice article dRD. I have also thought in the last couple of years that downloads could really proove extremely successful for TV shows. A lot of people have sort of adapted to downloading them already as it is, even though 99.9999% of it is illegal. I can sorta relate to Finland with Lost. In Ireland, Lost Season 1 is finished. I saw them months before thanks to the Internet and have been waiting for a DVD to buy but get this... The UK is oinly really on about episode 10 or more? and after episode 12 airs in the UK, they will be selling a Lost box... but it will only have the first 12 episodes. It's price for "Lost Season 1, Part 1" by Amazon is 24.99 (36.40). So when Part 2 with the last 12 episodes appears that'll be about the same price so lets say both together would set someone back 50 (73) if they bought both right aftyer they were released. So what is wrong with that? I'll tell you what is wrong... In the United States there is 7 DVD box set of Lost on sale with ALL Season 1 episodes and extras. How much does it cost there for ALL the material???? $38.99 (32.42 / 22.20) by Amazon. Now if there were a global pricing scheme for TV shows we wouldn't have this problem! Also Irish people wouldn't have to wait for months to see Lost Season 2. I think broadcasters intentionally hold big shows like Lost (and whatever you think of it, you can't argue the fact that it is a huge show globally) back for times when their ratings are suffering. So Hollywood, from a consumer here, let's cut out the middle and man and do business ok?

613.10.2005 12:03

Gallagher- In response to your first post (question in paragraph 1): Marketing. People who missed the 1st (or 2nd or whatever season) will rush out and buy the DVD set in order to catch up on what they missed. With so many entertainment choices available, the marketers try to make a purchase of their offering an imperative. Beside that however, I have heard of an item called a VCR that works well to record such programs when they are aired. Also, DVRs and DVD recorders are available. Sorry to be a bit sarcastic, and I realize this only applies where these programs are available "first-run", but the opportunity exists to record these programs for viewing at any other time in a number of ways. I also must disagree with you on the value of "producers". Producers are the ones who take a financial risk in bringing a show to fruition, and as such deserve to benefit from its profits. I agree that sometimes producers seem to take an inordinate percentage and abandon projects when an immediate return is not forthcoming, but expecting that all that is needed is "advertising/marketing" harkens back to the early Hollywood days when Chaplin et al formed United Artists to circumvent the "producers" siphoning off money and leaving the "creators" in the lurch. They quickly became "producers" as well. The same trend occurs today. Haven't you noticed that a large number of highly paid "artists" are now listed in credits as "producer"? The term "producer" in many cases should be called "coordinator", or "approver". Producers don't actually produce anything, but rather, mold its marketability. As such, it does stunt creativity. However, actors, directors etc. do not want to work on spec. They want their $1.5 Mil/episode or $20 Mil/Movie up front and are not willing to wait for someone to buy their creation (at 99 cents a pop) in order to pay for their Malibu beach house. We are the ones paying for that in the general marketplace, and these people are not going to risk a pay cut. Secondary advertising puts the real money in their pockets. Seriously, what does drinking CocaCola have to do with "Lost"? Think about that, and you'll understand that the product is actually secondary.

713.10.2005 12:05

If apple could pull this off I would get my tv from itunes and not bittorrent! Seriously, I dont mind paying if I can get what i want when I want and to get the shows the day after they air is awesome and for 1.99 not a bad deal. Does this also mean that you can watch them on your pc too?

813.10.2005 15:19

There are all forms of media. Different technologies come and go. But the artists will always be there and the buyer will always be there. Our conflict is how to get the art from the artist to the buyer. Apple for some, MSN for me. What I do not see in this equation is the record company or the movie company that distributes the art. Take Napoleon Dynamite for instance. Wonderful movie that was independently produced. After it was successdul at the Sundance film festival, it should have been able to have been purchased online for justa few bucks. But no. We have to wait for it to be put on DVD and VHS and other media before hand. Allow the middleman all you want, and you can go buy it. Great for you and everyone else who still writes letters instead of sending e-mail. Imagine having to pay a postage stamp on E-MAIL! Same analogy. There is no CD/DVD, so why am I paying full price getting the movie/song without the physical material? Therefore, the option to buy online should be much cheaper. .99/song is a rip-off. Multiply that by the standard 12 or so songs and it still comes out to $13.00/album . . . see the problem? You are paying exact same price buying online! The companies are making a fortune selling online, yet want even more restrictions.

913.10.2005 16:34

I don't think I will download TV shows off of Itunes. Yea 1.99 is cheap and you can get them the next day but bittorrent is free and you can also get them the next day. 1.99 is cheap but that crap adds up fast. If you think about is 24 episodes x 1.99 is 48 bucks. I would rather download off bittorrent and then get the dvd set for 50 bucks when it comes out which is a lot better then having 24 downloaded episodes for the same price. With the set you get actual dvds, extras and what not. Same thing goes for songs. 99 cents is cheap but then you download 20 and all of a sudden you just spent 20 bucks. On a side note: Is anybody else really annoyed by the stupid 99 crap. Seeing a video game for 49.99 doesnt make me want to buy it anymore then if I saw it for $50. I cant believe either that seeing that makes anyone else want to buy it more. A flat screen tv for 1999.99---What is that crap??? Where is the flat screen tv for $2000. I know its not a big deal but its just annoying to me.

1013.10.2005 19:58

Get a life, people. What's the difference if you see it today or tomorrow? Watch it when you want.

1114.10.2005 09:45

To answer the question, no...

1214.10.2005 09:47

Gallagher, your notions are good but the terminology is off. The producers are the ones who form talent into something that can be sold, so they're quite valuable in the process. Sure, they can dilute the raw creativity or package it for the unwashed masses but without producers, we'd have some pretty amateurish looking stuff in video and music. The problem is the distribution cartels. They aren't producers, they're business people who control the distribution channels. Places like the MPAA and RIAA handle produced media as if THEY owned it - and quite often, they do. The price for distribution through locked down channels is to sign your life away. That's wrong in this world. Steve Jobs has developed a model that isn't new but it's currently successful. First, he offered the music industry a way out of the doldrums of digital piracy with iTunes. They were VERY excited about it a few years ago and it appeared to have a great deal of success. True to form, now the RIAA cartel wants more control and more money out of that channel. The RIAA in particular should be very careful NOT to isolate Steve Jobs because he'll just find another model that doesn't include the RIAA middleman - and he'll do it. While he's currently marketing music under the RIAA's control, he also has about 1,000 indie labels that fall outside of that. Apple has a mechanism that directly connects the artists to the listeners, the exact model you and I like, and the RIAA is very aware of that. If they aren't careful, the RIAA will be very broke very soon if they continue to pressure Steve Jobs over royalties. That's exactly the kind of thing that got Disney disconnected from Pixar movies. As far as despising Apple for not using WMA, I'd say "why?" Microsoft wouldn't use AAC, an industry standard. Apple doesn't even own AAC, they license it. Microsoft prefers the world use something only they get paid for and they want to strong arm manufacturers to ensure Microsoft's competitors fail. It's only good business. What you should be angry about is the number of players out there that don't play AAC, which is an industry standard (otherwise known as Dolby Digital or MPEG2 layer 4 or MPEG4). WMA is NOT an industry standard. It's proprietary to Microsoft with trecherous licensing terms. Microsoft has made deals with a lot of player manufacturers to use WMA and MP3 but nothing else, which prevents people from using the most popular (by the numbers) audio format - AAC. It has nothing to do with what sounds better or interoperability, it has to do with preventative business practices limiting what you can use. That's what should be despised. Lots of people are puzzled by now as to why WMA is not the preferred distribution choice, particularly the manufacturers waiting for Redmond to secure this monopoly. The answer is in the distributors. They don't trust Microsoft enough to hand over the keys to their DRM technology. Microsoft has demonstrated many times in the past that terms will suddenly change to favor themselves once one of their technologies achieves critical mass. The RIAA fully realizes that Microsoft is a bigger pirate than they are. That's how Microsoft got as far as they did and the RIAA has no intention of letting Microsoft or anyone else dictate music licensing terms. This is also why Microsoft is about to tank in the DVD HD world. The MPAA doesn't trust them either. Its always dangerous to hook your fortunes to a single vendor, which describes WMA/WMP and their DRM. That's also why AAC/MPEG4 is likely to outlast WMA/WMP since AAC has an Industry Standard Source License and nobody can tell you where WMA/WMP is going or what a license will cost in the future. If things go the way Microsoft wishes, you yourself will likely have to repurchase all your music and video over and over if you intend to retain access to it. Same for Apple's DRM, FairPlay. That's tied to a single vendor and is dangerous to long term access of encrypted files. I'd prefer Apple license FairPlay, but they won't. If they did, the first thing that would happen is all the player manufacturers would escape their Microsoft contracts, make MP3/WMA/AAC players and get a slice of the iTunes support business. That would seriously dent iPod sales, so FairPlay will not be licensed. The only thing these player makers can do (other than look to Real, which is almost irrelevant) is wait for Microsoft to pull a rabbit out of their hat. So, here's Steve Jobs standing up to the cartels that don't trust a monopolist who wants own everything. Where will it go from here? He represents the hope of artists and actors being able to benefit from their work without the middleman. Absent that, media pricing will start looking like buying gas before you know it. These are the same people who want you to buy postage for you email from them.

1314.10.2005 11:03

...uhhh... p.s. Must mention that AAC and FairPlay (Apple's DRM) are seperable. You can encode music to AAC without the DRM and you'd be able to load it into any player that handled it. No encryption when you rip a CD to AAC. That's a point of confusion for many people who believe AAC isn't capable of playing anywhere except an iPod because Apple wants it that way. Not true. Microsoft wants it that way. They want to relegate anything that isn't WMA into oblivion (how's that going, Bill?). Microsoft also started a move kill MP3 a few years ago, citing lack of DRM but they backed off. They need MP3s until AAC goes away, then they'll kill it off. Anyone can buy a Standard Source License and build AAC compliant products. Same with MPEG3 - it's a license to use the source code to build products. It's not a technical barrier that other players can't decode AAC, rather a business "deal' barrier that keeps other players from deploying a technology deadly to WMA. The future move most technically savvy writers expect from Microsoft is for them to one day destroy the non-DRM music living on your computer. However, for a fee, you can start renting access to the music you've lost after you repurchase it with DRM applied. This is one place where Microsoft and the RIAA agree - everyone needs to forget the notion of "owning" music. It's only a license to listen to music on demand and the emerging digital capabilities have the capacity to enforce that. If those two outfits could start trusting each other, we'll see a very different music world where you'll pay a monthly bill for music. It's a proven model with XM/Sirius, cable television, DMX and all the rest. The result will be more money for the distributors with no benefit for the artists. If that happens, expect something completely insane out of Apple - connecting artists directly to listeners at a fair price and with a fair payback. No doubt, Apple could also turn into a control freak but their track record is to enable the flow of creativity rather than erecting a toll both every 20 feet. I'll put my money on the Apple model. Extend all this to video. The thing people will want is video on demand. The broadcast model is dead, where you wait for a show to be scheduled to play. It won't take much for consumers to get used to video on demand. Video features that are now broadcast will be released asynchronously just like movies and recorded music. Video will live very nicely in the same model. For the true couch potato, there will still be preprogrammed channels, but they'll let you make your OWN program selections and your OWN time slots. That's the way it should work. Can we get rid of ASCAP and BMI while we're at it - two more cartels that reap money and don't benefit artists to the extent they represent.

1414.10.2005 15:36

I understand what you are talking about when you don't want Microsoft to conquer the market. However, it is just like you said: AAC is not as widely used as WMA is. At least in devices I have found. I know it is bad to go with the big boy on the block sometimes, but I would rather use the file that is most widely spread of the two. And I give Microsoft credit for standardizing the industry. Not sure how old you guys are, but I was raised back in the days of the Commodore, IBM, Tandy, Amiga, and Apple computers all fighting each other. Nothing compatible guys. Over time, two emerged, IBM (Microsoft DOS) and Apple. So I am not too upset when there is a standard. Now, I want there to be multiple choices so I do not get ripped off when it comes to price, so they should certainly try to make most items accept multiple formats. And how is it working with the new Blu-Ray and HD-DVD formats? Hasn't Microsoft released Windows Media Player 9 as VC1? I thought that was now out of their hands and basically open-source now. And talk about the most anal when it comes to proprietary formats, I am sorry but Apple has not been the most open. I was surprised when they allowed HP to begin making IPODs but they have not allowed HP to allow WMA format like HP wanted. Once again, Apple closing its devices off just like Microsoft. So both are to blame, let's not forget that.

1514.10.2005 16:48

A few confusing points: standards come in two forms; one is an agreed standard with published specifications for building products and royalty fee structures laid out in advance. The other is a defacto standard where a manufacturer is able to flood a market with a product and everyone uses it by sheer force of presence. AAC is more widely used than WMA. It has another name with a slight variation called AC3, which is the standard audio track on every DVD. Even XM radio uses a variation of AAC, so it's really everywhere. True, you'll find a few hundred different personal music players that play WMA files, but all of them put together make up about 25-30% of the market on a good day. The rest is AAC. Looking at a store window full of WMA players against one iPod isn't a good measure of market penetration. The market shows the WMA players are likely to stay in their boxes. For Microsoft standardizing the industry, that they did and look where it's getting us. Price abuse and feature stagnation runs rampant in any sector not challenged by competition. It was true in Beta vs VHS; huge leaps of technology were realized in every corner until Beta left the market, then VHS didn't have a single significant improvement afterward. S-VHS was really the last improvement to counter Beta-ED and that was it. Internet Explorer and Netscape did the same thing until Netscape was beaten to a pulp, then what improvements were made to IE until FireFox came and bit them? None, really. In fact, Microsoft was trying desperately to downplay Firefox's features until they lost 10% of the browser market. Now, we may see some technical movement in IE. The other confusion, and this is where I'm confused, is the American public's spoken desire for freedom of choice. Yet, at every turn, when there are multiple competing formats of any kind, the American public does all it can to ensure only one will survive. Windows Media 9 and the VC-1 codec component are different things. Windows Media 9 encompasses the player and all the hooks that handle media, hand off messages to other APIs and the like. That's not included in the standardization process. VC-1 is just the codec. VC-1 may become a standard by next year - March 2006 they figure, barring any details. VC-1 is not open sourced. It carries Microsoft's first standardized technology royalty license structure. This is very unusual for a company which has spent its life running as far away from standards as fast as it could. The big future surprise is that it also doesn't carry any DRM. Windows Media 10 does that and it's not in the standardization pipeline. Who knows what that codec will be called - VC-2 perhaps, and that will take another round of standardization. With H.264/MPEG-4 Part 10 (known as AVC) already in the can, it's more likely that VC-1 will be an interim market standard at best. Last week, there were reports of Bill Gates blowing a gasket at a Sony Corp. officer over making Blu-Ray compatible with the Microsoft platform. Blu-Ray has been a standard in Japan for a few years already and is not likely to get modified to fit Microsoft's wishes. HD-DVD is still relatively immature and doesn't have half the chance of survival that Blu-Ray does for a number of reasons that I won't go into. Without Blu-Ray compatibility, Microsoft is watching all of it's media domination dreams vanish. Apple has not been open, particularly with its DRM. From a usability standpoint, that's not necessarily good but from a corporate standpoint, that's how companies survive these days. HP wasn't making iPods, they were rebranded licensed products. Again, not incorporating WMA in the iPod is exactly what Microsoft would do in reverse if it actually made it's own players and music store. This is corporate survival which wasn't necessary until Microsoft showed everyone how far you could get by cutting throats. I'd recommend re-reading the passages that speak of how Microsoft blew up all their bridges with anyone looking to do business. Nobody trusts them to take the next step. Any company, including Apple, worries me when it has too much control over a stream of consumer goods and services. Greed and abuse usually follow soon after. Somehow, I don't believe Apple to be wired that way but time will tell. However, they learned from the masters and now the masters get to take a little of their own medicine. That's sort of fun to watch, but could be bad in the future, we don't know. Many technologies have suffered and almost nothing runs smoothly because, to a large extent, Microsoft tried to own the technology by embracing it at first, modifying it to work only with their platform and re-releasing it in a way that made the original technology irrelevant or significantly damaged; CD-ROM, browsers, java, RealMedia, email protocols, every standard by the W3C, XML... the list is very long. It's time to stop that kind of standards making and create standards we can all develop with. The kind of agreed standards that allowed U.S. technologies to grow and flourish rapidly between 1945 and 1980, not die a horrible death at the hands of any company who doesn't get paid for it. Otherwise, start learning Chinese. I was raised on PDP-11's, and came from planet CP/M. One thing is for certain: this, too, shall pass.

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