Chris Jay [09.03.07 05:45 AM]

The web will globalize TV distribution. If, sitting in the UK, I can log on to a US website to watch "Friends", why should I bother with local channels (except for purely local content)? This will make for a massive shift in business models. See http://chrisfjay.blogspot.com/2006/12/creative-destruction-in-media.html

Perhaps counter-intuitively, I also predict a clearer (if narrower) role for public service broadcasting. That's because of the niches opened up by the long tail of the web - they'll be able to avoid the game shows and concentrate on informing, educating, and entertaining. See http://chrisfjay.blogspot.com/2007/01/bbc.html

  Alex Tolley [09.03.07 05:56 AM]

"A friend asked a question about income from online properties, namely how can you continue to make a $200k episode if you're making $60k from online distribution and the online is killing the broadcast distribution? The question wasn't well answered other than a handwavy "it'll all work out". "

Why is the lack of advertising revenue considered bad?

It is certainly arguable that tv as a medium has tried to sustain monopoly rents for video advertizing. The use of DVRs to "skip ads" should be a sign that viewers are intolerant of the ad saturation on US tv. Some recapture will no doubt be made via YouTube and its ilk, but so what will happen if it doesn't?

The obvious answer is an acceleration of the trends we see today - cheaper, schlockier shows that will chase away audiences even more quickly and more use of existing libraries. The other is that the cost structure of tv production will have to radically decrease for the same level of quality - technology will have to replace or reduce the costs of actors, sets, locations, film and production crews etc.

Maybe tv just slowly dies and ends up like the radio wasteland - broadcasting content created elsewhere (music) and talk shows. Who seriously bemoans the decline of radio today?

  Harvey Pengwyn [09.03.07 06:07 AM]

It is not quite true to say the Interactive TV is left over from teletext days. On 'Sky' it is the ironically named OpenTV platform, on digital terrestrial it is MHEG-5 (it looks to me like these Multimedia and Hypermedia Experts had never actually seen a programming language before, and I dread to think what their first 4 attempts were like - although no doubt it is a thing of beauty from some bizarro theological perspective).
On cable the interactive TV is some sort of web, this should of course be the best but in practice is the worst because the main cable company is short of money.

In all cases there is capacity for extra video streams (more on 'Sky' than DTT). As an old fart I wish they would just say 'dial channel 1132 for whatever' rather than hiding things away behind the red button.

  Harvey Pengwyn [09.03.07 07:52 AM]

PS. Presumably there are complex socio-techno-economic reasons why Teletext caught on in a big way in the UK (and, I think, the rest of Europe) but not in the US.

  Tim O'Reilly [09.03.07 10:08 AM]

Nat,

You addressed several key points of "what O'Reilly thinks about the future of media" in this article, but not in the paragraph that started off with that question. So I thought I'd expand:

1. "Brands not shows." This is a key part of O'Reilly's strategy. Our books were always strongly branded, with a focus on the brand rather than the individual author or title (which turns out to be better for both the author and the title if you succeed -- the majority of the most successful computer books are part of strongly branded series). But more importantly, our core business strategy -- to take our mission of "changing the world by spreading the knowledge of innovators" and apply it across multiple product types led us from books to online to conferences to investing and to magazines and market research -- and ideally, we tie these businesses together by cross-product brands.

   Make is a great example. It started as a magazine and associated web site and blog, added a strong video component, a live event (the Maker Faire), and is now exploring a possible public TV program.

   In addition to our product brands, we've always had a strategy of building brands around the "big ideas" that drive our product strategy. These are not brands we own -- for a big idea to work, it has to be something that's bigger than a single company. The commercialization of the internet, open source, web 2.0, are all big ideas that we worked to market and spread.

2. the medium changes the preferred format. Radio and television started out closely mimicking live performance but soon grew beyond that. YouTube teaches us how people want to consume video today.

A lot of our thinking about Safari Books Online was driven by this insight. Rather than simply trying to produce standalone ebook copies of our books, we believed (and have been proven right, as Safari is now the fastest growing part of our book business) that people would want to use a large collection for reference.

Similarly, the O'Reilly School of Technology is working to rethink teaching online. (That's another of the jobs that our books do.)

There are lots of other areas where this insight needs still to be applied in our business. We're behind the curve a bit on video and screencasts. For instance, we like what Peepcode is doing with screencasts, and Lynda.com with instructional video.

3. In the era of the long tail, the outsized returns go to the aggregators, especially those who are using new collective intelligence mechanisms to find and feature the best content. Publishing has always been about curation. Publishers need to embrace the new forms of curation, which involve harnessing the intelligence of your customers as partners and co-creators of value in your business.

Instructables.com, one of the companies we've invested in, is a great example of this new kind of business. They've done a great job of both collecting and curating user-generated content in areas that are closely allied to our "howto" publishing businesses.

  Hamish MacEwan [09.03.07 02:23 PM]

Having followed the decay of centralised distribution models for some time generally, and recently specifically video broadcasting in NZ with Russell Brown, James Gibson and others, this is a subject of some interest.

While most of the discussion follows the decline in revenue, I haven't seen or heard much comment on the declining cost of production and distribution which must be part of the equation about the economics of the matter. Nor for that matter of the good better citizen satisfaction derived from a wider range of options generates.

Its all about the money, apart from the soft soap "Motherhood" statements about National Identity and other jingoistic relics in a global and more cosmopolitan age.

All centralised vertically integrated distribution models decay down the stack to their lowest common denominators. Yes, for live mass events broadcast distribution has a cost effective place in the repetoire. It has never done diversity well and despite a zillion channels, never will.

Thanks for the observations on historical analogies in print, magazines and radio, very handy. I thought the networked PVR idea great (kinda like the RSS/BitTorrent model, plus social networking) but why you would require "free to air" broadcasting to drive such a model seems an odd inclusion of the legacy.

The past has been time era of vertically integrated specialised distribution networks, often of limited geographical reach, for both tangible and intangible goods. Attempts to "save" television via parallel digital transmission systems are steam winches on the decks of sailing ships.

Yes, while TV was complex and costly (both in production and distribution) the Coasian (or Christensen) integrated model was necessary and possessed a value proposition that justified its existence. This is no longer true and efforts to sustain it are, IMHO, driven (as was the FreeView discussion in NZ) by incumbents rightly afraid, but wrongly motivated, by their inevitable loss of significance.

  gnat [09.03.07 09:45 PM]

Alex: the decreasing broadcast advertising revenue is a problem because the costs of making a primetime show are in equilibrium with the advertising dollars. So we get movie stars in TV shows, great directors, even some special effects. High production values come from the high advertising value of the finished product.

Every show has to pay crew, cast, location, food, production, and post-production costs. That adds up. Yes, you can make shows cheaper. But quality at price $1/episode is obviously lower than quality at price $1M/episode. And while the graph of price to quality may not be straight it's still clear that some high quality shows made on a high budget (think Rome, Sopranos, Deadwood) may not be able to exist on Internet advertising revenues.

That's my suspicion, anyway. I don't have anything but vaguely-remembered figures on how much it costs to make an episode of E.R. (think about how much cast members make per episode, though, to figure out how much the network pays for the show) I'd love to see hard numbers for how much it's possible to make distributing shows online and how that compares against the cost of something like an episode of "Lost".

  Mark Simpkins [09.04.07 12:56 AM]

Now the BBC is going to open up interactive TV production via their Backstage project, initially looking at teaching and making available tools for using MHEG.

The BBC also has 'project conger' which is a tool set and set of design principles to allow for a more rapid development of interactive TV (disclosure. I am the technical project manager for the Conger project and one of the original project designers).

Mix these up, MHEG as an open standard and conger as a more open flexible definition of what interactive TV could be, package the players up with something like MythTV and you could look at a tool that would allow you to save a programme to your PVR and still access the interactive content on playback.

We still need more work but hopefully it will be done more by the community via initiatives such as backstage.

  SR [09.04.07 02:38 AM]

"Here's a crazy idea: a web site lets people select what shows or movies they want to watch, those shows are scheduled over the satellite, and subscribers' PVRs pick them out and saves them for later viewing."

I hear rumours that in the UK there's work going on to develop a web service that will do this from your mobile phone...

  alex tolley [09.04.07 11:26 AM]

gnat: "the decreasing broadcast advertising revenue is a problem because the costs of making a primetime show are in equilibrium with the advertising dollars. So we get movie stars in TV shows, great directors, even some special effects. High production values come from the high advertising value of the finished product."

Problem for who? The tv media or the consumer? As I said, if revenues decline, either the tv shows become lower quality, or the quality is maintained using cheaper production methods. So far it is mostly the former. But recall when Costner made "Waterworld", it was said that had he waited a year, the production costs would have been much lower using CG.

But I want to answer my own question - bad for who and does it matter?

Certainly the tv/video industry will suffer, as have many industries where taste changes and technology shifts have occurred.

Does it matter for the viewer? One could make the argument that tv is a highly addictive drug (there was a SciAm article on this) and that cutting its profitability will reduce its influence. Twice in my life I've experienced withdrawal from tv and found that I could live without it, and do much more by being less of a couch potato. On a related note, I read an amusing blog on the radio wasteland and recognized that I no longer listen to much radio when driving, I prefer audiobooks. You might argue that is bad for radio, I would argue that it might be better for me and society as a whole to reduce consumption of advertising sponsored radio.

Worrying about the decline of advertising revenue for tv to support its product might seem as quaint as pining for the old days of high production values radio or Vaudeville.

  gnat [09.05.07 04:57 PM]

Alex: I watch very little television now that I've moved back to New Zealand, and what little I do watch comes via BitTorrent. I won't be pining for Team Knight Rider or Baywatch Nights, trust me. I'm not wringing my hands, staying up at night fretting about what will happen to the poor TV producers.

I'd argue declining advertising revenues are a problem for both the TV industry and for consumers who like the current crop of television. There may well come along a new show format that is just as entertaining or more entertaining, but at the moment I don't see it online. By that I mean, I haven't found a video podcast I'd follow religiously online the way I followed the Daily Show in 2000 or Buffy the Vampire Slayer.

  oyun [02.09.08 08:48 AM]

All centralised vertically integrated distribution models decay down the stack to their lowest common denominators. Yes, for live mass events broadcast distribution has a cost effective place in the repetoire. It has never done diversity well and despite a zillion channels, never will.

  betsson24 [03.25.08 01:59 PM]

Good stuff. Thanks and greetings!