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The Progressive Economics Forum

Rethinking copyright, TV edition

Much of the outrage about file sharing (aka “piracy”) has come from movie studios and record companies, but not much at all from TV networks. Of course, they do put out their product for free, albeit bundled with advertising. Lots of people record these shows and watch them at their convenience, often skipping the adversiting. So it is not much of leap from that to downloading the show and watching it with the ads already stripped out.

Mark Pesce uses one of my faves, Battlestar Galactica (seriously, if you have not seen it, put aside your preconceptions and watch it), as a case study for how file sharing has increased network viewership through the same word-of-mouth buzz factor that works in music file sharing. And he points to that little space in the corner, where the network logo lives, as the prime real estate for future advertising that is synched to this new distribution model.

Whether this actually happens, we will see. But Pesce offers some interesting food for thought about copyright policy in the face of technology that can spread digital content so easily. This article is form 2005, pre-You Tube. Since then, some innovations have occurred, such as pre-season-three Battlestar “webisodes” available for download on the sci-fi network itself, so the networks may well be getting with it.

Piracy is Good? How Battlestar Galactica killed Broadcast TV

Mark Pesce

PART ONE: HYPERDISTRIBUTION

October 18th, 2004 is the day TV died. That evening, British satellite broadcaster SkyOne — part of NEWS Corp’s BSkyB satellite broadcasting service — ran the premiere episode of the re-visioned 70s camp classic Battlestar Galactica. (That episode, “33,” is one of the best hours of drama ever written for television.) The production costs for Battlestar Galactica were underwritten by two broadcast partners: SkyOne in the UK, and the SciFi Channel in the USA. SciFi Channel programers had decided to wait until January 2005 (a slow month for American television) to begin airing the series, so three months would elapse between the airing of “33” in the UK, and its airing in the US. Or so it was thought.

The average viewer of the SciFi network is young and decidedly geeky. They are masters of media; they can find ways to get things they shouldn’t have. Thus, a few hours after airing on SkyOne, “33” was available for Internet download. No news there.

A new peer-to-peer file sharing technology, BitTorrent, was employed to share the quarter-gigabyte audiovisual files of “33”. Unlike older forms of internet downloading, where too many requests for the same data can clog up internet links and send servers crashing. BitTorrent distributes files more and more efficiently, as more people join the hunt for the data. Everyone looking for bits of a file – say, an episode of Battlestar Galactica – shares the pieces they’ve already located with anyone else who doesn’t already have that piece. Since the pieces are scattered randomly among all the users who want the data, there’s a lot of to-and-fro between the users; rather than being a request for one copy of one file on one server, it’s as though many hundreds of hands are copying and exchanging playing cards. You may start out holding only the Ace of Hearts, but soon enough you’ll have a full deck.

This is a form of peer-to-peer file sharing known as “swarming”: all of the peers in a swarm share the portions of the data they’ve already received. And, as the Chinese proverb goes, “Many hands make light work.” BitTorrent transforms the creaky and unreliable technology of audiovisual distribution, making it fast and hyper-efficient. BitTorrent creates the conditions for something I’ve termed “hyperdistribution” – a distribution channel which is even more efficient than broadcasting.

That has certainly been the case with Battlestar Galactica. The British aficionados of the series provided torrents for each episode within a few hours of each broadcast. Many fans in the US picked them up and watched them; so did many people in Australia.

While you might assume the SciFi Channel saw a significant drop-off in viewership as a result of this piracy, it appears to have had the reverse effect: the series is so good that the few tens of thousands of people who watched downloaded versions told their friends to tune in on January 14th, and see for themselves. From its premiere, Battlestar Galactica has been the most popular program ever to air on the SciFi Channel, and its audiences have only grown throughout the first series. Piracy made it possible for “word-of-mouth” to spread about Battlestar Galactica.

Just two months ago, we saw something very similar happen, again with a beloved series, the BBC’s Doctor Who. After a hiatus of almost two decades, the BBC cast Christopher Eccelston in the role of the Doctor, and set the show to premiere on the 24th of March. A few weeks before the air date, an “unfinished” version of the first episode of the new series leaked onto the internet through the BBC’s production partner CBC. Hundreds of thousands of Doctor Who fans downloaded the episode, wanting a preview of this new version of the nearly-immortal Doctor. The BBC were publicly outraged, but there’s a strong sense that this act of piracy, while not officially sanctioned, was unofficially encouraged by BBC. It certainly created a groundswell of interest in the series, allowing people to “try before they buy,” and probably increased program viewership. (The episode drew 10.81 million viewers to BBC1, which is among the highest ratings Doctor Who has ever seen.)

Audiences are technically savvy these days; they can and will find a way to get any television programming they desire. They don’t want to pay for it, they don’t want it artificially crippled with any digital rights management technologies – they just want to watch it. Now. This is the way that half a century of television and a decade of the Web has conditioned them to behave. We can’t really complain that audiences are simply doing as they’ve been told. It is pointless to try to get them to change their behavior, because, in essence, you’re fighting against the nature of television programming itself, the behavioral narrative which grew out of our relationship to the technology. We all understand that this piracy is technically illegal, technically a violation of copyright; but we’re in a hell of a bind if we’re telling the audience to “sit down, shut up and do as you’re told” when it comes to television viewing. The audience won’t do as they’re told: they’ll do as they’ve been taught, and that is another story entirely.

Still, piracy presents us with an economic problem: how do producers get paid for the programs they create when audiences disintermediate the distribution channels through which producers get paid for their programming? The economics of television production, as practiced for the last fifty years, are very straightforward: producer (or perhaps the producer’s distributor) sells the program to a broadcaster. Broadcaster sells commercials to advertisers. Everyone gets what they want: the producer gets enough money to cover his costs, the broadcaster gets money to cover his costs, the advertiser gets some attention from the audience, and the audience gets the program.

Widespread piracy of television programming has short-circuited this process, connecting the producer directly to the audience. As yet there are no viable economic models connecting the television producer directly to the audience. Industry pundits talk about audiovisual downloads through some system like Apple’s iTunes Music Store, and perhaps we’ll see something like this in the near future, but this works against the simple fact that people do not expect to pay for television programs. People will pay for movies, when they choose to pay for movies, but they won’t pay for television programming. Not if they can get it for free. The audience is not at all involved in the economic value chain of television production; that’s been the rule for a half-century. It’s reasonable to presume that any attempt to change the economic behavior of the audience is doomed to failure.

Cable and satellite broadcasting presents something of an argument against this assertion insofar as people do pay for these services. But in these cases the audience is really purchasing choice. (Los Angeles has at least 20 broadcasters, and, despite this, has a thriving cable and satellite broadcast market, because people want even more choice, and are willing to pay for it.) Hyperdistribution has extended this choice to anyone with an broadband connection — extended it well beyond any possible offering by any cable or satellite broadcaster. Can these industries possibly compete against the nearly infinite range of content offered on a broadband connection?

Now we have a paradox: the invention of an incredibly powerful mechanism for the global distribution of television programming brings with it a fundamental challenge to the business model which pays for the creation of the programs themselves. This is not at all BitTorrent’s fault: the technology could have come along a decade ago, and if it had, we’d have stumbled across this paradox in the 1990s. This is a failure of the value chain to adapt to a changing technological landscape — a technological desynchronization between producer and audience. Once again, there’s no need to find fault: things have changed so much, and so quickly, I doubt that anyone could have kept up. But the future is now here, and everyone in the creative value chain from producer to audience must adapt to it.

This presentation outlines one economic model — actually more like a family of models — which connects television producers to their audiences through an hyperdistribution strategy, one which doesn’t require any change in the audience’s economic behavior. This, I believe, is the surest path to success for any new economic model; without audience acceptance, any model will inevitably fail, and while this model is not guaranteed to be successful, it seems to face fewer roadblocks to acceptance than other models which have been proposed.

Television broadcasters owe their existence to the absence of substantially effective competition. When you’re dealing with real-world materials that are in naturally short supply – whether diamonds, oil, or broadcasting spectrum — a cartel can maintain and enforce its oligopoly. But when you’re working with media, which exist today as digital ephemera, bits that can be copied and reproduced endlessly at nearly zero cost, broadcast oligopolies are susceptible to a form of “digital arbitrage,” which can hollow-out their empires in an afternoon. Hyperdistribution techniques are more efficient than broadcast networks for television program distribution.

Now, before you presume that this is all so much future talk, that maybe, someday, people will be downloading television programs from the Internet, know this: that someday has already come and gone. Per capita, Australians are the most profligate downloaders of television programming in the entire world, followed closely by the British. While the Americans lag behind, they’re still on the chart, in third place. The sea change has already taken place – undoubtedly sped along by the monopoly position of the commercial broadcasters, who, in many cases, act as barriers rather than conduits for television programs. If a commercial broadcaster doesn’t show a program, or delays it for years, that’s no longer of concern to television audiences: they’ll just download it from the Internet.

This trend is only going to accelerate with the uptake of broadband throughout the world, progressively hollowing-out the commercial broadcasters until they have returned to their roots: television as a live medium. The only types of programming unsuitable for hyperdistribution are those which are broadcast live: news, event and interactive programming, and sport. Since these are all widely popular, it’s not as though the commercial broadcasters will collapse. But their business models will change, because their cash cows are fleeing the paddock.

The pervasive culture of TV downloading leaves the producers of pre-produced television programs high and dry, receiving nothing of value for their work. But is this really true? The absolute, basic motivation of a TV producer is not money — though money is needed for production — but to gain and hold an audience’s attention. TV producers want their programming to be watched as widely as possible — by everyone. That’s what they care about, and that’s all they care about, because, with viewers, everything else takes care of itself: audiences equal money.

This assertion seems so basic, so fundamentally essential to the economics of television, that it’s very hard to understand why anyone (other than a broadcaster being cut out of the value chain) would get upset about piracy of television programming. The model as practiced at present can’t effectively leverage the economic benefits of hyperdistribution, but that model was created before hyperdistribution was technically possible. The age of hyperdistribution demands the development of new economic models which can harness piracy, for profit. So, let’s move directly to a discussion of one such model.

Consider Battlestar Galactica. A few weeks before the series premiered on television, I sat down to watch the 13 episodes of the first season, all of which I’d found on BitTorrent. Somewhere around the second or third episode I became briefly aware of the “bug,” the smallish, semi-transparent station ID which has become the constant on-screen companion to all television broadcasts. I was looking at the bug for SkyOne, the British satellite broadcaster, which nestled comfortably in the upper left-hand corner of the screen. I noted the bug, then proceeded to ignore it. But it never went away. In episode after episode, the bug remained, a tattoo commemorating the trip from broadcaster to audience.

Somewhere around episode seven, it hit me like a ton of bricks: I was looking at the most valuable and most underutilized piece of real estate in the world. The bug carried the station ID — which is fine if I’m in the UK. But in Australia SkyOne has no meaning at all. So that message, which should be full of meaning — full of “payload” — has been utterly misspent. It’s as if they took the finest piece of land in Sydney Harbour, say where the Opera House resides, and decided to use it as depot for broken trains. That screen real estate has real value, because it commands the audience’s attention, constantly if subconsciously.

What if, instead of carrying the broadcaster’s station ID, the bug contained an advertiser’s payload? I decided I wanted to see what that might look like, so I took an episode of Desperate Housewives and ran a little test, using the logo of one of Australia’s best known retailers, Myer. I placed the advertiser’s bug in the lower left-hand corner. This is probably sufficient for a well-known retailer like Myer (or Macy’s or Harrod’s, etc.): it’s simply enough to remind the public that they exist – and that there’s undoubtedly a sale on.

While I thought I was being truly innovative in my thinking, I was wholly wrong. On a recent Friday evening I sat and watched a rugby match: to my astonishment, I found that a commercial broadcasters had already adopted this technique. When the game went into an instant replay, the icon of an Australian liquor distiller Bundaberg Rum did a little dance in the upper left-hand corner of the screen. This means that the technique is already in use, and advertisers understand its value. That’s a very important point: advertisers are ready for this.

The earliest models of both commercial radio and television developed around the idea of program sponsorship: one sponsor per program. Over the 1950s (in the case of television) this model evolved toward the 30-second advertisement, which interrupted the broadcast. For the last half-century that has proven to be an enduringly successful economic model, but that model is now under threat from Personal Video Recorders (PVRs), which allow a viewer to fast-forward through all advertisements, often taking them in 30-second leaps, so the audience never sees so much as a single image from an ad. PVRs, playing into the television-taught behaviors of immediacy and convenience, have proven immensely popular, and are not going away; instead, they will become an integral and expected feature of the television viewing experience. This means 30-second ads are not a part of television’s future. They’re too easy to edit out of the viewing experience.

The idea of an advertising payload attached unobtrusively to the television program has a certain appeal; it can be ignored, but it’s always present. The audience can’t edit it out of the program without destroying the content of the program. Audiences will learn accept them — so long as the advertisements aren’t too busy, distracting, or otherwise obnoxious. (Consequently, there will be a lot of work going on in the next decade to determine just how obnoxious such an ad can be before the audience objects to it.)

As the advertisement-as-interruption disappears, we will see a series of advertisements — perhaps running five minutes apiece — embedded into the programmme itself. This is easy to achieve technically, and will be palatable to most major advertisers. Since this evolution seems inevitable, another question comes immediately to the fore: what’s the role of the broadcaster in this new economic value chain? Today the broadcaster aggregates audiences, aggregates advertisers, puts commercials into the program breaks, and makes a lot of money doing this. But — and here is the central point I’m making today — wouldn’t it be economically more efficient for the advertiser to work directly with the program’s producer to distribute television programming directly to the audience, using hyperdistribution?

Let me run some numbers for you, based on another set of back-of-the-envelope calculations: If we presume that the advertiser is going to pay at least as much as the broadcaster for hyperdistribution rights to a program, there’s a large fixed cost for the purchase of those rights. Further, there’s another fixed cost to maintain the internet servers which “seed” the program’s hyperdistribution – the internet equivalent of broadcast transmitter operation costs. Add in a small amount for the post-production costs incurred to affix the advertiser’s payload to the program, and we’re done. Those are the entirety of the costs.

The advertiser is looking to lower costs in advertising; if those advertisers are paying between $250,000 and $500,000 for thirty seconds of advertising (in the United States), just a handful of advertisements would cover hyperdistribution costs. It’s a numbers game: if enough viewers watch a hyperdistributed television program, it is cheaper for advertisers to work with producers, and handle the distribution themselves. Furthermore, if the program is widely popular, it is far, far cheaper to do so. In other words, the higher your ratings, the cheaper the advertising. That’s precisely the reverse of broadcast television, and one big reason that advertisers will find this model so appealing.

Although no formal surveys have been conducted, it’s reasonable to assert that at least four percent of Australians, two percent of Britons, and one percent of Americans are already using broadband hyperdistribution to get some percentage of their TV programs. Based on my own research, I have found television downloading to be widespread among men 18 to 25 years old, precisely the demographic most coveted by advertisers. In other words, the prime audience is already there, already waiting and already willing to receive. All that remains is to put the components of this new value chain into operation.

PART TWO: THE NEW LAWS OF TELEVISION

There are two principle components of the new value chain of television hyperdistribution: the producer and the advertiser. An advertising agency is likely acting as an intermediary between these two, connecting producers to advertisers, working out the demographic appeal of particular programs, and selling ad payload into those programs; this is a role they already fulfill – although at present they work with the broadcast networks rather than the producers. There is no role for a broadcaster in this value chain; the audience has abandoned the broadcaster in favor of a direct relationship with the program provider. That said, the broadcasters are uniquely qualified to transform themselves into highly specialized advertising agencies, connecting advertisers to producers; this is something they already excel at.

This is clearly a viable economic model: the producer gets paid at least as much for their programming as they would have received from a broadcaster, and probably more; the advertiser gets a cheaper ad buy; and the audience continues to receive free television programs. This is a win-win-win scenario, unless you’re a broadcaster.

Although broadband uptake is ramping up rapidly throughout the world, many areas have very limited broadband access, and many other families can’t afford the fifty dollars a month for a broadband link suitable for television hyperdistribution.

Although broadband is still the exception in most households, at least 70% of those households now have at least one DVD player. DVD has rapidly supplanted VHS as the distribution medium of choice for audiovisual content, and sales of DVDs have passed twenty billion dollars a year. So, for the rest of world, which doesn’t yet have broadband, and who might never want to futz with all these new technologies – could an advertiser just send them a DVD in the mail?

This may sound ridiculous on the face of it, but can we make the math work? Can we get to cost-equivalence for DVD distribution of television programs? Let’s run the numbers again: if you really compress a TV signal, you can fit about 3 hours of video programming onto a standard dual-layer DVD. Because the ad breaks have been removed from the programs, that 3 hours is actually the equivalent of four hours of television programming – which is a fair helping of prime-time television. If I wanted to send this directly to millions of the households, it would cost no more than perhaps fifty cents per DVD. It’s going to cost an advertiser about the same as ad buys in a television broadcast, but consider: this is no longer television by appointment. That DVD can be watched anytime, by anyone, anywhere there’s a DVD player. These DVDs will have “handoff rates” close to those of magazines. They’ll have long shelf lives. This model would probably be very successful.

If it seems ridiculous to consider sending a DVD to the majority of households in the English-speaking world, I have to tell you a story from my own experience in the United States. During the 1990s, AOL grew from a tiny company to a giant which would later swallow TimeWarner. A few times a year I’d receive an AOL mailing: in the mid-90s, these mailings would have a floppy disk in them, preloaded with the AOL software. By the late 1990s, those mailings would be CDs of AOL software. And these weren’t targeted mailings – these were mass mailings, reaching most of the hundred million US households, at least twice a year. It got so bad that friends of mine made objects d’art from AOL floppies – and plenty of folks used their CDs as coasters.

Retailers mail circulars to their customers, or put them into newspapers; why not put a week’s television programs into the weekend edition of the New York Times or the Sydney Morning Herald? (The Herald distributes the Sydney Tropfest DVD every year – this is no different.) These novel partnerships would bring the distribution costs way down, and have the added side-effect of raising newspaper readership. (Consider News Corporation, which owns newspapers and a television network. There are opportunities for real “media synergies” here.) There are any number of ways to make the economics of television distribution by DVD work. I believe that the first producer/advertisers to do so will open a door to a new form of distribution – television by mail, and television by newspaper.

What I’ve described so far sounds promising. But let’s face it, there are going to be strong arguments against the widespread adoption of the hyperdistribution models I’ve just described – it’s just that many of these arguments won’t be based in economics. The first of these arguments will undoubtedly be inertia: everyone is making money, so no one will want to change. Producers will continue to sell their programs to broadcasters, and broadcasters will continue to sell ads to advertisers. It has ever been thus, it will ever be thus. While this argument is appealing, it assumes that the present, and worse, the future, looks anything like the past. It ignores the fact that because of hyperdistribution, the audience is already in control of distribution. The producer has lost control over where, when and by whom productions are viewed. The producer may fret and file lawsuits and lobby to change the laws regarding the copying and distribution of television programs, but these have little overall effect – though it will anger the audience. Consider that, despite the famed Betamax decision of 1984, it is still just as illegal to time-shift a broadcast television program in 2005 as it was in 1979. Yet no home viewer has ever been prosecuted for it. Why? Because you don’t sue your audience. (Just ask Metallica how well that worked out.)

The producer has a better chance to reach an audience than ever before, but has no control over how productions reach that audience. If control over distribution could be maintained, if the oligarchy of commercial television broadcasting could consolidate its hold on program distribution, none of this would need to change. But it has already begun to change; the horse has already fled the barn.

The audience is asserting their control over television programming; this is actually a good thing, because the moments for television viewing are expanding in direct proportion to the exercise of this new power. Until very recently, television was an experience which was confined to the lounge room, shackled to a big, heavy box. But now we can watch full-length television programs on our mobile phones (a new capability of the latest generation of mobiles), or on the Sony PlayStation Portable (PSP), a high-resolution, widescreen, portable game and media machine, two of the new “must have” items for the younger set. Audiences are growing fond of the idea of on-demand TV, available wherever they are, whenever they want to watch it. Television viewing has become a multitasking activity; you might watch a short program – something like the 11-minute “Adult Swim” episodes pioneered on the Cartoon Network, or the 3-minute “mobisodes” being rolled out by various wireless carriers. You can dip in, watch something, then go on to something else. Television viewing is no longer wholly consuming; but it is also becoming more pervasive. Freed from the tyranny of the box, people will be watching more TV, and more different kinds of TV, than ever before.

Now for the economic objections. Television producers only make real money when their programs go into syndication – generally when a series reaches 100 episodes. Broadcast networks in the US are notoriously cheap – they’ll cover some of the production costs for a CSI, but the rest is the producer’s gamble. Fortunately, producers have begun to realize huge revenues selling DVDs of their most popular television series. NEWS Corporation, for example, earned unexpected record profits in Q4 2003, based on the sales of DVD sets of Buffy the Vampire Slayer and The X-Files.

Hyperdistribution will undermine the market for syndication and DVD distribution of television programming, so producers will be understandably reluctant to hyperdistribute their works. On the other hand, the direct relationship between the producer and the advertiser should mean that more money goes into the producer’s pocket than ever before. With the disintermediation of the broadcast networks, advertisers will pay less, but producers will get paid more. Television production may not have the jackpot of syndication, but it should become a more profitable business overall.

Furthermore, people have been taping their favorite series for years, and that hasn’t undercut DVD sales. People buy a DVD because it’s packaged in a neat box, with special features, commentary tracks, and the kind of paraphernalia that a fan wants to invest themselves in. Owning a DVD is about more than simply having a copy of the program; it’s a badge of membership in a community of fans. The core audience for a DVD of a television series will buy it, even when it is freely available through other means. And while DVD sales will certainly slow in the age of hyperdistribution – and syndication will likely disappear – that’s lamentable, but unavoidable. Hyperdistribution isn’t going away. DVD may have been no more than a brief, happy moment in the distribution of television, after TV went digital, but before those bits found their way onto the Internet. No one can reasonably expect those kinds of revenues will last forever.

Another, more important economic question arises: if broadcast television is abandoned as the distribution outlet for television programs, how will audiences know what to watch? It’s believed that without the endless promotion that accompanies any television broadcast, the audience will simply evaporate. That’s true insofar as the audience won’t know what television programs to watch if they aren’t advertised. But given that the audience is already being presented with a nearly infinite number of choices, that’s a problem which producers will be facing whether or not they remain with the broadcasters. Even if a producer resists going into hyperdistribution, there are already many programs in hyperdistribution, and this number is rapidly increasing as Google, Yahoo! and others enter this field. Avoiding the paradox of hyperdistribution is not an option.

The only long-term solution to this problem lies in actively encouraging fan communities – social networks which spread the word about the show. That’s certainly been a successful strategy for Battlestar Galactica: the SciFi Channel has been providing episode “podcasts” on their website – audio commentary by series creator and executive producer Ron Moore. Fans can download these podcasts and play them in conjunction with the program. (Interestingly, the podcasts are recorded as if the commercials have been removed from the broadcast – making them suitable as DVD commentary tracks, but also ideal for the edited versions that viewers have been downloading.) Fans want to be involved, they want to be enthusiastic. Fans want to make converts, encouraging their own circles of friends to watch the show. Podcasts are the perfect spoils for such folks.

Let me give you a personal example: my friends in Australia have formed a small cult of hard-core fans of a new Cartoon Network (USA) series, Robot Chicken. Robot Chicken isn’t yet available in Australia – and may never be. A few months ago I read about Robot Chicken in a New York Times article, which I forwarded around; another friend downloaded the first episode using BitTorrent. That episode was funny enough to keep us hungry for more. So now, nine episodes into the series, we’re all up-to-date on Robot Chicken, half a world away from its broadcast territory. I’ve told my friends. They’ve told their friends. And on and on and on. It doesn’t require a broadcaster; it doesn’t require advertising dollars. All it takes is a solid program and hyperdistribution. The audience takes care of the rest.

And so we come to the final objection, which is both economic and sociological: it’s too hard for the average viewer to download hyperdistributed television programs. It is true that, as of this writing, the technologies used to locate and retrieve hyperdistributed programs aren’t really designed with the average computer user in mind; they require some setup, and their interfaces are less than friendly. But even these crude interfaces have been enough to jump start Australia into first place globally in television program downloading. The situation is a lot like digital music, before the advent of iTunes; when Apple married digital music to an impeccable user interface, they touched off a revolution which gave them 70% market share in online music purchases, and a monopoly position in digital music players. But back in 2000, in the months before iTunes, people were making the same objections about downloaded music they make today about hyperdistributed television programs.

It’s as simple as this: we’re in an interregnum, that brief period of time before some bright young hacker or some clever company solves this problem definitively. When that happens, when the rest of us can download television programs quickly and easily, it’ll seem like a bomb went off – broadband use will soar, people will desert the broadcast networks, and the only producers to survive this transition will be those who harnessed the strength a new value chain, where piracy truly is good.

There’s no doubt that the broadcast networks will do what they can to slow the transition to this model, because they’ll lose billions of dollars. But here’s another paradox: they more they try to slow it down, the more they’ll anger their audiences, and drive them to hyperdistribution. For the broadcast networks it’s a lose-lose situation; all they can do is transition as quickly as possible to a live-interactive broadcasting model, and work to transform themselves into advertising agencies connecting producers and advertisers. Their future looks nothing like their recent past.

So, how do we jump start this? Which producer and which advertiser are willing to risk their livelihood on an unproven economic proposition? It’ll likely be a fledgling producer with a hot property and nothing to lose, paired with an advertiser who thrives on being there first – perhaps BMW, perhaps Nike, perhaps a brand we’ve never heard of. Once the model proves successful, there’ll be a groundswell, as the economics behind television production realign to accommodate hyperdistribution. And that time can’t be more than months away.

Meanwhile, coming up from behind, beneath, and all around, the two giants of the Internet, Google and Yahoo, are laying the groundwork for hyperdistribution networks of their own. Already, you can upload your own content to Google Video, and very soon they’ll make that video available to everyone else. Broadcasting is facing a threat that’s not economic – it’s attention-based. Those giant networks are providing a media experience which is personal and immediate, something a broadcaster can never offer. They’ll change the face of television as well – and that’s something which will be fully explored in hyperpeople.

The new laws of television production and distribution emerge from an understanding that the audience is in control of distribution, and that this is not a situation to be feared, but to be embraced wholeheartedly.

Rule One: Create Globally, Distribute Globally

An independent television producer can now reach the same global audience as any of the big studios. Distribution is no longer the barrier it once was; you don’t have to get yourselves “over the hump” and into global distribution. All programs are now, at least potentially, globally hyperdistributed. This means that your content probably shouldn’t be too localized. Productions need to be written with an eye toward the more than four hundred million English speakers in the US, UK, Canada, New Zealand, and Australia. If you can produce regional content that does well internationally, good on you. But don’t plan on it. Work with universal themes, and universal stories – they’ll give your productions legs to travel the world.

Because you have no choice but to release your productions to the world, you will need to develop a strategy to work with advertisers from across all the territories across the English-speaking world. That’s certainly more work – and a burden which was previously shouldered by the distributor – but it’s also an enormous opportunity. If you have a solid production, you’ll be well rewarded for your efforts.

Rule Two: Shorter is Better. Funnier is Better.

The television moment is becoming more pervasive, as television spreads into mobiles and laptops and game machines. This is creating an enormous demand for programming well-suited to these devices and the situations where they’re commonly used. This is the archetypal example of someone waiting for a bus or train, or having a few spare minutes at lunch. This audience often doesn’t have the time to watch a 22-minute or 44-minute program; they have a few minutes to spare, and want to be taken out of the moment. This market generally favors comedy – such as Cartoon Network’s “Adult Swim” episodes, which run for 11 minutes, or even shorter pieces, such as “Happy Tree Friends,” or JibJab’s “This Land” (which had over 70,000,000 downloads in one week). It seems that the shorter and funnier the piece, the further it is likely to travel. That said, this doesn’t mean that television is about to devolve into slapstick. Robot Chicken, for example, is often highly intelligent, with jokes that work on several levels simultaneously, including satire, parody, and slapstick.

If you do have a desire to create drama, consider how to deliver it in small doses that leave the viewer wanting more. This tends to favor melodrama over drama; we’re already seeing an explosion of short-form soap operas, a renaissance of telenovelas. If you have a grand design for an epic, consider how to deliver it in little, self-contained nuggets of entertainment. Study the audience; don’t try to force your own dramatic ideas on an audience which doesn’t have the time or attention to invest in them.

Rule Three: It Won’t Happen Overnight

Although we are already into the era of the hyperdistribution of television programming, don’t expect the broadcasters and their lucrative models of television distribution to disappear overnight. The bulk of this transformation in distribution will happen slowly, over the next five years. That’s actually a good thing, because it gives you time to experiment, to learn what does and does not work. It gives you time to hone your skills. This is a new world for television, and a level playing field for producers. With the barriers to distribution gone as the audience takes control, you have as good a chance as Brillstein-Grey or Southern Star to create a series of hit programs. But how do you keep those hits coming? At every step along the way, with every production you create, look to building a brand identity. In a world where there are no more broadcasters, where audiences are getting their programming by any means necessary, brand identity will be the one way that audiences will separate the good from the bad. Having just one well-branded hit may be all you need to set you on your way to a very successful and lucrative career in television production.

Rule Four: Do It Or Die

If you ignore the coming era of hyperdistribution, we can write you off right now. You’re in the same boat as a producer of radio plays in the 1950s; the most successful of those individuals established careers in television, but others ended up bitter and unemployed. We have to deal with the world as it is, not as we’d like it to be. The clock can’t be turned back on BitTorrent. In the new, “flat world,” where any program produced anywhere in the world is immediately available everywhere in the world, the only sustainable edge comes from entrepreneurship and innovation. Yet broadcast television has become a self-contained world, inside a comfy plastic bubble, breathing its own air, which – after half a century – has gone noticeably stale. It’s ready to be shaken up.

The future belongs to the fast, cheap and out-of-control. Cheap productions will more easily find the advertising partners they need for hyperdistribution; costly productions will find themselves competing against so many cheap productions that they’ll find it progressively harder to justify their costs in the face of ever-smaller ratings. The audiences of the future will only very rarely number in the millions. The “microaudiences” of hyperdistribution will range from hundreds to hundreds of thousands, but in that “long tail” of television productions there is a vast appetite for an incredible variety of programs. This is no longer an era of mass media and mass audiences: the dinosaurs of media are about to give way to the mammals.

I want to close with a story I read a few years ago, about the beginning of Michael Eisner’s era at Disney. He had his right-hand man down in the vaults, surveying the crown jewels – fifty years of classic films like “Snow White”, “Pinocchio”, “Bambi”, and “Fantasia”. Every few minutes Eisner would get a call and hear, “I just found another hundred million dollars.” Disney holds some of the most valuable screen properties in history; Eisner’s genius lay in developing an economic value chain which could leverage their true value.

The transformation of Disney from a failing motion picture studio, mired in obsolete economic practices, into a massively profitable, vertically-integrated media megacorporation is a case study of how a transformation in distribution can breathe life into an entire industry. The renaissance of Disney owed more to the emergence of VHS distribution than any financial magic cast by Eisner. Yet VHS was decried as the “Boston Strangler” by Jack Valenti in the years before it became Disney’s ace in the hole. Once an economic model harnessed the power of VHS distribution to the studios’ advantage, all talk of piracy ceased. Profits went up. Everyone got what they wanted.

Thirty years later, we’re at the edge of another transformation in distribution. The forces that cry “Piracy!” today will be congratulating themselves on their “sound business practices” tomorrow. There’s money to be made; there is a viable economic model. All we need do is connect the wires, and watch the sparks fly.

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Comments

Comment from Deanna
Time: February 8, 2007, 1:30 pm

Free DVDs of TV shows? Why would they do that – we’re already prepared to spend $100 or so on a full season of BSG, Dr Who, Stargate, and so on. Why would the producers hand them out for free?

My friends and I are the geek demographic. Sure, we download movies and TV shows but we also go out and buy the DVDs when they become available – even though we all have DvD players with DivX support and can watch our downloads as a family group on TV instead of crowding around a monitor. I really can’t see the producers giving up that revenue stream.

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