When VHS and other videocassettes first became popular, film companies and other content producers fought tooth and nail against adapting the new technology, doing everything they could to shut it down. Lengthy legal battles ensued. But videocassettes didn’t go away and, instead, transformed both the way people consumed content– and the content providers’ business model. The same pattern is mirrored in the battle over DVDs. Today, for most films, positive profit on a popular film isn’t even expected until DVD sales kick in. Now that DVD sales are plummeting, the industry is yet again at a crossroads. Knowing they should learn from the past, content providers have attempted to be (at least a little) less combative against the newest technology yet: the internet. They swear they’ve learned from the music industry and Napster. Most have reluctantly joined Hulu, iTunes, Netflix, and others– and only with very clearly defined, old-school benefits. It’s clear they’re not doing enough.

What content providers don’t seem to understand is that the internet, much like the videocassette, is not going to provide revenue in the same way that they’re used to getting it. Instead, it’s going to be in an entirely different, perhaps still completely unknown, way. Quality content will always play a pivotal role in what we consume (after all, that’s why Apple teams with the New York Times on the iPad or Hulu with Disney) but, at the same time, it’s inevitable that we’ll eventually consume content the way that’s most convenient for us– and the quality content providers have to follow us there.

The thing is– the general public doesn’t mind advertisements. We don’t mind things that are relevant or interesting or helpful in making more informed consumer decisions. There’s a reason the Super Bowl’s advertisements are such a big deal– we like them! Just imagine, then, what would happen if the content providers embraced internet TV…

Imagine that, after ceding some of the control they so stubbornly cling to, they could come up with new ways to monetize in totally valuable and different ways. There’s never been a better way to target ads than the internet– imagine if you could do that (Hulu-like) in every TV show anyone watches online. Imagine being able to click and purchase any song, piece of clothing, car, anything that shows up in a movie while you’re watching it. Imagine subscription models that stagger releases of content to people who are willing to pay different amounts. These models are not necessarily part of what content provider plans now… but the ones who jump on it first and aren’t afraid to experiment could turn analog dollars into digital hundreds. Why not? Some of it won’t work– and experimentation always takes time. But eventually content providers will find their Google AdSense– something (or many things) highly profitable that consumers not only don’t mind, but can even appreciate.

It’s clear that incredible companies like Boxee (not to mention some of the other people trying to create THE set-top box) get it. As founder Avner Ronen succinctly puts it:

In our opinion it is not a question of “if” the Internet represents the future of TV it is a question of “when.”

I agree wholeheartedly with Ronen– and, though I see where Mark Cuban is coming from, don’t think it’s a question of wasting the internet on TV. It’s enhancing it. Imagine an API for TV– where people rush to create killer apps that make TV better and more valuable to both the content providers– and the people watching it. I’m imagining it and excited for it. Content providers have to learn to feel the same way.

This entry was posted on Thursday, March 25th, 2010 at 10:00 am and is filed under Digital Media, Ideas & Stories, Media & Entertainment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.