If you had asked me about the broadcast industry a few short weeks ago, I would have summed it up as follows:
The cable and satellite companies continue to use a dinosaur model that requires you to subscribe to a specific cable/satellite provider to get content from companies such as HBO. In the long term, however, this model will die because it is competing with the Internet, where everyone has access to the same content.
I have strongly believed this, and I've continuously talked about it over the years. For example, in 2010 I asked the question Will the cable/satellite model have to change?, and provided the following answer:
If enough people decide that cable/satellite service isn't worth it, the industry will be forced to adopt a more economical model that better serves the customer.
And I continued to make similar statements:
[O]bviously people won't pay for these cable/satellite services any more. And at the same time, the content providers won't get all of that guaranteed revenue that has made them greedy.
Then both the cable/satellite providers and the content providers will really have to fight for my business. Instead of holding these fake crisis wars every few years, they'll have to come up with a new business model - oen that will make it worthwhile for me to watch your shows.
It's only a matter of time before this cable/satellite model keels over, right?
In the history of my Jim Bakker-ish "I was wrong" moments, this has probably been the biggest "I was wrong" moment yet - and it only took me a couple of days to figure out how wrong I was.
For those of you who missed it, two big stories emerged over the past few days. Timothy B. Lee summarized both of them - the ongoing negotiations between Cogent and Verizon, and the completed deal with Netflix and Comcast.
In brief, Netflix (a customer of Cogent) accounts for a huge percentage of Internet traffic. For various reasons that Lee explains, this means that broadband companies such as Verizon and Comcast can try to demand money from Netflix (or Cogent) to carry Netflix's traffic. As of now, Verizon has not succeeded in getting money from Cogent - but Comcast has succeeded in getting money from Netflix.
There are, of course, a number of ramifications of this. One of those, however, bears mentioning:
As this proceeds, there will be no effective difference between the current cable/satellite entertainment industry and the online broadband industry.
For example, this month's current brouhaha in the former industry is DirecTV's refusal to carry The Weather Channel. Perhaps your response is to ignore DirecTV altogether and just go directly to weather.com. But what if weather.com has paid a fee to Verizon, and hasn't paid a fee to AT&T? If that is the result, then videos on weather.com may be degraded if you try to access the website from AT&T. And, of course, Jim Bakker's own website may be affected.
Of course, it's possible that the fees would only be demanded - and paid - by companies such as Netflix with extreme broadband requirements, and that it wouldn't be economically feasible for the broadband providers to demand similar fee payments from weather.com, or jimbakkershow.com, or blogger.com, or wordpress.com...
Hmm. This is suddenly getting somewhat personal.
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