Monday, September 03, 2007

A boring rant

In the interest of keeping items brief I've cut the previous post and put the boring stuff here. Enjoy. Or don't enjoy, as the case may be. Skip over it. Whatever.

It's not just Disney and ABC that are out of touch. Look at the management team at NBC Universal. Look at the GE board of directors. Do these people scare the living shit out of you? They sure scare the hell out of me. They're all buffed and polished and about a hundred and fourteen years old. They look like cadavers who've been done up by the world's best funeral home makeup artist. A lot of them are just GE lifers who did time in plastics and then airplane engines and then somehow got dropped into the TV group.

Here's what I tell them. Friends, you run a television network. Now let's think about this. What the fuck is a television network? It's a system of affiliates designed to help carry a broadcast signal across the wide continent of America on airwaves and into television sets owned by millions of people. In essence, you are in the distribution business. In the second half of the twentieth century you had the great good fortune to be granted a kind of limited monopoly over the distribution of a very valuable commodity. There were only so many airwaves, hence only so many networks. There were way more advertisers than there were channels to carry their advertising. So you sat there with your choke-hold on the garden hose, controlling the flow of programming and getting fatter and fatter and fatter.

It was a wonderful system. For you anyway. Except that it had one huge flaw. Which is that for you guys, the middlemen, to get rich, you needed to fuck over the people at both ends of the value chain -- the consumers who had no choice in what they watched and spent years being fed mountains of dog shit, and the producers of content who were at your mercy and had to negotiate with this tiny number of networks who operated, let's be honest here, as a kind of cartel.

It's over now. Your business model was a historical anomaly built on scarcity of a valuable resource and the willingness of a small group of network operators to not slit each other's throats and to collaborate in exploiting the content producers. Sort of like the Five Families in New York. Wars are bad for business.

You know what the new network is? It's me. I don't think people have quite figured this out yet, but just as Pixar was once a medical imaging company until I decided to make it into something completely different -- ie, the most important entertainment company of the 21st century -- so Apple is not really a computer company anymore, or even a consumer electronics company. We're a network. We take content and distribute it out to millions of people, who play it on handhelds (sold by me) and computer screens (ditto) and yes, maybe, sometimes, on actual TV sets. At one end of the value chain, the consumer end, people have already voted. They like my system better than yours.

At the other end it's trickier. We don't deal directly with the content producers. Instead, we have to deal with these network gatekeepers. But why? What value are they adding? As far as I can see the only thing the networks add is an extra step and a big scoop off the margin.

The producers of content don't like the TV network system but can't quite see the way across the divide into my digital world. Some musical artists, like Prince, are figuring it out, but they're isolated examples. Trust me, however, when I tell you that TV and movie people will figure it out too. These are not stupid people. And they are not un-greedy. Which means their desire for more money and more control and more freedom will lead them to apply their energy into figuring out how to get out of the plantation the TV networks have created for them. They will break free. Mark my words.

The talented ones will go first. Bad news for you, TV networks. You'll be stuck with the shittiest creators, the timid ones who don't dare cross the chasm. Your shows will get worse and worse. Your sitcoms will grow lamer, if that's possible. Your reality shows will grow stupider.

What's left? You've already gutted your news divisions, which was a truly moronic move since that was the only place where you really could continue to add value. Your news shows will continue to devolve into not-really-news Fox-style argument shows where retarded bullies like Bill O'Reilly come on the air and shout at people because some gangsta rapper has a deal with Pepsi, or argue with straw men about whether we should put more troops into Iraq. Where once we had Edward R. Murrow and Walter Cronkite, we'll instead have John Gibson and Sean Hannity ranting about patriotism and calling people names. All heat, no light. Well done, TV networks. When you finally die, the world will celebrate. Because you'll deserve it. Totally.

For now, when these bastards come threatening me and demanding that I join them in fucking over consumers and also allow them to grab a bigger slice of the pie, my standard response remains this: Siooma, ass-munchers. Siooma.

56 comments:

Sam said...

So why did you cut out half the article? If I didn't have my RSS reader, I would have lost some of the more important parts of your rant! Fight the man, Steve, and let the law department worry about all the little legal "issues."

Leigh McMullen said...

Sweet Jaaysus, FJS... that was actually insightful...

Stop it, right now... lest one of these "We don't inform, we sell toothpaste" network bastards decide to get proactive...

...

Naaa... never gonna happen... they'd have to have some imagination first...

Anonymous said...

I sure hope the RSJ thinks this way, the world will be a "betta place" (a la Louis Armstrong)

Anonymous said...

"...meet the new boss, same as the old boss."

Sean said...

Right now, NBC Universal ponies up the dough to produce the expensive Battlestar Galactica, a show I buy regularly from iTunes. Or used to. Anyhoo, if you cut NBCU out of the loop, from whom does producer Ron Moore get the dough to make those episodes? Television without cash for episodes is called YouTube.

Anonymous said...

I know this is the FSJ blog, but if we're speculating on the future, what would it take for a company like Apple or Google to start comissioning their own content..?
Rather than get content via the networks, why not go straight to the independent producers..? Why can't Apple or Google be the next HBO with great content that people are willing to pay for..? The networks have started the trend for you by outsourcing a lot of stuff to independents rather than employ good people (like Murrow and Cronkite), so why not take advantage..?
In that respect, haven't the networks always been about bundling the crap in with the good stuff..? How many hours of crap are there on NBC for every episode of The Office or Heroes..?

Anonymous said...

Great rant FakeSteve! You're totally right and you make me laugh out loud the way you write it. These kind of posts are why I love FSJ, not the 2 line links to some stupid movie or picture! Keep on giving us your 'inside' view of the industry please!

Anonymous said...

Namaste,

The way I understand it, advertising pays for the hefty pay packets of the actors in sitcoms.

Do you think your model of direct sale to customer will still support this premise, or should it be supported at all?

Or am I completely wrong in my assumption?

It seems easy to set up a deal with Prince for % of sales, but how would one deal with actors in sitcoms?

Mark said...

I think FSJ is onto something here. Maybe Apple should start a cable TV station. This might allow them to cut out the middlemen completely. As it stands now, producers of content don't want to jump across the digital divide because 99% of people still consume media the old fashioned way. While we can see what is coming, Apple could build a bridge to the digital world through the ownership of a TV cable channel. This could help content producers make the jump, and help cement Apple's role in the new distribution system. They could also put good content on the channel - things like Diggnation that no one else has the balls to show right now. This model could be extended to real radio stations that play music that is interesting and can be purchased from iTunes. Current homogenous radio stations suck, too.

Anonymous said...

That wasn't boring, a little abusive maybe, but not boring... and 100% on-target.

Lee

Anonymous said...

Totally right, totally awesome.

Network TV is just a walking corpse.

Scott said...

Spot on, Fake Steve baby! Way to kick ass.

Dan the Barbarian said...

Great Rant,

Spot on about who and what networks are and where they're headed.

I suspect your a little off about the migration to digital though, and I think you can use Fox as an example of this. When they started, they got only the crappiest of programming, just the creators who had no where else to go or nothing to lose. Now they've worked their way up to what? Second? and they've got some of the best shows on network TV.

Now as to News, that's where the Fox model really shines. The reason all those networks have gutted their news devisions is that they were arterial bleeders of red ink. Fox saw this, decided that maybe the viewers were tired of Dinosaurs like Cronkite spoon feeding them with liberal / socialist rhetoric. Hense, we get Hannity and O'Riely and the viewers love it. I mean Fox news has more viewers than the other three all-news channels put together.

All of this, of course backs up what you said. When someone is willing to give the consumers what they want, the old models break down quickly.

adam said...

Bless you, FSJ. Truer words were never spoken -- er, typed.

Let's hope RSJ is reading these words on this broiling Labor Day morning, pumping his fist in the air and chanting "Siooma" in his living room.

Bring it on, dinotards.

Anonymous said...

Amen, brother Jobs.

The network news is a joke, and "reality" TV sucks. The networks won't die soon enough to suit me.

=bg= said...

Ann Fudge? GE is run by a human with the name Ann Fudge?

PG Waddilove in England said...

To second 'Anonymous', "What a beautiful world it would be..." if the RSJ thinks like this, too. Probably the most cogent description of the media 'problem' and possible solutions I've run across. Thank you for phrasing so cogently what many of us think.

Steve Jobs, build studios! Get the word out to the artists! Pay the poor buggers some 'DRM' they never see from the big companies! Have a ball!

Poisson said...

That Beth Comstock of NBC is quite a number. I wonder what she would look like in a bike helmet.

Sean said...

One other thing. P&G have been in the business of providing content (um, soap operas, have you heard of them?) longer than FSJ has been alive. Not to mention the company has survived, like, 100 years or more. They might have something useful to contribute. If I was/were Apple, I'd listen thoughtfully to what they had to say. But don't get me wrong, this was another sweet FSJ post.

Grover said...

At one end of the value chain, the consumer end, people have already voted. They like my system better than yours.

They did? Cause last time I checked the number of people getting their video programing from iTunes is a tiny fraction of the people that get it from the television networks. Hell let's throw in bittorrent downloads too and you still have the "Donate it to charity." slice of the lottery pie.

In fact, I haven't sen any evidence that people are watching less TV. Would anyone even want the latest episode of Battlestar Galactica if they hadn't watched it on TV first to decide they liked it? Let's throw some indie TV shows on there and see how they compare to the sales of The Office. In fact, didn't NBC report a boost in viewing due to iTunes sales?

I wish I were wrong and you were right, but I just don't see it.

Kevin said...

heh, I wonder these days if RSJ surreptitiously sends FSJ some messaging for a bit of "distribution".

Mike said...

Yep, the "content creators" -- or should we call them "content brokers"? -- don't get it.

And they have to push it; they have to cram themselves like Monty Python's Mr. Creosote. So NBC wasn't happy with people paying a reasonable price for old TV shows. They already made money on the shows when they screened, and they get most of what Apple charges for the downloads. But it's never enough, is it? What would they prefer -- that people balk at the price and BitTorrent them instead? Then I suppose they reckon on trying to use national criminal justice systems as a private collection agency -- as if there were not better uses for tax money.

The preferred model of the content brokers is, of course, one where the end user owns nothing but rents everything; and therefore pays far more in the long run but has nothing to show for it. The end user in this plan is to play the part of a kind of propertyless content-proletariat.

The head of Columbia Records just today:

In his conception, people would pay for subscriptions ... The iPod will be obsolete."

Well, Columbia, it's like this: the public and Apple and the smarter artists like Prince have other plans. Everyone has legitimate interests here, and you can't expect those not to be balanced out but only yours to prevail and everyone else's to be disregarded indefinitely, however many votes in Congress you've bought.

Chris Papadopoulos said...

Great article FSJ.

I'd like to see the storytellers break free of the networks as well.

As one example of somebody who I really want to see do this: Joss Whedon. He's got a loyal fan following who would pay money up-front for any content he produces and has been screwed over by networks many times before so he might just consider something like this.

The free publicity alone would pay for the 30-50 million necessary to fund a season of one of his creations.

Call up Whedon, Steve. Do it now.

Anonymous said...

FSJ, you are too good...

As soon as people started to rip - or buy the particular tracks that they wanted - and made their own playlists in iTunes for their iPods, it was obvious that this was how people would consume media in the coming years.

So with TV, the idea of a linear scheduled channel is slowly fading - but does that leave the networks as publishers still?

Yes, for the moment but as you have argued their time is fading because as you outlined, the reason for them to exist is rapidly coming to an end.

This being so, I wonder when the iTunes music store will start distributing artists' work directly? There's absolutely nothing to stop this from happening already, except that the record companies would drop all of their content from ITMS at the drop of a hat.

Until then, it'll be interesting to see who comes out smelling of roses as the TV content business changes.

My hope is that content creators will be able to get a bigger cut in dealing with distributors like ITMS - but no offense FSJ, will they find that they have swapped one evil master for another?

Being a fan of 60s rock music you probably know these lines already:

Meet the new boss
Same as the old boss...

Skorry said...

FSJ: Brilliant.

Apple will start producing content. First music. Then shows and movies. No doubt about it.

Apple will make a car one day. This VW-iCar thing is the Apple M.O., like that phone with Motorola: Show us how you make one of these so we can fix it.

By the way, WTF is an Exec VP of Diversity? Unbelievable. Talk about trumpeting how out of touch you are. Let's hire someone to placate and tell us about those other people, the ones not like us.

Anonymous said...

FSJ, don't forget the tools Apple has been creating to 'own' the content creation market and bring the costs down from the stratosphere. Anyone can set up their own video production equipment and if they have a little bit of talent, can really make a difference. The real competition is for our eyeballs and our time. It's going to be a free-for-all out there and we will all benefit from how it is opening up. Podcasts are just the start..

DD

Fake Emad said...

LOL!

Anonymous said...

Walter Cronkite is a senile old fart. He is considered a good newsman because he had no competition.

Say what you want about O'Reilly, but at least he goes after people who need to be taken down a notch. He yells at people who don't answer his questions. I don't agree with him all the time, but, in general, he is trying to make a difference...

John Proffitt said...

Grover said: "Would anyone even want the latest episode of Battlestar Galactica if they hadn't watched it on TV first to decide they liked it?"

Yes. In fact, I had never seen BG before I bought an episode on iTunes on a whim for $2. I was immediately hooked and then bought the entire series. I've bought every single episode from iTunes and then I actually re-bought everything on DVD (better quality, easier media format, permanent copy).

I have NEVER watched BG from the SciFi Channel or via any other traditional TV distribution mechanism. And I'm happier this way -- no commercials, no interruptions, no network "bug" on the screen, and so on. Far better experience.

That said, the traditional TV model is a bargain in that you get a lot of content if you're willing to pay the cable gateway fees. But how much of that content will you actually watch and -- here's the kicker -- actually like? Even with a TiVo in place, how much of the broadcast media world would you actually want to spend your time watching?

Random-access and multi-access video programming is the wave of the future. Whether Apple will be at that banquet table remains to be seen. Hopefully NBC will be locked out of that deal.

mark stultz said...

Nicely put.

Mister Snitch! said...

Brilliant, Fake Steve. Just brilliant.

Anonymous said...

NBC isn't that bad. GE is a pretty geriatric, but what's it say that it's still more diverse than your board.

Anonymous said...

Users have always wanted control over content: Betamax, VHS, DVRs, Slingbox, etc., with iTMS being the most recent example. Hell, twenty-five years before "Rip, Mix, Burn" I watched my dad record from vinyl to reel-to-reel to, (...wait for it...) 8-track so that he could enjoy Rick James in his car in what passed for mobile high-fidelity then.

If the nets don't figure out the new model, their distribution scheme will become as outdated and pointless as video laserdisc players. Why should content creators be enslaved and ripped off along with end users? The market, blessed by technology, will find a way...

Michael Davies said...

In fact, I haven't seen any evidence that people are watching less TV.


Here ya go - "[UK] Sixteen to 24 year olds are spurning television, radio and newspapers in favour of online services"

Anonymous said...

God-daym FSJ.
Good to have your biting incisive tongue back. It was quiet over here for a wee while.

Lally said...

RE: Apple starting a network.

Apple stuff only works when it doesn't require much apple. Lots of front-end design work with revisions every 6-10 months. A continuous operation like a TV station isn't going to work.

If apple wants their own content or network, they've gotta go the youtube route. Let people sell their stuff on iTunes directly.

Merciel said...

Sorry, Apple, but as a fan of NBC's must see TV (That America's Got Talent show is so unique and creative!), I cannot be friends with you anymore. I will be selling my Mac Pro for a Dell Inspiron loaded with Vista. It isn't perfect, but it will be with SP1. It was Bill's plan all along to make anti-Microtards think Vista would be the OS to revolutionize the computing industry when the rest of the world knew that Vista SP1 was where he had his WMDs hidden.

Anonymous said...

i fail to see how Apple as the middle man is any better than NBC as the middle man.

FedUp said...

There is one element missing from your analysis - advertisers. Where do they fit into the new model? I would hope not at all (first against the wall in the digital revolution?). Anyway, that's another interest group with plenty of financial clout and a stranglehold on opinion.

Yet another steve said...

You guys are buying the lead.

NBC is demanding that the FCC require ISPs to "filter" content to prevent piracy. That may sound reasonable but when you drill down their talking about government mandated censorship of the net.

One tidbit:
NBC "claims that consumers are not entitled to use “applications that allow” infringement. Okay, not let's make a list of applications that allow infringement: word processors, email... well what doesn't?

Now I'm a software developer, I believe in copyright, I pay for my music. But I believe in free speech more.

Steve, you needed a content provider you could bitchslap HARD and you chose well. Now start the leak machine and call in a few favors and let's get the:

"NBCU WANTS A CHINESE STYLE INTERNET"

headlines rolling. When you think about it, it's not even much of an exaggeration. And a hell of a lot less than what those censortards say about what's on our iPods.

related link:http://www.publicknowledge.org/pdf/pk-etal-fcc-07-52-20070716.pdf

And FS, there's gotta be a lot of fun fodder for you here too. =)

Eric Eggertson said...

Apple isn't going to be able to have a piece of every pie, but if they keep playing their cards right, they'll have enough of the online distribution business to be a true network to anyone with Internet access and a device that can display video.

Joe@Singapore said...

All these OWD just don't get it.

Most of us don't mind spending $1.99 or maybe a liitttle bit more for a 1-hour episode.

But if they go out with something like $4.99. My Transmission, Acquisition and Limewire apps start to get some play, if you know what I mean.

It's just a fact. You can probably draw a nice exponential curve of p2p downloads vs. legal price. Use analytics.. yield the revenue. This is the 21st century.

Merciel said...

The difference is that NBC is ran by old farts who don't connect at all with today's generation while Steve Jobs is young, hip, and stylish.

Eh... Not so much said...

I have been wondering the same thing: whether a show could just go directly to The People, ask them to pledge X amount of money, and make their show with that. I'm not sure it would work though.

Anonymous said...

apparently some people haven't discovered why battlestar galactica is over after this season. thanks nbc.

Anonymous said...

FSJ, Fight That Fight!

Anonymous said...

I would love this: a television network that played music videos. They would have VJ's with names like Martha Stewart and they'd show me all the great new bands that I've never heard of. Sound plausible?

Anonymous said...

Yes yes yes!! So begins the mass exodus from the middle men, the distributors, or really I should say the glorified administrators!
Take the power back NOW - content is king!!! Digital - the great leveller... yes I'm a deserter from 'traditional' (had it) media beginning my own mini revolution... right here right now... oh in fact whenever and wherever I fancy... oh the joys of digital!!!

Toki-chan said...

Your rants could never be boring.

I think all the guys are from the same cookie mold though....
Good response man.

diogenes said...

Good rant Steve.

But as usual: you are wrong.

Take my word for it. I own one of those 'evil distribution conglomerates'.

The best content creators may move away from TV - and some of them have. But there will always be room for middle men AND low quality content.

Sure the boys in the board room are getting old - but as everyone knows - quality and popularity are two very different things. 'Indie' content may be quite good - but the vast majority of people don't care about quality.

Sure, the quality of our content is horrible. But people don't care about quality - they want to be entertained.

Take 'Seinfeld'. It is considered to be a 'great comedy' by most Americant's. But it was a show about nothing. Sure the show was funny - as most are - but it was also completely pointless. 90% of people just don't care about quality - in fact they want mindless programming that is easy to digest.

So Steve, you can distribute all the 'high quality' content you want. You might even sell some of it. But even if you sell 10 million TV shows a day - you will still be just a speck on the wall of the Colosseum.

Anonymous said...

remember that eyephone video?

http://www.youtube.com/watch?v=jwiNu_gb4D8

Anonymous said...

"Say what you want about O'Reilly, but at least he goes after people who need to be taken down a notch. He yells at people who don't answer his questions. I don't agree with him all the time, but, in general, he is trying to make a difference..."

Sorry, we were talking about BILL O'Reilly, you know the asshole on TV that's in love with the sound of his own voice. Not sure who it is you were talking about.

leah said...

This is how i think NBC composed their press release:
http://www.itgumbo.com/mumbogumbo/2007/09/it_is_estimated_that_nbc_think.php

Anonymous said...

So i was thinking about this a little more because I read someone posted something saying that internet distributed tv shows would fail because the lack of advertiser sponsorship. I can definitely see that pitfall, so i decided to do some numbers on a few shows and see what we came up with.

Stargate SG-1 is a fairly popular program that just got cut from Sci-Fi channel. It had an average viewership of 780k-1M viewers per night it was on. At $1.99 per episode and 1M viewers watching thats roughly $1,990,000 per new episode received in revenues. More people will probably download later on and add another 25% to the sales totals, but lets just say for the sake of argument, the show is released and sells 1M units that same day.

Of that $1,990,000 is what we have to split for content producers and Apple. Lets say its roughly a 70-30 split, apple receiving the 30% end (still a large chunk to reuse the same distribution outlet, and adding incentive to content producers to make the switch to Apple as their studio/distributor). Assuming the producers get a 70% split, plus all future profits of the show thats roughly a profit of $1,712,793 per episode, at the low end of only 1M viewers per show. Thats still enough profit per show to continue with that model, however tv budgets would have to be adjusted in order to make the economies work, there is definitely a viable model to release TV shows and content directly to the internet based on a subscription based model. It also will measure direct viewership instead of a sampling of viewership which is a weakness of the Nielson ratings. Theres many times a show has more viewers online than it shows on the rating and those shows would benefit the most by web metrics vs. nielsons.

Personally, I think theres a ripe opportunity to move on this front, only for a limited time though cuz the TV guys are seeing they are exposed and that the normal ad model for tv shows is no longer working on the internet and have been adjusting accordingly, turning their websites into better vehicles for interactive content, almost more like a tv station/web portal thing.

Anyway, wanted to do some rough math on this stuff here. Someone said it wasnt feasible to distribute over the internet. At 1M viewers, it totally is. It would be a good test if Apple start buying the rights to shows that have recently been dropped off and revive them for the web. Like Stargate SG1, Invasion, and some of the other cult following shows with loyal audiences that would pay the $1.99 to see the episode the second its available without any advertising.

Then if advertisers really want their products to be seen, they could pay to make the show free w/commercials so anyone could download it.

Karl said...

My computer is hooked up to my TV. Most of the shows I watch is downloaded. I love the idea of distributing content online and the internet is the main source where I get my entertainment from... for free that is!

Now I don't mind paying for show I like but why should I? There are so many torrent site out there where I can get my movies in less then 5 minutes it easy fast and costless and almost all the shows/movies are in better quality then my cable company can provide.

I watched "The Andromeda Strain" an A&E special commercial free a week before it's release here in Canada, while my work friend waited. Him like must of the older 50+ people I know have no idea how a torrent works! To them downloading show online is too much to learn (yet they willing to drive 30min to a Chinese mall to get pirated DVD's for $5 every week), plus they're not technical enough to run dual monitor so they don't see the point of hooking up their only computer to the TV.


So...the point of my story is...if you want to change the way how people watches TV, then you got to convince people to paid for show that they can get for free. Forget DRM I'm sure there are way people can get around. Please look at the core of the problem that is HOW TO MAKE A DEAL THAT IS SWEETER THEN FREE!

Also make user friendly hardware that is as easy as "flipping a channel"! Ever though about a central entertainment management unit located in the basement!

drogen said...

Hi,this is alora.I sure hope the RSJ thinks this way,the world will be a berra place.
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