Nobody wants to watch the Discovery Channel. 2.9 million people viewed “Naked and Afraid.” But a hundred million paid for it. More than a buck a month. The CEO made $156 million. Now what?
Verizon is following the customer, allowing its FiOS TV subscribers to pick and choose channels. And the content providers are going nuts!
Let me analogize for you.
A CD cost $12. But people only wanted to hear one song. There was no other way to get it than to purchase the album. The labels liked the income and the acts believed the other nine tracks had value, but not to the ultimate customer, who didn’t care and oftentimes didn’t believe in the act at all, moving on to someone else soon thereafter.
What changed the equation?
Piracy is disruptive, sure it’s theft, but it breaks the logjam. You might be bitching you’re making less money on recorded music, but you’re simultaneously complaining about your cable bill.
You can’t have it both ways.
Napster begat the iTunes Store, the great unbundling already happened in the music business, and the acts still haven’t recovered. Turns out most people only want the single, and with everything available they don’t want your music, maybe not at all. Kind of like in cable… The three networks used to have 90% of the audience, but now the four and a half networks get a fifth of the viewers, with the rest spread amongst a zillion outlets. And these outlets get paid by the cable company, via extortion. That’s right, the providers consolidated the channels, such that if you turn off one, we won’t give you the other. As a result, customers are paying for what they don’t want to watch. And they’re sick and tired of it.
Now in music we’re ahead, you can get all the programming in one spot, whereas in TV you’ve got to have a subscription to Netflix, Hulu, HBO, Showtime, cable, internet… They’re inviting you to pirate. However, we’re also moving in the wrong direction in music, with the exclusive. Once Apple/Spotify/Tidal all have different product people will return to piracy, or stop paying all together, as they’re doing with cable, cutting the cord.
HBO is going direct. You no longer need a cable contract, you can subscribe on the internet for $15.
But HBO is a winner, Discovery is not.
Taylor Swift is a winner, you are not.
That’s right, the old model was different. Very few people could record and distribute. Radio was the only way to get traction, and the major labels controlled the slots. And, as stated above, music was sold in a bundle for a high price. So, if you ran this gauntlet, you were a winner, you made money, whether it be the advance on your deal, even if you were a failed artist, or the royalties you got as a songwriter. But now that old system has been decimated, via the internet and piracy, and it turns out most people don’t want most music and you just can’t make what you used to.
Like Discovery. I’d cancel it tomorrow if I could, I haven’t watched it in years.
Nor have I viewed the vaunted ESPN, which costs every cable customer six plus bucks. That’s right, the success of sports is built upon a fiction, that we all care. But we don’t. Go a la carte and sports turn niche. Well, they tumble to a level far below the perch the media puts them upon now. As for the value of live sports… That’s to the advertiser, other than the Super Bowl, which is a national holiday, most people aren’t watching the game either. And if we all stop paying six plus bucks a month…
Everybody makes less money.
The corporations didn’t beat you, the public did!
It turns out people have time for great, they’ll even pay for it. HBO has got over 30 million subscribers, it costs $15 a month. Just like people will pay triple digits to see a superstar in concert. But they won’t pay to see you.
Superstars are making more than ever before. Sure, recorded music is a smaller piece of the pie, but ticket prices have far outpaced inflation and sponsorship offers are legion.
But it’s hard to become a superstar. You have to be great, you have to have promotion, to gain traction and stick you have to be at it for years.
And there are very few shortcuts. Ignore the U2 tour hype. They scaled down from stadiums, their new album was distributed and not heard. The people going are all Gen-X’ers who still believe, there are no new fans, because U2 is irrelevant, because the band doesn’t have hits.
You hate that you need hits.
But that’s what “Game of Thrones” is.
No one wanted to watch “John from Cincinnati.”
And that obscure show you love on Animal Planet… It’s being paid for by those who never watch, who aren’t even aware of it. It’s going to disappear when the great unbundling appears.
Which is happening now. In five years the TV landscape will look totally different. You’ll pay less, but there will be fewer high quality shows available. Then again, maybe TV should be made on the cheap, for YouTube.
You can be on YouTube. You can put your music up there and get paid just like the superstars.
But you won’t make much because most people don’t care, you have a tiny audience not because your promotion sucks, but you do.
Sorry to wake you up.
But what killed you was the customer. Turns out the customer only wants great. And if something is superior, there’s seemingly no limit to what he’ll lay down for it.
Them’s are the rules, that’s the game we’re playing, don’t shoot the messenger, your cheese was not only moved, but completely stolen, you can complain all you want but it ain’t gonna make any difference.
Note: Partially inspired by “How Cable Lost The Remote”
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I would pay to see this guy.
I have been waiting for “unbundling” of cable TV for a long time. I have 130+ channels with DirecTV and watch maybe 30ish. It just wonder if the big guys, DirecTV, DISH, Comcast, will offer a la cart programming? It seems they will have to if they want to survive. As a side note I just subscribed to Netflix. (Daredevil is AWESOME by the way) #about time
Much food for thought here. I remember a sentence in our Tellabs briefing book when I was working there on calblephone. “If bits are just bits…and they are, then since video is in megahertz and audio is in kilohertz, either cable TV should cost tens of thousands of dollars per month per subscriber or cable telephone should cost a small fraction of a dollar.”
I’m to the point where I would pay to NOT have all the stupid channels show up in the searches (done on Comcast’s advanced, user friendly, Underwoodesque User Interface)
I hope the bg media distribution CEOs all die horrible deaths or get invited to spend an evening with Jack Welch pine on about Ted Cruz.
“I’m to the point where I would pay to NOT have all the stupid channels ”
That is exactly where they are headed:
Super Everything on Cable Bundle? $20
Elite List of Popular Channel Picks? $35
Personal only What YOU Watch Bundle? $50
They will monetize your choice, no doubt.
“Now in music we’re ahead, you can get all the programming in one spot, whereas in TV you’ve got to have a subscription to Netflix, Hulu, HBO, Showtime, cable, internet… They’re inviting you to pirate.”
Yes to this, about the only bit of Lefsetz I seen that was worth reading.
I don’t dispute his knowledge, just his ability to communicate it. He dumps a bowl of spaghetti on the table, and it is up to the reader to find the one noodle that carries the coherent line of thought.
Spectator sports will survive nicely, as they have since men discovered rocks on the ground.
Iamthe50percent – Ha! I’ve lived in cell phone circuits long enough to know a text bit is worth 100x what a voice bit is. Some binary sequences are more binary than others.
Eh, I agree with some of this. I do hate cable companies. Mine, at least (Time Warner). My bill for basic cable is $90 a month now. It has gone up quite dramatically in just the past 5 years.
Every now and then the douche CEO sends a letter to us explaining why costs go up. It’s to “improve” service, you see. According to them, I have a lot of channels. But half those channels are HD channels of the channels I already have. I know I’m supposed to get all excited about HD programming, but I just don’t give a shit about it. I’m also paying for religious channels I never watch, sports channels I never watch, and shopping channels I never watch. I’d like it if I wasn’t asked to pay for those (the channels I never watch and the HD channels). I’d be absolutely fine with all those disappearing. In exchange for a reasonable bill (let’s say $50 a month). Of course, that’s not gonna happen. WTF would Time Warner reduce my bill when they don’t have to? It’s not their fault I couldn’t care less about TV shopping, Spanish TV or religion. It’s my fault I’m not watching all of those, nor taking advantage of HGTV and Food Network on HD. They’re giving me “service” I never asked for, much like a stalker who loves someone so, so much and doesn’t understand why the object of their obsession doesn’t appreciate the attention.
I am about ready to cut the cord. The ROI on $90 just isn’t there anymore and I do have OTA TV in another room. So I could see the “network” stuff (NBC, ABC, CBS, PBS) if I wanted.
Agree 100% I thought I was the only guy who didn’t watch sports on TV. I also can’t tell the difference between HD and regular, presbyopia, am an atheist, don’t speak Spanish and would never buy a dog biscuit from the shopping channels.
Ever since cable reneged on its “contract” to provide programming without commercials in exchange for customer dollars, and began accepting advertising dollars, they should have unbundled the channels and stopped charging customers. As it is they are effectively double-dipping.
That is EXACTLY correct! The “bargain” consumers were asked to accept was paying for direct access to commercial-free programming and Cable co’s abided by this agreement for a very long time with some of the big early networks (i.e. MTV, HBO, Showtime). It was a differentiator that mattered, but that agreement was unilaterally broken by a naked money grab by both the content producers and Cable co’s. I suspect most current subscribers aren’t old enough to recall this fact, or have just resigned themselves to Cable co’s ripping them off blind, but this is Exhibit A of breach of contract and the U.S. regulatory bodies sat meekly on the sidelines while citizens have been fleeced by media conglomerations.