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Who needs the networks?

Who needs the networks?

In the wake of the current spat between NBC and Apple over the price and DRM applied to TV content sold on iTunes, many people have been considering the status quo of TV distribution and pricing. Fake Steve, through his usual hyperbole probably comes closest to the truth by asking, essentially, why we need the networks at all. Don’t they exist simply to agrigate content produced by production companies in order to pipe it over the airwaves to consumers? Why should we need them at all when the content producers could sell directly through iTunes or any other internet distributer? What are they there for other than to take a cut of the profits?

Leaving aside the fact that—for now—vastly more people watch plain old, live, non-time-shifted network TV than any kind of content on the internet, you could come up with a few reasons for networks to keep on existing:

1. Don’t we need someone to decide what should go on the air?

No. There is no air. There are no time-slots. Those are constructs of Fake Steve’s “historical anomaly built on scarcity of a valuable resource.” If there are enough people out there willing to pay to see a show that producers want to make, it should be made. Anything else is insane. It’s throwing away an opportunity to take money that people want to give you. We don’t have to fit everything into the available prime time slots when people are watching the show whenever they want. There’s no reason for a less profitable show to yield to a more profitable show when you can have both.

2. But don’t we still need taste-makers?

Sure… But there’s plenty of people out there who want that job and they generally don’t ask for a large cut of the proceeds of a show to do it. They’re called reviewers.

3. But without networks, how will the production companies get the money to produce the first show? How will shows have enough time to attract an audience and build up profitability if they can’t mooch off of already established shows?

Ding! Here we have the problem. This is the one thing that the networks are good for. Production companies may spring for enough to make a pilot, but they don’t make the 10 or so episodes needed to see whether a show will be profitable until a network buys them. The network takes a risk airing several episodes of a show that might be a success or a flop because the shows that are profitable will pay enough to support the failed attempts.

So what’s the solution? Are we tied to the networks? Of course not. We just need a funding model. The best idea, as far as I see it, would work something like this:

The production companies themselves, the distributers, or some kind of new “pseudo-network” middle man will pay to make the first 10 episodes of a few promising shows (obviously, like any new venture, some venture capital or startup fund of some kind will be needed at first). These will be freely downloadable to anyone in order to attract an audience (perhaps some very limited advertising will help alleviate distribution costs).

After the first 10 shows have “aired”, there will be a break and a sort of auction will be held. The company calculates, based on the cost to produce each episode, the number of people downloading the free pilot episodes, and the number of shows they think will succeed, how much to charge for the remainder of the season of each show. Those shows that can get enough people to order them will get made, and the people who ordered those shows will get charged. If a show can’t raise enough money to pay its way, it doesn’t get made (though perhaps there could be a second call with a raised price to see if the enough of the people who ordered it would be willing to pay a little more to see it continue). The company would have to charge enough to cover both the upcoming episodes and the first 10 episodes as well as the first 10 of those shows that don’t get continued.

People could continue to buy in at any time in the future if they hear about a good show, and this money would be pure profit above and beyond what is needed to produce the show. The company might, however, want to think about releasing past seasons for a reduced cost or for free in order to encourage latecomers to pick up the current season.

At first this might seem a little over complicated, but I don’t think it would be in practice, if handled through a skillful site like iTunes. All you’d be doing would be watching free content and then choosing to buy it, not really any different from hearing songs you like on the radio and then going to a record store or iTunes to buy the album. The only difference would be that if you like something sufficiently unpopular, you might not get it, but you won’t be charged for it either. For people sufficiently TV addicted or sufficiently put off by the a la carte method, they could have the option of subscribing to the whole set of shows made by a given company, or else to pre set thematic or “choose any 5” type packages which would give less flexibility but more predictability in pricing.

The best thing about this is that it would be great for cult shows: All those shows that manage to gather a couple of million rabidly loyal viewers only to be told that somehow that isn’t enough would have a chance. Are those viewers willing to pay the cost to get the show produced? Then it gets made. No more tyranny of the mediocre middle.

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