ABC Affiliates Grapple With TV-Show Downloads

Carl Bialik writes "By making an episode of 'Lost' available for download last week just half a day after it aired, for a $1.99 charge, 'Apple may have helped open a Pandora's box for the media business,' the Wall Street Journal reports. The president of the association representing ABC's affiliate stations sent a letter to the president of ABC, reading in part, 'It is both disappointing and unsettling that ABC would embark on a new -- and competitive -- network program distribution partnership without the fundamental courtesy of consultation' with its affiliates. While the extent of Apple's TV downloads is limited, the Journal parses the potential impact: 'if downloading episodes over the Internet proves popular, analysts believe Apple will get permission to offer shows with better-fidelity pictures. Any success Apple has won't go unnoticed by other online media powerhouses with expanding video initiatives like Yahoo Inc., Google Inc. and Microsoft Corp., which could all help extend TV downloading to more viewers.'"

Ding Dong . . .

[ndansmith]

. . . broadcast TV is dead. Or is this another Wolf-cry like VHS destroying the theater business or catalogs (or the internet) closing every mall in America?

Advertisement Woes

[digid]

Advertising, in my opinion, is a huge reason behind the controversy. The traditional distribution model allows media outlets to force consumers to have interrupted commercial sessions. With a single point of exit media outlets can statistically figure out how much viewership they have and set appropriate advertising rates. Now that ABC has broken the mold its causes much concern among affiliates on the future of advertising rates and whether they can still drive as much revenue. Of course I'm just speculating.

Most of national advertising rates fluctuate as they are based off of current Nielsen ratings which samples viewing habits year round. However local advertising rates are set for a yearly basis based off the TV audience during a specific period 4 times a year(Sweeps Week). With a smaller audience watching TV through this traditional method local affiliates lose a huge chunk of ad revenue.

Quality

[afaik_ianal]

When I originally read about this, I wondered what the quality would be like. A brief googling suggests that the files are about 150-200MB, which seems like the quality should be better than I was expecting.

Does anyone have any first hand experience with the downloaded episodes? How is the quality on a pc or tv screen?

Mr. Dinosaur meet Mr. Meteor

[voss]

Network affiliates are the roadkill of the information superhighway.
Once broadband reaches 25mbps there is no reason for a separate tv connection.
The tv networks will become what UPN has already a dumping ground for
tv viewers who are Old and poor.

The networks however have a saving grace, they can still outcompete
itunes. People will happily accept commercials in their tv programs
if they get the programs for FREE...history has already proven this.

There is no technical reason people cant simply download their favorite
programs and watch them with commericals for free or commerical free
for an additional fee.

This would actually free up networks ro produce programs audiences wanted
instead of programs affiliates wanted...programs that could be targeted
to niche audiences rather than lowest common denominator.

content quality vs. distribution mechanism

[MMHere]

When will pervasive broadband, peer-to-peer sharing, and availability of downloadable digital media start to improve the quality of the media/content that is available, not just the delivery mechanism via which that content gets to me?

"Lost?" Come on. I don't even watch that stuff on TV let alone waste bits from my broadband connection to download it...

Produce something worth watching and I'll go back to watching TV.

Oh the horror

[multiplexo]

Local TV affiliates, which are incredibly profitable businesses that manage to satisfy their public service obligations by airing local TV news shows that have become so idiotic that they are impossible to parody any more and the occasional PSA telling you "Don't suspect a friend, turn him in." might lose out on part of their revenue stream. "Waaaahhhh, we're big media, consumers owe us a living.". Call 1-976-CRY-BABY (279-2229), it's two bucks a minute, but you can whine about that too.

Here's a wacky idea, rather than just rebroadcasting network crap, why don't local affiliates actually produce quality programming of their own that they could sell on the iTunes video service. Believe it or not they used to do this sort of thing back in the day. Oh wait, that would require them to work, which is much harder than sitting on your ass and making a lot of money by squatting on publicly owned airwaves.

iTorrent?

[3770]

This is slightly more technical, but I've been wondering about if they are going to offer up a torrent style iTunes client. This could be a tremendeous boon for for instance podcasts, and video podcasts in general. Maybe only for free content but still.

Sure, many wouldn't be able to figure out how to open up their firewall, but enough people would, that it would make a tremendous difference for some poor podcaster. It will likely let them cut their provider bill in half. Or they could reach 10 times as many people for the same cost. They could even make sure that all their friends have seeds before they release the podcast, that way they don't even really need a server provider (not of the type where you need to know how many GB per month you are allowed).

This would also be a tremendous benefit for Apple since being on iTunes definitely would be the shiznat for all the podcasters because now it also has a very direct benefit for them.

Also, if they did the torrent thing then they would get some serious Google type respect from geeks. Apple would be credited for making decentralized file sharing mainstream.

I can't even think of a down side. Can someone slap me out of this?

How about the quality?

[Anonymous Coward]

Allow me to be the first one to say (this minute at least): I sure as hell hope for the TV serie industry their downloadable material is at least better than the pirated versions. As a fan of Lost living in a country where Season 2 doesn't air, I have practically three choices:

* I wait an hour after the US airing and download a generic 350 MB HDTV-rip of the show. DVD quality. No ads.
* I wait two hours after the US airing and download the much better 700 MB HR HDTV-rip with surround sound. Better than DVD-quality. No ads.
* I log onto my non-existing iTunes account on an iTunes-network I am not allowed on and for $2 dollars download.. What exacly? Some kind of quicktime version?

Oh well, they will probably never try and do it right, because then they can't say this new distribution system didn't work.

A bigger mess than music...

[nunchux]

The record labels are horrible beasts, but at least we know where we stand with them-- they own a song outright and have ultimate say as to what can be done and what the price should be. Television shows, on the other hand, are based on many complicated deals that extend far into the the future-- and they have to be, because there are a lot of people (and companies) involved in a production who all want their share of potential revenue. It's not all about the first run ad dollars.

"Lost" and "Desperate Housewives" are Touchstone productions, so Disney has a lot more control over their distribution. That's not always or even often the case-- many times a network works with a separate production company, and if it's an older show someone else may have the rights to syndication. Which basically means the contracts for many programs, especially those "in the vault", are going to have to be renegotiated before a network can make them available for download, and some won't be available at all. It also means $2 downloads may not end up being the standard.

I wouldn't be surprised if the guilds got involved, too. Actors, writers, and directors are due royalties from syndication and DVD compilations. Are they going to get a cut of that $2? Their contracts most likely specified terms for residuals from reruns, but what's their cut of an iTunes download? This will be addressed in every contract from today forward, but what about the ones in place now (and the ones from a decade ago?)

On the bright side, what I've noticed on Apple's marketing is that they keep slipping in references to "video podcasts"-- which at the moment barely exist. This could mean iTunes could branch into a new distribution channel for indie programs, like how Netflix is having some success as the sole distributor of certain movies.) It could be both the "bush leagues" for aspiring shows, or the place where shows with a fan base but who can't get the numbers to stay on the air (like Futurama or Freaks and Geeks) could end up.

Re:to quote Dave Letterman: What is WRONG with you

[ipoverscsi]

The problem is ad revenue. Advertisers pay ABC to produce the show and ABC affiliates receive funding during such programming because more eyes are watching it. If popular programmes are being downloaded from the Internet, this may not hurt ABC per se, but this certainly cuts into affiliate revenues.

You have to remember, there are many people making money on the current television distribution system, from the people who make the programs to the guys who carry the video to the broadcast booth, all the way down to the local TV stations that get syndication revenues (which is why old popular TV shows are not already available for download).

As usual, the answer to the question is 'follow the money'.

I can't believe this...

[Koil]

1) Lead
2) Follow
3) Get the hell out of the way

Interesting pricing structures....

[FreakyControl]

I just find it funny that it costs at least 0.99 USD to purchase a three-and-a-half minute song, but only 1.99 USD to download an episode of a TV show, which has cast and crew to pay, filming, sets, etc. Combine this with the fact that the RIAA wants even more money for a single track...pretty amazing.

I suppose compared to purchasing a box set of a show that may cost up to 60 USD, at least TV episode downloading seems to offer some sort of significant price break from purchasing the actual high-quality non-DRM'd media from a store (new or used), and provides the a la carte option. The only question that I have regarding the a la carte option for TV shows is, wouldn't there be a much greater demand to own an entire season of a show than there would be to own an entire CD? After all, on a CD it's not as if Track 11 of an album doesn't make sense if you didn't listen to Track 9 or 10.

Re:this Pandora's box can be closed

[qbwiz]

Oh no, what will Walt Disney do when it is confronted by the monster that is ClearChannel? What can ClearChannel do, lobby Washington with more money than ABC can to make it illegal for ABC to sell shows over the internet?

Re:Choice

[dougllio]

No way - this is a media issue. As long as content producers make content available in other formats - consumers still have a choice. And the difference between VHS/Beta or CD/MD is that it costs almost nothing to produce multiple formats. This could also come back to bite Apple if the movie studios are able to implement their variable pricing plans with non iTMS distributors - what's to stop them from pulling out of iTMS? It's not like they don't have their traditional distribution channels.

Re:Choice

[Spy Hunter]

Really the ones you should be thanking are ABC. They had the balls to finally let somebody try real Internet distribution. Miraculously they didn't form a cartel with the other big networks to make unreasonable demands, they didn't go around "consulting" everybody to see if they thought it was a good idea, they put their biggest hits on the line, they didn't include ads, and they agreed on a quite reasonable price. ABC had all the power here and they did the right thing with it.

As for Apple's part of this deal, I downloaded Lost and my first impression was that iTunes is a terrible video player, at least on Windows. Not merely bad, but terrible. It crashes, it freezes for a second or more every time you click on something (including the seek bar, which makes it practically unusable), its user interface is completely unsuited for video, it glitches when it's not the top window, it seems to choose random brightness/contrast settings for each video (or perhaps that's just bad encoding), when downloading and watching videos at the same time it randomly pauses and skips for periods of 5 seconds or more (invariably at an important moment in the dialogue), I could go on and on. And of course you can't use any other video player because of the DRM (which AFAIK hasn't been cracked yet), unless you have a video iPod (I don't). I downloaded a BitTorrent copy to compare and the quality was *far* better, not to mention that it was in its native widescreen format (showing more of the action), and I could use a video player that didn't suck.

I still plan to buy Lost as it comes out to support legal TV downloads and because I have faith that Apple will soon fix iTunes, but when I want to actually watch those episodes I'm going to use BitTorrent.

Commercial Free

[PorchPuppy]

This crap better be commercial free or I am gonna scream. I don't give a rats ass about the economics of advertising dollars paying for the free broadcasting of television shows. I want my shit commercial free. It is bad enough that my TiVo finger is worn out because of all the fast forwarding I do...

Re:Choice

[mabhatter654]

Apple doesn't have a monololy on anything except iPods. That's the difference. Remember, all that music store "competition" out there is only 2 players... Microsoft and by a long shot Real. All the other stores, napster, musicmatch, dell, walmart, yahoo, etc.. are all part of the Microsoft cabal. If you look at microsoft's intentions for x360, you'd see they're just setting up the "market" so they can gobble it up at will and shut everyone out.

The difference is that Apple has one really big store... kinda like Walmart. How silly would it be if companies would refuse to sell their CDs at brick and mortar Walmart just because they were "bigger". Sure companies may favor Walmart over BestBuy or Barnes and Nobel, but record companies don't wholesale refuse to sell to any other chain like that. Microsoft on the other hand is trying to keep the market "selectively split" so that so the only thing you have to glue your stuff together is Microsoft DRM.. Microsoft is buy far worse because they're using their monopoly on the desktop to force all the publishers to be "sharecropping" paying a toll to Microsoft for everything you download.

I don't get the rabid anti-itunes rants.. there's no middle ground... choose Apple or Microsoft, everybody else is bit players.. remember, HD-DVD is the coupe-de-grace when MS will embed their DRM support in everything consumer!

Re:Choice

[mabhatter654]

The catch to "non-iTMS" stores is that they're pretty much ALL microsoft fronts!! Apple should really consider opening up something to Real... just to throw a bone out there to all the anti-apple people. Apple needs to start the enemy-of-my-enemy type thinking about the whole media thing... Bill Gates has an awsome gnack for getting along with "suits" at these big media companies. Apple needs to push the non-windows front a little harder. then the market will be big enough that one "store" can't dominate the landscape. Like in the brick-and-mortar world, the idea is to get enough different things out there it's stupid for anybody to try to sell their wares at only one store.

Lost is a great show, but...

[Mr2001]

It is character driven with outstanding production values and quality acting.

Now if only they'd put some of that effort into the technical writing.

Remember Sayid's attempt to triangulate the French woman's broadcast from season 1, by placing antennas at various points around the island and turning them on all at once, even though there was only one radio and it wasn't connected to any of them? Or how about when he walked around looking for cellphone-style "bars" on his walkie talkie so he could transmit a distress call? Or when he couldn't transmit because there was a powerful signal on a different frequency? Simply ridiculous.

People have been speculating about the machines in the hatch.. you know, "That computer looks like [system XYZ] but the Execute key only appeared on [system PQRS], so this must be a special lab if it has that kind of custom equipment!" I can't help but laugh, because the writers obviously don't care about making any of the technology realistic.

Re:Choice

[BorgCopyeditor]

they DO want to segregate blogs from their normal search function.

Interesting. However, I searched on their blog and couldn't find a post on that. Got a link?

After doing a little more searching, I did read at least one good reason why blog search might be separated. It's actually done using the RSS (or whatever) feeds of the blogs; to use the usual spiders would mean blog posts take days to get indexed, which would not be so good for the timeliness of the usual blog posts. So, having a separate search makes sense.

What I still wonder, however, is whether they will also index blogs in the normal way.

Re:Choice

[Duncan3]

iTunes made the album obsolete, no more paying for 10 pieces of crap to get one song.

This latest move threatens to make the TV station obsolete, and has cable scared shitless. 100 channels, and all I really care about is CNBC, and about 6 shows. 6 shows will be WAY cheaper then the monthly bill eventually (1.99 per episode can't last long, it's insane).

And we can all pre-order more episodes of a show, so they can MAKE THEM and not more crap.

Re:Thank you Apple!

[Swift2001]

Surprise, surprise, you're in it! Truth is, there's been a lot of positive feedback, some of it over the top and flack-like. But there's a constant thread of people looking to do Apple in. I can't count how many times I've read, "The Cosmos 89 is the iPod killer! This one can get AM radio, and you can listen to the Top 40!" Or, "Steve Jobs is all hat, and no cattle!" Or, like the above, "What's this? Apple didn't invent the computer, the mp3, the theory of general relativity, so what good are they?" It's not the be-all and end-all. It's the major part of the mp3 player market, for some pretty good reasons, and now it can do video too. I'm not sure that we understand what a little machine like this can do, yet. I know that a lot of vidcasters are very interested in this, not just the majors. We could be at the beginning of a new era in visual media, and the iPod and the iTMS is right there at the beginning. It's not that it's the only one, or the first. But it's huge in the culture. You can now buy a video, or convert a video and put it on your iPod, and play it on your TV, or whatever. It's the beginning of the infinite channel universe.

Re:Thank you Apple!

[Lumpy]

Funny part is that I have been doing this for over 1.5 years now. my replay TV I use a linux java app to extract automatically the shows that I need potable, then use linux tools to compress them down to the size my archos gmini 400 likes to have them at. I simply plug in and upload (just like itunes users) and can fit 20gigs of tv shows, movies, etc on the portable player for my enjoyment.

apple is simply making it so you can spend $1.99 instead of a couple of hours scripting to get the shows you want.

Hell, archos made a unit that would record the shows directly 2 years ago.

Re:Paid downloads by the numbers

[joshv]

And that $11.9 million is pure profit? None of it goes to pay for things like oh, say, salaries at local affiliates, broadcast hardware, electric bills, etc? An iTMS TV download costs Apple 200 MB of disk-space and the same amount of bandwidth per download. I think the margin on the download is a teeny bit higher.

Re:Paid downloads by the numbers

[caudron]

That means 6 million people need to purchase each episode in order to match what ABC currently gets from advertisers.

And Desperate Housewives averages 21.3 million viewers per episode. If a market can be created where even 1 out of 3 viewers downloads the episode instead of watching the advertising-laden version, they've made their money. If half the viewers downloaded instead of watching over the air, the business model is changed forever. Better than that. Offer a discount to people willing to commit to a whole season preemptively and you've got a clear budget going into the shooting season. No more begging for more money from execs. No more guesswork about return on investment. Just "we have brought in 4 million per episode this season so we are keeping shooting costs under 3.5 million per episode". Nice and straightforward.

I've been saying this for a very long time. All it will take it to build this purchase/download capability into the next gen tuners (Tivo is already moving in this direction) and even the next gen AV receivers.

Do that. Make it easy for people to find and get what they want. Make a mint.

Somehow I think the people talking about the death of broadcast TV are a bit pre-mature.

The prediction of the death of broadcast TV is both premature and possible erroneous. It neededn't die out. They may still be a market in perpetuity for people willing to watch it over the air with commercials for free, but that is most definately not the way of the future. It'll be about as common as rotary phone service is now. I know some people still have it, but not too many.

Re:Thank you Apple!

[Clod9]

I've noticed that theatrical releases are moving more towards simultaneous distribution in all countries. I'm sure the show producers will still want to use regional price-fixing, as they do now with DVD region coding, but I suspect that, as media conglomerates continue to consolidate around the globe, the delays in distribution will be shortened.
Once they start making real money with online distribution, they'll speed things up in order to take your money that much faster.