In 1990, I was introduced to Jan Stenbeck, the third wealthiest man in Scandinavia. He was a self-made media billionaire, a Swedish Ted Turner – brilliant, mercurial, iconoclastic.
I had spent two years travelling around the world with my small video camera, selling pieces to Nightline or MacNeil/Lehrer. Stenbeck immediately understood the economic implications of the VJ model. He capitalized a company for me, gave me 30% equity and moved me to Stockholm to start building VJ-driven stations. (As you can see from the comment in the article below from Norway, the model works quite well there).
But this is not about VJ… for a change. It’s about how one person leveraged off a technological shift and made (another) billion dollars. Why does it matter? Because, I think, what Stenbeck did with television in Scandinavia in the ’90s, someone will do with video online in the (what do we call them, the ’00s?)
For the past 50 years, the broadcasting world has lived off a very clear model: networks like ABC, or local TV stations had a monopoly on the means of delivery. They held the license rights to a chunk of the spectrum that was used for broadcasting. They had the only way of getting into people’s homes. They then turned around and leased small 30-second chunks of that access to advertisers, like Nike, who paid a premium for the real estates, so they could deliver their message to the same homes. The broadcasters, then took the money the advertisers paid for that access and bought programming that delivered the audience the advertisers were looking for. It was a nice, neat circle.
When cable arose in the 1990s, it simply meant that the limited pie got cut into smaller pieces – 500 channels instead of 3. But the model remained the same. And the advertisers just bought more bits of more channels.
When the Internet goes to video, however, it means that 3 networks which became 500 channels will soon become millions of channels – an infinite number of channels. This is a problem. But there is an even more serious problem, because as video goes to the web, content becomes non linear and on demand. So there is no guarantee than anyone will even watch commercials distributed over a million channels. Its a mess.
And this is where Stenbeck comes in.
In the ’90s in Scandinavia, before Stenbeck, there was only a State Broadcaster, SVT, and no commercial TV. There was no tradition of commercial TV. And to get TV into people’s homes in Sweden, people would have to buy and install satellite dishes on their homes! And pay for it! A lot of people thought this was more trouble than it was worth. They would stick with the free SVT they always knew.
But Stenbeck was smart. Ruthless, but smart.
He bought the rights for Ice Hockey for Sweden.
In Sweden, this is the equivalent of buying the Superbowl, the World Series and the PGA all rolled into one. Then, with the rights secured, Stenbeck essentially told the people of Sweden – ‘if you want to watch ice hockey, buy a dish and put it on your roof and watch my TV3. Otherwise, don’t watch ice hockey.”
Sweden was outraged.
Then, they bought the dishes.
What does this have to do with the Internet?
Instead of Nike buying swaths of commercial time from ABC so that ABC can take the money from Nike and buy the rights to the World Series, Nike will one day just turn around and buy the World Series themselves. Now, if you want to watch the World Series, the only place you can do it is at Nike.com.
And while you’re watching the World Series on the Nike.com website, the online video will be surrounded by click and buy spots. All the time. But no commercial breaks! Sounds like a deal, no?
Think it won’t happen? Don’t bet on it.
ABC needs Nike. Nike will soon discover it has no need for ABC… whatsoever.