The lifeblood of television is money.
Specifically, advertising money.
Take away the advertising money, and everything else ….. the conversations about quality, crew, anchor, content, all become pointless.
So, as Deep Throat once said – let’s follow the money.
Since their inception, networks (and local TV stations and cable for that matter) have been able to charge advertisers for time on their platforms because they could take the advertiser’s message into people’s homes and put it in front of any given or projected number of eyeballs.
When television was broadcast over the air, the pure physics of transmission and the limits of jamming so much analog information into the electromagnetic spectrum meant that there was a physical limitation to the number of networks (or local stations) that could exist. Those fortunate enough to get licenses from the FCC (for free, no less), became fabulously wealthy – the Paleys, the Sarnoffs…. What would any advertiser pay to get their message into 30 million homes? (what would they not pay?) Networks were machines to print money – an effective technological monopoly (or triopoly, more properly). But there was plenty to go around.
When cable reared its technological head in the 1980s, like expansion baseball teams, it spread the wealth. Old habits die hard, so the nets moved to cable (anyone out there got any rabbit ears?), and grudgingly gave up some of their households to new billionaires like Turner or Hendricks (Discovery) or as of last week Laybourne (Oxygen) – or moved into the territory themselves (MSNBC, A&E). There was still plenty to go round. The triopoly became something of a centopoly. But, (and this is important), the feeding model – that is, advertisers paying for a 30-second slice of air time, remained the same.
Now, (still with me?) – all of this takes us to the World Series.
(I knew that the photo above would take Mr. Safran, from Boston, down this far).
Here is the money model – Fox pays a lot for the rights to the World Series, but rates high and charges advertisers a lot for 30-second slots of airtime.
The World Series rates high because it is a content specific monopoly – you can’t see it anywhere else. So ad rates go for close to $500k per spot.
How does video on the web impact on this?
Online video removes the technological monopoly – or centopoly. Now anyone can stream tv into 3 billion homes – for free.
I just joined Mogulus, which allows me, and anyone in the world, to create their own tv network online.
Now, Nike, which is not so dumb, wakes up one day and says, “why should we pay all this money to Fox to carry our commercials. No one is watching ‘Fox’, what they are watching is The World Series. “Why don’t we buy the rights to The World Series and broadcast it ourselves? Who needs Fox?
This does make sense.
So Nike buys the rights to the 2008 World Series, and now, if you want to see it, the only place you can see it… is on Nike.com.
(Which, by the way, is now festooned with click and buy for Nike products).
Not to Fox…. but definitely to Nike.
If you want to understand who will win the game – first find out who owns the stick and ball.