Category Archives: TV Business

Is Aereo Legal? Should It Be?

(Disclaimer: I am not a lawyer, and I could very easily be talking out of my ass here. Take everything you read here with a grain of salt.)

The Supreme Court is set to decide, at least in part, the fate of Aereo; plaintiffs’ amicus briefs were due Monday, Aereo will present its opening argument by March 26 with amicus briefs in their favor due by April 2, and oral arguments will begin on my birthday, April 22. For those not familiar with it, Aereo is the service that has set up tons of tiny antennas and rents each one out to each of its customers. Customers can view free, over-the-air TV from their personal antenna over the Internet on whatever Internet-connected device they wish, and record said over-the-air TV on Aereo’s cloud DVR. Aereo claims that it is merely helping people access the free, over-the-air TV they’re entitled to, but if you think the foregoing description sounds like an unnecessary technological kludge, you’d be right. Broadcasters have been suing Aereo in any court they can, convinced that Aereo is getting away with not having to pay retransmission-consent fees cable operators are subject to, and fearful that cable operators might decide to do the same thing to get away from retransmission consent fees themselves.

That this is the issue is important, because the issue being presented to the Supreme Court is the notion that Aereo is engaging in a “public performance” in violation of copyright law. And as kludgey as the foregoing description is, it would be ridiculous to argue that it is based on it; Aereo isn’t engaging in any sort of “public performance” beyond what broadcasters are already doing with their free over-the-air signals, and any notion that what people do with their personal DVR service constitutes any sort of “public performance” is ludicrous, not to mention contradictory to past court decisions. In fact, it’s been argued that a decision against Aereo on this count could set a dangerous precedent that could preclude other technologies such as Slingbox.

Let’s be clear here. Aereo is clearly trying to take advantage of a loophole in the retransmission consent (not copyright) rules, and if it keeps winning in the courts Congress is going to have to step in, if only because it could render the retransmission consent regime unenforceable. Given that Congress is likely to close the loophole on which Aereo rests anyway, the Supreme Court doesn’t need to step in in order to kill Aereo. As such, it should avoid a decision that results in any sort of unintended consequences just to kill Aereo. The Supreme Court could rule on whether or not the loophole Aereo claims to have found exists, but it’s not its place to legislate it out of existence.

Broadcasters have argued that an earlier court decision in favor of Cablevision’s cloud DVR service doesn’t apply here, because Cablevision paid for the copyrighted content. But what about someone with an over-the-air antenna hooked up to a Slingbox? What has that person done to “pay for the copyrighted content”? Nothing, at least not to the broadcasters. Yet it’s obvious that such a situation is fully legal and within the intent of the law: Congress has mandated that television signals broadcast over-the-air be available free for anyone with an antenna to pick up, and the Betamax decision established the legality of recording content for personal use.

To close the loophole on which Aereo rests, Congress would need to figure out what differentiates the above situation from what Aereo is doing. One way it could do so is by noting that Aereo is charging for access to free over-the-air TV. In other words, Aereo is making money off of broadcasters’ free over-the-air signals, and so is bound to kick some money back to them. If Aereo were really interested in just helping people access the free over-the-air TV they’re entitled to from their own personal antenna, they wouldn’t be charging rent for access to that antenna (which implies that Aereo, not the consumer, actually “owns” that antenna). But that has nothing to do with copyright, and if that’s not what retransmission-consent law says already, that’s not the place for the Supreme Court (or any court) to decide that it does.

What does the Comcast-Time Warner Cable merger mean for you?

It certainly doesn’t sound good when the two largest cable operators, substantially bigger than any of their non-satellite rivals (a year ago TWC had 12.2 million subscribers; even counting telco companies Verizon had only 4.7 million), announce they’re going to merge. As part of the deal, Comcast announced it would sell off systems representing 3 million subscribers to other parties, getting to 30 million and under a former 30% cap that had been thrown out by the courts. Were it not for that, the combined Comcast-Time Warner monolith would have had control over fully a third of the market, over seven times that of the next largest cable company, and nearly as big as DirecTV and Dish Network combined. But what would that actually mean?

Cable operators are natural monopolies; with the exception of a few “overbuilders” (none of which have more than a million subscribers), in most places you only have the choice of one cable operator if you don’t want to get a dish or Verizon or AT&T aren’t available. There’s basically nowhere where Comcast and Time Warner Cable were in direct competition with one another. The fear of a Comcast-TWC merger, it seems, is that such a behemoth could basically set up shop wherever it wanted and keep other cable operators from growing, but even then it’s hard to see how realistic that is. (Or maybe that Comcast could afford to rest on its laurels in terms of service, making it even more Comcrap.) Comcast’s purchase of NBCUniversal had the potential to be far more detrimental to the consumer in this light.

The image that comes to mind when it comes to horizontal integration on this scale is the former AT&T telephone monopoly, but even that was not broken up so much because of its overall reach but because of its vertical integration with AT&T’s business selling telephones and using its control of the phone network to undercut rival phone sellers. Perhaps the analogous fear is that Comcast will use its broad reach to show preferential treatment to NBCUniversal networks, crippling rival programmers by denying them access to 30% of the country or subjecting them to onerous conditions to get there, but it’s not clear that’s actually possible, certainly not as cable providers increasingly become Internet providers first and foremost – especially given the conditions Comcast agreed to as part of the NBCU deal, including abiding by net neutrality even after the courts threw the FCC rules out last month. If anything a larger Comcast (which, if it continues negotiating for Bright House Networks as TWC had, will be negotiating on behalf of 32 million subscribers) might actually lead to positive outcomes for consumers in the long term, standing up to increasing rights fees asked for by other programmers, especially ESPN – though of course Comcast’s own stake in content production might still give them an edge that results in worse outcomes for rival content providers and consumers. (Time will tell if the new Comcast’s approach to sports networks will be more like that of Comcast – which has largely avoided rocking the boat with anyone en route to a portfolio it proclaims as “your home for the most live sports”, legal wrangling with Tennis Channel excepted – or Time Warner Cable, with its high-profile showdowns with the likes of NFL Network, MSG, Viacom, and broadcast networks like CBS and Fox.)

Of course, where those fears might be well founded is in how much leeway Comcast has had even under net neutrality rules, including engaging in its own carriage disputes with bandwidth providers, throttling traffic on video sites, and imposing broadband data caps. A monolithic Comcast/TWC union could still conceivably, without restrictions imposed by Congress or the FCC or agreed to voluntarily by Comcast, create winners and losers in the Internet marketplace, to the point of being able to throttle cord-cutting for a substantial number of Americans. That underscores the importance of allowing as much video as possible to be transmitted over the air where it can lie outside of Comcast’s reach.

An Open Letter to FCC Chairman Tom Wheeler

To: Federal Communications Commission Chair Tom Wheeler
CC: Other FCC commissioners, the United States Senate Commerce Subcommittee on Communications, Technology, and the Internet, the House Energy Subcommittee on Communications and Technology (and any other interested members of the House of Representatives), the National Association of Broadcasters, and all concerned citizens reading on MorganWick.com Read More »

The Problem With Internet Companies Getting Major Sports Rights

I have a much longer series of posts planned on the broader issues surrounding the current era of sports on television, but I wanted to make this particular point because I think it’s particularly important.

The NFL is reportedly still considering an expansion and splitting of its Thursday night package to sell to another partner, and is reportedly interested in potentially selling games to a tech company like Google or Netflix. This comes as the NBA, still in the process of negotiating its next TV package, has been speculated to potentially also sell games to a tech company. And that comes amidst years of speculation that tech companies like Google, Apple, Microsoft, Facebook, or Netflix, could be the best candidates to challenge ESPN and completely upend the sports TV wars.

But I’m still unconvinced that Internet companies are really the threat they’re made out to be. In my opinion, the speculation surrounding them is mostly superficial and based on only a few factors, without seriously considering the circumstances and what their entry into the market would actually mean, and I don’t believe they’re a realistic candidate to score sports rights, or that if they are that it would turn out to be a good idea, or that if it does that they would really be as revolutionary as they’re cracked up to be.

For one thing, I’m having a hard time seeing exactly how tech companies would distribute games and make money off them. I can’t imagine Google would simply slap games on YouTube, as that would mean they would need to collect money through advertising alone, when the great advantage of sports networks like ESPN is their dual revenue stream of advertising and subscriber fees. That means tech companies would need to restrict access to the games in some way, and most of the options don’t sound very promising. Would Apple restrict games to users of iOS devices and Apple TV, or Google restrict them to users of Android devices and Google TV? That seems like it would have the potential for disaster as people would be shut out for choosing the wrong product, especially if we’re talking about being the equivalent of a national television partner as opposed to getting a piece of the out-of-market package. A company like Netflix could distribute games to its subscribers, but that would be the equivalent of a premium channel at best. The best-case scenario probably involves Facebook or Google effectively blackmailing people into signing up for their services in order to view the games, but even then I’m not seeing how that would help them raise enough money to be competitive with sports networks.

And none of these approaches would avoid the other issues, certainly not the issue of being a middleman. The nature of TV is such that sports benefit from distributing their games through middlemen, which is why none of the sports leagues that own their own networks have abandoned their relationships with other partners; from its humble beginnings as the Outdoor Life Network, the entity now known as the NBC Sports Network has acquired more and more properties to obtain more distribution than any sport-specific network other than Golf Channel and, until this past August, Speed – and those two had a multiple-year head start on gaining distribution before the full effect of the sports TV wars set in. In theory at least, fans of any of its properties can drop in on coverage of any other property, thus broadening the exposure to that property. But the open nature of the Internet already provides exposure to anyone who wants to drop in, so I’m not sure what sports leagues would gain from selling games to Google when they could cut out the middleman and distribute games themselves. In this sense, Major League Baseball has already entered this territory; its MLB.tv service regularly offers one game for free each day to non-customers.

But none of that begins to approach the most fundamental issue, the basic distinction between the Internet and television, which I laid out before: the Internet is good at distributing many programs to a few people, but television is good at distributing a few programs to many people. The Internet effectively consists of one “channel” for each of its customers, meaning you have a channel that you can program yourself, allowing you to watch whatever you want whenever you want. But if many people want to watch the same thing all at once, i.e., some sort of live event (i.e., a live sporting event), they all have to watch it on their own individual “channels” – the server has to serve the event to each individual computer that asks for it. We saw the result with the massive issues NBC had with streaming of events at the London 2012 Olympics, and those didn’t reach more than a million or so people at a time. Things haven’t improved that much since then:

Perhaps the issues surrounding large-scale Internet streaming can be fixed with bigger pipes and more investment in servers and the like, but this structural issue will remain: why distribute the same event many times to each individual customer if you could find a way to distribute the event once and allow anyone, at least with the proper credentials, to hop on the stream with no additional strain on your end? On this front, it’s instructive to see how the mobile world, which (at least at the moment) already lives in the world where all television is over the Internet, is dealing with this issue, and it’s clear that they at least recognize it: AT&T has begun work on a network that will precisely allow them to push video out to many different devices at once. One thing strikes me about this project: it is a completely separate service that requires use of completely separate spectrum from AT&T’s normal 3G/4G network (indeed, spectrum that had most recently been used for a similar service). In other words, once you begin broadcasting the same signal for any device to hop on to, it is no longer the Internet, at least not as we know it. In this particular case, it becomes something fundamentally not that different from over-the-air broadcast television – indeed the spectrum in question may well have once been TV spectrum.

Once the distinction between and relative strengths of TV and the Internet are recognized, it’s clear that at least on a large scale, showing a single live event for everyone to view at once is something the Internet simply is not suited for. The great advantages of the Internet for viewing video are the ability to view it anywhere you want and to watch whatever you want whenever you want, but only the former applies to live events like sports, and even that goes away if the technology is developed to deliver content to many devices at once. Broadcast television is already halfway there, but is currently only reaching mobile devices through optional kludges attached to the existing broadcast standard, rather than having one standard suited to reaching all devices whether stationary or on the go. If the television industry recognizes its place in a future where Internet distribution of video reaches maturity – a place where its purpose becomes refocused specifically on the broadcasting of live events – adopts a standard that maximizes its investment in its existing infrastructure and reorganizes its business accordingly, it can survive and effectively compete in that future for years to come, even if that future is substantially different from what exists now.

Breaking Bad and the future of scripted linear television

Of the many cable series that have attracted tremendous critical acclaim and popularity in recent years, there is one in particular that seems to be reaching its zenith in popular culture in its final year, one that has certainly received its share of critical acclaim but isn’t even the biggest critical darling (or, arguably, most popular show) on its own network. That show is Breaking Bad.

Grantland’s Bill Simmons describes how Breaking Bad airing its last few episodes head-to-head with Sunday Night Football over the next few weeks is forcing him to make the sort of decision that seemed to have been left behind in the pre-DVR era:

Back then, most people couldn’t record two shows at the same time, and you didn’t have to worry about an unexpected moment being spoiled on Twitter…So you simply recorded The Wire and watched the game live. And that became the habit on Sunday nights, at least for me — record the good Sunday-night show (Mad Men, Game of Thrones, Dexter, whatever), avoid it until the football game finished, then throw that episode down like television dessert…[But] this final season of Breaking Bad changed the rules…It’s the greatest final season of any television show. At least so far. Two different times this season (including last week), the show ended in such an electric way that I didn’t even know what to do with myself. After last Sunday’s episode, I somehow ended up in my backyard — I don’t even know how I got there. And there are three episodes left!…For the first time, I find myself choosing an already-filmed, can-watch-it-whenever-I-want television show over live football.

At a time when DVRs and online streaming threaten to make the traditional linear broadcast schedule obsolete for scripted shows, is Breaking Bad a glimpse into the future, a preview for how a scripted show on a linear television network can be so compelling as to pull a sports fan away from the almighty NFL? Outlining how Breaking Bad got to this point, Slate’s Willa Paskin describes an aggressively modern, yet potentially soon to be normal, rise to prominence, and identifies in Breaking Bad the qualities that can allow a scripted show to survive on linear television:

The ratings success of Breaking Bad shows that excellent programming can grow an audience, a big audience, if treated with proper patience…Breaking Bad is also, perhaps, proof of what a really propulsive plot can get you. Mad Men was media-friendly and stylistically aspirational from the very start, but it does not have the same What happens next?! vibe as Breaking Bad, and its slower-growing audience reflects that. Don Draper looks great and deep, but there is still nothing like a cliffhanger to make sure an audience checks in at the appointed time.

Once you’ve had a shot of a show like Breaking Bad, in other words, it’s like crack (or, perhaps more appropriately, meth): it keeps you coming back every week to find out how the story unfolds next. Social media reinforces this process and forces someone like Simmons to tune in at the appointed time, not a second later, lest spoilers litter the feed. HBO understands this well, which is why so many of its most popular and talked-about shows, like Game of Thrones and True Blood, are heavily serialized.

But while such shows can ensure that no one who starts watching will dare to stop, it can also make it difficult for any potential new viewers to join in, lost in the thicket of continuity built up over the seasons. This helps explain why broadcast networks have typically been reticent to air serialized shows in primetime. Instrumental in the slow growth in Breaking Bad‘s audience and AMC’s willingness to wait for that audience to build, Paskin notes, was the ability to catch up on past episodes on Netflix; even if the show premiered with middling numbers, any new viewer could watch all the previous episodes and be as up to speed as someone there from the beginning. (Webcomic aficianados may recognize this as the archive binge.)

If and when the day ever comes that a scripted show can just as easily be released over the Internet as over a traditional linear television channel – and that day may be fast approaching, given Netflix’s own investment in original series – there will need to be a good reason for it to be tied down to a slot on a linear television channel, a reason that can compel millions of people to tune in at one particular time, as opposed to watching at their leisure. Ironically, the best bet for compelling such behavior is another aggressively modern technology, social media, and the desire to engage with the discussion about the show on social media or simply avoid the spoilers that discussion inevitably contains.

In other words, the most important property that the TV show of the future can have is the modern equivalent of “water cooler value”, and that value is amplified when people are so engaged with the content they have to see “what happens next” as it happens. As I explained four years ago, the latter is best served with serialized installments doled out slowly on a regular basis to build anticipation for what comes next, which Paskin suggests belies Netflix’s own strategy of releasing entire seasons of its own original series at once. If it becomes harder for a scripted series to justify its place on a linear television schedule, then such serialized shows are investments requiring much more patience than broadcast networks have shown in recent years, and the ability to easily catch up on past episodes is instrumental to allow the audience for such a show to grow fairly quickly over the seasons. Regardless of whatever else you may think about the CBS-Time Warner Cable dispute that ended earlier this month, this is why Les Moonves’ desire to secure CBS’ right to sign digital distribution deals with platforms beyond cable operators was so relevant.

I personally think most of what currently passes for a scripted show on linear television will move to the Internet within a decade. What’s left, though, will need to provide a good reason for people to come back at the exact same time every week – and in doing so, they may want to take a few pages from webcomics’ playbook.

In Defense of Broadcast Television

Technology has radically changed how we consume video, and how we will consume it in the future. Though much of the current landscape still reflects the cable television paradigm that became mainstream in the 80s and 90s, we are fast approaching a critical point that will establish the new paradigm going forward, as on-demand streaming of TV shows becomes more and more popular. The Internet has blown the “thousand channels” once promised by cable out of the water with a seemingly limitless selection of video, all waiting for you whenever you want. Soon, your television and cable box could be replaced by a computer that can pull up shows from the Internet, rendering any older concept of the “television” obsolete.

Yet another aspect of technology may in some ways shake up the landscape even more, if only in how it shakes up our definition of a computer itself. This is the rise of mobile devices such as smartphones and tablets, devices that connect to the same Internet as more conventional computers even if they do so in ways that present themselves differently to the end user. There may not be any distinction between TV and Internet in the future, but these devices are counting on it, because they have no way to connect to cable TV other than by using the Internet as an intermediary. And if the Internet itself changes when we consume content, mobile devices change where we consume content. Ironically, this shift could make the question of “when” less relevant by making sure you’re never unable to catch your shows when they’re on (unless perhaps you’re behind the wheel of a car). Perhaps partly because of this, for the moment the consumption of content on mobile devices reflects the current cable television paradigm even more than the general landscape, with cable companies embracing the future they call “TV Everywhere” where any channel you can watch at home you can watch on your smartphone, tablet, or computer – if you “authenticate” with your cable provider.

The notion that in the future, there will be people that get all their video off the Internet in some way should give one pause, raising the question of what the implications are on a more basic level. What sort of infrastructure are we building for the consumption of video, and is it the right tool for all the jobs we might end up asking it to do?

Consider what happens when you watch a video over the Internet. Your computer (or phone, or tablet) sends a message that it’d like to watch a certain video, which the ISP (or wireless carrier) relays to the server on the other end. The server sends the video back through the network to the ISP, which delivers it to your computer. If someone else wants to watch the same video at the same time, specifically a streaming video showing something happening live, even if they’re on the same ISP or wireless carrier, they go through the entire process over again: their computer indicates that they’d like to watch a video, and the server on the other end sends it back to them. Not only the server on the other end, but even the ISP in the middle, has to deliver the stream to each of you individually; you can’t piggyback off the other guy. In effect, if a million people are watching the same thing, they’re effectively watching it on a million different “channels”.

This helps explain why NBC’s streaming coverage of the 2012 London Olympics ran into so many problems with just a million people watching at most (could you imagine if everyone who wanted to watch the Super Bowl wanted to watch it this way?), and why ESPN is reportedly trying to get wireless providers to exempt their WatchESPN service from data caps. The Internet is good at delivering a large amount of content to a few people each, but not so good at delivering a small amount of content to a lot of people each. That is the strength of over-the-air broadcasting, and admittedly linear cable television as well, and it’s a strength that shouldn’t be overlooked, even in areas beyond video; imagine if your device, whatever it is, was capable of passively receiving data from a wireless provider, broadcast station, or cable company, without specifically asking for it. A broadcast station can send out a single signal from a single antenna, and that signal can be seen by anyone with an antenna capable of picking it up; a cable company similarly sends the same signal across all its pipes, and your cable box simply tunes into the sliver you want (though cable companies have increasingly shown interest in “switched-broadcast” technologies that switch out a single sliver when you change channels).

It may seem as though all this means is that the Internet will never eclipse the existing linear television infrastructure, but the other principle once upheld by broadcast television, that anyone with the proper equipment can tune in for free, is one worth preserving even if the majority of people have been willing to pay for more options; the state of sports, which probably makes up the majority of this sort of live event, should serve to underscore that. If anything, the Internet seems to me to be more of a threat to cable than to broadcast. When you look at everything out there on cable, very little of what’s out there consists of the sort of live event people wouldn’t be willing to watch on their own time later; the Internet holds the potential to absorb most of the promise of choice cable once offered. If the demand for traditional linear television is more limited, if it reaches a level broadcast can fulfill on its own, cable television, not broadcast, becomes a relic of times gone by, squeezed out by the double whammy of the Internet and a resurgent broadcast.

Broadcasting, however, has not really effectively competed with the Internet. The digital television standard America finished transitioning to in 2009 had a number of flaws, both in and of itself and in the manner in which it was implemented, but perhaps the most critical was that it failed to anticipate the magnitude of the advent of mobile devices, devised as it was in the early 90s and with implementation beginning in the early 2000s, years before the birth of the iPhone. It was woefully ineffective at being received by anything but a traditional, stationary television set. The industry has responded by adopting a modification that allows broadcasters to transmit a second, low-resolution feed that can overcome interference, but it’s a kludge to overcome the deficiency of the original standard in the first place, and it says a lot that you probably haven’t heard of it or any of its implementations – with the end result that ABC has rolled out a separate app that allows users of mobile devices to watch the programming of participating stations over the Internet… but only – say it with me now – if you authenticate with a participating cable provider, an absurd outcome that results from broadcast stations attempting to play the cable networks’ own game by acquiring “retransmission consent” fees from cable companies, resulting in the seeming paradox that over-the-air broadcast stations would seemingly prefer that people not consume their content over the air.

In an age where this paradox has reached the seemingly inevitable conclusion of News Corporation COO Chase Carey’s threat to make most of the Fox network’s most valuable programming cable-only if anything happens to cripple Fox stations’ retransmission consent leverage, an age where, with only the ever-powerless and ignorant consumer seemingly left to defend the technology of broadcast, the FCC seems to be proceeding full-steam ahead to reclaim vast amounts of broadcast television spectrum on behalf of big wireless companies that don’t need it, it’s important not to lose sight of the important role the technology of broadcasting can serve in the video landscape of the future.

The Future of Sports and Broadcast Television

I’ve spoken in the past about how the rise of the Internet may render the sports TV wars irrelevant, but it may be helped on that front by a most unlikely source, a blast from the past making a vinyl-record-esque return from the grave: over-the-air broadcast television. I wrote about the state of broadcast television way back in 2009, and since then “cord-cutters” have caused the seemingly inexorable climb in cable-TV penetration to level off and start declining, though estimated rates vary widely depending on the source and methodology. I’m reposting this guest post I wrote for RabbitEars.info exploring what this could mean for the TV industry in general and sports in particular.

There have been several posts on RabbitEars opposing efforts by the FCC to reclaim spectrum from broadcasters for the sake of wireless providers and touting the value of broadcast television, and many in and out of the industry have refuted the notion that broadcast television is an outmoded technology obsolete in the age of the Internet. While I sympathize with the cause and don’t disagree with the message (a change of heart for me), I think it’s worth considering why people might think the Internet makes broadcast television obsolete, and from that determine how broadcasters might be able to leverage their strengths to survive and thrive going forward.

Regardless of anything else, I think it’s hard to dispute that technology, not only the Internet but also DVRs and maybe even digital television itself, have rendered the traditional linear broadcast schedule mostly obsolete. It’s now possible to watch huge libraries of movies and episodes of TV shows past and present in places like Netflix, Hulu, YouTube, and more, all waiting whenever you want it. Even when the episode first airs, it’s possible to use a DVR to time-shift it and watch it whenever you want, skipping ads along the way, which has become the bane of broadcasters and cable networks alike. The traditional linear broadcast schedule is an artifact of the days when television spectrum was extremely limited to the point where no market had more than seven VHF stations and the vast majority had far less; shows had to be squeezed into whatever spots on the schedule were available. Now, however, cable television has hundreds of channels and still falls far short of the offerings out there online; a typical scripted TV show on broadcast ends up waiting to be squeezed into a spot in a three-hour window (two on Fox and the CW, plus another hour on Sundays) where it has to compete for attention with numerous other shows on other networks and hope no one fast-forwards through the ads.

Where the value of a traditional linear broadcast network may lie is in live events that can’t be started whenever you want and can’t be delayed until later. If broadcast television survives and thrives past 2025, I have a hunch that a majority of it will be live programming. Scripted shows will not go away entirely, because advertisers can still get people to watch more ads more reliably when they’re stuck watching a linear channel (especially, oddly enough, if social media makes the first airing an event unto itself), but their share of the total schedule will shrink. I see the broadcast schedule of the future being heavy on news (especially live events like the State of the Union), reality shows with a live component, and – perhaps especially – sports.

One of the topics I tend to talk about the most over on my blog is sports, and specifically the state of sports on television. For those who have cable, we live in a golden age of sports on television where our options keep on expanding. For broadcasters and cable networks alike, sports has proven to be incredibly valuable programming as one of the few types of programming truly resistant to time-shifting, compounded by its ability to attract the kinds of audiences advertisers love. These factors have propelled ESPN in its rise from a small operation run from a shack in Bristol, CT, to quite possibly the most powerful brand in American media, one that makes so much money as the most profitable division of the Walt Disney Company it allows Disney’s other operations to rest on their laurels. A couple years ago ESPN paid the NFL nearly two billion dollars a year for the rights to Monday Night Football into the next decade (only a 63% increase over the previous contract, worth $1.1 billion) – the most valuable of all the NFL’s contracts despite MNF arguably being the second-weakest package in terms of quality of games behind only the package on the NFL’s own network.

This was partly for ESPN to have the rights to a considerable amount of NFL highlights, but also because having NFL games is a major reason for cable companies to pick up ESPN and people to sign up for cable to watch it. MNF and many other big-time sporting events make ESPN by far the most pricey national non-premium cable network out there: a good $5.26 of your cable bill goes into ESPN’s pockets (and that’s just for the main network, not its sister networks like ESPN2, ESPNU, or ESPNEWS). Where being a cable network was once a huge disadvantage, these days the fact ESPN can make money not only from advertising but also subscriber fees, something broadcast networks can’t do to the same extent, has given it a massive advantage when acquiring sports rights. In 2008 the Bowl Championship Series signed a contract with ESPN to put their five games on the ESPN network, turning the once-unthinkable into reality: college football’s national champion crowned on cable. Four years later no one batted an eye when the BCS extended that deal for ESPN to show the new playoff for another twelve years on top of that, especially after CBS and Turner’s own deal for the NCAA Tournament included a provision that will put the Final Four on cable the next two years and crown the national champion on cable every other year starting 2016.

The other three broadcast networks have taken notice, and all of them have launched sports networks of their own for their own piece of the action. CBS, which bought College Sports Television in 2005, has rebranded it into the non-college-specific CBS Sports Network; a big reason Comcast bought NBC was to synergize it with its own Versus network, since rebranded NBC Sports Network; and Fox relaunched its Speed Channel into Fox Sports 1 just this past weekend. That’s not all; Turner has reportedly flirted with converting TruTV into a male-focused sports-heavy network; Viacom replaced departed UFC programming on Spike by out-and-out buying the closest thing it had left to a competitor, Bellator, and reportedly kicked the tires on going after some Thursday NFL games; even Discovery Networks reportedly kicked the tires on putting some English Premier League games on its Velocity network. Even Al Jazeera has gotten in on the action, picking up rights to three European soccer leagues to help it establish a foothold on American soil with beIN Sport. All four traditional major sports leagues have started their own networks, as have two college conferences with a third on the way.

With the major media companies fighting each other for sports rights for their various networks, the fees those companies pay for rights have skyrocketed, and every time another incredibly lucrative deal is signed or another sports entity launches its own network, commentators come out of the woodwork to complain about the inevitable effect on your cable bill – including (perhaps especially) some within the world of sports itself. Here’s a little exercise: Take a look at your channel lineup, make a note of every single sports channel you receive (as well as other networks with significant sports content like TNT, TBS, and Galavision), then go to What You Pay For Sports, check off the networks you receive, and find out just how much of your cable bill is going into the pockets of big-time sports leagues before you even turn on your television set. Even cable operators are chafing at the rates all these sports networks charge them; after the MNF package was signed, some wondered openly whether cable and satellite providers might start dropping sports channels to save their customers money, and now DirecTV and others are charging a fee to customers in areas with multiple regional sports networks and Verizon’s FiOS is offering a package without sports channels.

Sports may be a big reason cable has gotten so expensive, but it’s also a major obstacle to cord-cutting, perhaps the single biggest one. Back in December, Slate‘s Matthew Yglesias wrote a blog post explaining to people looking for Apple to make some sort of disruptive product to magically accelerate cord-cutting that pretty much everything you’d need to cut the cord successfully is already here – with one glaring exception:

In my household, as it happens, we’re cord-cutters. The only things connected to our television are an Apple TV and a broadcast antenna. We watch Hulu and Netflix on our Apple TV, we buy some shows and rent some movies à la carte on our Apple TV, and we subscribe to NBA League Pass Broadband on our Apple TV. The disruption, in other words, is right there right now as we speak. The problem is it’s not quite good enough. Thanks to blackout rules, even if you subscribe to League Pass Broadband you can’t watch your home team’s games or ESPN or TNT games (i.e., the playoffs). To really make League Pass Broadband a compelling product, Apple and the NBA would need to negotiate different deals. I assume the MLB and NHL apps suffer from similar limitations.

The state of Internet streaming of sports is decidedly mixed. ESPN’s broadband service, ESPN3, is available on most Internet providers, providing access to events ESPN has the rights to but doesn’t have room for on ESPN, ESPN2, or ESPNU, and many other networks that carry sports can be streamed online as well. However, most of these, as well as NBC’s streams of events like the 2012 Summer Olympics, require you to “authenticate” with a participating cable provider, effectively forcing you to sign up for cable in order to use a technology that should be making it obsolete. That’s assuming your cable provider has signed up for online access to those networks; the list of providers offering access to ESPN’s WatchESPN service is distressingly short (I believe it includes a grand total of one provider outside the top ten, and neither satellite provider). In any case, the great advantage of the Internet is its on-demand nature, which means its only value for sports-watching, aside from its potential cord-cutting value, is mobility.

As cable providers begin to launch new low-cost packages for customers who only want to pay for the channels they actually want even as they fight calls for a la carte, teams and leagues must ask themselves: will they continue to sacrifice some exposure for money, cutting deals with the likes of Apple (and Google, and maybe Microsoft and Facebook) as Yglesias suggests? Considering that this would either move national and local-team coverage to a subscription model (a-la-carte or no) or effectively turn Apple into a cable provider (Google’s actual entry into that field notwithstanding), I’m not sure that would preserve exposure as much as you might think, and it certainly wouldn’t be the best option for consumers. Thus, they must ask whether they are willing to keep taking more money even if it ultimately limits their exposure to the die-hards who can’t live without their product or whatever other programming their partners offer. Considering most sports as it stands consciously avoid the logical conclusion boxing took, with the biggest fights almost entirely residing on HBO and pay-per-view and the sport pushed to the margins of the mainstream consciousness, I doubt their appetite for money is that bottomless.

But that leaves teams and leagues with a seemingly intractable conundrum: their programming is so valuable that seemingly any outlet for it ultimately prices out the casual fan and threatens to rob it of that same value – unless they find an outlet that can continue to reach the maximum number of people no matter how valuable it becomes. That would appear to leave over-the-air broadcasting as the best long-term solution, and as such, broadcasters may well find themselves at a critical point of opportunity, the salvaging of the marriage between sports and broadcasting critical to the future of both, a substantial, rejuvenated sports presence on broadcast potentially enough to spur the unthinkable outcome of cord-cutting sports fans, even sports fans at the forefront of cord-cutting.

One of broadcasters’ great advantages is their ability to operate locally, an aspect that, when it comes to sports, should come in especially handy when it comes to the level of individual professional teams. However, in addition to the aforementioned disadvantages, broadcasters run into a few other problems that effectively leave them begging for scraps in most cases from local teams. Teams want an assurance of coverage outside their immediate market, and that means they’d rather sign up for a single regional sports network that can establish cable carriage fairly easily with a small number of providers than try to syndicate their games to stations in outlying markets; for their part, in an age where most general-purpose stations are network affiliates, broadcasters are reticent to piss off those networks by pre-empting programming for sports events. Many teams have also decided to start networks of their own, especially in baseball where money from owning your own RSN isn’t subject to revenue sharing agreements in a sport without a salary cap, allowing the Yankees to use their YES Network to maintain their dominance at the top of baseball’s food chain. (The Yankees sold close to half of YES to Fox last year.) Even the venerable WGN could see the end of its 65-year-old relationship with the Cubs so the team can chase more money by putting all its games on cable (never mind the national distribution on cable WGN America gives them), on a channel the team owns itself.

To me, this suggests the key could be the edge cases – once-independent stations that once were at the core of local teams’ reach, but were deprived of them not only by the rise of the RSN but by their own affiliation with UPN and the WB, and these days, with the CW and MyNetworkTV. Though it initially launched with pretentions of bringing English-language telenovelas to the American market, MyNet quickly abandoned it in favor of a mini-network format consisting of a random collection of reality shows and, for a time, WWE SmackDown!, before abandoning even that pretense and becoming a “programming service” doing little more than redistributing other syndicated programming, resulting in there being no practical difference between taking on MyNet and remaining independent; it is, quite literally, the “network” that should never have been, yet one that continues to survive against all odds because cheap station group owners appreciate the two hours a day of inventory they don’t have to program themselves. I have no doubt MyNet, and possibly the CW, would not even exist, at least not on a national level, if it weren’t for RSNs’ advantages in money and distribution that leave local stations begging for scraps from local teams (scraps that most outlying markets have to watch on the RSN anyway).

What would happen if stations that were MyNet (or even CW) stations now instead somehow were able to obtain the rights to a variety of local sports? By itself, it probably isn’t enough reason for ESPN junkies to cut the cord, but I have to imagine that for many, the ability to watch your local team is a bigger reason for getting cable than simply grabbing ESPN, especially if cord-cutting accelerates to the point where leagues decide taking money from ESPN doesn’t outweigh the relatively marginal exposure they’d get, resulting in even less reason to pick up ESPN. Perhaps ESPN comes to resemble what it looked like in the 80s, running on college and niche sports, perhaps with some occasional professional games thrown in. Even at best that would be a long-term process, at least on the national scale, with most of the most valuable national contracts locked up into the next decade, though I could see some of the most popular games, like the college-football playoff, moved to sister broadcast networks through emergency contract tweaks if cord-cutting accelerates fast enough.

This is just one area where broadcasting can reclaim some territory in the world of sports that has been ceded in recent decades, and it may not be one the owners in the best position to do so would want to take; the part-owner of the CW and the full owner of MyNet, CBS and Fox, care so little for broadcasting they’ve been making noise about migrating their networks to cable, and Fox in particular also happens to be the largest owner of RSNs and so is the last party who’d want to stop that gravy train. (Tribune, the other major big-market CW and MyNet affiliate owner on top of owning WGN, could take the lead on this, but I personally would like to see the rise of a true fifth network, and Tribune’s stations are pretty much the only CW or MyNet affiliates in the country, with a very small handful of exceptions, to produce their own news, making them the most important stations for such a network to corral.) Broadcasters would face tremendous obstacles in trying to wrench rights away from cable channels in the short term, but in the end, sports may be vital for the survival of broadcasting in the long term – and broadcasting may just have something to offer to teams and leagues that could make their long-term prospects more viable as well, if they can sell it to them.

2 years of the Sports TV wars, and the coming Year of Fox

Year Three of the sports TV wars will be when they start to kick off in earnest with the pending launch of Fox Sports 1, and not only is Fox making a huge push for the launch, they’re not giving up their regional sports network hegemony without a fight. Over the past month and a half, Fox has bought portions of the YES network and SportsTime Ohio, the RSN run by the Cleveland Indians.

It wasn’t that long ago that we were talking about Fox no longer having any presence whatsoever in any market larger than Dallas should Time Warner Cable win the rights to the Dodgers (though TWC SportsNet’s chances are still very much alive at the moment), about the launch of Fox Sports 1 representing the final abandonment of the FSN concept and that Fox would cannibalize FSN’s national programming to fill time on its new national networks. Now Fox has an owned-and-operated presence in the top two media markets, and if they win Dodgers rights they’ll be very hard to kick out of either one.

What might be sustaining FSN’s continued interest in acquiring existing RSNs, including a rumored bid for the MASN network co-owned by the Orioles and Nationals? It may be a clause in Fox’s new baseball contract that only recently came to light: apparently, Fox can fill up its lineup of games on FS1 by cannibalizing them from RSNs it owns – a clause that might be a remnant of the early days of the national FSN experiment when FSN would air a “national” game every Thursday. Owning a piece of YES allows Fox to fill up FS1′s lineup of games with far more Yankees games than, say, Mets games.

This suggests Fox might also be thinking about making a run at NESN and its associated Red Sox rights, and why Dodgers rights will be far more valuable, at least to Fox, than has already been suggested. As much as basketball can move the needle, baseball’s lack of a salary cap and some quirks in its revenue sharing model have made the local sports TV wars especially competitive regarding, and lucrative for, baseball teams, long higher-rated as a whole than basketball games anyway (notwithstanding national interest). If Fox has this added motivation driving them to acquire baseball rights specifically, don’t be surprised to see the values climb into the stratosphere, especially in competitive markets. In particular, I wouldn’t be surprised to see Fox absolutely break the bank on the St. Louis Cardinals, Atlanta Braves, and Detroit Tigers in their next contracts, even without obvious competition; even the Florida teams could rake in the dough if Fox fears Comcast or Bright House coming calling.

Most speculation on national networks beyond Fox Sports 1 has settled on Fuel becoming Fox Sports 2, with Fox Soccer remaining as is, which has never made much sense to me given Fuel’s smaller reach and Fox Soccer’s loss of its best, most consistent programming. But Fox may have in mind transitioning Fox Soccer out of the sports market entirely. The LA Times reported earlier this week that Fox is considering relaunching Fox Soccer into a general entertainment network, effectively an “FX2″. That seems a substantially riskier move than turning it into Fox Sports 2; if your company runs multiple entertainment networks, it’s usually critical to make sure they have their own identity so as not to cannibalize one another (for example, TBS being all about comedy while TNT stresses its dramas), especially when the channel is starting with relatively little distribution – Fox Soccer is in about 50 million homes, better than a lot of startups but not enough to launch a big-time network and vulnerable to cable company defections, especially when many cable operators currently put it on sports tiers. To explicitly market it as a “lesser” channel to FX smacks of borderline suicide, and something no general entertainment channel I know of does.

If Fox is going to do this, I would suggest either marketing it as a comedy network (FX is primarily known for dramas though it does have more than a few comedies), marketing it towards women, or create a kids network powered by the old Fox Kids block that entertained so many kids during the 90s (though the rights to many of those cartoons may be owned by other entities). Fox could also market to niche genres, like with NBC Universal’s Cloo and Chiller channels, or pick up the geek crowd disenchanted with the state of SyFy and G4. An outside-the-box possibility could be to convert Fox Soccer into an international version of the Fox News Channel; Fox Soccer already occasionally airs the general “Sky News” from Britain. Ultimately, however, I wouldn’t be surprised if Fox decided that turning Fox Soccer away from sports risked losing too much existing distribution for too little gain to be viable and the only feasible option would be to convert it, not Fuel, into Fox Sports 2, getting that network off the ground that way. (I continue to maintain that Fuel doesn’t feel like a sports channel in the same way as the others to me; it may be about “extreme” sports beyond its UFC coverage, but, well, those are marginally “sports” at best.)

In any case, if Fox only creates two networks that means the chances are borderline at best that it shuts down Fox College Sports entirely, but recent events have still suggested it should rethink what role FSN takes when acquiring college rights – people in the Bay Area have been scrambling to watch Cal and Stanford basketball games FSN holds the rights to since the area’s Comcast SportsNet networks aren’t showing FSN programming.

I haven’t spoken about conference realignment in a while (partly because the whole thing has just gotten too depressing for me), but Fox is also the reported leader in the clubhouse for the rights to the so-called “Catholic 7″, the non-football-playing members of the Big East who finally figured out that the depleted remnants of the football half of the conference weren’t going to command a contract anywhere near as good as what commissioner Mike Aresco was trying to make them believe, especially with the Big East losing its privileged BCS status. (Once Tulane became a viable Big East member, it became clear that this was essentially Conference USA 2.0, with only UConn being a true “Big East” school – and they, not Louisville, probably should have been the school the ACC called when Maryland left for the Big Ten.) Fox has been reported to be offering something in the neighborhood of $300 million, an astonishing number for a non-football conference and hopefully a wake-up call for all the other actors in conference realignment that football itself is not what powers the money machine, but sports people want to watch.

Fox is a rather odd choice to go after the Catholic 7, but unless its existing Big 12 and Pac-12 contracts have limited at best basketball inventory for FS1 their only other option to truly establish their basketball bona fides is the Big Ten contract in a few years, which admittedly I’d be shocked if they don’t snag. But until purchasing YES Fox had very little RSN presence in the Catholic 7 territory; RSNs in Michigan, Indiana, Wisconsin, and Ohio, but Marquette might be the only school in any of those states. YES puts them in St. John’s backyard, and the Catholic 7 might be going after the likes of Butler, Dayton, Xavier, and Saint Louis (and Virginia Commonwealth, which might bring FS South/SportSouth into play as well), so they have that going for them.

But considering how much the Big East and ESPN have meant to each other, and the fact that the Catholic 7, to me, are the true inheritors of the Big East’s legacy regardless of whether they actually win the name (a basketball conference with the likes of Memphis, Temple, Cincinnati, and UConn may be a very good mid-major, but still a mid-major), I cannot believe that ESPN would let them blithely walk away to Fox so easily. I have to imagine ESPN will make a big run for at least a piece of the Catholic 7, probably sublicensing some games to CBS – the first real competition between ESPN and Fox since the World Cup rights came up. (Pre-split, NBC was considered a favorite to snag Big East rights and a major reason Aresco kept hyping how much money the conference would make from the sports TV wars – but at this point, which half they go after depends on whether NBC wants to keep piling up mid-majors in football or establish their basketball bona fides. Considering the Mountain West was literally the only FBS conference at their disposal last season, I would lean towards the latter at this point; the only major football conference they have a shot at for several years at this point is the Big Ten, and that shot is very remote.)

Last year saw Fox establish the foundation for Fox Sports 1 with its baseball and NASCAR contracts, while NBCSN settled into a third-place groove (and potentially started to establish a niche for themselves) by acquiring the Premier League, driving the final nail into Fox Soccer’s coffin. While this year will see the fight for the Catholic 7 and the awarding of the other half of the NASCAR package, and the NBA rights might come up for negotiation as well, for the most part the stage for the sports TV wars will move away from acquiring rights and towards what the contenders, especially Fox, do with them. FS1 is likely coming in August, and that is when the Wars will start in earnest.

Is Google the cable company of the future?

Amidst a television landscape of authenticated streaming, pointless restrictions on online viewing, inflated sports rights fees, a-la-carte debates, cord-cutting debates, five-dollar ESPNs, and contentious carriage disputes, a technology giant that originally made its money on the technology responsible for all of this is about to give a bunch of ordinary people in America’s heartland a taste of the future.

Google is about to launch its new Google Fiber project in the Kansas City area, and it provides a glimpse into how what we now know as a cable provider might look in the future. At first glance, it’s offering a standard TV/Internet bundle, but Google seems to see it as substantially more than how you might be seeing it, that it’s not clear where the TV ends and the Internet begins, if it does at all. In addition to an HD-ready “TV box” and network connectivity, Google is also offering a “storage box” with two terabytes of DVR storage (including the ability to record eight shows at once) and other functionality, as well as a free Nexus 7 tablet (advertised as “your new remote” while also touting the ability to share your TV viewing with friends), a free 1TB Google Drive account, and the chance to buy a Chromebook on top of everything else. (I’m guessing either the TV or storage boxes will come with Google TV as well; Google is promoting Netflix integration with the service. It’s also possible to just get the network box and Google Drive account without the TV hookup or anything else.) According to Google, its gigabit Internet speeds are 100 times the norm in the industry – enough, it believes, to completely revolutionize the Internet experience – and it claims to be able to deliver HD with zero compression.

Perhaps the most intriguing aspect of the rollout of Google Fiber, though, has to do with the process of getting it. Part of the reason why cable companies tend to have effective monopolies – and why the “last mile” problem in installing fiber-optic networks has been so intractable – has to do with the nature of the technology and the expense of laying down wires across a large urban or suburban area. Google, by contrast, decided to save money by only building its network in areas that wanted it enough to justify the expense. So it divided the two Kansas Cities up into 202 “fiberhoods” and gave each one a threshold for pre-registrations it had to meet for anyone to get Fiber installed. To sweeten the pot for anyone who would normally be uninterested, Google has even offered Internet service at typical broadband speeds for a one-time $300 construction fee (payable in $25 installments for the first year), and completely free thereafter. Google is also providing full service to community buildings in each fiberhood for free as well. As a result, 180 of the 202 fiberhoods met their respective thresholds before Sunday’s deadline, nearly 90 percent of all the fiberhoods Google identified.

There is a massive Achilles heel in Google’s pitch, as right now its TV lineup has some glaring omissions – most notably, the Fox and TimeWarner cable networks (including the Turner networks and HBO) as well as AMC. One wonders if those companies are trying to slow down what could prove to be a massive disruption to their business model, though Google did recently get the Disney networks, including ESPN, on board. By forcing neighborhoods to pay first before Google will connect them, it could also leave poorer neighborhoods out in the cold. Still, if it works (and many in the old guard are skeptical), I wonder if this could prove to be a paradigm shift in the cable industry, one pointing to a future of blurrier lines between TV and Internet, one where the infrastructure needed to bring both technologies into the future becomes cost-affordable by building it only in the places where it’ll be most profitable, and thus one where that future, one that blows the massive potential of the Internet wide open and where TV as we know it today ceases to exist, becomes a reality.

Misconceptions about the Future of Television

I have spoken often about a future in which television as we know it today no longer exists – where producers of television content, be they sports leagues or major studios, cut out the middleman and release their content directly to the people via the Internet. But on Wednesday I mentioned that such a future is at least a decade away, and to the reasons I gave in that post I would probably add the struggles people have had making money off video ads on the Internet. People don’t tolerate ads on the Internet in the same numbers they do on TV, though my anecdotal evidence suggests the tide may be turning on that front, and those ads don’t make nearly as much money as TV ads despite the lack of competition.

As such, it’s hard to imagine such a future at all, and it’s tempting to define it in terms of the structures that exist today. When I see much of the “old media”‘s streaming efforts consisting of Internet versions of their normal linear channels, when I see networks control streaming rights instead of studios, when I see access to shows continuing to be restricted by country, when I see that access to NBC’s Olympics streaming is controlled by your cable provider (regardless of ISP), I just shake my head. Such things are necessary in the present as we go through the awkward transition to the future, but I hope they don’t give anyone the wrong idea of what the future is going to be like.

For example, because the Internet video ad market isn’t mature and because of the nature of streaming of cable channels right now, it’s tempting to think the future won’t be much different from the ecosystem of channels that exist now, only with those channels that don’t offer live programming decoupling their lineup from a schedule. Most of the bigger-budget shows will be associated with some sort of “network” that charges substantial fees to Internet service providers to allow them to access their content, even if it’s just a brand name for content produced by a studio. It’s technically getting rid of the middleman, but in a way that mirrors the current TV landscape and, more importantly, preserves the revenues the biggest-budget productions require.

It’s also wrong. I don’t believe we’ll need to set up “barriers to entry” to pay for most of our TV shows, in part because I don’t believe it’s possible; “barriers to entry” is another word for “a reason to pirate”. Piracy is only going to get easier; I have on my computer RealPlayer SP, which pops up a button whenever I’m watching a video on the Internet to download the video to my computer. Not all videos can be downloaded, but there are videos with ads that can – and when I watch the version that RealPlayer downloaded, there are no ads. If a respected, legitimate video player is making piracy that easy, the fight against it might be futile.

We have shows that are paid for entirely through ads. They’re called broadcast television, and while it may be a wasteland now, that’s only because of the increased competition from cable; before cable came along, broadcast television had no shortage of groundbreaking shows. All in the Family, M*A*S*H, and the early seasons of The Simpsons (back when it was still good) all aired on broadcast; so did Star Trek, Hill Street Blues, and Twin Peaks. Even today there are independent producers making money by making high-quality videos on the Internet off ads alone (though probably the majority of the ones I know of use footage from older, more popular shows or otherwise relate to other things rather than be wholly original creations themselves). Today’s television landscape privileges those who take advantage of the “dual revenue streams” of advertising and subscriber fees; the Internet turns that on its head. It’s too democratic for every video producer to charge subscriber fees and succeed. I don’t believe pay-per-view or the equivalent of premium channels will go away entirely (Netflix seems to be becoming the HBO of Internet “premium channels”), but neither do I think the biggest budgets will become the sole province of movies either.

That said, I don’t want to discount that model entirely, but I would rather see it in a more decentralized form, where anyone can and does make money off of what they put on the Internet. Whenever you access a page, your ISP automatically pays the producer of whatever content you’re accessing, and passes the costs on to you. Had this model been in place from the beginning of the Internet we wouldn’t have spent the better part of two decades trying to figure out how to make money off the Internet and struggling through such gimmicks as micropayments. I’m not sure if it’s realistic now, and it could give ISPs a real incentive to attempt to repeal network neutrality laws so they can block sites they don’t like.

But I do think that one of these days, your bill for the Internet alone will start to rival what you pay now for cable and Internet combined, and producers will want to tap some of that. That may take the form of charging you directly for content, it may take the form of charging ISPs, or it may take the form of some variant of the automated-payment system I just laid out. Or it could be a combination of all of the above. But it’s not going to turn the Internet into the same cable TV model we have today.