After years of clinging to traditional business models, media companies have finally started embracing ad-supported Internet distribution in a big way. Yesterday's announcement that several major music labels made nice with YouTube may turn out to be a watershed moment for the industry. Instead of attempting to sue the company out of existence, everyone got together and forged a mutually beneficial deal that's pretty good for consumers, too.
Now comes news from Disney-ABC that content producers have had a revelation: instead of simply trying to squash piracy, it might be more productive to understand and compete with it. That's the message brought by Anne Sweeney, the president of Disney-ABC Television Group and one of the "50 Most Powerful Women in Business," according to Fortune.
"So we understand piracy now as a business model," said Sweeney in a recent analyst call. "It exists to serve a need in the marketplace specifically for consumers who want TV content on demand and it competes for consumers the same way we do, through high-quality, price and availability and we don't like the model. But we realize it's effective enough to make piracy a key competitor going forward. And we've created a strategy to address this threat with attractive, easy to use ways to for viewers to get the content they want from us legally; in other words, keeping honest people honest."
When you start thinking this way, the goal becomes offering a more compelling product than file-swapping networks can provide, rather that attempting (for instance) to sue the users who like your content. For ABC, this has meant launching their own streaming media player and providing shows like Lost and Desperate Housewives online only minutes after they air.
Earlier this year, ABC launched its player on a two-month trial basis. It was an instant hit (almost 6 million people requested episodes) and did well enough for the network that they elected to bring it back permanently in September after working out a way to compensate affiliates who were being cut out of the revenue pie.
Our own experiences with the revamped player have been positive. Though it does not fill the entire screen, the video looks good and comes in 16x9 format. It won't replace your HDTV, but it's a nice way to get a quick Lost fix, and the (unskippable) commercials don't detract from the experience. It's nice to see a network like ABC responding to piracy not by locking down its content even more tightly, but by making it easily available to even more people.
While it's hard to compete with free, it's not impossible—witness the success of iTunes in both music and TV shows. You just have to offer a compelling product at a reasonable price that is simpler to use than the alternatives. When ABC introduced its own shows into iTunes earlier this year at $1.99 a pop, it sold more than 8 million of them without damaging its TV ratings at all.
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