Television is surviving digital takeover

Within a year, Netflix will have more viewers than any of the three broadcast networks, a couple of analysts at FBR Capital Markets predicted recently. There are some caveats having to do with the differing ways that streaming and broadcast audiences are measured, but still, an 8-year-old streaming service now claims an audience of comparable size to major television networks that have been around since the dawn of TV.

So does this mean that Silicon Valley--where Netflix is based and with which it long self-identified--is conquering television? Or is it that Netflix has simply learned how to be a successful television network?

Michael Wolff has an answer, which he expounds on with his usual biting humor and possibly misplaced certainty in his new book Television is the New Television. Here's the short version, from about halfway through the book: "The challenge for television is not the Netflix model; rather, the challenge for Netflix is to figure out how to adopt more of a television model."

That's not entirely right. The shift from "live" transmission of programming over the airwaves or via conventional cable networks to on-demand streaming via Internet protocol does change TV in a few key ways that Netflix is probably better suited to take advantage of than its broadcast rivals. But on the whole Wolff has a point. The news media and the music industry have been transformed and by some lights destroyed by digital disruption. Television, on the other hand, remains its couch-potato-breeding and spectacularly profitable self, even when watched on tablets or phones. Along the way it has surpassed movies--which have survived the digital transition more or less intact but somewhat diminished--as the dominant entertainment medium.

Why is that? Why has the rise of the Internet affected different media so differently? Wolff's book is an attempt to answer that question, and if you're at all interested in the topic I highly recommend it.

Yes, there was a moment early on when I remembered that Wolff, now known mainly as a pundit, first rose to prominence with Burn Rate, a hilariously mean-spirited 1998 account of his misadventures as an online media entrepreneur in the early days of the World Wide Web. "If you understand this stuff so well," I couldn't help but think, "why aren't you counting your money instead of writing books?"

Still, a version of that criticism applies to any journalist attempting to analyze the business world. And Wolff's long and varied experience in media gives his account a richness that more than makes up for the occasional score-settling and sloppiness.

What interests me most about it is the compelling if not always convincing case Wolff makes for the importance of path-dependence in the business world. He never uses that ungainly phrase, which became popular in certain economic and antitrust circles in the 1990s. But it's useful. The idea is that the development of a technology is highly dependent on the choices made in its early days; the resilience of the QWERTY keyboard in the face of purportedly better alternatives being the seminal if controversial example.

The opposite view is what you could call inexorablism, the idea--popular in Silicon Valley--that technological advance follows a powerful logic that is pointless to resist.

In music and in print media, the inexorablists have largely won. Wolff doesn't discuss music much, but he's withering about how digital forces have atomized and devalued the work of newspapers and magazines. Because video took up so much more bandwidth, the TV and movie industries had time to plan a counterassault, and they largely succeeded in imposing the same kind of licensing regime that prevailed before the Internet. And television, thanks to the part-advertising, part-user-fee revenue model that it haphazardly developed in the 1980s and 1990s, found itself positioned to not just survive but thrive in this new environment.

Along the way there was Viacom's copy infringement lawsuit against YouTube, which pushed YouTube and its owner Google away from piracy and toward becoming licensors of content just like TV networks, and Netflix's shift--forced on it by the 2012 end of a deal with cable movie channel Starz--from movie purveyor into television network. It all could have gone so differently, the path-dependence reasoning goes, but this is how things worked out. And in Wolff's view the result is a TV environment that's vastly healthier and more value-creating than what's left of music and the news media.

There were some less-exorable forces at work too--three-minute songs and 800-word articles lend themselves to atomized contextless consumption in a way that a two-hour movie, a 300-page book or an 85-episode TV series do not. One remarkable characteristic of the current media environment is the renewed power of the series or the sequel, not just in TV but in movies and books. This was characteristic of early mass media (think Charles Dickens and his novels coming out installment by installment), and now it's back with a vengeance. Serial entertainment is the new serial entertainment.

There are differing ways to deliver and pay for it, though. Wolff seems to agree with the widespread consensus that the current cable-TV bundle is doomed, the victim of both technological change and its own bloat. But he figures it will be replaced by a new set of skinnier over-the-top bundles shaped by the same kinds of licensing deals and negotiating tactics that now rule TV. I'm guessing he's right. Technology doesn't always have to change everything.

Editorial on 07/05/2015

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