overthinking the idiot box

May 16, 2005

Morality is Irrelevant: TV and the Digital Age

by Kenneth Requa and Doug Spice

Illegally downloading media these days is a hot topic among those in the entertainment industry and the lawyers they retain. But what are the possible implications of this hot new trend? Doug Spice and Kenneth Requa look towards the future as they attempt to determine how technology may transform television.

Doug: I suppose a good place to start is with this: I think the morality of the situation is irrelevant. That's a nice shortcut to the good stuff, and also I just wanted to be the first person on SMRT-TV to say "morality is irrelevant."

Kenneth: Well it would be important to define what we mean by 'the morality of the situation'

The typical BitTorrent window. Not that we'd know anything about how one looks...
Doug: Fair enough. Downloading television theoretically takes money out of the pockets of the networks as it circumvents the only business model most television has ever managed to develop: the sale of commercial air time.

Kenneth: True. Not to mention the fact that it violates at least the spirit, if not the letter, of US and international copyright laws.

Doug: But whether or not you believe that there's a mandate enforcing your watching of those commercials (which also of course has lots of interesting implications for TiVo users and the like), I still sincerely believe the morality is irrelevant. Maybe it's stealing, maybe it's not. There's more gray area here than in a related field such as mp3s or movies, although there's also a lot of common ground.

None of that changes the fact that "morality" is not a set definition: it is defined by the actions of the masses, and the masses - historically speaking - have rarely been deterred by a fleeting moment of commercial intervention as to what is moral and what is not. Which is why I say that in this situation the morality is much less relevant and less interesting than the practical aspects of the situation. For starters, I do believe that it is the obligation of business, not consumers, to adapt to paradigm changes. That's what's going on now, and in an open market, businesses that are able-minded should be able to emerge or evolve to be successful.

Kenneth: I agree with that. However it is a hindrance to creating new paradigms when the consumers are circumventing them, by illegally pirating the product.

Doug: No, it just means that the business models are lagging behind the technology. Example: it's still very easy to download almost any music you might like from a wide variety of sources all over the internet. And yet the iTunes store has been phenomenally successful. How is this? I'm probably not really qualified to say, but I bet it's a combination of appealing to that gray area in people's moral code and developing a brand that makes people satisfied. Apple has built a comprehensive product, and so far it beats the hell out of all of their competition. Not everyone can be so lucky, but the fact is that it is a hugely successful product at the same time that the commodity for sale can be had for cheaper or for free elsewhere.

Kenneth: It can be had for cheaper or free, but not as convenient, and certainly not as accessible to less computer-savvy people.

Doug: Right, and so that's where the business opportunity lies. Legitimize it, bring it out in the light of day, make it easy for people. A lot of people will pay a premium for that.

Kenneth: I think we agree on a lot here. So the question then becomes, "Can TV adopt the iTunes model?"

Doug: Hard to say at this point. Technically speaking, I don't see why not. But from a business perspective there are more enormous hurdles. Most of these are politics, sadly.

Kenneth: If people are downloading TV shows, assuming they do so in an existing video format (QT, WMV, etc) they would be capable of skipping commercials, just as in TiVO

This wouldn't be a problem if they're generating revenue from the downloads, perhaps, but could also speed along the trend we're already seeing of increased product placement.

Doug: Right. The revenue format has to change. Creative tech types will always figure out how to circumvent basic protections, I think history has proven.

Kenneth: You can't fast forward through Sydney Bristow talking on her Nokia phone, and that's catching on.

Doug: I can't really say what a valid new revenue format is; that depends on the direction the technology takes. Pay-per-view, subscription, co-branded programming? Those are all options.

Kenneth: I think the key would be to give options. People want to be able to either subscribe to a show at a discounted per-show rate, or pay a small premium to just pick and choose.

You can't fast forward through Sydney Bristow talking on her Nokia phone, and that's catching on.
Doug: Yes. The basic scenario is this: people don't like TV. Many of them never have. Even the laziest couch potato will admit that much of the time, the selection available even on satellite or extended cable sucks. TiVo (or rather, TiVo-like devices... they weren't the first, just the best in market) is brilliant in that way. There's a huge desire for video-on-demand.

Kenneth: The other concern would be the effect this downloading would have on TV's newest cash cow: DVD sales.

Doug: My guess there is: not much.

Kenneth: The die hard fans will buy the DVDs anyway.

Doug: DVDs, for some reason or another, are like magic candy. People can't not buy them.

Kenneth: I suppose with the ever increasing quality of home theater systems, a downloaded file would have to be unreasonably large to compete with the ability to watch a 5.1 mix on the DVD.

Doug: That's true. HD-DVD and Blu-ray are supposed to be out next year, and that will push the technical capabilities of pre-recorded, pre-authored material beyond what you can conveniently download yet again. And if you want to talk morality again, here is an area where I can have little sympathy for the networks. If they start taking losses in DVD sales... so what? It's an entire market that didn't even exist ten years ago, and they've milked it beyond what anyone thought possible. Of course DVD offers other advantages as well. Commentaries, making-of, featurettes... studies show that most people never watch these bonus features, but I am not convinced that they don't purchase in part because of them.

Kenneth: True. And there is such a huge economy surrounding a change of formats, as we witnessed with DVD, that one can only assume that it will happen every 5-10 years now. But I want to go back to something you said earlier about video-on-demand. If people don't actually like TV, and TiVo still only allows them to capture what's already on, can the networks regain some of that revenue from TiVo through downloading, if its a much more involved process to download something than to TiVo it?

Doug: I'm sorry, not totally following you here.

Kenneth: There are a lot of shows on TV that I would watch if I found myself in front of a TV when they were on. Maybe half of those would I program into my TiVo. I can't think of more than maybe 1 or 2 shows that I would take the time to download. Downloading requires more effort/input/time from the consumer.

Doug: So you're saying the ease-of-use is still a problem in this hypothetical early model.

Kenneth: Yes.

Doug: I'm not sure I agree with that. Ideally the system is functionally equivalent to TiVo. TiVo works only as an "always on" device. It records the shows as they air. So it's not like you can ask TiVo to grab anything for you, and wham, it's done. The advantage is that it records in real-time, which isn't a realistic expectation for download services.

Kenneth: True, but it is at least, a dedicated box for just that purpose. Downloading TV interrupts one's ability to do other things on the computer, not to mention requiring a high-speed connection, a fair amount of hard drive space, and a decent processor.

Doug: Yes, but I think those are all transitional concerns. Home Theater PCs are starting to become quite popular in enthusiast circles, and I think it won't be long before they're available as pre-fab "black boxes" to people who aren't technically inclined.

Kenneth: I think they're still significant concerns to the average user, and they're concerns that I'm sure Apple is capable of overcoming better than anybody.

Doug: Functionally, they're not very different from TiVo units - in fact most of them offer the exact same functionality of a TiVo, along with everything else they do. Anyway, you've got to look at downloading as a longer-term commitment. More targeted. Yeah, it'll take 6 hours to download this show you want. But it could be anything.

Kenneth: OK, so if you clear that hurdle, and you assume some sort of iTunes-esque pay-per-download (with digital rights management, of course) model...are there implications for the content?

Doug: You mean in an FCC, family consent, decency and morals sort of way?

Kenneth: There are those questions. Plus what about the idea of more "cult" shows being distributed ONLY for download, saving more "lucrative" airtime for shows with broader appeal? With downloading you have the capablity of really targeting a much more specific audience than you do over the airwaves.

Doug: Yeah, you could be concerned about the marginalization of content, but I think you see that already. Truly unique and interesting shows are usually shuffled around, crammed into corners, or relegated to the HBOs, Showtimes, or SciFi Channels of the world. But again I think there are broader questions at work. For instance, you mention "airtime". And I think airtime - the physical broadcasting of content through the air - as we know it won't be around for long. The FCC wants standard definition broadcasts off the airwaves already. I forget the deadline, but it'll finally be happening.

Kenneth: That's entirely possible, especially with the mandate for digital broadcast coming up. And without getting into all of that, it might be relevant to ask how the FCC would adapt to such a system. Our concept of "network" television will erode rather quickly, with every step we take towards television being on-demand.

Doug: Yes, and that's another problem. I remember Al Gore running off about the Digital Divide during his campaign: the gap between the electronic haves and the have-nots.

Are we capable of moving forward without leaving a large part of the public behind?
Kenneth: Historically, that gap has always closed itself over time. Like with the move from TV to radio...but you're right... with the economic gap widening across the board worldwide, are we capable of moving forward without leaving a large part of the public behind?

Doug: That's one of those things where time will tell. It's not like we (the United States) are the market leaders here. We're many years behind Japan and many parts of Europe when it comes to any sort of communication systems. Even China has demonstrated a capability to ramp up that exceeds what we're doing here at home.

Kenneth: There's an inherent stubbornness to Americans that is really not helpful in the technology age.

Doug: Ultimately, wondering who we're leaving behind isn't going to be a concern. The market isn't going to pause, because you can't. You can't catch your breath and stay competitive. In the end we have to remind ourselves that television is a luxury, not a necessity or a right. And in many cultures or perspectives, it's not even desirable.

Kenneth: But to work back to the topic, if people from Time-Warner, Sony, and Viacom sat down in a room together tomorrow and decided on a downloadable distribution format, and started releasing episodes of Lost, Desperate Housewives, and Family Guy at a per-episode fee....I doubt there would be any immediate repercussions.

Doug: No, I think people on the outside would embrace it. Not instantly, but I think within a year or two you'd turn a successful system out. The problem, as I said - morality being irrelevant - is not with the consumer. It's within the business.

Kenneth: And if people are willing to pay $15/mo for HBO primarily for their original content, which is usually only one series at a time, and HBO can obviously sustain itself, I see no problem with WB or ABC increasing their revenues significantly. And the first noticeable impact would be the end of commercial breaks as we know them. It would be a move backwards, really, to the days of corporate sponsorship of individual programs, or blocs of programs.

Doug: That's the problem. Politics and infighting. Who wants to see their network ad sales cannibalized because the network decides to deliver the same shows via an alternative media? People will lose jobs. There's no way around that.

Kenneth: There is a way around that, but it involves a forward thinking CEO taking a chance. Which means there's no way around it.

Doug: Well, I hereby promote you!

Kenneth: I think if a company were to go out on a limb and sponsor some of this transitionally it would be a big attention-getter. Cingular's already gotten a lot of mileage out of American Idol, for instance. What if you could just watch the performances on your phone?

Doug: It'll get there. But like you said, it's going to take a handful of uncompromising people with vision.

And some of those people will lose millions.

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Return to Vol. 1, Episode 4.