If you're in manufacturing, one of your greatest frustrations is excess capacity--factories that can be producing more than they are. And your gravest concern is excess inventory--unsold goods piling up in warehouses, their carrying costs increasing even as they prevent newer products from getting into the marketplace.
TV, as any who stay up past the witching hour know, is a galaxy of capacity and a forest of inventory. Late-night is dominated by infomercials, marginal repeats and dead air. While TV's inventory doesn't carry the costs of hard goods, when it disappears its value is lost forever. As the spectrum grows, this gets worse. On my new Time Warner digital cable box, there appear to be several hundred channels, most of them what I'd charitably call "unproductive" between midnight and 6 a.m. Isn't there a way to turn all that ether to good use?
I submit there is. The answer lies in one of my obsessions with which faithful readers are familiar: PVRs, as the personal video recorders from TiVo and Replay are called. PVRs may be the bridge that unites the "push" and "pull" models that vied for dominance on the early Internet, fashioning a "pushmepullyou" model that can recreate TV in a way that's both viewer- and advertiser-friendly.
This musing on media business models began in a conversation with my old friend I. Don Brown. I. Don was at the forefront of new media before the term even applied. He was a co-founder of USA Today Sky Radio, a pioneering in-flight radio service. Later, he was co-founder and president of Qradio, Quincy Jones' online music site. More recently, he guided broadband and radio development for Space.com. Ruminating over lunch about the problem of infinite spectrum and excess capacity, he and I realized PVRs could be used to create new niche networks at such low cost that they could serve small audiences--and the advertisers who want to reach them--with great effectiveness.
The concept is deceptively simple. PVRs are devastatingly effective time shifters. They're also great aggregation devices. If you're a fool for old movies (as I am), you spend 10 minutes a week flipping through the comprehensive schedule TiVo uploads to its hard drive, make your choices, and each night have a personalized movie channel. As it now stands, such personalized channels are entirely "pulled": My channel reflects my selections. Both TiVo and Replay do push programs onto users that reflect their viewing habits, but the technology is crude--nothing like the goods a canny programmer would provide if he or she really understood me or my cohort.
That is the key insight to my crude business idea. It seems a simple matter for independent programmers to assemble their own virtual "networks," using a combination of original and existing programming. The shows could be programmed across the dead air of individual cable and satellite systems, and aggregated at the client side inside home users' own PVRs.
These networks could be targeted at niche audiences large enough to interest advertisers but too small to support a free-standing cable or satellite network. Is there an audience beyond the Food Network? The Italian Food Network, perhaps? How about the Noir Network, for those who can't get enough '50s B flicks from Turner Classic Movies? The possibilities are limited only by the creativity of the programmers and marketers who come together to identify these new niches, and the needs of the advertisers who want to reach them. The risk they'd be undertaking is substantial but still far less than creating a "real" TV network, with its infrastructure costs and the need to negotiate with--and pay--cable and satellite systems for carriage. Better yet, because PVRs are interactive they can return real viewer information to the advertisers, solving the Nielsen problem once and for all.
Sure, there are problems with this idea--foremost among them the low penetration of PVRs. But that's about to change. The other day I ran into Michael Silbergleid and Gregg Luckner, respectively the editor of and a columnist for a wonderful Web 'zine, DigitalTelevision.com. Perusing their site and links, I discovered TiVo is soon to be embedded in new digital set-top cable and satellite boxes. There are even rumors of PVRs with 60 hours of capacity--enough for a full week's worth of watching.
The Rugby Channel, anyone?
Copyright October 2000, Crain Communications Inc.