ABC's Lost gambit

Despite selling a lot of copies of Lost, the wickedly wierd castaway drama, through Apple's iTunes, ABC is planning to offer free versions for streaming viewers. It makes sense, because streaming is a different channel.

Lost on a phoneThe announcement that ABC has decided to provide free streaming versions of its hit television shows, including Lost, has people shaking and stirring their perceptions of media. Jeff Jarvis says TV has "finally exploded," but that's a judgment that's about two years too late. Advertisers have been looking for newABC went with this tactic because streams provide metrics familiar to advertisers. channels for years and, according to advertising industry sources, there are "billions of dollars" in play for programmers that can capture some of the former broadcast revenues with new audiences and metrics.

In fact, TV, along with every other analog medium, exploded a few years ago. The pieces just started landing, and they're falling all over the place.

That's a very good thing, because we're finally seeing a lot of experimentation that is going to produce new business models for audio, video and text. I don't agree with Jarvis that every other media segment is at risk of losing its revenues to television. Rather, there is a war coming, one that will be based on the flexibility of channels and formats. It's microformats, yes, but also macroformats, those that include new approaches to everything from news to entertainment. If you haven't noticed in the midst of the terrible New York Times redesign, the newspapers are becoming video producers.

So, to the ABC announcement. Let's be clear that time-shifting is only part of the challenge "broadcasters" have to overcome. Streaming programs to the desktop is very different than making programs available for download, which can be moved to another device and location before being played. Place-shifting is at least as important, so streaming isn't the answer that will beat downloads, it will complement it.

The ABC move, though, represents flexibility. It's hugely important that we assume media will be delivered many ways, with multiple economic models. Every show will be delivered in many channels. For some, there will be the option to buy a show for a fee, never seeing or hearing an advertisement. For others, there will be free versions, both as streams and with advertising.

ABC's streaming strategy plays on its ability to measure the viewership of shows. As David Berlind points out, you can't skip the ads in the ABC streams and the user experience is spotty, at best: "Real timeshifting doesn't put an unreliable medium with unpredictable quality of service between me and access to the content I want."

ABC went with this tactic because streams provide metrics familiar to advertisers. Advertisers want to know their money isn't vanishing into the ether, never to return any value to their bottom line.

I've been working with Audible for the past couple years and we have a system that supports advertising and paid ad-free audio programming, because there is no single right approach to delivering programs or podcasts. The same show may be ad-supported and fee, one mode serving those that don't want to pay for their entertainment and the other for people who would rather have their audio without ads. You can debate what's right and wrong, but we recognized the only business option was to make many choices possible and see which perform best.

Streams are inefficient for the company delivering them, despite what some who envision everyone streaming everything someday like to claim. My good friend Rob Greenlee is high on streaming. It will be a mix of streams, downloads and other modes of capturing programming from one source and playing it on another. The spectrum isn't wide enough for all the streaming we might do, because reliable high-definition video/audio quality programs will eat massive swaths of available wireless throughput. Downloading, which can be prioritized differently, slowing down to make room for higher priority traffic is cheaper. This lowers the cost of delivery dramatically, making time- and place-shifted programming cheaper than any stream.

Of course, the audience doesn't see it that way. They see the stream as "free," though they are paying with their time and attention to the ads. The net result is that price pressure will force downloading fees lower fast while ad prices will determine whether there is a business in delivering ad-supported free programming. The consumer wins because the different channels and economic models will compete for the a new mix of audience attention/revenue. 

Lost downloads at iTunes may decline, but Apple and ABC can lower those prices to make ad-free shows more attractive. Likewise, when streaming proves to be inflexible or, at least, less flexible about the location where programs can be played, you may see an ad-supported download, too. There's nothing but change on the horizon.

With all these pieces raining down, there will be many experiments by folks picking them up and reassembling what used to be a programmer-defined experience into a user-defined set of choices.