Cutting the cord: a how-to for media companies (warning: I swear a lot)
Media companies have been in a frenzy trying to figure out how they’re going to make money in the age of this newfangled “internet” thing that’s been around for the past couple of decades. I’m a pretty benevolent guy, so I’m going to just lay it all down here for media companies to copy down. And when I say “media companies,” I’m talking about the networks, the ones you buy entertainment from as part of your cable subscription (or maybe you don’t because you live in the 21st century).
Media companies, you’ve been blaming the internet for all of your problems lately. The more time people spend being entertained on Facebook, the less time they’re spending watching your TV shows and movies. Not making the revenues you used to? “Blame piracy!” you say.
Piracy has several distinct causes. Sometimes people just can’t afford cable but they want to watch your shows anyway. Some people don’t like the ads. Some people don’t want to wait for episodes to end up on Hulu. Some can’t legally get your show in their country in a reasonable time. In all of these cases, there’s something you could be doing to have these customers’ business, but you choose not to, and instead you complain that they aren’t paying you money on your terms and that you’re stuck living a life of semi-luxury. Maybe copyright infringement of your content is morally wrong, maybe it’s not. Who gives a fuck? What matters is that you’re not making money and you could be making more if you’d shut the fuck up about how pirated content is the source of all your problems and maybe find the business opportunity. Below are steps you can take to correct this and prepare yourself for the future, so if you’ll stop being a little bitch for a minute, maybe you can get in on this action and maybe start seeing some growth again. Or don’t, and when you go under the world will wonder what could ever replace your unoriginal content.
First off, fuck the cable companies that you’ve got these longstanding relationships with. This is going to hurt, I know. They’re probably paying you some really good deals to have exclusive distribution rights to your prized TV shows, and to sweeten the deal they’re probably also taking some of your shit content too, and they pass it all off to the consumer in a “package.” Today, you as a media company are making most, if not all, of your money from these cable companies. It’s going to be really painful to walk up to them and say “nope, you’re not going to have exclusive rights to our stuff.” Before you continue doing what you’ve been doing, which is continue to lose viewers to other sources, let’s rethink the relationship you have with cable companies. It used to be that the cable company made its money from customers from one source: selling cable TV to subscribers. But since then, they’ve been capitalizing on this period of time during which they’ve been double dipping, collecting cable fees and internet fees. Well, you’re going to ultimately put an end to this by gradually negating customers’ needs for cable and you’re going to directly sell them the content, cutting out the cable company as a middle man. The cable company’s going to hate you over this. It’s going to kill off a big part of their business over time, and they’re going to have to get used to that. They’re going to have to downsize and they’re going to have to shift their investments into their internet infrastructure. Ultimately, they are going to thrive as the ISPs of the future, and they’re going to be better at it because then they’ll be focused exclusively on giving customers internet access. They’ll work more aggressively to extent their reach to more places, and they’ll look to investing more heavily into their backbone infrastructure as they seek to get more revenue per user by selling them more bandwidth at higher speeds.
The cable companies are going to fight you tooth and nail. They may even try pulling some shit in which they try to throttle their customers from accessing your content. It’s at this point that you call up the congressmen whose campaigns you contributed to (quit with your surprised looking faces; I know you contribute handsomely to their campaigns) and tell them to take swift action to protect your industry. Believe me, the consumers are going to be with you on this, and they’re going to love seeing this new Hollywood that is an advocate for consumers.
So what are we fucking cable companies over for? Because I don’t have cable and there doesn’t exist a legal way for me to watch new episodes of Shameless when they air. Because I’m part of a new generation of people who grew up with high speed internet access and we’re smart enough to figure out ways to entertain ourselves without paying a $100 triple play cable bill, yet here I am, wallet in hand, looking for a way to see popular TV shows first run, and you won’t fucking sell me the show. Why would you, as a content creator, ever want that? Rectify this. Start offering first run TV content online. Offer it so that everyone who wants to see the content first run can see it at a great price. Go to Apple and have Apple sell TV show episodes to users at 99 cents per episode. None of this variable pricing bullshit, just sell it to them at a flat price. Tell Apple that you want an 80% cut. Apple’s going to balk at this, but you know what? Fuck you, Apple. I don’t see you using your $90 billion stash of cash to create content that’s better than mine, and you’re not going to, because that’s not what you’re good at. You know what you are good at? Making a great device that will make it a joy to experience MY content. But you’re not going to sell many of those devices without my content, so you can take 20% or you can go penetrate yourself with a buttonless Apple remote control and admire how smooth it feels going in. But the key is that you put first run content in the iTunes store (and when I say first run, I mean first run, none of that east cost/west coast delay bullshit), and Apple will make up that lost 10% in volume, and they’ll sell more devices, and they’ll be happy that you made the deal.
For some reason you media companies have been so goddamn uneasy about selling TV shows online at a good price, instead looking to keep stuff on Hulu for free. You’re worried that selling at 99 cents an episode will devalue the content. Know what? you’re a fucking moron. I don’t know where you got your MBA and what crackpot theory they taught you there about your content, but advertisers are paying you something like a $20 CPM on your content. I once read that Hulu gets you a $60 CPM, or at least it was before Hulu started showing twice the advertising in a show. Selling your episodes through Apple at my aforementioned 80% cut of the retail price, you get an $800 CPM. That’s fucking forty goddamn times the CPM of what you’re letting advertisers pay you for that content. And in addition to making 40 times as much money, your TV show isn’t interspersed with some stupid ass animation of an army general trying to sell car insurance. Let’s be honest here, what really devalues your content? Assuming it’s a 23 minute show, customers pay a little over 2 bucks to watch an hour of commercial-free content. That’s $2 for 14 minutes of commercials saved, which means that as long as your customers’ time is worth more than about $8 an hour they’re coming out ahead. Of course, most of your customers are too stupid to do that math (because if they were smarter, they’d have stopped watching House after the first season, realizing it’s the same episode each time) but 99 cents will feel like a great price for the show. 99 cents is within reach of a ton of people.
First run content at cutthroat prices like that is going to sell like goddamn gangbusters. People who previously were blowing $100 a month on their cable bill on hundreds of channels they didn’t want, to get the few shows they did want, are now going to be more than happy to spend their money readily to get first run content. Now that they have a little more money to blow, you damn well better let them do it. Maybe they want to watch this one old obscure movie that isn’t on Netflix. Back in the days of physical media it was costly to distribute those movies and give them shelf or bargain bin space, so it made them more scarce. You don’t have that limitation with digital media. Get your entire catalog out there, available for purchase on the cheap. Again, shut your fucking mouth about devaluing content by making it ubiquitously available. We’re talking about your back catalog here. Any scratch you can make on these movies is better than the nothing you were probably getting before with your DVDs in a bargain bin at Walmart. Sell these babies for $3 or $4 a pop and you’ve got a sizable revenue stream coming in from old movies. Let Apple handle the selling of the movies and allowing people to keep their copies of the movie. Don’t try to pull some bullshit where the movie can only be watched a said number of times or will expire after a certain period of time. Customers aren’t buying it, and you’ll just piss them off. If I bought Forrest Gump and I’m sitting on the shitter with explosive diarrhea in a bus station and decide I want to continue watching it, then don’t fucking judge me, let me watch my movie and shit in peace, crapdammit. If I later buy a new iPad or whatever and want to watch it again, then don’t give me any fucking flack about it. I buy it, it’s mine to keep.
And don’t forget to sell your first run movies too! As much as I know you’d love to try to sell me a digital download of a movie that’s only in theaters for $40 because you think I’m desperate enough to pay it, think again. It’s not only in theaters, it’s also available on The Pirate Bay. I’m fine with paying $10 to watch the movie that early on. Don’t try to fuck your customers over with this artificial scarcity of limited release windows when the movie’s first out, because if you do that you’re a fucking moron. If someone wants to watch the movie and is willing to pay you money, let them fucking buy it. Are you sad that the movie theaters will go out of business with this new model? Fuck them. Their popcorn and ticket prices were obnoxiously overpriced and the previews were a goddamn half hour long (which I know was actually your fault as a media company, so fuck you too). You might have to start offering the content to movie theaters at a better price so they at least have a fighting chance, but with their concession stand profit margins they honestly could probably all retire now. Perhaps they could start selling their old 100 gallon drink cups to factories to use as barrels. I don’t know what they’ll do. They can be creative if they want to survive. Maybe appeal to some new markets. It’s not your job to be benevolent (and if it is, your customers sure as shit don’t get that vibe).
It all comes down to the fact that you’re still trying to run media distribution as if the internet doesn’t exist and that video content is a physical good that you can easily control supply of, and the fact that the internet exists is really starting to damage that delusion. You can accept this reality and do your best to try to make a profit from it, or you can continue living in denial, only throwing the tiniest of bones to Hulu and the like to make it seem like you’re interested in the future while you continue to let emerging entertainment forms start to eat away at your customers’ attention spans. If you’re not willing to sell people your content on the internet, someone else is going to start making content and they will be willing to sell that content, and their shows are going to gradually start appearing in conversation at the water cooler.