Why Free TV Isn’t Free on the Web

ESPN started the practice back in 2009 of tying online content access to a pay-TV subscription. And while it’s taken a while to catch on, the trend is starting to gather serious momentum. HBO has extended its campaign of streaming content behind a subscription-based authentication wall, and now Fox is getting in the game by pulling new episodes away from free websites, including its own Fox.com. Peter Kafka of All Things Digital reports that ABC may be next in line.

Here’s the thing. While ESPN and HBO have always been premium channels, Fox and ABC are part of the free broadcast television line-up, and the idea of paying for online access is a bit hard to swallow. If I own a computer instead of a TV (think dorm room), why shouldn’t I still be able to watch prime-time television?

The problem is that the business dynamics today are far different from what they were when cable television first entered the scene. First, online video delivery costs money above and beyond what it takes to broadcast OTA content. Second, cable (and telco and satellite) retransmission fees are a big part of programmers’ revenues, which means they have every incentive to make pay-TV subscription packages more valuable with exclusive content. And third, consumers can get free or cheap entertainment in a lot of different ways today, which means broadcast television really does align more closely with premium content than it did back in the 1980s and 90s.

I don’t like the idea of having to pay (directly or indirectly) for Fox content online any more than anyone else, but from a business standpoint, the programmer’s decision certainly makes sense. At least it does unless and until Fox starts to lose audiences. The question is, do consumers want their Fox content today as much as they wanted their MTV 20 years ago.

6 thoughts on “Why Free TV Isn’t Free on the Web”

  1. I recall the writer’s strike couple years back had a lot to do, if not all, with broadcast television/movie streaming its content over the interweb at no cost to the consumer while Fox, ABC and the like slapped ads on such streamed content and writers of all types were not getting any of the “new” enormous amounts of profitable revenue that was being generated. The reason, I recall, was writer’s contracts did not extend to online media distribution, but did extend to DVD sales, which were beginning to see its early slump in sales as more content was being digitized via itunes and the like year over year.

    Fast forward to today, just like the music industry finally getting its act together with drm free music and the like, we now have more ways to legally download/stream music than ever before, therefore it’s only a matter of time until the online tv/movie distribution market matures well enough as the online music market did for us to no longer require our televisions to watch broadcast content or even cable only paid content.

    example: listening to music on the radio is free while watching television over the air is free, but consumers have the option to pay for premium satellite radio only to get higher fidelity audio + endless channels and consumers have the option to pay a premium to get a la carte television content from abc/fox/nbc over the internet but still littered with commercials.

    “In areas like streaming video, despite the fact that it earns studios and networks significant advertising revenue, we get exactly nothing, because they claim its use is simply promotional.”

    source: http://www.wsws.org/articles/2007/nov2007/writ-n13.shtml

    In my opinion only: not to nitpick at anything you had to say, because i believe you understand what i’m about to say as well, but the concept of free television content over the internet made sense back in 2007 (and I stress at the time) since the idea of broadcast content was “free” to begin with over the air that why should consumers have to pay for the same content online? well, the same concept applies to over the air radio vs. premium satellite radio — no one questions having to pay for satellite radio even though its typically the same music content that’s free over the air, but we question having to pay for online network content when its the same content over the air on television as well.

    we wouldn’t be asking ourselves this question if tv networks debuted its digital distribution model correctly in the first place by paying writers instead of not paying them just like premium satellite radio required consumers to subscribe to its high value cost when its model first debuted, which, by the way, satellite radio quickly suffered in its customer base, because consumers quickly realized that premium audio was too expensive (especially these days) now that we can get internet radio on our mobile devices and into our cars even easier and cheaper than before, but that’s another story…

    in 2007 or earlier, networks didn’t have to pay anyone but themselves (more or less, yes, i’m sure they had very high bandwidth costs, etc) and we as the consumers benefited from this temporary “promotion” as the networks stated, only for the them to be forced to come to agreement, thankfully, by the writers strike that networks actually had to pay the talented people that make the their shows Emmy winning!

    It’s now 2011 — and the tv/movie online distribution model is still very much maturing and we as consumers are still asking ourselves the same question 5 years later: Why do we still have to pay for this online content when we can still get it over the air for free?

  2. Just so we air both sides here, I very much enjoy my TV Everywhere, my HBO Go, my Comcast Xfinity, my iPad video. All of this something that was impossible back in 2007. So while I certainly understand why people are pissed that they might be losing access to shows, I personally would be paying my cable bill anyway, and I like the extras I’m getting in the process.

    That said, the usual balance must be struck. Streaming video displaced P2P (torrents) traffic as the #1 consumer of bits on the internet in recent years because of all the free video available. Shift the balance too much away from consumers and piracy will rise in popularity once again.

    Also, the obvious: there’s only so many hours in a day for people to watch TV. And there are LOTS of other ways to spend your time. And no I’m not talking sports, or hiking. I just mean playing casual games on your phone, or browsing the internet, or watching free reruns on Netflix or … If people can’t watch Fox they can probably find something else to do. Like Mari says, until Fox’s ratings start to fall…

  3. If Fox went it alone I am guessing no one would pay for their content. I would rather pay for an OTA DVR than to subscribe to a single network on the Internet.

    However if it is part of a larger paid service like Hulu+ I think they will be fine and people will pay for the service because it is more than just Fox.

  4. I have to admit that Mari’s last sentence gave me a chuckle. I certainly hope consumers DO NOT want Fox content as much as they wanted their MTV 20 years ago–look what MTV has become in the last 20 years!!! ;-)


  5. I believe the Funny or Die Netflix spoof had it right:

    “Screw it, I’ll just use BitTorrent”

    ESPN and HBO can get away with it because they have compelling content. Fox? Not so much.

  6. “in 2007 or earlier, networks didn’t have to pay anyone but themselves (more or less, yes, i’m sure they had very high bandwidth costs, etc) and we as the consumers benefited from this temporary “promotion” as the networks stated, only for the them to be forced to come to agreement, thankfully, by the writers strike that networks actually had to pay the talented people that make the their shows Emmy winning!”

    In a nutshell, yup.

    Streaming video for next to free made more sense for the content companies back when it was a revenue stream that didn’t they didn’t have to pay their employees for.

    Now that the content companies only get a share of the pie in that revenue stream, to mix my metaphors, it makes sense that the economics would change.

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