Have you heard? Apple wants to get into the TV business. And the latest? The company supposedly wants to create a premium service that allows users to skip commercials. But wait, there’s more! Apple apparently thinks it can set up a revenue-sharing system that will pay programmers for the ads that viewers skip. According to former Wall Street Journal reporter Jessica Lessin and “people briefed on the conversations,” Apple is literally proposing to compensate media companies for the dollars they lose to commercial skipping technology.
There are so many oddities and possible permutations to this particular idea that I have to wonder if the media leaks are accurate. First off, there’s the premium ad-skipping service. Haven’t we had DVRs for more than a decade? What’s new? And if nothing, why would Apple need or want to negotiate some new type of payment plan to do what TiVo or other OTA DVRs already do?
Second, there’s the issue of determining the value of a skipped commercial. Is an ad worth more depending on when and where it’s skipped? If viewers increase ad-skipping behavior with other services, is the value of the ad decreased? What if a viewer sees part of an ad, but not the whole thing? How is the revenue split decided? Will Apple provide data on user behavior to programmers to validate ad-skipping fees?
Third, if Apple is willing to negotiate with programmers, why not just use the standard retransmission fee model? Sure, it sucks. But does create a compensation plan that requires complex evaluations for every commercial skipped sound any better?
Maybe Apple’s proposal to programmers is actually a modified retransmission scheme with blanket ad-skipping fees worked in. However, even that seems odd because it suggests Apple is willing to set itself up to pay more for content in order to attract licensing deals. Ultimately that move would put it at a serious disadvantage among pay-TV providers. How would Apple stay competitive?
The whole situation here sounds weird to me. The way I figure it, either the news reports are wrong, or Apple still has a lot of work to do figuring out television programming in the living room.