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From Forrester Research:
Forrester and the ANA (Association of National Advertisers) surveyed 133 national advertisers representing almost $20 billion in ad spending. More than three out of four told us that traditional television commercials have become less effective in the past two years. As a result, advertisers are formulating strategies to coexist with digital video recorders (DVRs) and are both shifting their spending online and experimenting with new TV ad formats and placements. Let there be no mistake about the meaning of this -- the DVR will, in the not-so-long run, destroy the current model of ad-based model of TV.
The math is simple: if a million people watch a show that contains 12 30-second commercials, and advertisers calculate that each pair of watching eyeballs is worth a nickel, then advertisers will pay a total of $600,000 to create and transmit that show. If the DVR cuts estimated commercial watch rates in half, then the value of the show, and thus the money available to create it, is cut in half. QED,
Personally, I dislike TV commercials, and watch shows on tape so that I can avoid them. But this makes me into a free rider, depending on the value created by other people to fund the shows I like. As my numbers multiply, the ad-based model will be able to create only much cheaper shows.
This shift is fine with me, because I am happy with pay-per-view, in either its subscription or transaction-based forms. So if regular TV shrinks and HBO grows, great! HBO will get more money to do even better shows! More Deadwood; more Rome.
But not everyone feels this way, and it is important to face the reality of what is going on in the shift to the DVR. It is also important not to interfere with the creative companies' development of new business models based on subscriptions or individual transactions, or on new advertising mechanisms, which means that it is abasolutely essential that their products be protected from piracy.
So bring on DRM! And down with Net Neutrality -- bring on bandwidth charges on BitTorrent!
posted by James DeLong @ 8:42 AM | Media: Video, Music...
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