The second season of Rome on HBO just had its third episode, and it remains a brilliant show, superb in wrting, acting, historical presence. Unfortunately, there will be no season three, because it draws only about 1.5 million viewers, and is very expensive to produce. These numbers do not add up to continuation.

On NBC, another good show, Friday Night Lights, is also in trouble, since a measly 6 million people tune in. It may not even survive the year.

But think about it -- 1.5 million/6 million -- that is a LOT of people. In each case, the problem is that the fans cannot register their appreciation by paying. Friday Night Lights requires eyeballs to attract advertisers, while Rome needs to build HBO's subscriber base a lot if it is to be worth the cost. Both are financed through these intermediate mechanisms, and sort of like most of the energy that goes into an engine is dissipated as heat, most of the consumer value of a show is lost in the frictions of these financing mechanisms.

If I and my fellow fans could pay, we could easily support these shows. I would pay $5/episode for Rome (and that is just my opening offer). Multiply it by a million, and you get a revenue stream of $5 million a week -- for that they can restage the chariot race from Ben Hur, every week.

The same goes for FNL -- charge a dollar a viewing set and you could easily finance the enterprise.

Now, I do not object if people want their TV free, and are willing to watch ads as the price. I will not interfere with their economic model. So they should not interfere with mine, and mine requires pay-per-view with DRM to exclude free riders. The market will evolve to provide both types of experience, as long as it is allowed to do so without destructive intervention.

posted by James DeLong @ 10:51 AM | DRM & Watermarks, etc., Markets: Business, Investment & Innovation

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