[By Duncan McLeod]
The Internet seems to transform everything it touches, threatening old business models, and creating new ones. The big record labels were among the first to feel the pain. Then it was newspapers’ turn to feel the heat. Could television broadcasting be the next industry set for a shake-up?
It seems like just the other day, but it’s been more than a decade since Napster — the first high-profile peer-to-peer online file-sharing service — turned the music industry on its head. Napster was revolutionary at the time, allowing people to share music and other content easily online.
Record companies saw Napster as a threat to the very future of the music industry; many consumers embraced the free music, dismissing or ignoring pleas from the big labels not to pirate music on the Internet.
Napster’s long gone — it went legit and basically disappeared — but the technologies it spawned are still used by millions of people every day to download music, movies, and other content without paying for it.
Of course, a lot of legal purchases went online, too. Apple’s iTunes Store has generated billions of dollars selling songs, TV shows and movies. Last year Apple sold its 10 billionth song. It’s now the biggest music retailer in the US — physical or virtual — eclipsing even Walmart.
The iTunes Store accounts for more than two-thirds of all music sold on the Internet worldwide. It may be time to rename the compact disc, introduced commercially in the early 1980s, as the “compact dead”.
The music industry, suffering slumping music sales — it’s blamed online piracy, but the reasons are manifold — has been forced to reinvent itself. Concert ticket prices have risen sharply in the past decade as especially big-name artists look to counter falling record sales with live shows.
Newspapers are facing similar challenges. Publishing mogul Rupert Murdoch is throwing up pay walls around his newspapers’ websites, but most people in the industry think he’ll fail to stem print’s decline as news goes onto the Web. When The Times, a Murdoch paper in the UK, closed its website to non-paying readers, most people simply abandoned it for free websites operated by newspapers such as The Daily Telegraph and The Guardian.
SA papers have been spared the carnage witnessed in more developed broadband markets, especially the US. That may change as broadband becomes more pervasive and cheaper.
It’s been suggested by many people over the years that the Internet will eventually transform every industry whose main product is information that can be converted into digital ones and zeroes and sent down a broadband connection.
That’s certainly true of music and news. But one industry that’s escaped the transformative power of the Internet relatively untouched, is television broadcasting.
Pay-TV broadcasters, in particular, continue to thrive. It’s a dichotomy in a world where the Internet is becoming an ever more important component in people’s entertainment mix. But it’s a dichotomy that probably won’t last.
Television continues to attract eyeballs for several important reasons. The biggest is probably sheer human slothfulness. It’s easier to lie back on the couch, press a button on a remote, and aimlessly surf through channels than it is to go to a computer, download a movie, watch it on the computer, or find a way of squirting it across to some sort of television-connected set-top box.
Then there’s live sport. In a rugby- and soccer-mad country, sport will probably keep people coughing up monthly pay-TV subscriptions for years to come, even if they find themselves getting more of their video content online.
But the Internet will become an increasingly important source of video entertainment for consumers. Big technology companies such as Apple, Google and Microsoft have identified this trend and are all engaged in a race to design — and profit from — the next-generation living room.
Apple recently introduced a new version of its Apple TV product, ditching the device’s built-in hard drive, and creating a video streaming service linked to the iTunes Store.
If you have enough bandwidth — and live in a country where the service is available — you can use the Apple TV, which hooks up to most flat-panel television sets, to buy or rent the latest shows and movies in standard or high definition at the click of a button.
Google is approaching it from a slightly different angle. Instead of building its own set-top box, it’s created a software platform based on its Android operating system that can be integrated by manufacturers into high-definition sets or set-top boxes. The system, unveiled in May, is co-developed by Intel, Sony and Logitech, and provides instant access to online media services such as Netflix, Amazon Video on Demand, YouTube, Flickr, Pandora and Picasa.
And companies such as Microsoft and Sony are integrating Web-based television offerings into their Xbox and PlayStation gaming consoles.
Then there are the content aggregators like Netflix, which could be left holding the trump card in the new era where content is distributed not via satellites but over broadband telephone lines.
There’s no way yet of knowing who is going to win this race. What’s instructive, though, is that it’s the big tech companies, and not the broadcasters, which are at the forefront of developments.
Unless the broadcasters get more innovative, they could join the record industry bigwigs and the newspaper publishers in wondering what the heck happened to their respective industries.
- Duncan McLeod is editor of TechCentral; this column was first published in MTN Business’s customer magazine, [email protected]