Reuters’ Media and Technology Summit was held this past Thursday and during the event, hosts spoke to Google’s current senior vice president of video and YouTube, Salar Kamangar. Though it’s no formal announcement, Kamangar mentioned one very interesting idea: YouTube was looking into subscription-based content as a way for web viewers to watch channels typically bundled up in more expensive cable network packages.
Cable Companies Aren’t Playing Nice With the Internet
This comes at a particularly tense moment in relations between the cable companies and the internet services they never expected to compete with. On June 13th, the day before Reuters’ media summit was held, the Department of Justice opened an investigative probe into cable TV practices and whether or not they are improperly suppressing Internet competition. As they say in old Westerns you’re now probably watching on Netflix instead of television, “these parts ain’t big enough for the two of us.”
The DOJ probe has a number of different accusations against cable companies that it is investigating. Cable companies and bundled channels have adopted the practice of hosting their website content behind a subscription gateway that usually requires additional monthly purchases on top of a cable subscription. The services offered by these extra subscriptions are identical to what other online content providers are providing or could provide, and cable companies are simply extending their influence over the internet to collect unnecessary and potentially unlawful fees.
The probe is also investigating the legality of contract clauses that reward cable companies the lowest fee prices for content distribution rights—fees that are more expensive for online content providers seeking to deliver the same material to their customers. If your favorite TV series or movie isn’t on Netflix or Hulu, it’s likely because cable companies are being unfairly favored over online providers.
Opening Up the Tubes For New Business Models
Most importantly for internet users, the probe investigates the legality of data “caps” imposed on broadband internet subscribers over the past few months. Every major cable company announced a data cap that would hinder certain content services in favor of others: making Netflix perform poorly with an artificially bad connection while proprietary online video services and on demand cable TV content run fine, for example. These data caps are seen as hostile attempts to stifle online content providers in favor of cable television.
YouTube providing subscription content would essentially put it in direct competition with cable networks, an incredible idea that has been years in the making. Cable TV has consistently lost subscribers over the past years due to customers switching to the web: between 2008 and 2011, studies found that 2.86 million people canceled their cable subscription and that 50% fewer customers are signing up for cable TV compared to last year.
Personally, this isn’t a big surprise. For years, cable TV was the pinnacle of “rich media,” but now the internet is king of that domain. Many say that internet piracy is killing the media industry, but with blockbuster movies breaking billion-dollar box office records and entire TV series being snapped up on release, the media industry clearly isn’t “dying”; simply changing. Piracy isn’t even the driving force behind the change: there are plenty of legitimate online content providers like Netflix and Youtube that are powering valuable new shifts and trends in technology.
The Bottom Line: Get Ready for Cheesy Song Lyric Headlines About the Media
I was tempted to make this article’s headline “Internet Killed the Video Star,” but instead left it to the dozens of rehashes of that line we’ll see again and again over the coming months. As media businesses continue to evolve, consumers will inevitably get caught in the middle. We may see a boatload of new fees that turn people away from their favorite outlets in favor of new ones, or we may see a boatload of new services that could one day be the next YouTube. In the near future, when you say “I Want My MTV,” you may turn to the internet instead of the television. For now, we can only wait and see.
And from a different perspective – would you pay to watch Youtube Videos? Imagine a world where those cut little cat and dog acts were charged per play….okay, maybe not.
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