Friday, August 14, 2009

Setting TV Free

Re-blogged from C21 Media, due to the absence of a link I could copy.

Chris Anderson, editor-in-chief of Wired magazine and author of books including The Long Tail and Free, gave his take on how broadcasting is changing at a recent event to launch new BBC series Digital Revolution.

When you cast back to the beginning of broadcast in the 1920s for radio and the 1950s for television, if you look at it from an economic perspective it was profoundly different than anything that came before.
When you put up a radio or television tower you could reach a million people for the price of one. The marginal cost of reaching the next person was close to zero. We didn't really think much about that.

But as we turned it into a business we realised that what we needed to do was to create a form of content that would suit everybody at the same time.
The way to amortise the cost of your towers was to reach a million people, to be able to broadcast messages to as many people as possible so you could sell those audiences to advertisers and so we had to invent this new content called mass media - the blockbuster and the primetime hit and bestsellers. We had to invent the kind of content that suited everybody at the same time, and this defined the 20th century. The 30-minute sitcom, the happy ending, the movie stars - these were all designed to reflect the commonalities of our taste, and that was incredibly powerful.

Now we've invented a new medium and this new medium has its own technological and economic logic. We are essentially economic animals whether we think about that or not.
And what's different about the internet and broadcast is that broadcast had an implicit trade-off, which was that you can reach many people at the same time with a very limited number of channels.

We all watched the same things at the same time.
The internet allows you to broadcast with an infinite number of channels, and what we're now realising is that while with it too the cost of reaching other people is close to zero, there are no limits to the size of the audience. It is scale-agnostic. It works as well for a million people as it does for one person. And it works two-way, which is to say it's not guys like me or the BBC deciding what we're seeing, it's individuals seeing what we see. We think of that as being a social phenomenon - it certainly is, this peer-to-peer function, this ability to broadcast without regard to how large the audience might be - but it's also an economic function, and that's because digital stuff has this extraordinary ability to not only cost almost nothing for reproduction and distribution but to get cheaper over time.

The 20th century was the century of stuff and atoms and physical production and that's an inflationary model - everything tends to get more expensive over time. The internet, Moore's law of processing and its equivalents for storage and bandwidth, is the first industrial economy in history that has for decade after decade continued to get cheaper every year. Whatever it costs to stream a YouTube video today, it will cost one half as much a year from now and one half as much a year after that, and continues to get cheaper and cheaper over time.

What this allows us to do is not only use the internet wastefully without regard to its underlying costs - to treat it as a blank page without rules and regulations about what's appropriate and responsible - but also to use it as our creativity dictates because the economic cost of doing so is so low. It also allows us to build businesses without implicitly knowing how they're going to make money.

It allows us to build large audiences at very low cost and allows companies as small and as powerful as Twitter to be run on 50 people - companies with network television-sized audiences to be run with cottage industry-sized staff. What this creates is a world where free in both senses - free as in liberty, and as in cost, gratis - drives the underlying usage of the medium. That's where the creativity comes from because we're free to do what we want. We're economically liberated to do it at almost no cost.

So from an economic perspective the internet is the first truly free medium that we've ever created and we've just begun to see what we'll do with it.

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