Building a High Rise on the Foundation of a Colonial Home

 

Television. When you’re building something from the ground up, it needs a good foundation. The Empire State building, for example, rests on a foundation that is 55 feet below the surface of the earth. The same applies to business, not just monetarily, but in the way ideas are executed. Rob Long wrote about Netflix’s disruptive influence on television. The question then follows: Is Netflix built on a solid foundation, or will it crumble under its own weight?

Entertainment media in The United States lays on a foundation dug and set between 1926 and 1927 by two men, David Sarnoff of the Radio Corporation of America and William S. Paley. When those two men established their radio networks — NBC and CBS, respectively — they decided that audiences would receive their product for free and that programming would be paid for by advertisers. The audience, of course, had to purchase their radio sets (a bonus for Sarnoff if you bought an RCA model), but that was it.

Pet

1950: After 15 years with Johnson’s Wax, Pet Milk steps in to keep a radio institution on the air. Radio sponsors bailed to television rather quickly.

This model would endure for the next half century. To be sure, there were modest modifications along the way. In the beginning, the networks merely sold time and didn’t do much programming; as such, radio became the medium of advertising agencies. They bought half- and whole-hours and filled them on behalf of their clients. They paid the stars, the writers, producers and directors. The whole ball of wax was theirs.

21

Jack Berry (Center) and “21” star contestant Charles Van Doren. Notice the prominence of the sponsor’s name on the podium.

That stood right through the early days of television. Then came the quiz show scandals. And when it was revealed that producer Dan Enright was rigging 21, NBC brass claimed that they were just as much the victim of fraud as the general public since they had no control over the content.

Congress held hearings and passed laws (Yes, Virginia, it was Congress that reacted, not the bureaucrats at the FCC) and the networks responded by taking greater control over programming. Full sponsorships gave way to the birth of spot advertising buys.

And so it was until the 1970s. Cable television is as old as TV itself. (Signal meet mountains; mountains meet miles and miles of coaxial cable.) Then, Charles Dolan introduced a little thing called Home Box Office and Ted Turner thought of something called a “superstation” and 24-hour news networks. Slowly, Americans warmed to the idea of paying for additional programming, both with and without commercials.

That success, however, was bought with a price. Reruns of off-network shows slowly migrated from local independent stations to cable networks. And so did the local sports they carried. A segment of society that used to get such programming for free found they were left behind when they could not pay.

Audiences began to scatter. Government responded by approving consolidation and relaxing ownership regulations for broadcasters. It was a temporary save at best. With the advent of the Internet, the fractionalization increased exponentially. The programming fees for cable soared, as did consumer bills. Cord-cutting began.

CBSAANow, we stand on the threshold of an on-demand world. Even the networks are there. CBS charges $5.99/month for next-day, on-demand access to all their new programs, along with live streaming from one’s local broadcaster.

But what are the audiences’ expectations? If they pay on-demand, are they still willing to accept advertising just as they have since 1927? Who will fund development costs? Who’s going to pay for the bandwidth and more infrastructure to carry it? At least in the heyday of broadcasting, the networks didn’t ask you to pay the bills on their transmitters.

“Disruption” is here. But are the foundations there for strength or are we building on rubble?

Published in Culture, Entertainment
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  1. BrentB67 Inactive
    BrentB67
    @BrentB67

    Great article. I am not a TV guy, but have been very intrigued by Apple TV. If I can just pull up whatI want to watch, when I want to watch, with no advertising I am interested.

    Reading your article made me think of Sirius/XM radio. I used to like that when it first came out and didn’t mind paying for commercial free radio. Then they started with their endless in house advertising to cut down paying royalties and I was gone.

    I am willing to pay for 100% ad free content or watch advertisements for free content, but I am not willing to pay for content with ads.

    • #1
  2. RightAngles Member
    RightAngles
    @RightAngles

    Very interesting! I know that my college-student daughter and her friends do not watch TV. They stream Hulu etc on their laptops. Hulu charges a low yearly subscription fee now, with an extra fee if you want no commercials. My father was in advertising, so I’m very glad this didn’t happen when he was alive. It will be interesting to see what happens next. Product placement on steroids? More sneaky usage of social media?

    • #2
  3. Mate De Inactive
    Mate De
    @MateDe

    Upside to today’s model, content is king TV is vastly better then it was 15 or 20 years ago. Down side a scattered culture, I think Andrew klaven talked about this in one of his podcasts as there was a shared culture when everyone was watching the same thing, now not so much. But is that a good thing or a bad thing?

    • #3
  4. EJHill Podcaster
    EJHill
    @EJHill

    Mate De: But is that a good thing or a bad thing?

    I think it’s bad. I remember the days when Johnny Carson could create a nationwide toilet paper shortage with a bad monologue joke.

    But the question here is sustainability. Who or what in television survives?

    • #4
  5. RightAngles Member
    RightAngles
    @RightAngles

    EJHill:

    Mate De: But is that a good thing or a bad thing?

    I think it’s bad. I remember the days when Johnny Carson could create a nationwide toilet paper shortage with a bad monologue joke.

    But the question here is sustainability. Who or what in television survives?

    It’s bad. It contributes to the fracturing the culture has already undergone due to multiculturalism.

    • #5
  6. Z in MT Member
    Z in MT
    @ZinMT

    EJ,

    I thought for sure this was going to be a post about Trump’s future remodel of the White House.

    • #6
  7. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Really good article & a necessary companion piece to the disruption article. Main feed!

    You bring up a couple of possibilities, but I’ll only consider one: In the future, stuff that will be common will be free stuff. Say, youtube, not Netflix. That suggests a class divide. Some classes will pay for content, & partly because they can. Others will avoid content which requires payment, & partly as a rejection of the class-implications. The peculiar arts of persuasion typical of sophisticated audiences & to popular audiences will divorce sharply.

    This will effectively turn comedy into class-warfare & drama into propaganda. It will make it impossible for poets to make poems in which America is a whole. The primary problem is not the fragmentation of the audience, for there is no such thing as individualism. (Individualism in Silicon Valley means one thing, but far a different thing in the states tainted by a drug epidemic–recently, oxy &, when banned, heroin.) The primary problem is that the separation into permanent classes–like the libertarians promise: Do you know Messrs. Tyler Cowen & Charles Murray?–will leave poets no way to defend themselves from class prejudice.

    It is not possible for the most conservative, America-first American today to say that redneck comedy & college-liberalism comedy (Messers. John Oliver, Jon Stewart…) are not mere class prejudices with neither respect nor sympathy for each other, but endless contempt. Prejudices instilled in the young are reinforced endlessly by contempt. Opinions that cannot cut across class lines are strengthened.

    • #7
  8. Paul A. Rahe Member
    Paul A. Rahe
    @PaulARahe

    Let me add another angle. What about movies? My sense is that the industry is in trouble. Most of what it produces operates on the level of video games and is aimed at pre-teen and teenage boys. Real drama is rare.

    It is rare, that is, at the movie theaters. It seems to have migrated to television. Think of Breaking Bad, Downton Abbey. I could go on.

    Is television supplanting the movies when it comes to real drama?

    • #8
  9. EJHill Podcaster
    EJHill
    @EJHill

    Paul A. Rahe: Is television supplanting the movies when it comes to real drama?

    Yes. But because the domestic audience for movies is irrelevant. Overseas markets now push motion pictures unless you can make a favored political point. Do you think The Imitation Game gets made if Alan Turing had been straight?

    Disney made a film about the heroics of the United States Coast Guard called The Finest Hours. They are expected to take a $75M loss on the project.

    • #9
  10. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    It’s arguable that on-demand streaming has actually caused a boon (or a dead-cat-bounce) for over-the-air broadcasting.

    Lots of cord-cutters who switch from the expensive monthly fees of cable television to the a la carte payment model of online streaming have taken to hooking rabbit ears up to their big screen TVs in order to get local HD programming through-the-air.

    There’s a pretty decent business selling “HD quality” tv antennas.

    I suspect these things are kinda like “premium” audio cables, but I ended up buying one anyways.

    Doesn’t work for everyone, of course, but since I live on the 24th floor of my building I get really good reception on channels from pretty far away, like upstate New York for example.

    • #10
  11. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Paul A. Rahe:Let me add another angle. What about movies? My sense is that the industry is in trouble. Most of what it produces operates on the level of video games and is aimed at pre-teen and teenage boys. Real drama is rare.

    It is rare, that is, at the movie theaters. It seems to have migrated to television. Think of Breaking Bad, Downton Abbey. I could go on.

    Is television supplanting the movies when it comes to real drama?

    It’s true that the dominant audience for blockbusters is young: Kids–animation–or boys & girls, with their different violent, sarcastic movies. But it still is the case that some of the people making comic-book movies–Batman or Superman–are far superior as poets to the people who do TV. TV does mediocrity far better. But there is nothing that matches with movie excellence. I’m not sure why–there’s enough money, job security, prestige, & popularity in TV.

    Maybe this will change, if movie spectacles cannot maintain their attractions. In a sense, it should change, if movie-makers who have ability but no resources turn to TV & are allowed to work. But I don’t really have evidence of it happening…

    • #11
  12. Vectorman Inactive
    Vectorman
    @Vectorman

    RightAngles:Very interesting! I know that my college-student daughter and her friends do not watch TV. They stream Hulu etc on their laptops. Hulu charges a low yearly subscription fee now, with an extra fee if you want no commercials. My father was in advertising, so I’m very glad this didn’t happen when he was alive. It will be interesting to see what happens next. Product placement on steroids? More sneaky usage of social media?

    I watch Hulu online for “free” with commercial breaks. About 50% of the movies and programs are only on the yearly subscription, but there are plenty of freebees leftover. I particularly like the Korean dramas, as they can have adult themes without the gratuitous sex scenes. Reminds me of Hollywood movies of the 1950’s and 1960’s.

    • #12
  13. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    EJHill:

    Paul A. Rahe: Is television supplanting the movies when it comes to real drama?

    Yes. But because the domestic audience for movies is irrelevant. Overseas markets now push motion pictures …

    There is a lot to this. I’ve put up some numbers for Ricochet to show how it works. But really, the world audience needs the guidance, it seems of the American audience, which seems to introduce franchises, but is rather unnecessary afterward. As always, the question about leadership arises: Is the American audiences leading where it wants to go or where the global audience wants to go? There is some evidence of a difference between movies that make half their money in America & the rest. But even with the rest, there is this to consider: The studio or distributor may get half the money from domestic box office receipts–the rest stays in theaters–but far less on overseas monies. So there is still an economic basis for American dominance. There may be a deeper problem–the movies that, although astonishingly popular, are far more popular in America than the rest of the world–not because they’re new, but because they’re too American–those stories may show something worth studying by people who’d like to keep America American, as it were…

    • #13
  14. The Reticulator Member
    The Reticulator
    @TheReticulator

    RightAngles:

    EJHill:

    Mate De: But is that a good thing or a bad thing?

    I think it’s bad. I remember the days when Johnny Carson could create a nationwide toilet paper shortage with a bad monologue joke.

    But the question here is sustainability. Who or what in television survives?

    It’s bad. It contributes to the fracturing the culture has already undergone due to multiculturalism.

    It’s good. It contributes to the fracturing of the cultural conformity that has given us the likes of Barack Obama and Hillary Clinton.

    • #14
  15. Vectorman Inactive
    Vectorman
    @Vectorman

    Misthiocracy:It’s arguable that on-demand streaming has actually caused a boon (or a dead-cat-bounce) for over-the-air broadcasting.

    Lots of cord-cutters who switch from the expensive monthly fees of cable television to the a la carte payment model of online streaming have taken to hooking rabbit ears up to their big screen TVs in order to get local HD programming through-the-air.

    There’s a pretty decent business selling “HD quality” tv antennas.

    I suspect these things are kinda like “premium” audio cables, but I ended up buying one anyways.

    There’s no difference between HD antennas and old fashion outdoor (bow tie / Log-periodic) antennas on getting the signal to your TV. The HD antennas are just designed for indoor use.

    In the 1970’s, most middle size (19″) Analog TV’s had built in antenna(s) that you could pull out and make your own “rabbit ears.”

    • #15
  16. Jim Beck Inactive
    Jim Beck
    @JimBeck

    Morning Titus,

    Do you think that the contempt one class feels for another or the separation of one class from another is the rule or exception?  I think it is the rule.  Even if during the last 100 years or even before, since Gutenberg, we have had more common cultural lives through the Bible, McGuffey Readers, the radio, broadcast TV, we have had the usual class line divides, townies despise the farm boy. Even in our popular media we seem to take notice of these divides; from “Oklahoma”, “The Farmer and the Cowman”, https://www.youtube.com/watch?v=Vg5cwSBnyQU,  and from Buckley’s “God and Man at Yale” the contempt for believers was rather universal. Do you think that the class divides are different and more isolating that they were before.  Or do you think that it isn’t the media culture which has become more divided but the common beliefs in personal and civic responsibility.

    • #16
  17. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Vectorman: There’s no difference between HD antennas and old fashion outdoor (bow tie / Log-periodic) antennas on getting the signal to your TV. The HD antennas are just designed for indoor use.

    There you go, destroying my illusions that inside the plastic case from Best Buy there’s a fancy fractal antenna.

    I don’t want knowledge! I want certainty!

    ;-)

    • #17
  18. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    Jim Beck:Morning Titus,

    Do you think that the contempt one class feels for another or the separation of one class from another is the rule or exception? I think it is the rule. Even if during the last 100 years or even before, since Gutenberg, we have had more common cultural lives through the Bible, McGuffey Readers, the radio, broadcast TV, we have had the usual class line divides, townies despise the farm boy. Even in our popular media we seem to take notice of these divides; from “Oklahoma”, “The Farmer and the Cowman”, https://www.youtube.com/watch?v=Vg5cwSBnyQU, and from Buckley’s “God and Man at Yale” the contempt for believers was rather universal. Do you think that the class divides are different and more isolating that they were before. Or do you think that it isn’t the media culture which has become more divided but the common beliefs in personal and civic responsibility.

    Hello, Mr. Beck, glad to hear from you & Oklahoma! Just earlier today, I was listening to ‘People will say we’re in love.’ Oh, what popular music once was…

    I think along three lines: First, class contempt is inevitable, like contempt between all different groups. People who feel otherwise must look to the left, look to the right, & see they’re in heaven!

    Secondly, class contempt used to be concealed far better in America & both public life & political life especially was simply less class-divided or professional!

    Thirdly, democracy is dangerous.

    • #18
  19. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    So that at the worst time for class differences to be exacerbated–democrats get really angry at snobbery & have some of the aristocrat’s ability to feel humiliated, insulted, slighted–they are exacerbated almost inevitably, because the oligarchic classes are losing their aristocratic superiority & descending to irresponsibility & lack of tact on a mission to bring scientific control of life to everyone.

    It seems like every massive problem in America shows this combination of aristocracy in the lower classes & democracy in the higher, a weird inversion. Who sits around wasting more time, rich or poor? Well, daytime TV ratings don’t lie… Who obsesses over their children’s success & well-being & who is rather more callous?

    Schools get better & better for the well off, but seem to be getting worse for the worst off. The basics of aristocracy that keeps oligarchy tolerated & competent–make sure about education for everyone, given modern requirements for work–are abandoned by classes that seem to worry more about gluten or global warming, or any other inhuman responsibility.

    • #19
  20. Titus Techera Contributor
    Titus Techera
    @TitusTechera

    The reaction is that public education, really & truly, is done by popular music. Education as people think about it when the word comes is more & more restricted to classes who keep their kids away from popular music.

    • #20
  21. skipsul Inactive
    skipsul
    @skipsul

    As a cord cutter going on a decade now, what seems to be lost in this is that the content producers had abandoned me and my type long before we abandoned them.  I stopped regularly watching TV at all back in the 1990s!  I largely stopped going to movies by about 2006.  I rarely even watch them at home anymore.  The only reason I kept going with cable until 2008 was that I kept hoping that something worthwhile would turn up.  It never did.

    As I have pointed out in some of EJ’s similar posts over the last couple of years, the arguments he makes here have the causes and effects backwards.  We cut the cable and stopped watching TV or going to movies because neither venue was making content we wanted to see, much less pay for – and those channels had not been doing so for a very long time.  Bundled cable is effectively like a welfare state for TV – high taxes on what little you do want to pay for freeloaders you don’t want.

    Asking us to continue to pay for what we do not want in the vain hope that we will eventually get something worthwhile is rather akin to continuously sending political hacks back to Washington on the promise that they will get the government off of our backs, only to have them instead continue to vote for more taxes and regulations.

    Unlike taxes, though, I can choose not to pay for this.

    • #21
  22. EJHill Podcaster
    EJHill
    @EJHill

    Misthiocracy: It’s arguable that on-demand streaming has actually caused a boon (or a dead-cat-bounce) for over-the-air broadcasting.

    If the bounce exists is it the availability of the stream or the cost of cable? My bill, for phone, tv and Internet hovers around $1,200/year.

    The streaming vs cable argument may boil down to how many subscriptions will each family buy? The average family is a regular consumer of around 15 networks. That would be $75 in subs. Then you have to buy bandwidth to handle it. That will run you $50 or more.

    So you’re still paying $125/month and you’re still watching commercials with no DVR functionality.

    • #22
  23. skipsul Inactive
    skipsul
    @skipsul

    EJHill: Disruption” is here. But are the foundations there for strength or are we building on rubble?

    The business is changing, and people will get what they are willing to pay for in terms of time and money.  That is the new foundation, and like any business foundation it will be as strong as it needs to be to make money.

    • #23
  24. skipsul Inactive
    skipsul
    @skipsul

    EJHill: The average family is a regular consumer of around 15 networks. That would be $75 in subs.

    That may be the case now, but I imagine that number will change as people readjust their budgets.  They watch 15 channels now because they do not see the individual pricing.  If they saw that pricing, they would economize.

    • #24
  25. EJHill Podcaster
    EJHill
    @EJHill

    Skipsul – But right now Netflix and others are riding on a foundation you hate. They rely on it for development costs and a high quality library. If you collapse that, what’s left? Will the next great series come “fund me” donations? I seriously doubt that.

    • #25
  26. skipsul Inactive
    skipsul
    @skipsul

    EJHill:Skipsul – But right now Netflix and others are riding on a foundation you hate. They rely on it for development costs and a high quality library. If you collapse that, what’s left? Will the next great series come “fund me” donations? I seriously doubt that.

    Netflix and Amazon are starting to “roll their own” content, so why assume they will continue to need the old foundations?  They are building their own.  And so what if they are distributing old content made elsewhere?  It’s not as if that content would even have an outlet otherwise.  It got them started, sure, but it’s not their model going forward.

    As for “the next great series” – isn’t this akin to the feds saying “but we built the Hoover Dam and the Space Shuttle!  You have to trust us to also fund the welfare state!”

    • #26
  27. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    EJHill:The streaming vs cable argument may boil down to how many subscriptions will each family buy? The average family is a regular consumer of around 15 networks. That would be $75 in subs. Then you have to buy bandwidth to handle it. That will run you $50 or more.

    So you’re still paying $125/month and you’re still watching commercials with no DVR functionality.

    Well, of course the calculus changes depending on one’s viewing habits.

    I’m a 40-year-old man who lives alone and is very selective about what movies and shows he watches, not an average family of 4.5 people where the kids would watch tv 24/7 if they were allowed to. My annual bill is just high-speed internet, a netflix account (and I’m sponging off my beloved’s account with that), and the cost of the shows I get a la carte from iTunes. No home phone and no cable, cell phone provided by my employer.

    I’d also like to echo skipsul’s comment about how very little of the broadcast networks’ offerings appeal to me. I pick at most 10 shows a year to watch from start to finish. Assuming an average price of about $35 per season on iTunes, that’s only $350.

    • #27
  28. EJHill Podcaster
    EJHill
    @EJHill

    skipsul: Netflix and Amazon are starting to “roll their own” content, so why assume they will continue to need the old foundations?

    Because Netflix and Amazon Prime have yet to show a profit. Right now they are relying on these development costs to be a loss leader.

    Netflix has just as many subs as HBO. But – and it’s a big BUT – does the bandwidth even exist for profitablity? Because Netflix is international it can’t even partner with other outlets the way BBC does.

    • #28
  29. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    EJHill:Skipsul – But right now Netflix and others are riding on a foundation you hate. They rely on it for development costs and a high quality library. If you collapse that, what’s left? Will the next great series come “fund me” donations? I seriously doubt that.

    Folk like me and skipsul are not their target market. They make their money off of the 15 to 30 year olds who watch a lot of tv, as well as the news and sports viewers who watch live broadcasts.

    Streaming and a la carte delivery are actually (arguably) a much better way to squeeze extra dollars out of older, more selective viewers who have little desire to pay for content they don’t consume.

    Cord-cutters did exist before streaming. I know a few older bachelors who got by just fine with rabbit ears and a DVD player. Thanks to steaming and a la carte delivery, distributors make more money off them now, not less.

    Is it enough to offset the losses from piracy? Only time will tell.

    • #29
  30. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    EJHill:

    skipsul: Netflix and Amazon are starting to “roll their own” content, so why assume they will continue to need the old foundations?

    Because Netflix and Amazon Prime have yet to show a profit. Right now they are relying on these development costs to be a loss leader.

    Netflix has just as many subs as HBO. But – and it’s a big BUT – does the bandwidth even exist for profitablity? Because Netflix is international it can’t even partner with other outlets the way BBC does.

    Technically, none of Amazon’s business has ever “shown a profit”, because of how they structure their accounting.

    • #30
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