By Ryan McGreal
Published April 23, 2009
The Star reports that Ivan Fecan, head of CTV, told Parliament the Canadian network TV industry will "cease to exist" without being allowed to develop a new business model.
Fecan insisted CTV is not seeking a bailout. However, he said broadcasters must be able to charge cable TV providers for the right to carry their over-the-air signals - known as fee-for-carriage.
Alternatively, he said, networks should be relieved of their obligation to provide specified amounts of local news and Canadian content. That would be a less desirable solution, Fecan added, since there's not much point in providing local television stations if there's little local content on it.
The failure of the network TV business model has nothing to do with whether networks receive enough public subsidies or are allowed to carry more American shows, and has everything to do with the collapse in advertising as a revenue stream.
People have always hated interruption ads, but for the first time it's trivially easy to avoid watching them. That's why advertising revenue on TV is way down - the economic crisis has just aggravated a trend already in play.
The ideal answer is for TV viewers, rather than advertisers, to pay for the TV they watch.
Every business model has a seller, a buyer, and a product being sold. Under today's business model, the seller is the TV network, the buyer is the advertiser, and the product being sold is viewer eyeballs.
As a result, TV is tailored to suit what the buyer (the advertiser) wants, rather than what the product being sold wants. One result of this is an overabundance of bland, goofy TV shows that appeal to the lowest common denominator and are careful not to threaten the interests of advertisers.
If we switched to, say, a BBC-style viewing licence model, the market incentive would be for TV stations to produce shows that viewers want to see.
Shows could be smarter, edgier and more idiosyncratic, while news and investigative programs would be bolder and more controversial (no more could advertisers censor embarrassing exposes by threatening to withhold revenue).
At the same time, viewers would no longer have to sit through (or, increasingly, fast-forward through) interruption ads.
The model doesn't have to be a BBC-style licence. It may make more sense to sell TV on a pay-per-view basis, or via subscription to fairly fine-grained streams. TV networks could take a cue from online technologies and employ some form of Bayesian logic to develop a personalized program recommendation engine, a la Amazon's highly successful "Customers Who Bought This Item Also Bought..." feature.
The point is that a shift to having viewers pay for the TV they watch would improve the quality of TV by more closely linking what people want to watch with how much revenue the TV networks receive.
Today's advertising-based business model has run its course. The solution not to borrow from the future to prop up yet another failed business model, but to help the networks transition to a forward-compatible model.
Since TV is delivered over publicly owned radio frequencies, lawmakers have a critical role to play in supporting this transition in a way that results in better TV with sustainable funding.
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