Apple opens Pandora’s box for the media business, could have profound long-term consequences

21 years ago

“Last Thursday morning, Apple Computer Inc. started selling an episode of the hit television series ‘Lost’ through its iTunes Music Store for $1.99 after the show aired the night before on ABC. It marked the first time a popular show was made available for legal downloading over the Internet so quickly after its original airing,” Nick Wingfield, Joe Flint and Ethan Smith report for The Wall Street Journal. “With that, Apple may have helped open a Pandora’s box for the media business. The Cupertino, Calif., company and its first TV partner — Walt Disney Co., the parent of ABC — have taken a potentially significant step in the dismantling of a decades-old system for distributing TV programming to viewers, a move that could have profound long-term consequences for broadcasters, cable systems and satellite companies if more users download shows instead of watching them the old-fashioned way.”

Wingfield, Flint and Smith report, “It’s unlikely Apple will cause a meaningful diversion of viewers from traditional TV in the near term. For now, it offers less than a half-dozen TV series from Disney through iTunes. Shows can take more than an hour to download if users don’t have the speediest Internet connection. And the video quality is inferior if displayed on a large television, though the picture looks better on a computer or one of Apple’s new video-capable iPod portable players. But the partnership with Disney may be merely a first step for Apple, which said it expects to offer more TV shows. If downloading episodes over the Internet proves popular, analysts believe Apple will get permission to offer shows with better-fidelity pictures. [MDN/iPodDN added bold emphasis] Any success Apple has won’t go unnoticed by other online media powerhouses with expanding video initiatives like Yahoo Inc., Google Inc. and Microsoft Corp., which could all help extend TV downloading to more viewers.”

“The technologies are all part of the slow death of ‘appointment viewing,’ the mantra networks lived by for decades as they sought to habituate viewers to watching shows at one time on one outlet. The growth of TiVo and other personal video recorders that make it easy for viewers to record shows and watch them when they like, while skipping through commercials, helped undermine the networks’ control over viewing habits,” Wingfield, Flint and Smith report. “If Apple is able to assemble enough top-notch TV programming for iTunes, it could prove vexing to cable operators like Comcast. In the past, cable operators have faced pressure by politicians and consumer groups to offer individual channels ‘a la carte,’ rather than forcing all subscribers to pay for large packages of programming that most don’t watch in their entirety.”

Wingfield, Flint and Smith report, “TV advertisers, too, could someday be forced to adapt if Internet downloading of shows takes off, since the programs Apple is selling are commercial-free. Advertisers typically pay fees based on the size of TV audiences; if audiences shrink, they pay less. The Apple deal ‘is part of the changed world that we are living in,’ says Peter Gardiner, a media executive at Interpublic Group’s Deutsch ad agency. ‘This is about finding news ways to distribute content and it’s up to us to find new ways to advertise.'”

Full article with much more here.

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