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There are two principle components of the new value chain of television hyperdistribution: the producer and the advertiser. An advertising agency is likely acting as an intermediary between these two, connecting producers to advertisers, working out the demographic appeal of particular programs, and selling ad payload into those programs; this is a role they already fulfill - although at present they work with the broadcast networks rather than the producers. There is no role for a broadcaster in this value chain; the audience has abandoned the broadcaster in favor of a direct relationship with the program provider. That said, the broadcasters are uniquely qualified to transform themselves into highly specialized advertising agencies, connecting advertisers to producers; this is something they already excel at.

This is clearly a viable economic model: the producer gets paid at least as much for their programming as they would have received from a broadcaster, and probably more; the advertiser gets a cheaper ad buy; and the audience continues to receive free television programs. This is a win-win-win scenario, unless you're a broadcaster.

Although broadband uptake is ramping up rapidly throughout the world, many areas have very limited broadband access, and many other families can't afford the fifty dollars a month for a broadband link suitable for television hyperdistribution.

Although broadband is still the exception in most households, at least 70% of those households now have at least one DVD player. DVD has rapidly supplanted VHS as the distribution medium of choice for audiovisual content, and sales of DVDs have passed twenty billion dollars a year. So, for the rest of world, which doesn't yet have broadband, and who might never want to futz with all these new technologies - could an advertiser just send them a DVD in the mail?

This may sound ridiculous on the face of it, but can we make the math work? Can we get to cost-equivalence for DVD distribution of television programs? Let's run the numbers again: if you really compress a TV signal, you can fit about 3 hours of video programming onto a standard dual-layer DVD. Because the ad breaks have been removed from the programs, that 3 hours is actually the equivalent of four hours of television programming - which is a fair helping of prime-time television. If I wanted to send this directly to millions of the households, it would cost no more than perhaps fifty cents per DVD. It's going to cost an advertiser about the same as ad buys in a television broadcast, but consider: this is no longer television by appointment. That DVD can be watched anytime, by anyone, anywhere there's a DVD player. These DVDs will have "handoff rates" close to those of magazines. They'll have long shelf lives. This model would probably be very successful.

If it seems ridiculous to consider sending a DVD to the majority of households in the English-speaking world, I have to tell you a story from my own experience in the United States. During the 1990s, AOL grew from a tiny company to a giant which would later swallow TimeWarner. A few times a year I'd receive an AOL mailing: in the mid-90s, these mailings would have a floppy disk in them, preloaded with the AOL software. By the late 1990s, those mailings would be CDs of AOL software. And these weren't targeted mailings - these were mass mailings, reaching most of the hundred million US households, at least twice a year. It got so bad that friends of mine made objects d'art from AOL floppies - and plenty of folks used their CDs as coasters.

Retailers mail circulars to their customers, or put them into newspapers; why not put a week's television programs into the weekend edition of the New York Times or the Sydney Morning Herald? (The Herald distributes the Sydney Tropfest DVD every year - this is no different.) These novel partnerships would bring the distribution costs way down, and have the added side-effect of raising newspaper readership. (Consider News Corporation, which owns newspapers and a television network. There are opportunities for real "media synergies" here.) There are any number of ways to make the economics of television distribution by DVD work. I believe that the first producer/advertisers to do so will open a door to a new form of distribution - television by mail, and television by newspaper.

What I've described so far sounds promising. But let's face it, there are going to be strong arguments against the widespread adoption of the hyperdistribution models I've just described - it's just that many of these arguments won't be based in economics. The first of these arguments will undoubtedly be inertia: everyone is making money, so no one will want to change. Producers will continue to sell their programs to broadcasters, and broadcasters will continue to sell ads to advertisers. It has ever been thus, it will ever be thus. While this argument is appealing, it assumes that the present, and worse, the future, looks anything like the past. It ignores the fact that because of hyperdistribution, the audience is already in control of distribution. The producer has lost control over where, when and by whom productions are viewed. The producer may fret and file lawsuits and lobby to change the laws regarding the copying and distribution of television programs, but these have little overall effect - though it will anger the audience. Consider that, despite the famed Betamax decision of 1984, it is still just as illegal to time-shift a broadcast television program in 2005 as it was in 1979. Yet no home viewer has ever been prosecuted for it. Why? Because you don't sue your audience. (Just ask Metallica how well that worked out.)

The producer has a better chance to reach an audience than ever before, but has no control over how productions reach that audience. If control over distribution could be maintained, if the oligarchy of commercial television broadcasting could consolidate its hold on program distribution, none of this would need to change. But it has already begun to change; the horse has already fled the barn.

The audience is asserting their control over television programming; this is actually a good thing, because the moments for television viewing are expanding in direct proportion to the exercise of this new power. Until very recently, television was an experience which was confined to the lounge room, shackled to a big, heavy box. But now we can watch full-length television programs on our mobile phones (a new capability of the latest generation of mobiles), or on the Sony PlayStation Portable (PSP), a high-resolution, widescreen, portable game and media machine, two of the new "must have" items for the younger set. Audiences are growing fond of the idea of on-demand TV, available wherever they are, whenever they want to watch it. Television viewing has become a multitasking activity; you might watch a short program - something like the 11-minute "Adult Swim" episodes pioneered on the Cartoon Network, or the 3-minute "mobisodes" being rolled out by various wireless carriers. You can dip in, watch something, then go on to something else. Television viewing is no longer wholly consuming; but it is also becoming more pervasive. Freed from the tyranny of the box, people will be watching more TV, and more different kinds of TV, than ever before.

Now for the economic objections. Television producers only make real money when their programs go into syndication - generally when a series reaches 100 episodes. Broadcast networks in the US are notoriously cheap - they'll cover some of the production costs for a CSI, but the rest is the producer's gamble. Fortunately, producers have begun to realize huge revenues selling DVDs of their most popular television series. NEWS Corporation, for example, earned unexpected record profits in Q4 2003, based on the sales of DVD sets of Buffy the Vampire Slayer and The X-Files.

Hyperdistribution will undermine the market for syndication and DVD distribution of television programming, so producers will be understandably reluctant to hyperdistribute their works. On the other hand, the direct relationship between the producer and the advertiser should mean that more money goes into the producer's pocket than ever before. With the disintermediation of the broadcast networks, advertisers will pay less, but producers will get paid more. Television production may not have the jackpot of syndication, but it should become a more profitable business overall.

Furthermore, people have been taping their favorite series for years, and that hasn't undercut DVD sales. People buy a DVD because it's packaged in a neat box, with special features, commentary tracks, and the kind of paraphernalia that a fan wants to invest themselves in. Owning a DVD is about more than simply having a copy of the program; it's a badge of membership in a community of fans. The core audience for a DVD of a television series will buy it, even when it is freely available through other means. And while DVD sales will certainly slow in the age of hyperdistribution - and syndication will likely disappear - that's lamentable, but unavoidable. Hyperdistribution isn't going away. DVD may have been no more than a brief, happy moment in the distribution of television, after TV went digital, but before those bits found their way onto the Internet. No one can reasonably expect those kinds of revenues will last forever.

Another, more important economic question arises: if broadcast television is abandoned as the distribution outlet for television programs, how will audiences know what to watch? It's believed that without the endless promotion that accompanies any television broadcast, the audience will simply evaporate. That's true insofar as the audience won't know what television programs to watch if they aren't advertised. But given that the audience is already being presented with a nearly infinite number of choices, that's a problem which producers will be facing whether or not they remain with the broadcasters. Even if a producer resists going into hyperdistribution, there are already many programs in hyperdistribution, and this number is rapidly increasing as Google, Yahoo! and others enter this field. Avoiding the paradox of hyperdistribution is not an option.

The only long-term solution to this problem lies in actively encouraging fan communities - social networks which spread the word about the show. That's certainly been a successful strategy for Battlestar Galactica: the SciFi Channel has been providing episode "podcasts" on their website - audio commentary by series creator and executive producer Ron Moore. Fans can download these podcasts and play them in conjunction with the program. (Interestingly, the podcasts are recorded as if the commercials have been removed from the broadcast - making them suitable as DVD commentary tracks, but also ideal for the edited versions that viewers have been downloading.) Fans want to be involved, they want to be enthusiastic. Fans want to make converts, encouraging their own circles of friends to watch the show. Podcasts are the perfect spoils for such folks.

Let me give you a personal example: my friends in Australia have formed a small cult of hard-core fans of a new Cartoon Network (USA) series, Robot Chicken. Robot Chicken isn't yet available in Australia - and may never be. A few months ago I read about Robot Chicken in a New York Times article, which I forwarded around; another friend downloaded the first episode using BitTorrent. That episode was funny enough to keep us hungry for more. So now, nine episodes into the series, we're all up-to-date on Robot Chicken, half a world away from its broadcast territory. I've told my friends. They've told their friends. And on and on and on. It doesn't require a broadcaster; it doesn't require advertising dollars. All it takes is a solid program and hyperdistribution. The audience takes care of the rest.

And so we come to the final objection, which is both economic and sociological: it's too hard for the average viewer to download hyperdistributed television programs. It is true that, as of this writing, the technologies used to locate and retrieve hyperdistributed programs aren't really designed with the average computer user in mind; they require some setup, and their interfaces are less than friendly. But even these crude interfaces have been enough to jump start Australia into first place globally in television program downloading. The situation is a lot like digital music, before the advent of iTunes; when Apple married digital music to an impeccable user interface, they touched off a revolution which gave them 70% market share in online music purchases, and a monopoly position in digital music players. But back in 2000, in the months before iTunes, people were making the same objections about downloaded music they make today about hyperdistributed television programs.

It's as simple as this: we're in an interregnum, that brief period of time before some bright young hacker or some clever company solves this problem definitively. When that happens, when the rest of us can download television programs quickly and easily, it'll seem like a bomb went off - broadband use will soar, people will desert the broadcast networks, and the only producers to survive this transition will be those who harnessed the strength a new value chain, where piracy truly is good.

There's no doubt that the broadcast networks will do what they can to slow the transition to this model, because they'll lose billions of dollars. But here's another paradox: they more they try to slow it down, the more they'll anger their audiences, and drive them to hyperdistribution. For the broadcast networks it's a lose-lose situation; all they can do is transition as quickly as possible to a live-interactive broadcasting model, and work to transform themselves into advertising agencies connecting producers and advertisers. Their future looks nothing like their recent past.

So, how do we jump start this? Which producer and which advertiser are willing to risk their livelihood on an unproven economic proposition? It'll likely be a fledgling producer with a hot property and nothing to lose, paired with an advertiser who thrives on being there first - perhaps BMW, perhaps Nike, perhaps a brand we've never heard of. Once the model proves successful, there'll be a groundswell, as the economics behind television production realign to accommodate hyperdistribution. And that time can't be more than months away.

Meanwhile, coming up from behind, beneath, and all around, the two giants of the Internet, Google and Yahoo, are laying the groundwork for hyperdistribution networks of their own. Already, you can upload your own content to Google Video, and very soon they'll make that video available to everyone else. Broadcasting is facing a threat that's not economic - it's attention-based. Those giant networks are providing a media experience which is personal and immediate, something a broadcaster can never offer. They'll change the face of television as well - and that's something which will be fully explored in hyperpeople.

The new laws of television production and distribution emerge from an understanding that the audience is in control of distribution, and that this is not a situation to be feared, but to be embraced wholeheartedly.

Rule One: Create Globally, Distribute Globally

An independent television producer can now reach the same global audience as any of the big studios. Distribution is no longer the barrier it once was; you don't have to get yourselves "over the hump" and into global distribution. All programs are now, at least potentially, globally hyperdistributed. This means that your content probably shouldn't be too localized. Productions need to be written with an eye toward the more than four hundred million English speakers in the US, UK, Canada, New Zealand, and Australia. If you can produce regional content that does well internationally, good on you. But don't plan on it. Work with universal themes, and universal stories - they'll give your productions legs to travel the world.

Because you have no choice but to release your productions to the world, you will need to develop a strategy to work with advertisers from across all the territories across the English-speaking world. That's certainly more work - and a burden which was previously shouldered by the distributor - but it's also an enormous opportunity. If you have a solid production, you'll be well rewarded for your efforts.

Rule Two: Shorter is Better. Funnier is Better.

The television moment is becoming more pervasive, as television spreads into mobiles and laptops and game machines. This is creating an enormous demand for programming well-suited to these devices and the situations where they're commonly used. This is the archetypal example of someone waiting for a bus or train, or having a few spare minutes at lunch. This audience often doesn't have the time to watch a 22-minute or 44-minute program; they have a few minutes to spare, and want to be taken out of the moment. This market generally favors comedy - such as Cartoon Network's "Adult Swim" episodes, which run for 11 minutes, or even shorter pieces, such as "Happy Tree Friends," or JibJab's "This Land" (which had over 70,000,000 downloads in one week). It seems that the shorter and funnier the piece, the further it is likely to travel. That said, this doesn't mean that television is about to devolve into slapstick. Robot Chicken, for example, is often highly intelligent, with jokes that work on several levels simultaneously, including satire, parody, and slapstick.

If you do have a desire to create drama, consider how to deliver it in small doses that leave the viewer wanting more. This tends to favor melodrama over drama; we're already seeing an explosion of short-form soap operas, a renaissance of telenovelas. If you have a grand design for an epic, consider how to deliver it in little, self-contained nuggets of entertainment. Study the audience; don't try to force your own dramatic ideas on an audience which doesn't have the time or attention to invest in them.

Rule Three: It Won't Happen Overnight

Although we are already into the era of the hyperdistribution of television programming, don't expect the broadcasters and their lucrative models of television distribution to disappear overnight. The bulk of this transformation in distribution will happen slowly, over the next five years. That's actually a good thing, because it gives you time to experiment, to learn what does and does not work. It gives you time to hone your skills. This is a new world for television, and a level playing field for producers. With the barriers to distribution gone as the audience takes control, you have as good a chance as Brillstein-Grey or Southern Star to create a series of hit programs. But how do you keep those hits coming? At every step along the way, with every production you create, look to building a brand identity. In a world where there are no more broadcasters, where audiences are getting their programming by any means necessary, brand identity will be the one way that audiences will separate the good from the bad. Having just one well-branded hit may be all you need to set you on your way to a very successful and lucrative career in television production.

Rule Four: Do It Or Die

If you ignore the coming era of hyperdistribution, we can write you off right now. You're in the same boat as a producer of radio plays in the 1950s; the most successful of those individuals established careers in television, but others ended up bitter and unemployed. We have to deal with the world as it is, not as we'd like it to be. The clock can't be turned back on BitTorrent. In the new, "flat world," where any program produced anywhere in the world is immediately available everywhere in the world, the only sustainable edge comes from entrepreneurship and innovation. Yet broadcast television has become a self-contained world, inside a comfy plastic bubble, breathing its own air, which - after half a century - has gone noticeably stale. It's ready to be shaken up.

The future belongs to the fast, cheap and out-of-control. Cheap productions will more easily find the advertising partners they need for hyperdistribution; costly productions will find themselves competing against so many cheap productions that they'll find it progressively harder to justify their costs in the face of ever-smaller ratings. The audiences of the future will only very rarely number in the millions. The "microaudiences" of hyperdistribution will range from hundreds to hundreds of thousands, but in that "long tail" of television productions there is a vast appetite for an incredible variety of programs. This is no longer an era of mass media and mass audiences: the dinosaurs of media are about to give way to the mammals.

I want to close with a story I read a few years ago, about the beginning of Michael Eisner's era at Disney. He had his right-hand man down in the vaults, surveying the crown jewels - fifty years of classic films like "Snow White", "Pinocchio", "Bambi", and "Fantasia". Every few minutes Eisner would get a call and hear, "I just found another hundred million dollars." Disney holds some of the most valuable screen properties in history; Eisner's genius lay in developing an economic value chain which could leverage their true value.

The transformation of Disney from a failing motion picture studio, mired in obsolete economic practices, into a massively profitable, vertically-integrated media megacorporation is a case study of how a transformation in distribution can breathe life into an entire industry. The renaissance of Disney owed more to the emergence of VHS distribution than any financial magic cast by Eisner. Yet VHS was decried as the "Boston Strangler" by Jack Valenti in the years before it became Disney's ace in the hole. Once an economic model harnessed the power of VHS distribution to the studios' advantage, all talk of piracy ceased. Profits went up. Everyone got what they wanted.

Thirty years later, we're at the edge of another transformation in distribution. The forces that cry "Piracy!" today will be congratulating themselves on their "sound business practices" tomorrow. There's money to be made; there is a viable economic model. All we need do is connect the wires, and watch the sparks fly.

Download (using BitTorrent, of course) the live presentation of "Piracy Is Good?", delivered by Mark Pesce on May 6th, 2005 at the Australian Film Television and Radio School in Sydney. (200MB)

See for help downloading.

Part One: Hyperdistribution

Post-Script: The Swarm Manifesto
Written in response to news that the MPAA has filed lawsuits against six sites for sharing TV programs.

Mark Pesce is the co-creator of the Virtual Reality Modeling Language (VRML) - the first 3D interface to the internet - and the founder of the Interactive Media Program at USC's School of Cinema-Television. In 2000, Ballantine Books published Pesce's The Playful World: How Technology is Transforming our Imagination, which explored the world of interactivity through a detailed examination of the Furby, LEGO’s Mindstorms and the Playstation 2. In late 2003, Pesce was invited to the Australian Film Television and Radio School, with a mandate to redesign the curriculum to incorporate the new opportunities offered by interactive media.

Starting in June, Mindjack will be serializing Mark Pesce's new book, hyperpeople.
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