TV networks fight back amid online turmoil

But what’s the Internet upside for television? Print and music, of course, get to shed the costs of physical distribution — no more mailing magazines or shipping CDs.

Television, on the other hand, is already electronically distributed, in a way that makes lots of money for the networks and stations. But there’s a different benefit for television — getting out from under the cable and satellite owners. It didn’t take long, for example, for network TV executives to figure out that interactive advertising was going to be controlled by the set-top box.

In other words, if CBS sells an ad where the viewer clicks on Ashlee Simpson’s sweater to buy it, under the current distribution model the cable or satellite company is going to get a cut of the action. With video delivered on the Web, the network could get 100 percent of the deal.

So when do we all start watching television on the Web? Certainly not anytime soon.

Computer manufacturers need to sell more media-centric machines, such as Media Center PCs, that connect directly to the big screen in the living room. Delivery to cell-phones must also be standardized and simplified. Apple could provide a boost when it finally provides a living-room Mac with full television compatibility— not to mention a video iPod phone.

Television producers have to be convinced that digital rights management systems will protect them from the illegal downloading of the music industry. And then Internet picture quality needs to improve. That last is inevitable: video compression and bandwidth will only get better. And MP3s and iTunes have already demonstrated that consumers will give up some quality in return for convenience and control. 

Finally, it’s once again worth looking at history. Ten years after newspapers went onto the Web, print circulation is beginning to drop substantially for many papers, while their Internet properties grow by double digits. On the music side, the value of legal downloads tripled in 2005 even as CD sales fell 7 percent, and neither trend is slowing.

It’s only logical to assume that five or 10 years out, the television landscape will see a similar shift. Cable, broadcast, satellite — plus the new telephone company fiber-optic systems — will still deliver lots of video, especially high definition. But both consumer video buying and advertising spending will increasingly move to the Internet.

It’s still very early days for the television industry on the Internet, but so far it seems to be doing an excellent job at keeping its business options open. Ironically enough, even though Internet entrepreneurs have always glorified the “first-mover advantage,” television may demonstrate that the last to arrive at the party may occasionally still have the best time. 

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