1. The Centrality of Broadcast Networks
It seems beyond obvious that many of the dynamics that have plagued the music industry in the transition from CDs to digital downloads are driving changes in the market for video. A lot has been made of technologies like BitTorrent which allow/require anyone to be a distributor as well as a consumer of content. At the very least, it is true that the technologies needed to produce content have become much cheaper. I tend to think video distribution still has some interface issues to overcome but certainly BitTorrent and H.264 video codecs show that the underlying technologies for cheap distribution exist. This is especially true if the distribution takes place 'in network' as service providers pay a lot more when data crosses over internet backbones.
As a result of these changes it is becoming rapidly apparent that advertising on broadcast television is overpriced. In a way, the situation is analogous to the price of an SMS message. SMS, which is just text, has less functionality than email and has got to be the most expensive form of data transfer on the planet.
SMS = $0.20
Email = $0.0001 (12GB = $70)
The premium probably stems from a lot of factors but at least one must be the small number of mobile phone carriers and networks. Within their walled garden, it made sense to charge as much as people would pay. However as users become more network savvy, it makes sense to ask the question - why does sending my data over these particular pipes cost so much more than these other pipes?
Comments
These purposefully-inflated prices will continue until competitors to the SMS message (e.g. IM over wi-fi) are as easy-to-use and readily-available as SMS. Only once people make the move away from SMS will the market note that they are not worth their price.
Ross, I think you're 100% right that consumers won't change their behaviour until real competitors emerge. Hopefully the first step in this emergence is people becoming aware enough to ask the question - why is this so expensive?