Tuesday, June 11, 2002

I want my Tivo! Here are some advertising rates for television. My primetime viewing is worth roughly $0.0065 - $0.013 per 30 second commercial. I'm not sure what the difference between the network television cost and spot television cost is; those are the two bounds above. So assuming I watch 4 hours of primetime television a day, or about 122 hours/month, and there are 30 such spots per hour of television, I am worth about $18.30 - $36.60, roughly speaking. Now, let's ignore for the moment the specifics of my demographic information (plus: 18-35, college education - minus: under-employed, cheap) that might affect those numbers. Let's also ignore the overhead costs of managing advertising sales at the networks, as well as that these costs come from the networks, not the ESPN2 that I've been watching lots of lately. And then, of course, we ignore the large number of ads on television that are for the network's own programming. I'm worth, at most, $37/month (assuming average household size of 2) to the networks. That sounds like a lot. But then we note that my cable bill is $45 + $11 for HBO. So making me pay explicitly (again noting that this number is inflated) for my television programming would cost me about 50% more. That's not a small number. But it's not a huge number either. I don't know if I'd want to pay that much for commercial-free television because, well, I don't know what commercial-full television is like anymore. I'm guessing my actual worth to a network is considerably less than that, perhaps in the teens of dollars per month. I would gladly pay that directly. That's what the new business model should be to allow people to watch TV the way they want. People who own TiVo and similar devices should be able to pay the networks indirectly for the shows they watch in order to pay for the lost advertising time. People who don't own such devices get the programming more cheaply, but have to endure commercial interruptions. In a perfect world, television broadcasts would have hidden codes embedded in them so PVRs wouldn't even record the commercials. Of course there would be problems with cheating, but I don't see that sinking today's pay-for-cable systems. The networks need to realize this and embrace the future.

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