A New Revenue System for TV Shows

What if advertisers stopped buying TV spots? What if they decide to spend their advertising budget exclusively in other mediums? How would television shows be funded? Here’s my proposal, which might also be best if television shows (instead of television networks) wanted to maximize the amount of money they make:

Have each user pay $X a month for unlimited video. A cable box-like device would measure how many M minutes you watch each show (or network, although I don’t think we need networks anymore, but that’s a different post).

That show’s income would = M (minutes of show watched) / T (Total Minutes of Video You Watched) * $X (the monthly service fee)

For example: The service costs $40 per month, I watch 5 episodes of The Office with each episode being 20 minutes long, and I watch 800 minutes of TV in the month. The creators of The Office would receive (20 * 5) / 800 * 40, or $5. With 9 million viewers, these numbers add up quickly.

Of course, the company (most likely cable or satelite provider) that creates and adminsters such a system would charge an administrative fee (I’d imagine it around 10% – 20%).

Some Consequences / Impacts:

  • The more popular your show, the more money it makes, instead of going to the TV Network.
  • Built in residual income — if your show gets popular five years after it comes off the air, you still get paid and can turn a profit. This is basically The Long Tail effect.
  • Contracts structure might be changed so that more actors / directors / writers are paid a percentage of the total income, instead of a one time fee. This better aligns everyone’s incentives for a successful series.
  • Instead of pitching an idea to a TV Network or production company, you could pitch it directly to a venture capitalist (Sillicon Valley Style). You’d just need one (really rich) person to believe in your project.
  • This same cable-like box could also incorporate an Amazon / NetFlix like recommendation system for TV. Users can rate and review shows, and receive recommendations on what shows they may like based on how they’ve rated shows to date.
  • Would there be a need for television networks anymore? This could turn into a Yahoo! Music type stream, where everyone has their own customized channel(s) with the shows they like to watch.
  • Everything but news and sports might become on demand
Opinions? Any obvious consequences or impacts that I missed?

One Reply to “A New Revenue System for TV Shows”

  1. This is a brilliant idea….I think networks….like record labels….should eventually go extinct…..
    I think this is a brilliant way to monetize content without having to suffer advertising……
    My only concern would be the rise of prod. integration……
    I think you should fine tune this proposal and pitch……TV is moving in a new direction….

    Question to consider: how will shows advertise themselves on TV? maybe a screen at the end which (like you said) reads “shows you might like?”

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