In a recent New York Times column, Joseph Nocera ponders the rise of time-shifted media a la iPod, and shrugs. But then, he discusses this phenomenon with James Chanos, the hedge fund manager -- the guy that bet that Enron would collapse, and was proven monumentally right:
[from A La Carte? Nah, Hand Me The Remote]
For months now, Mr. Chanos, a well-known hedge fund manager who specializes in short selling -- that is, betting against companies -- has been articulating an investment theory that he calls, rather poetically, the The Twilight Of The Gatekeepers. The Internet he believes, is going to erode the value of -- if not destroy completely -- virtually all the companies that serve as intermediaries between the big content providers like Disney and your and me.
Chanos' theory suggests that Comcast, Blockbuster, and others that act as middle men in the media bazaar are dodos. And Apple's introduction of the Video iPod is a turning point, perhaps the inflection point where this die off becomes inescapable. Time to sell them short.
As Mr. Chanos sees it, the iPod deal is the next wrinkle in the assault on cable. "The important thing isn't the device," he told me recently. "It's the fact that iTunes is a software program that allows you to download video content." Which means that, in time, we'll download all our television programs, via the Internet, through some piece of software. Perhaps we'll have a box on our TV that looks like a cable box that resembles a cable box but is actually a wireless modem made by Cisco.
Or more sensibly, a wifi connector that pulls stored or streaming media from a PC. This is dead on, I think, although Nocera argues that the intermediaries -- like local cable companies -- will fight this tooth and claw. Let them. His arguments never dig very deeply into the reasons that individuals might want this revolution to happen, like time shifting, removing ads, and so on. He only mentions the fact that people will have to pay more for a la carte as opposed to bundled cable service. Gee. But in the unbundled world I have access to limitless channels, not the 500 Comcast offers. And if I don't watch, I don't pay anything.
And his final argument that this way to experience video is complicated compared to sitting down and watching TV is just dumb. The iPod/iTunes experience is amazingly simple and intuitive, and what we are going to see coming out in this battle for the living room will likely involve the best user interface designs in the world, as opposed to the bad, bad, bad stuff that monopolistic cable companies develop. Have you seen the Comcast email client, for example?
And, in the final analysis he goes on to suggest that the whole scenario is too far out:
Will there eventually be broadly available video-on-demand? Of course. Will people use media devices to watch news clips or NBA highlights -- or even "Desperate Housewives?" Undoubtedly. But does it mean that television as we know it is coming to an end? Not likely.
Once again, don't look to an aging member of the mainstream media to look in the crystal ball and foretell a revolution. Portable media players like the iPod did not exist a decade ago, and that, along with the Internet, has completely remade the music industry. Portable video players, including cell phones, connected to the Internet, will rewire the entire television/movie marketplace, and in a shorter time this time around.
So I am betting with Chanos, at least philosphically, if not with coin, and Nocera I relegate to the list of shortsighted mavens who fail to see the evidence before their eyes, or at the least, fail to come to the final conclusion.
1. mark on December 12, 2005 10:39 AM writes...
But isn't Apple's iTunes Store just another intermediary? Will it not be just that the carrier is no longer the intermediary? And we will go to one of a few stores instead?
Or do you think that each producer (Disney, Warner, Paramount, etc) will have its own store and we will go directly there via a browser (or descendant of such)?
Permalink to Comment2. Sam Damon on December 12, 2005 11:10 AM writes...
No, what's happening is this: We are rapidly moving to a "one-channel universe" where YOU are the program director.
And, as mentioned, if you don't watch, you don't pay.
Permalink to Comment3. thomas Barta on December 12, 2005 12:37 PM writes...
Damon is right on; the key feature is easy access to the content YOU want. Havimg said that, I don't expect Blockbuster etc to disappear-- they will get smaller, like bricks and mortar book stores did post-Amazon.
Permalink to Comment4. mark on December 12, 2005 12:50 PM writes...
I fully agree that the broadcast/cable scheme is on the decline. And that we will choose to watch what we want when we want. But that doesn't mean there aren't any intermediaries.
For where are you going to access that content? Except if it's the content producer, you are still going through an intermediary, just of a different kind. And if you want EASY access, it's likely not the content producers.
The new intermediaries (portals?) will have a always-available selection, not limiting you based on time, like the broadcast/cable channels.
Apple, Google, Yahoo, Microsoft, AOL/TW, News Corp, and possibly others are in a race to define and become the intermediary of choice.
Permalink to Comment5. Poster on December 12, 2005 01:46 PM writes...
Perhaps "intermediary" is a bit vague. There will be fewer and fewer physical storefronts as middlemen. Because music and video can be sent to individuals as data, then the physical store is in a precarious position. E.g. movie theatres are being replaced by Blockbuster, which is being replaced by Netflix, which is being replaced by iTunes. But iTunes is not an intermediary in the same sense as a Sam Goody's is. It is more like a virtual warehouse, not a value-added reseller. Yes, there will always be a need for a place to sell goods and services, but what we're seeing a shortening of the supply chain.
Permalink to Comment6. thomas Barta on December 12, 2005 02:05 PM writes...
One added value of iTunes for me is that you can hear
Permalink to Commenta 30 second clip before you buy. It is typically not convenient to do that in a record store, and if you try to do that on Amazon, you need to install crudware like WMP RealPlayer. I am not willing to load dodgy stuff like that on my system.
7. Steve Bryan on February 4, 2006 06:07 PM writes...
"they will get smaller, like bricks and mortar book stores did post-Amazon."
Could you define what you mean by smaller? I suppose I am being lazy by not trying to nail down the details myself, but anecdotally I've seen bookstores become larger and more numerous throughout my life. Especially since the 80's. I know Amazon sells a lot of merchandise including books and I have been one of their customers since they first appeared. But I would be astounded if your claim is actually true.
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