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The Next Media Gamechanger

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The biggest heist in history was when newspapers and magazines allowed Google to "crawl" their content to readers, to pay nothing and to sell ads around their stories.

Google became, in other words, the ubiquitous newspaper right under the noses of proprietors who should have charged.

But they didn't because most failed to understand that Google cannibalized their business model, capturing the eyeballs and advertisers and using them as bait.

Now the old media experiments with pay walls and new media products, but audiences have switched and new readers are addicted to free online content.

The only other fix would have been the creation of an iTunes for periodicals and newspapers, as the embattled music industry grabbed. That way readers would have paid to download stories or publications. Apple's Steven Jobs offered this rescue to newspaper publishers, but none were willing to share with him their subscriber lists.

It was the second fatal mistake and the genie's out of the bottle. But Google, and others, are not finished. They now stalk television and cable, their next prey and are beginning to make major moves to dis-intermediate both and provide video content directly to viewers.

The business model under attack is monopoly cable companies which make roughly $2,000 a year from the average cable subscriber. But this hegemony ended in 2009 when the technological Rubicon was breached and television signals became digital not analog.

Since then, US subscriptions began to decline as viewers bypassed cable and networks and went straight to the content providers via the Internet. And new forms of distribution have sprung up offering more for substantially less.

The younger generation has adopted the new reality first and online video programming is now readily available via devices such as X-box, Samsung's Smart TV, Sony Play Box or other web services. Popular television shows, movies and documentaries are available online as are major sporting events downloadable on a teenagers' computer or iPad or iPhone anywhere, anytime.

Some call this looming competition as the "Battle for the Living Room" and, additionally, a battle to build and own the coffee table remote device. The protagonists are Google, Apple, Netflix and Amazon.

Apple TV will be rolled out shortly with a new iPad and/or iPhone, possibly at the end of March, that will become the coffee table remote that finds channels or videos or games. Its added advantages to viewers will be an ability to pre-emptively skip commercials as well as to set up video conferencing or meetings.
Apple, as with its other products, will create devices that simplify the technology and applications as it has done for years.

Google, through Google Fiber, is experimenting in Kansas City with fiber-optic cable that provides Internet lines 100 times' faster than anywhere else and more viewing options for the same price as the local cable provider. Early estimates are that 90% of users there are buying all their content and Google plans to roll this out everywhere. Its users are able to obtain, record or store high definition TV instantly and watch these programs or events on their phones, tablets, computers or televisions.

Another entry is the world's biggest department and book store, Amazon. This giant has launched Amazon Instant Video.

As their website notes: "We have it all, anytime you want it: this week's newest movie releases, your must-watch TV shows, and classic favorites, all available right now. Plus, you can subscribe to current TV seasons, with new episodes available the day after they air. Our store offers instant streaming on Kindle Fire HD, as well iPad, PS3, Xbox, Wii, Wii U, Roku, on hundreds of TVs, set-top boxes, Blu-ray players, and on the Web. Plus, all of your videos are stored in Your Video Library, so you can access them anywhere you go."

Netflix is another distributor of cheap, online video. The company on its website boasts "no ads or commercials" and its subscribers can watch anything anytime for just a few dollars a month on many applicances from television sets to computers, Wii and Xbox. The company charges $7.99 a month and says it has roughly 33 million subscribers or $263 million monthly.

Netflix in a handful of years has become the largest provider of commercial streaming video programming in the world (YouTube owned by Google is bigger but its content is free and mostly amateur). But Netflix is a major reason why in 2012 more Americans watched more movies delivered via the Internet than on DVDs or Blu-Ray discs.

The company is also experimenting with its own unique content, a science fiction series, and has other projects in production. This means it wants to be a content provider as well as "pipeline" to on-demand content from around the world. This is because as consumers adopt to online streaming, the appetite for content grows.

This new delivery competition is seeking to grab the high "rents" charged by cable monopolies, and their network allies.

The new distributors can undercut these companies through more efficient transmission and by passing along the savings to consumers in the form of lower prices. Or that's the theory at least.

The appetite is enormous. New records are being set for online viewing. One blogger estimated that every second there are 46,296 YouTube videos being watched around the world.

A similar jump in demand for quality video, like Netflix, has also occurred and this will continue. The other giants are launching their new services and will do to video and films what Google did to greatly expanded demand for newspapers and other information sources by providing easy and free access via the Internet.
All of this means that, within the next decade or so, the cable guy and newspaper delivery guy will both disappear into the ether. The good news will be that information and entertainment will be cheaper and more plentiful for all.

The bad news will be those wed to traditional content providing will have to find new lines of work. But those commercial content providers, aligned with new delivery platforms, will proliferate and prosper in new ways.