The TV emperor has no clothes

No less a source than Mark Cuban is pointing out the current fallacies of the Internet video model, although he is using Craig Moffett of Bernstein Research to do it. Moffett has become the industry’s supreme number-cruncher, a guy willing to look past the spin to what quarterly earnings and federal regulatory reports actually tell us. He’s the canary in the coal mine about recent access line losses, among other things.

This time, though, Moffett, and now Cuban, are taking on the reality of advertising support for video and how Internet video is undermining the current market, while priming a new audience of viewers to expect to not only get video content for free, without ads, but to also get only the best of what content creators have to offer.

This latter part is what’s new here – Moffett calls it The Ala Carting of Video on the Net. He raises the very real spectre that what can be ad-supported on the Web, such as best-of clips from ESPN’s Sports Center, is hardly likely to replace affiliate fees and other advertising that pays for the rest of ESPN’s sports coverage.

At the end of the day, somebody has to pay to create content. We can argue that the way things are done today, with a small group of studio executives deciding what viewers get a chance to see, is a dying model. But before anyone proclaims the beauty of the Internet model, where anyone with a camcorder and a good idea can be a TV producer, they need to read what Moffett is saying, and what Cuban is adding.

Web-based advertising can be more powerful, and therefore generate more revenue, than the traditional 30-second spots to which we have become accustomed, if it becomes targeted, personalized and interactive. There is technology to make that happen and there are business models as well, but as yet no one has pulled the two together.

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