The Internet Has Changed Everything

Lesson Details

Subject: Business

Title: The Internet Has Changed Everything


Television in the 21st century is vastly different than what it was. The Internet has changed the way that we must think of TV -- it is no longer just a piece of furniture in your living room.


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Ok, now, this is a really interesting unique opportunity, but it's a whole new world; and if you want to be part of it, you really have to understand, first, where it came from, and then, how you can be a part of it. This is like when the Internet was first invented. This is like when television was first invented. This is like when radio was first invented. There's a whole new opportunity, a whole new business.

We're essentially moving into what I would call: The Third Wave of Television.

What do I mean by that?

The first wave of television was over the air broadcast. This starts in the 1930s, or if you want to go back to John Logie Baird in Britain in 1923, in which people began to try and force television, pictures, and sound, through the air into people's homes. This is where broadcast television came from. 

When you put the signal through the air, you put it through the electromagnetic spectrum. And that means there's a limited amount of space that you can use to push picture and sound through the air, and it takes up an enormous amount of space. Particularly because it was done analog in those days.

So, in the 1940s, 1950s, and 1960s, when television just gets started in the United States and then the rest of the world, the signal goes through the air, it takes up an enormous amount of space, in terms of the spectrum, so in this country, there's only really room for three networks: ABC, NBC, and CBS. And as a result, The FCC, essentially, cedes over to these three private companies this space on the spectrum, and that becomes, that's how we define television. 

And if you wanted to work in television, you went to work for one of those corporations, and if you wanted to make TV shows, you became an employee of one of those corporations and basically made what they allowed you to make -- which was fine for a what it was. 

In the 1980s, cable came along, and cable was really the child of people who couldn't get through the air signals in a funny way. And cable, took us from a world of three networks to a world of, originally, 40, 60, 100, 500, today in the United States, 1200 cable channels, and that's because we changed the method by which that signal got into people's homes.

That's what this is really about: is putting the image and the signal into people's homes. 

When you did it through the air, you were limited to three. When we began to run it through coaxial cables, and later fiber-optic cables, it meant we could go from three channels, or three networks, to 500, or as many as 1000. 

Well of course, that vastly expanded the number of people who could put content and create content and put it into people's homes.

But still, you were limited. The gatekeeper was no longer the network, now the gatekeepers were originally the channels, like the Food Channel, or National Geographic, or people who could afford the $500 million to a billion dollars to buy a channel, and ultimately the MSOs, the operators, like Time Warner, or Verizon, that decided what channels they allowed to be on. 

It was what the technology afforded and allowed. 

Now we are at the very first days of what I would call: the third generation, or third wave of television. 

Instead of going through the air and instead of going through cable, now for the very first time television programming can go through the Internet; and the Internet, as you know, A) carries video and carries it quite well and B) is essentially infinite. 

This infinite nature has enormous ramifications. First, for the number of channels that you can actually put into someone's home and second, for the way you architect your own channel. 

Right now, for the purposes of this lesson, let's deal with the first part of that.

We've gone from a world with three channels, to 500 channels, to infinite channels.

Well, you can have one of those infinite channels. 

Simply by claiming the space. Simply by creating your content and putting it online. 

Now, the difference here is that in the world of broadcasting, whether it was cable or whether it was broadcast, the programming was linear. That is: people watched it in real time. 8 o'clock, 9 o'clock, 10 o'clock, 11 o'clock, and so one. And so the difficulty for the television channels, or networks, and in fact the liability in a strange way, the limitation was they could only create a certain amount of programming and people got to only watch it once. 

In this new world of digital online channels, which really just started yesterday, that linearity goes away. There are no longer time slots. There are no longer specific times when people will tune in. 

Instead, we've created a world called video on demand, or non-linear programming: in which people come in and watch your shows, whatever they are, at any time they want.

It also means that when you create content, it stays there forever. 

If you're CBS and you have a show that's on Thursday nights at 10:00, that's basically the only time that people get to watch it. Unless it reruns sometime or they go online and essentially watch the same thing in a non-linear sensibility. 

If you're a cable channel, you run the same show7 or 8 or 9 times over, and that's where you make up your money. Ironically, DVR has killed the rerun business. This is crushing the cable industry's business model, which is also helping to drive them out of business or giving them enormous difficulty.

In the world of non-linear digital online channels, which is what we're creating here, and we're explaining to you, once you put content up, that content lives forever, and people can go and always get access to it. 

So every time you create new content, or you create a new show, you are building the body of your channel and you are building its worth. The long-tail, which means that once the stuff is up it can get watched over and over again begins to kick in here. This is the same thing that makes other online business work because once it's up, it's there forever. And even if only five people watch sometimes, and seven people watch, it doesn't cost you anything to continue to offer the programming and the content.

Therefore, the more programming that you create, the more viewership you can bring in, and the more interesting your channel becomes. 

We're not building a linear cable channel, this is an enormous mistake that people make when they start to launch their own channels, which some people are doing in a very embrionic sense here. 

They're not bulding a channel per say, rather they are building what I would call: A Sphere. 

We're talk about this in the next lesson.