Here’s an explanation how how á la carte television can and will work. After some discussion of this on Yglesias, it is clear to me know that people aren’t thinking out of the box enough.
First, the basic, obvious, and incorrect, view of á la carte is that each television channel gets sold separately. Well, duh, we all know that some channels effectively subsidize other channels, so that wouldn’t work. We’d just see all these channels suddenly disappear, even if some of the content would have been profitable individually. So that whole discussion becomes a myopic and messy and filled with strange regulatory discussions that are really missing the point.
Here’s the problem—people forget to think beyond channels. Channels are a historical technological necessity, and should not be concept we cling to. The concept exists because that happened to be the way that content could be distributed. But hey, this ain’t the 1950s anymore. Content can be distributed digitally in any bundle that we want it to. I could download a single show, a whole season, five seasons of shows, or subscribe to all of Sony’s content. Technologically, it doesn’t matter. So think of content bundles, not channels. In practice, a content bundle might be an App that you download on your AppleTV, or it might be subscription to Netflix, or might a single show you download from Joe-content-creator’s website. It doesn’t matter what form it takes, but either way, it’s a content bundle.
Perhaps it’s now obvious, but a true á la carte model, is really a content bundle model. By definition, any content owner is making a profit, or they won’t be around much longer. Thus, in total, their collection of content does make them money, even if every individual show does not. So what’s their á la carte model? They could bundle their entire collection together and sell it. Or not. Maybe they’ll find that wouldn’t maximize returns, so they divide it into smaller profitable chunks, each targeted towards different audiences. Don’t forget, there’s no reason that the same show couldn’t be offer in five of the different bundles. This is the digital age, they could bundle it in anyway they wanted.
The other benefit to this model is that smaller content creators have a more even footing. Suddenly, I don’t have to be a big conglomerate to reach a large audience. My website or my app could be used to sell the single show I created. If it’s popular, I make some money. Small and large business thrive in this model.
The other point is that I think this will happen. It’s inevitable. As it stands, those smaller content creators (individuals hosting their own websites, creating apps and that sort of thing) can’t exactly get their content to end users by having their own TV channel. So, the channel model was never an option unless they happened to be picked up by a conglomerate. However, with the internet as a distribution platform, smaller content shops can (and probably already are) making money selling their content more directly. This will eventually threaten the existing business model. But, even more, I’m already putting my money where my mouth is and only watching content in this manner. I don’t have a cable television subscription and all of my content is consumed with Netflix, AppleTV or other similar means.
My point I tried to make in response to Yglesias, was that this model is the same as the magazine model. Magazines are just bundled content and while individual articles may not be profitable with viewership, the bundle as a whole must be.