Business model blues

Item 1: A local newspaper reporter muses on a local radio show about the future of newspapers. Yes, the economy is bad, but the long-term problem is that classified ads have gone online and they're not coming back. One option is to charge for a paper what it actually costs to produce; this would more than double the price, cutting readership and so on and so on. The days of the newspaper as everyone's window to the world are fading fast. That, too has gone online.

Item 2: Viacom is urging viewers to call their cable operators (Time-Warner cable in particular) to urge them not to drop their channels. At issue: Viacom wants to increase its charges to providers. Providers argue that ratings are decreasing and the shows are available online for free in any case (often via the exact same cable). Fundamentally, the shift is from TV -- or perhaps more precisely, dedicated TV channels -- to online, where bits is bits and video is just one more bit stream, albeit a considerably bigger one than pretty much everything else.

(Here's the top hit I got for viacom time warner, while putting together item 2. The particular article is from Dow Jones, now owned by NewsCorp, carried on CNN Money, owned by Time-Warner. Caveat lector.)

Netflix, content and pipes

Previously, I pondered what cable companies would make of Netflix's new set-top box [reviewed here], which would seem to compete with existing on-demand video services, but also drive up demand for broadband internet. Hardly was the virtual ink dry before I ran across this item: Time Warner, under pressure from shareholders, is spinning off its cable business and is now, according to one analyst, "headed toward being a pure content company."

So, at a guess, and keeping in mind that besides not being a lawyer I'm also not a financial analyst, this might make everyone happy. Time-Warner gets to distribute its content however it likes, including via Netflix if that makes sense. Netflix sells boxes and rents movies, and the cable arm should do OK as long as it can sneak any money it loses in on-demand rentals into higher prices for its broadband service -- perhaps by making sure that the "regular" broadband service doesn't carry Netflix's movies quite as well as the "premium" version.