Tish-
Sorry to contradict you, but your memory about the history of cable packaging and pricing does not at all square with reality. There’s a wealth of historical pricing data from the past 20 years (both industry internal, FCC and industry-analyst (like Kagen) and cable rates have risen on average of 2-3 times inflation since the end of regulation. The average price for cable service in the early 1980’s was $22. Back in the period you descibe, which I estimate to be around 1979-81, the only a’ la carte offerings were the pay TV movie channels like HBO and Showtime. These were typically priced at $10-12 each and cable operators typically gave multi-pay discounts for those people who took more than one. Basic cable rates - which you correctly pointed out were almost exclusively off-air retransmission- averaged $10-13/mo. In addition, given the limited number of services that were even available back then, it is extremely unlikely that anyone could have been paying close to $100/mo unless it was a commercial account like a motel.

Blooky:

Your quote: “…giving Jeff Jarvis ESPN adds very little to their costs.”

ESPN now charges their distributors between $2.00- 2.50 per month per subscriber. You picked the most expensive basic network as your example of how grouping channels together in a forced buy-through scheme doesn’t significantly impact overall pricing.

The best things heard in the hearings were focused around promotion of the V-chip and setting up a tier of programming (yes, a bundle) of family-friendly stuff. Getting people–both parents and cable service providers–to be a little less lazy and to use the very adequate tools already provided should be the most important thing, not more censorship or more broad definitions of subjective judgements like “indecency” or “obscenity”…

But, in reading the comments here, I’m surprisesd some of the folks, including you Jeff, don’t remember when most of cable *was* a la carte. Maybe I’m just dating myself, or my collective memory is much longer than most people’s, but I do indeed remember when “basic” cable was little more than better reception for local UHF and VHF stations with a few newbie networks like Turner and some of the others superstations. Anything beyond that was premium and many times a la carte–which drove cable bills up to levels over $100 a month for one HBO channel and a few others that were designated “premium” by whatever cable system a particular region happened to have.

That’s the other thing–what’s offered as “premium” is often, like “obscenity” and indecency,” subjective. What is a premium cable channel to one system is, still, not what it is to another.

Bundling is not a perfect system. There are still differences in bundling according to cable service provider, which varies from town to town. But bundling offers more choices because it is far cheaper than a la carte ever was.

And Jeff, why should I want to limit my television choices with a la carte? My internet surfing is a la carte. I pick and choose what I want to see/hear/read when I want it. Television is a different form of media. It is not interactive like the internet and therefore I happen to appreciate the different choices–even when those choices include weird nuttiness like the pink haired psycho-evangelist on the Trinity Broadcasting Network. If I am always having to choose what I want to watch, rather than just letting it be there for me to gawk at like when I rubberneck at a bad car wreck, there then becomes no need for me to have TV.

If you really want a la carte, get TiVo.

Unfortunately how this concept is being used is what offends me. This is simply a wedge issue for the freedom-haters. Remember the V-chip? Remember how they pushed for this and how the networks eventually relented and came up with their own rating system?

And what did the moralists do? When the rating system was simple, the moralists complained that it wasn’t descriptive enough. And when a more descriptive rating system was set up, the moralists then said that it was too complex!

And even with the ratings system, even with the V-chip, even with the “established hours for indecent programming”, moralist parasites like L Brent Bozell continue to push for GOVERNMENT control of the airwaves.

It is a SCAM!

So let’s follow through on this… a la carte programming gets imposed and what happens? All of those religious channels get written off. Oops! Can’t have THAT, can we? Jerry Falwell and Pat Robertson will scream CENSORSHIP. Bozell and his acolytes will scream about the absolute NEED for religious programming for “family stability”. Ted “Pork Crybaby” Stevens and F “-You” James Sensenbrenner will DEMAND that there be “necessary exceptions” to the a la carte programming. Commissar Martin will warn cable companies to come up with “exceptions” or else he’ll get Congress to do it for them.

And the only way that the cable companies would continue to exist would be to cave in yet again. They’ll provide those “required channels”, and then get rid of the ones moralists like Bozell hate… lest people like Stevens and Sensenbrenner allow Commisar Martin to impose “indecency” fines on the cable companies as well as the networks and participants.

See how the SCAM is played?

All the major cable/satellite networks have baseline distribution provisions in their contracts with their affiliates that state that a their particular channel will be “part of the broadest (basic) tier of services offered to subscribers.” This very precious provision ensures that the networks have a guaranteed per-subscriber revenue stream for the term of the agreement that is calculated using the affiliate’s entire subscriber base.
For the programmers, this is a sweet deal by itself… but it gets even better because that contractually guaranteed, universal distribution of their channel gives them something even more profitable.

Most people outside the industry do not know that for the top 25 cable/satellite networks nearly 60% of their gross revenues are derived from national advertising. If the Gov’t were to force them to change the terms of these contracts; insisting they make allowances for individual channel purchase, this would be incredibly disruptive to what has been a phenomenally successful business model. The networks are greatly concerned that their total (actual) subscriber count would drop precipitously; followed by a corresponding drop in national ad revenues.

Of course, from a purely free market standpoint, such an un-bundling practice would represent the best of everything: consumers only pay for precisely what they want; the “true” value of a given network will be based solely upon how it performs in the “open” market, and advertisers will be able to judge the effectiveness of a network based not only on its program ratings calculation, but the actual number of people who like the network enough to pay for it.

I believe this change will eventually take place, but when considering the near term outlook, I have great doubts that it will happen within the next three years- there is simply too much money at stake in the existing way of doing business.

Second, it’s quite possible that there really are reasons why bundling actually is more efficient, even if the market isn’t perfect. The reason that the grocery doesn’t make you buy asparagus with the milk or eight boxes of cereal is that it really does increase the price they would have to charge, since the extra milk/asparagus/cereal is an actual physical product that has to be produced and shipped to the store. TV programming, by contrast, is an intellectual property good. Once the cable company has wired up your home, put in the satelite dishes, and signed up the cable network, giving Jeff Jarvis ESPN adds very little to their costs. And, if nothing else, having everybody decide on an individualized basis whether they want each channel would add to the administrative and technical costs. With, say, four tiers of service, there are four different types of customers, but letting everybody subscribe ala carte would result in millions of combinations. Keeping track of all that would probably be more expensive than the current system. And, why bother? A couple of people here may be annoyed at being “forced” to get ESPN, but I assure you that most people don’t stew over the fact that they’re “forced” to purchase channels they don’t watch.

Do I know what a system would look like if we had a real market for cable TV services, one where people actually chose between four or five cable providers? No — and neither do you. But I think it’s within the realm of possibility that in a perfectly-competetive market content providers would end up selling access to TV in blocs, pretty much as they do now. I suspect that prices wold decline, and we’d have more on demand services and such, but I’m not convinced that a more freee market system would lead to ala carte pricing, or individualized purchases of shows.

And I suspect that, even in that universe, the folks who complain about how parents can’t stop their children from watching Bad Stuff would still be complaining. I mean, we were told that the V-chip and tv ratings system would help parents, but now we’re told that we need something else, because people have a god-given right to be too lazy to set up the parental controls on five TV sets. If we go to ala carte programming, they’ll find some reason why that’s not enough. Nor am I convinced, by the way, that parents are actually bothered by this. I think that most parents who want to control what their kids watch on TV already do so, and most parents who don’t care won’t care even if we introduce new technology to “help” them.

Kevin Martin may ask “why should they have to” use the v-chip or blocking system put in place by the cable company, but I’m wondering why, by governemnt fiat, we should restructure an entire industry just for the guy with five TV sets who is too lazy to get off his fat behind and program them so his kids can’t watch South Park on any of them. For that matter, why isn’t he complaining about all the single guys and chidless couples now being forced to buy a V-chip equipped TV sets, when nobody uses them? Granted, it’s a small additional cost, but it does cost something.

if that’s where they’re going then yes, i like it.

Imagine the Amazon recomendation and review system but applied to episodes. It would solve the niche exposure problem and would encourage quality over filler. Shows wouldn’t have to be strecthed or contracted to fit some arbitrary standard slot. Imagine if all movies were forced to be exactly 90 minutes. Lord of the Rings would have suffered and an extended version of Deuce Bigalo would have lead to untold suffering.

The existing business model is all about corporate welfare, and very little about a free-market. Tiers of service where you pay for something you don’t want in order to get something that you do want is very anti-consumer. Packages were tollerable when there were 30-40 cable channels, but not today.

Requiring cable companies to sell channels a la carte does not mean that they HAVE to stop selling packages.

Cable companies won’t go broke adjusting to this new business model. Most have already upgraded their infrastucture and have rolled out digital cable in most areas. If you have a digital cable box, they can unscramble a two-hour PPV movie and bill you for it automatically. Certainly, they can individually block and add channels without causing an billing nightmare. All they need is an FCC regulation or US law that allows them to break long-term bundled contracts that they have with vertically-integrated companies like Disney-ABC.

I hope the FCC has the brains to outline a price control. Not a dollar amount (that would be anti-free market), but rather a percentage. Words to the effect of: “the total cost of all channels in a package priced individually cannot exceed 250% of the package price”.

I think it’s extemely alarmist to think that Americans will all immediately pare down their cable subscriptions and bankrupt ‘niche’ channels. Most people like variety, and will be more likely to dump some channels in their current package and then ADD some channels from a higher tier that was previously too expensive.

So you may see some subscriber loss from people that currently subscribe to everything (can’t possibly add more channels if you get them all), but you’ll likely see an increase from ‘broadcast basic’ cable subscribers that want a few more channels but never wanted to pay the ‘ESPN tax’.

Let’s not forget what ad-supported television is all about–yup, advertisers. Advertising has to be aligned to reflect actual subscribers instead of ‘in available homes’. The former number may be much smaller than the latter, but those viewers are more likely to see a commercial. They paid for the channel, so they are more likely to watch it.

A la carte is the way to go.

So true. Remember when we were told that paying for a service that used to be free would usher in the new golden age of TV, commercial-free? Some new channels are good, sure, but mostly we have reruns and niche channels for non-English speakers and endless cheezy ads.

I recently wrote to my provider to give me a channel I want like TCM instead of the half dozen or so channels in other than English. Everyone seems to be waking up to the fact that this model is not working. For the show or two I could wait for on DVD, I am considering going back to pre-cable days. Is this service worth $600 per year?

In the short run it’ll mean the end of programming with low demographics. But, depending on how producers handle costs and advertising, even low volume programming could find a niche. So long as producers find an audience willing to pay enough to cover the costs of production, even projects with limited viewerships could make it to the Internet.

If anyone is endangered by true ala cart tv, it is the cable companies. Once the technology is in place to allow the large scale distribution of video over the net, cable companies will either have to reinvent themselves, or go out of business.

Add the technology for cable lines to carry signals from multiple providers, and things will change even more.

Change is coming, adapt or die.

To Grove, business is chaotic and unforgiving. It is full of what he calls “strategic inflection points” — transformational changes that, if grasped, can guarantee a firm’s growth and, if not, can cause its death. Grove warns that “strategic inflection points are not a phenomenon of (only) the high-tech industry.” Witness how Southwest Airlines and its imitators have bankrupted many traditional airlines. People who succeeded under one business model often can’t acknowledge its impending collapse.

Sloan shrewdly foresaw that too much success could be fatal. It might dull “the urge for competitive survival,” which is “the strongest of all economic incentives.” Companies might fail “to recognize advancing technology or altered consumer needs.’

(1) Radio, Television, Film, Periodicals and Telecommunication industries are simultaneously confronting strategic inflection points. Allowing consumers to create their own bundles in and of itself will not trigger television’s contraction.
(2) Cables companies are failing to recognize altered consumer needs.
(3) Cable companies that offer bundled packages to specific demographics and interests will do well. Cable companies need to adopt TIVO-like functionality. By monitoring viewing habits, they not only recommend alternative content but products.

PS - I haven’t owned a television since 1987. The $50-$60 for cable access is instead allocated to concerts/theatre/books. If I could get local dialtone, long distance, broadband and cable television for $75/month, I’d sign on. What’s driving unbundling is also the perception that cable television pricing is a racket.

I say that if the 700 club channel can’t carry it’s own weight, good riddance. Find some other way to distribute that content then.

Seriously, does anyone honestly think that we owe everyone their every whim in what channels to watch, even if we don’t care to watch them? Bundling is an outmoded strategy to force content on people who don’t want it. Bring on the a la carte, and those people who end up losing distribution will find cheaper ways to distribute, if they really have enough demand to make money somehow.

Bundled cable pays for the channels that are extremely valuable to a few people but would never rake in enough cash to survive an a la carte system. ex: animal planet.

Although I don’t want most channels most of the time… it’s great to surf sometimes. I never watch Spike TV except for the Bond marathons. Maybe you don’t like sports, but there happens to be a big game on while a relative is over and they’d really like to watch it. Maybe everything on USA sucks, but all of a sudden they come out with next season’s best show. A la carte puts too many limits on what you watch.