There are a few things at play here:

1) Most content producers sell the rights to their content pretty quickly, and, in my opinion, to cheaply to distributors. They favor the production side of the business over the money side of the business. Even if the networks paid more for the right to show the content, it would still just trickle back to the actual producer as most, if not all, the rights to the content are held by the distributor.

2) Everyone spends a lot of money to develop their system. Everyone from aggregators to the networks have invested their money into developing their solution. What is a fair return on that investment?

3) What is a fair return? Is this industry bound by the rules of fair return or all out capitalism? (Remember large portions of it receive government funding) Should the return to all “links in the chain” be equal or should it be proportional to risk taken? What about compensating for the failed projects?

I don’t think the solution is as easy as giving more back to the content creators as most have signed away their rights to the content they created early on in the process.

I do believe that content rights holders have to do more to strengthen the value chain and provide consumers with what they want. If not, the video industry is going to find themselves going down the same path the audio industry did in the ’90s – and lose total control.

They need to embrace this new distribution method (internet) and work with emerging companies to try new distribution models. Enhance the ones that work and abandon the ones that don’t.

Digital distribution is democratizing distribution making it cheaper and easier than ever to reach inside the homes of viewers. With a solid technology base already in place in people’s homes (TV, PC, Internet) changing to a newer, cheaper and more direct distribution model is inevitable. If content creators want to get paid more, they have to start taking control of their content, educate themselves on the many digital outlets that are available to them, and start exploiting them to their fullest potential. Otherwise, take your producer’s fee, sell out to a distributor and move on to the next project that may make someone else rich.

And soon enough, the aggregators are going to be working with the online to TV box manufacturers to offer their aggregated index of online video directly to viewers on the television. It is interesting how the market is developing, however I am concerned for the content producer. I feel that the players are not placing enough value on content. I mean, of course they value having a wide selection of quality premium content, but they aren’t willing to pay for the right to run it through their box. They are happy to generate revenue from the box itself and the monthly fees that they will charge users of the box ( a highly profitable model I might add)., but the producer only sees a small amount of ad revenue from this, after it is split multiple ways, with all of the distributors, platforms, and ad networks taking a far larger slice than the producer along the way. I feel that the model that is emerging may hurt the content producer’s incentives to produce high quality content, and like the music industry there could be a decrease in the quality of the content produced, at least until monetization models are worked out and the lost traditional revenue is made up by increased digital revenue. And so I put it out there, that more people along the chain need to start paying the content producer. Otherwise, if that does not happen in the short term, the largest and most influential content producers and networks will go the route of exclusivity, and only offer their content on the few networks and platforms that they believe offer them the highest value and greatest control over their content. That may end up being the cable networks and their TV everywhere initiative, unless the other intermediaries begin paying the content producer. Absent that, the risk is that they will end up serving more of a niche role in the video ecosystem. Should be interesting to see how this all plays out.