Is Network 1.0 also Network 2.0?

By Robert Young

As the debate and discussions reached a boiling point last week about the strategic implications surrounding the major TV networks and their bold moves to embrace the web, the big question that popped into my head was… where does this leave Google, Yahoo!, and all the other established web players who were counting on becoming major distributors of Hollywood media products?

For instance, by deciding to offer up primetime fare directly on their web site for free (with ads), did ABC just dis-intermediate the portals? If so, what does this mean for the fledgling Yahoo Media Group and Google Video initiatives, in terms of long-form, high-production quality content? My bet is that Lloyd Braun and Co are going to be busy contemplating “plan B”, and in fact working on “plan C”.

I find it telling that ABC chose not to include even their own affiliates, where local stations could have used their own web sites to stream episodes. As for Rupert Murdoch, while his Fox network did reach a revenue-sharing agreement with their affiliates, they also did not provision the affiliates with the ability to distribute shows on their own sites.

As the major TV networks increasingly place their programming on the web, what’s interesting is how little differentiation there is between the Yahoo’s of the world and the networks’ affiliates (e.g. when everything becomes a bit, the Internet is the great equalizer). It essentially becomes a game of who can offer larger audiences and better financial terms.

Wittingly or unwittingly, the major TV networks may be setting up their own affiliates to compete head-on against the major web portals (setting up your old distribution channel to compete against the new outlets is actually a smart chess move). The same competitive dynamics will also impact the traditional syndication market and home video/DVD distribution. Of course, a cynic could view all this simply as an stunt by the media companies to appease the stock market mandarins who have been baying like a pack of wild dogs.

But assuming that the broadcast networks have indeed turned over a new leaf, what should Yahoo et al do? In one sense the answer is simple… given that they already have the Internet audience, they can win the battle as long as they’re willing to put up the money (and Google certainly has the cash). But the reality is much more complex, of course, and the old distribution channels will fight hard. Either way, the major broadcast networks are looking at a chess board where they can’t lose… and they may end up proving that content is king after all.

Having said all that, there is one media player that stands out with unique leverage, and guess who that is. Yup, it’s Murdoch. With his ownership now of MySpace, he doesn’t need a Yahoo or a Google. This will give him tremendous leverage, and a significant comparative advantage, against all other networks as well as distribution channels, both old and new. Like him or hate him, call it luck or skill, his brilliance never ceases to amaze. I should also mention that the other media giant that’s nicely positioned, given the shifting strategic landscape, is none other than Time-Warner… their ownership of AOL may turn out to a major win after all.

Check out, MySpace versus networks via Alexaholic.

Robert Young is a serial entrepreneur who played a major role in the invention & commercialization of the world’s first consumer ISP, Internet advertising (pay-per-click ads), free email, and digital media superdistribution.

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