the Internet has transformed the mu

the Internet has transformed the music
industry. Sales of CDs in retail music stores
have been steadily declining while sales of
songs downloaded through the Internet to
iPods and other portable music players are skyrocketing. Moreover, the music industry is still contending
with millions of people illegally downloading songs for
free. Will the television industry experience a similar
fate?
Widespread use of high-speed Internet access,
powerful PCs with high-resolution display screens,
iPhones, iPads, other mobile handhelds, and leading-edge file-sharing services have made downloading of
video content from movies and television shows
faster and easier than ever. Free and often illegal
downloads of some TV shows are abundant. But the
Internet is also providing new ways for television
studios to distribute and sell their content, and they
are trying to take advantage of that opportunity.
YouTube, which started up in February 2005,
quickly became the most popular video-sharing Web
site in the world. Even though YouTube’s original mis-sion was to provide an outlet for amateur filmmakers,
clips of copyrighted Hollywood movies and television
shows soon proliferated on the YouTube Web site. It is
difficult to gauge how much proprietary content from
TV shows winds up on YouTube without the studios’
permission. Viacom claimed in a 2008 lawsuit that
over 150,000 unauthorized clips of its copyrighted
television programs had appeared on YouTube.
YouTube tries to discourage its users from posting
illegal clips by limiting the length of videos to 10
minutes each and by removing videos when
requested by their copyright owner. YouTube has also
implemented Video ID filtering and digital finger-printing technology that allows copyright owners to
compare the digital fingerprints of their videos with
material on YouTube and then flag infringing mater-ial. Using this technology, it is able to filter many
unauthorized videos before they appear on the
YouTube Web site. If infringing videos do make it
online, they can be tracked using Video ID.
The television industry is also striking back by
embracing the Internet as another delivery system
for its content. Television broadcast networks such as
NBC Universal, Fox, and CNN have put television
shows on their own Web sites. In March 2007, NBC
Universal, News Corp (the owner of Fox
Broadcasting), and ABC Inc. formed Hulu.com, a
Web site offering streaming video of television shows
and movies from NBC, Fox, ABC, Comedy Central,
PBS, USA Network, Bravo, FX, Speed, Sundance,
Oxygen, Onion News Network, and other networks.
Hulu also syndicates its hosting to other sites, includ-ing AOL, MSN, Facebook, MySpace, Yahoo!, and
Fancast.com, and allows users to embed Hulu clips
in their Web site. The site is supported by advertising
commercials, and much of its content is free to view-ers. CBS’s TV.com and Joost are other popular Web
television sites.
Content from all of these sites is viewable over
iPhones. Hulu has blocked services such as Boxee
that try to bring Hulu to TV screens, because that
would draw subscribers away from cable and satellite
companies, diminishing their revenue.
According to Hulu CEO Jason Kilar, Hulu has suc-cessfully brought online TV into the mainstream. It
dominates the market for online full-episode TV
viewing, with more than 44 million monthly visitors,
according to the online measurement firm comScore.
Monthly video streams more than tripled in 2009,
reaching over 900 million by January 2010.
What if there are so many TV shows available for
free on the Web that “Hulu households” cancel their
cable subscriptions to watch free TV online? Cable
service operators have begun worrying, especially
when the cable networks posted some of their
programming on the Web. By 2010, nearly 800,000
U.S. households had “cut the cord,” dumping their
cable, satellite, or high-speed television services from
telecom companies such as Verizon’s FiOS or AT&T’s
U-verse. In their place, they turned to
Web-based videos from services such as Hulu, down-loadable shows from iTunes, by-mail video subscrip-tion services such as Netflix, or even old-style over-the-air broadcast programming. Although the “cord
cutters” represent less than 1 percent of the 100
million U.S. households subscribing to a cable/
satellite/telco television service, the number of
cord-cutting U.S. households is predicted to double to
about 1.6 million. What if this trend continues?
In July 2009, cable TV operator Comcast
Corporation began a trial program to bring some of
Time Warner’s network shows, including TBS’s My
Boysand TNT’s The Closer,to the Web. Other cable
networks, including A&E and the History Channel,
participated in the Comcast test.