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the Internet has transformed the musicindustry. Sales of CDs in retail music storeshave been steadily declining while sales ofsongs downloaded through the Internet toiPods and other portable music players are skyrocketing. Moreover, the music industry is still contendingwith millions of people illegally downloading songs forfree. Will the television industry experience a similarfate?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 ofvideo content from movies and television showsfaster and easier than ever. Free and often illegaldownloads of some TV shows are abundant. But theInternet is also providing new ways for televisionstudios to distribute and sell their content, and theyare trying to take advantage of that opportunity.YouTube, which started up in February 2005,quickly became the most popular video-sharing Website in the world. Even though YouTube’s original mis-sion was to provide an outlet for amateur filmmakers,clips of copyrighted Hollywood movies and televisionshows soon proliferated on the YouTube Web site. It isdifficult to gauge how much proprietary content fromTV shows winds up on YouTube without the studios’permission. Viacom claimed in a 2008 lawsuit thatover 150,000 unauthorized clips of its copyrightedtelevision programs had appeared on YouTube.YouTube tries to discourage its users from postingillegal clips by limiting the length of videos to 10minutes each and by removing videos whenrequested by their copyright owner. YouTube has alsoimplemented Video ID filtering and digital finger-printing technology that allows copyright owners tocompare the digital fingerprints of their videos withmaterial on YouTube and then flag infringing mater-ial. Using this technology, it is able to filter manyunauthorized videos before they appear on theYouTube Web site. If infringing videos do make itonline, they can be tracked using Video ID.The television industry is also striking back byembracing the Internet as another delivery systemfor its content. Television broadcast networks such asNBC Universal, Fox, and CNN have put televisionshows on their own Web sites. In March 2007, NBCUniversal, News Corp (the owner of FoxBroadcasting), and ABC Inc. formed Hulu.com, aWeb site offering streaming video of television showsand 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!, andFancast.com, and allows users to embed Hulu clipsin their Web site. The site is supported by advertisingcommercials, and much of its content is free to view-ers. CBS’s TV.com and Joost are other popular Webtelevision sites. Content from all of these sites is viewable overiPhones. Hulu has blocked services such as Boxeethat try to bring Hulu to TV screens, because thatwould draw subscribers away from cable and satellitecompanies, diminishing their revenue. According to Hulu CEO Jason Kilar, Hulu has suc-cessfully brought online TV into the mainstream. Itdominates the market for online full-episode TVviewing, 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 forfree on the Web that “Hulu households” cancel theircable subscriptions to watch free TV online? Cableservice operators have begun worrying, especiallywhen the cable networks posted some of theirprogramming on the Web. By 2010, nearly 800,000U.S. households had “cut the cord,” dumping theircable, satellite, or high-speed television services fromtelecom companies such as Verizon’s FiOS or AT&T’sU-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 “cordcutters” represent less than 1 percent of the 100million U.S. households subscribing to a cable/satellite/telco television service, the number of cord-cutting U.S. households is predicted to double toabout 1.6 million. What if this trend continues?In July 2009, cable TV operator ComcastCorporation began a trial program to bring some ofTime Warner’s network shows, including TBS’s MyBoysand TNT’s The Closer,to the Web. Other cablenetworks, including A&E and the History Channel,participated in the Comcast test.
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