AA039211Sounds like investors are worried a couple examples of soft ad revenue could turn out to be the proverbial canary in a coal mine for the entire TV industry.

Personally I think networks are doing everything they can to hasten the end of their dependence on ad revenue. It’s not necessarily that they’re doing it overtly, but it’s hard not to read the launch of things like CBS’s proprietary streaming service as anything but a hedging of bets against an uncertain future. It’s the TV network equivalent of making sure they have a week’s worth of bottled water in the basement in the event of a disaster.

But I think the reality of an a la carte world is turning out to be much different than anyone anticipated. And the end result of all these experiments may bring us to a point where people realize the current cable model is actually the lesser of two evils.

Right now the on-demand world is shaping up to be a confusing morass of required passwords, licensing deals and other hinderances to people getting what they want when they want it. X show is only available on Hulu, Y studio has licensed its movies only to Amazon and so on and Z network is only distributing shows on their own platform, and even then not everything. All these cost $10-$20/month, require you to have a unique account and don’t all work on the same device.

By comparison the current model, where one account and monthly fee brings in everything (or at least the majority of) you could want to one device (your TV, through some sort of cable box) seems like a much more user-friendly option.

If you think about it, those of us who grew up during the heyday of cable TV already lived through what’s now coming back around: If your parents only had a cable package that included HBO and Cinemax than the movies that were licensed exclusively to Showtime were inaccessible to you. That meant you could watch Clash of The Titans (the real one) as many time as you wanted, but Better Off Dead was out of touch.

Now we’re going back to that and we’re cutting out a big part of what made those economics work: Advertising. While the studios that produce the material stand to benefit most since they get the lion’s share of the direct-from-audience payments, the middle-men, the networks who traditionally distribute that material, are being squeezed because they overly relied on advertising (aside from cable networks like HBO of course) and shouldered many of the transmission and carriage costs.

So, again, streaming experiments by CBS and HBO provide a likely look at what’s to come. We will buy CBS and other networks directly instead of them being part of a larger package. But this model doesn’t actually address one of the public’s biggest issues with cable.

The complaint has long been that subscribing to and paying for 450 channels is inefficient because the average person may only regularly watch a couple dozen of those. But when you buy CBS you are getting everything they produce, even if you’re only interested in Mom and Hawaii 5-0. And they’re holding back The Big Bang Theory, making the entertainment value proposition even dicier.

Interestingly, this actually kind of harkens back to a practice that was outlawed decades ago. In 1948 the US Supreme Court banned movie studios from owning theaters because that ownership was getting in the way of fair distribution. Until that point Paramount and other studios owned the method of distribution. So if you wanted to see a movie by X studio you had to go to their theater. That sounds like exactly what we’re going toward here, where in order to see a show by one network (or studio since the idea of a “network” loses much of its meaning in an on-demand world) is only accessible through its proprietary system.

That was bad for the audience 60+ years ago and it’s bad for the audience now.