Paying for free

Rico says Eduardo Porter has an article in The New York Times about the lack of free television:

The proliferation of “free” media on the Internet seems to have convinced an entire generation that the old hacker slogan from a quarter-century ago, “information wants to be free”, can be an organizing principle for the information economy of the future. Google brings us abundant “free” content while raking in billions from the ads alongside their search results. The Pirate Bay delivers “free” music and movies to teenagers while living off the revenue from banner ads. But then there is television. One of the oldest free mediums, it has something to teach us about free information: It can be expensive. And, perhaps, we would be better off if we were allowed to pay for it.
The television spats of the past few weeks— between Cablevision and the Walt Disney Company over payments for ABC, and between Time Warner and the News Corporation over Fox— suggest that the future lies in the opposite direction from free.
The most recent tussle was over Disney’s demand that Cablevision pay something between 50 cents and $1 per subscriber per month, according to news reports, to pipe ABC to Cablevision’s three million subscribers in the New York metropolitan region.
Historically, cable companies have not had to pay for broadcast channels. They compensated broadcasters by buying access to sister networks. Cablevision says it pays Disney $200 million a year for about a dozen channels, including ESPN and the Disney Channel. On Sunday, as talks hit an impasse, Disney cut ABC’s signal from Cablevision for almost 21 hours, including 14 minutes of the Oscars— the second-highest ranked program on television by ratings after the Super Bowl. The signal was restored by a tentative, undisclosed deal.
If I were a Cablevision subscriber, I would probably want to pay. Compared with some of the other costs of free television, $1 a month doesn’t seem too expensive. In fact, for the right broadcast, I would pay even more. Americans watch 153 hours of television a month, on average, according to a Nielsen survey. On prime time, ABC has a 9 percent share. At $1 a month, a rough, back-of-the-envelope estimate (assuming families watch television together) would suggest Disney wants, at most, seven cents an hour from the average Cablevision subscriber to watch its shows.
Compare that with today’s price of television. Cablevision’s basic “family cable” package costs $55.95 a month, which works out at most to 37 cents an hour per home. That is cheap compared with the real price we pay for television: 18 minutes out of every hour that we are expected to spend watching ads. Those 18 minutes are much more valuable to me and you than they are to ABC.
A study in 2009 estimated that advertisers paid about $230,000 for a 30-second spot on ABC’s Desperate Housewives. That amounts to 79 cents an hour for each of the 10.6 million homes plugged into the show on Sunday nights. But if average hourly wages are $22.05 an hour, 18 minutes of the average workers’ time are worth $6.60.
Imagine a world in which information isn’t free. Your television set is fitted with a coin slot, or a PayPal account. Wouldn’t you rather pay 79 cents for an hourlong show to get rid of the ads? Even the fifty or so national commercials on the Oscars, for which ABC reportedly charged up to $1.5 million per spot, amount to about $1.80 for each of the 41.3 million viewers. While we’re at it, why not add 37 cents and ditch the family cable bundle and its dozens of unwatched networks? We could even throw in 7 more cents for Disney. It seems to be a better deal than $55.95 a month, plus 18 minutes an hour.
Technology might move us inevitably in this direction. Broadcast television networks are badgering cable systems for money because falling ad revenues are forcing them to find new sources of income. Digital video recorders that offer customers the ability to strip out commercials could hasten the trend.
If we’re lucky, we’ll get a world in which television is not free, but we will only pay for it when we want to watch it.