• by October 14, 2005

EROSION -- Maybe it's all the rain, but we're starting to feel a little hydrocentric. And it's occurred to us that digital media is a lot like water. It flows to the path of least resistance. And as if the sluice gates were suddenly released, we're beginning to see it flow in increasingly greater torrents, washing away the obstacles that remain in its way. It won't happen all at once, of course. But given enough time, digital media will erode many of the foundations we've come to know as media. Their founders continue to run for higher ground, but the level keeps rising. You don't have to be a geologist to know the effects of fluidity and time. It carves new channels and pathways, altering tributaries and transforming everything it washes over. We're seeing that now.

So when a 13-year-old boy asked us yesterday if we'd ever imagined a day when there'd be video iPods, we replied, "Yes, we just wondered why it took so long." Because the minute we learned the concept of digital media, we'd been waiting to buy one. That was nearly a quarter century ago, of course, and iPods weren't even a gleam in Steve Jobs' eye, though from what we've read, he was already beginning to glint in its direction. No, the first water digital droplet we felt was from Greg Weiss, then an undergrad studying engineering at Perdue University, who sat us down in front of our stereo system and began to turn the tap.

Stereos were a pre-iPod means of listening to recorded music. In fact, they played things called "records," and as Greg held one of these vinyl discs aloft, angling it so that the finely etched grooves reflected the light, he explained that such recordings were simply analog facsimiles of the sounds the musicians - we seem to recall it was The Clash - originally played. Those sounds were crudely engraved into vinyl so that when they came in contact with a tiny little needle in the record player, it produced a sound that was close to but not exactly what Joe Strummer and crew had originally intended. Digital recording, explained Greg, converts the sounds into codes that are exact replicas of the originals.

The truth is that some audio buffs believe the fidelity produced by analog technologies such as vinyl records are in some ways is better than what is rendered via digital recordings, but that's a different debate. This column isn't about fidelity. It's about fluidity, and what happens when media flows from analog to digital platforms. So it was the next part of what Greg told us that was such a revelation. "When data is stored digitally, it becomes portable," he said, explaining that instead of "owning" vinyl recordings of music, or bulky cassette tapes of TV shows and movies, we would some day buy data that would be stored or played on whatever device we chose - and this is the important part - when and where we wanted to play it. We don't know about you, but that was enough of a revelation to rock our kasbah. The problem was the digital media revolution was still mostly a theory. The technology existed - personal computers - but there was no mans of distributing it. There was no Internet. There was no digital cable backbone. So we waited for the revolution.

The next droplet hit us perhaps ten years later when we were invited to a press conference at a National Cable Television Association conference in New Orleans where cable TV visionary John Hendricks unveiled his next big idea: Your Choice TV. Hendricks, who founded the Discovery Networks, has this great idea for a new cable TV service that would give people the ability to watch any program they wanted anytime they wanted.

Because he obviously understood the political ramifications of media on-demand, Hendricks referred to his project as "second-chance TV," not an alternative means of distributing TV content. VCRs had already wreaked havoc on the TV and advertising worlds, and Hendricks understood the impact on-demand could have on existing TV distribution and advertising models, so he downplayed the fluidity of time-shifting, and on-demand, and played up the notion that Your Choice would give TV copyright holders a second chance to have their programming viewed by people who didn't get to see it the first time around. In fact, he said they would generate a second revenue stream from it, as Your Choice would charge viewers a nominal fee - about $1 per program viewed - which Your Choice would split with the copyright holders.

It was a great idea, which in the end was killed by the copyright holders. They simply didn't want to loose control of their content. The networks and studios weren't happy about the VCR, even though it proved to be a new revenue boon, as well, but they had no choice on that one. The Supreme Court saw to that. But they could at least nip this crazy notion of a video-on-demand server in the bud. So they did, and it's taken the media industry at least another decade to get back to that point.

Along the way, the Internet trained consumers that they could access digital media on-demand. Initially, it just didn't have much media worth demanding. Then along came the DVR, which trained consumers that they could digitally manipulate TV content in a way that analog VCRs never could. Of course, DVRs initially trained only a few of us, but we spread the word that viewers were in control. And the studios and networks got the message again, and did everything they could to get in its way, building as many dams as they could to stem the tide of digital media. In this case, the dam was a DAM - digital asset management. So when ReplayTV came up with a system that would not simply record TV programs digitally onto a hard drive, but would also enable its customers to upload and share them over the Internet, they banded together and sued ReplayTV. This time there legal efforts were successful, albeit temporary. ReplayTV was essentially driven out of business, and the concept of peer-to-peer file sharing of TV and movie programming got a brief respite.

Hollywood meanwhile muscled its way into TiVo using a different strategy, strategic investors and seats on its board to redirect that looming threat. And while the cable and satellite TV industries accelerated their own DVR and video-on-demand efforts, it was still at a snails pace as they debated platforms, interoperability, and business models.

The next big splash occurred with the emergence of Napster, which spawned trained consumers that they could digitally download media content when, where and to whatever platform they wanted: In this case, a PC hard drive or a portable MP3 player. Never mind that these were illegal downloads, and that the first peer-to-peer version of Napster was ultimately driven out of business. Digital consumer behavior had become fermented. It was here to stay. And for all its attempts at trying to legally enforce its copyrights, the music industry essentially failed until someone came up with a new business model that would work. If consumers wanted to download music files to a portable device, why not make a business out of it, reasoned Steve Jobs, who created iTunes, which indirectly propelled iPod, which indirectly propelled Apple computer sales. It was as brilliant, as it was pragmatic, and the only thing we wondered was why nobody was doing the same thing for video.

The truth is that the same forces that had begun to erode the record labels' control over digital music, were already sloshing at the foundations of the TV business well before Apple unveiled the video iPod. Bit Torrent, an ingenious file-sharing technology that enables to members to legally exchange copyrighted TV shows and movies already is one of the most popular activities on the Internet. This time around, Apple didn't wait for the business model to come crumbling down before it entered the market. This time it entered it while TV is still a going proposition, and is, in fact, still on top of the media food chain. It also launched its portable video business with one of the biggest studios (Disney) and networks (ABC) and with top Nielsen-rated content ("Lost" and "Desperate Housewives").

It will be a while before television evolves into anything resembling the iTunes model, but it will happen.