August 16, 2007
New Site: To Aggregate or Not to Aggregate? (4 of 4)

Why partner with FOX, a competing network with weaker web traffic, but consistently strong TV ratings, particularly for reality programs? It may be partly circumstantial; Viacom was originally in talks to join "new site", but pulled out and brought the $1 billion suit against YouTube.

As the Times article mentioned in the first part of this series cited , it may make the project more palatable for the giant conglomerates behind the media companies to be partnered with another conglomerate and an equity firm. But it also signals a willingness of traditional rivals to work together in digital distribution, perhaps a sign of consensus on how concerned the industry is for its long-term health.

To aggregate or not to aggregate? Producers know that content has a way of appearing on the web, whether or not they intend it to be there, as demonstrated by the recent discovery of new pilots circulating on the torrents, and that people want to access content online quickly and conveniently.

In that way, partnering with iTunes and Netflix may not mean huge returns, but it does offer alternatives at a relatively low cost and high profit margins. If it's being viewed through another channel, it might as well be a legal copy with ads, hence the logic behind "new site." But will it work?

As we've seen with social networks, strict controls turn off large constituencies within the online audience. And those audiences can be fickle - switching costs are very low online. If another site, without ads and with high-quality video, pops up, will audiences be loyal enough to NBC, or to FOX, or to the NBC-FOX partnership to stick with "new site," more so than network-branded sites? I'm inclined to doubt it.

The new media economy is not just about splashing digital content everywhere -- that's the easy part. It is about giving people a reason to seek it out from specific sources despite extensive choice. That, I would argue, is the real challenge of the digital age.

If NBC and FOX can be greater than the sum of their parts, they may meet it, and Providence made a good investment. If not, the industry really, really needs a new model. And fast.