Cable’s Lessons


Thirty years ago CNN was just a twinkle in the eye of yachtsman Ted Turner, of all people. ESPN was on the drawing board at Getty Oil, of all places. HBO was helping Time Inc. confirm that consumers would pay for television content, of all things.

The emergence of cable and pay-TV programming marked an exciting and explosive stage in America's communications history. As we enter a similar period with the Internet and digital technology, it's worth reviewing what was learned from the video revolution three decades ago.

Of course, for each individual user of new technology the revolution starts when it reaches the doorstep. The World Wide Web has been around since 1992, and the computers it serves were invented several decades earlier. But for most consumers and businesses the real breakthroughs in accessing and marketing digital content are still on the horizon.

I first took note of cable's growth in a 1979 article (re-published this fall by the Harvard Business Press in "The Story of American Business, from the Pages of The New York Times"). Back then I observed that cable-TV was a medium without a message, an industry whose chief concerns were technology and marketing.

As cable reached critical mass, its situation was strikingly similar to that of the Internet. Both were primarily delivery systems, capable of transmitting content to places where it had not been available, and in volume - "shelf space" as cable programmers termed it - that seemed almost limitless.

And just like the Internet, many of cable's early offerings were created by what are known in today's digital world as aggregators. Cable's so-called "superstations," WGN in Chicago and Ted Turner's Channel 17 in Atlanta (which later became WTBS), functioned mainly as aggregators of off-network reruns and movies. MTV was conceived to aggregate video clips that were produced as promotional pieces by record companies.

Cable's early entrepreneurs faced the same fundamental challenge that Internet operators are struggling with today: how to get consumers to pay for content that historically had been given to them for free. The cable industry solved this problem in two clever ways - by chopping the content into small pieces, and then by packaging many of those pieces together.

First, the chopping. Instead of a single channel offering news, sports, weather and entertainment, cable used its expanded shelf space to give each component its own separate channel. Back then, with the advent of CNN, ESPN, MTV, The Weather Channel, etc., the process was known as narrowcasting; today, on the Internet, it's called vertical organization of content.

Currently on the Net, for example, fans of classical music can subscribe to for $135 per year; weather buffs can stay current with the Pro package at for $250 a year. The digital choices already seem limitless - yet they're merely a hint of what's to come.

Second, the packaging. Once cable customers were hooked (literally), they were sold tiers of content, in which the narrowcast channels were combined to create simplified pricing options.

It's no accident that the first major general interest newspaper to erect a pay wall, Long Island's Newsday, is owned by Cablevision. By establishing a five-dollar per week "value" for, then packaging it with cable and Internet service, Cablevision is setting the stage for "Newsday Gold" or "Newsday Platinum" down the road - for additional fees.

Each of today's content creators - newspapers, book publishers, television, etc. - will find different lessons in cable's history. What Amazon's Kindle does with books and periodicals, what The Wall Street Journal does with its newspaper, and what the Web site does with TV programs, come closest to following cable's model for success in the digital world. Each has some control over both content and delivery, and each is creating multiple pricing tiers.

Based on cable's experience, it is possible that major newspapers will wind up charging for all but the most basic of online content, and it will be sold in pieces: the sports section, the opinion section, the entertainment section, and so forth. Networks of newspapers will be formed, so that for a single fee readers can access five or ten of the nation's best papers.

Perhaps the greatest lesson from TV's entrance into the video supermarket three decades ago is that cable didn't kill broadcast TV, although it forced some changes. Similarly, pay-TV didn't shut down the movie theaters.

Today, some maintain that the immediacy of the Internet and the ability of consumers to redistribute content with ease (via YouTube, for example) make earlier media models irrelevant. But the essential components of the cable revolution are likely to prevail in the digital age: content is key, and consumers will support it. Quantity is appealing, but quality sells.

And the more you look at history, the less revolutionary things become.

© Peter Funt. This column first appeared in The Boston Globe.

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