The emergence of the internet has disrupted the equilibrium in the entertainment world and radically changed the way content providers and users interact. It was no longer just through televisions or radios at a certain set time but also through the web on-demand available 24/7 with just a click of a button. The music industry was the first to be affected by such change. File sharing networks such as Napster and Limewire forever changed the industry’s definition of distributing contents. With the internet, new business models surfaced, creating the concept of online music store. On the not so bright-side, however, the Recording Industry Association of America (RIAA) has been blaming illegal downloads for the decrease in record sales.

Naturally, same transitions occurred within the media industry. Many media giants saw big potentials in distributing their contents through the internet to reach a wider audience. As broadband access become cheaper and more widespread, more “edges” are forming in the internet world. On the other hand, they had to deal with illegal downloads of television shows and movies through programs such as BitTorrent. They are also running into difficulties because there are not many options in the market to make profit off of. Video sharing websites such as Youtube are constantly under fire because of copyright infringements. While distribution through such venues could be used as a marketing tool for promotion, content owners cannot profit from it without commercials. Apple’s iTunes Store, the dominating download service provider in U.S., offers “profitable” business solution, selling television shows and movies at a certain price and letting the users download them to their computers or their iPods. Couple month ago, however, media giant NBC Universal decided not to renew its contract with Apple because NBC had limited options in terms of pricing and packaging its shows. This happened because Apple dominated the market of handheld video device with the iPod and thus have a wide distribution platform that no rivals can match. Its high “betweenness” gives the company more bargain power in deals with the media content providers.

As a reaction to this, many media giants are looking for alternatives. Majors have each opened their own website with their contents. NBC and News Corp. have teamed up to create new online video venture, Hulu. NBC Universal and GE Commercial Finance launched a $250 million Peacock Equity Fund in April to invest in media and technology companies that are developing products of relevance to NBC. Many have also teamed up with existing services such as Amazon Unbox, SanDisk’s Fanfare, Vudu, AOL, Comcast, MSN, MySpace, and Yahoo. They are trying create competition in the market by creating more distribution path, weakening their dependence on Apple and thus making the situation more favorable to them. Currently, the industry is trying to find its position in the new internet market, testing out different business models to figure out the user’s habits, which is now just taking place.

References:

http://www.forbes.com/2007/08/06/nbc-internet-video-biz-media-cx_lh_0806kliavkoff.html

http://www.nytimes.com/2007/12/02/business/02frame.html?_r=2&oref=slogin&oref=slogin