So what happens to broadcasters?

TV Networks and program producers can make more money off downloads of their programming than they can through advertising. That is the remarkable conclusion of a couple of noted researchers and reported today by Diane Mermigas in The Hollywood Reporter. The math is pretty amazing, and it validates what a few of us have been saying for years about the role of the local broadcaster — that the Internet destroys middlemen in the existing value chain of media.

The mass-market acceptance of broadband in the U.S. has tipped the scales back to content producers and packagers, with the proliferation of distributors diluting the de facto gatekeeper strength of television stations, cable and satellite systems, cellular and video telephones, personal digital assistants, personal media players and Internet service providers. That should theoretically boost the economic fortunes of content players, though much will depend on the details of new business models and prevailing of old business models.
So while the “economic fortunes of content players” are getting boosted, what about the old distribution system? Therein lies the rub for my friends and colleagues in broadcasting.

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