Tuesday, February 24, 2009 4:05 PM EST

Has the Internet Killed the Traditional TV Revenue Model?

by Oliver McIntyre

Gossip Girl is a teen drama based on a group of New York socialites. Since it’s launch in September 2007 it has been receiving a great deal of attention from both the viewing public and TV executives.

The show was created by the CW Network and targets the 18-34 demographic. Understanding that a TV show has a life way beyond the weekly spot was clearly something Josh Schwartz, the show’s producer, understood from the beginning. Gossip Girl was created to work across Television, Internet, and mobile phones and thereby reflects the ever changing needs and wants of the demographic.

CW has a strong online presence, most of which is free (advertising funded). It allows viewers to watch full episodes online, view exclusive interviews, meet and chat with other fans and dissect the characters through a private blog. As well as the advertising revenue that comes from the site, there are also revenues linked to product sales. Viewers can browse and buy the clothes and accessories worn by the characters. They can buy music featured in the show and download mobile screensavers and ringtones.

The primary focus of the Gossip Girl site is to market the shows and they do this very effectively in several ways including a ‘CW Mixer’ which allows viewers to create, upload, and share their own CW show-related video montages.

Online viewers download the show for free using file-sharing technology or pay to download it to an iTouch, iPhone or other mobile device.

The overall popularity of the show has increased, but the traditionally measured viewer figures have been declining, as have the traditional advertising revenues.

Last year TV execs decided to delay the show on the Internet, showing it a week after it was broadcast on TV. The reason: too many people were watching it online and this was having a major effect on the television viewing audience.

Cross platform fluidity is difficult for traditional broadcasters to embrace because their advertising revenue is linked to traditional audience metrics. We have already seen the Internet and file sharing technology wreak disastrous effects across the music sector when the key players resisted the need to change.

Over the past year, YouTube has agreed deals with several TV stations to legally post their clips and share the advertising revenue earned from display advertising placed next to the videos.

These deals provide YouTube with authorized local content and help the TV stations to get paid for content posted free online as well as extending their audience.

The future is about creating compelling content and at the same time understanding that this content is no longer just being accessed through a high-def TV. TV execs must embrace the fact that the existing revenue model is dead and develop new formats and metrics to facilitate and cater to the fact that people are increasingly watching TV shows on their laptops and through their mobile phones.

Comments (4 total) | Add Comment | Permalink

2009-03-19 10:08:03
from:

Hi Oliver I don't know if online media has killed traditional yet, but it certainly is equipped to do so. You and I did some innovative stuff with Raketu to show off the potential for sponsors to do things they could never do on television or in print. Didn't we break all kinds of click through records? I now am starting a channel on Youtube where we can offer sponsors more control and selling power than they ever had in traditional media. No time restrictions for ads, star characters who push the products in an entertaining way in their own shows, and direct links to the sponsors' websites where they can use those same stars to help the audience navigate the site as if they were their personal salespeople in a virtual store. And how about commercials that no one wants to fast forward through? ! am ready for this future; I know you are and it could come any day now - the day the first sponsor really wants to beat out his competition. Your pal, John Kricfalusi, creator of Ren and Stimpy
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2009-03-11 19:43:15
from: joseph@businesstribes.com

Integrating media formats is the key. Gossip Girls does not attract a viewer base, they built a tribe.
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2009-02-27 07:50:36
from: brendan@surveyguru.ie

Hi Oliver, Josh Schwartz deserves credit for trying these innovative,. mixed approaches. Jon makes an interesting suggestion on reversing the order of broadcasting. Perhaps the relative revenues (TV advertising versus the rest) would influence that choice. Brendan
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2009-02-25 11:19:31
from: jon@chocolate4health.co.uk

It appears to me that it would have made much more sense to be pioneering and air the show online one week earlier that the TV show. Imagine the value of an advertising slot there!
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