Cloud Computing and the Death of Local TV

The Internet has changed the newspaper business irrevocably: Will it do the same to local TV news? And what does this teach us about cloud computing adoption?'s Bernard Golden explains.

By Bernard Golden
Wed, May 26, 2010
Page 2

I am much more sanguine than Mutter about the prospects for citizens when local TV news goes the way of the dodo. Local TV news has always been a sinkhole of histrionic sensationalism mixed with puerile happy talk; local TV news may be deep in the quality basement today, but it descended no very long staircase to get there.

Other Markets Disrupted by Cheap Connectivity

vMuch more interesting is the reason all of this financial travail has occurred. While the financial machinations of the companies themselves didn't help their situation, what really made them come undone was the change in the market, as less expensive (or free) Internet-based services displaced them. The threat to local TV is only the most recent market disrupted by cheap connectivity and what it enables:

• Telephone Service: VOIP has ripped the guts out of one of the great monopoly markets ever. I continue to be amazed at how I often talk to people in several different countries via Skype all in a single day -- at no charge. How long will it be before telephony is included for free with some other, still valuable service?

• Music: The effect of file sharing has been around for a decade, but now online music streaming is coming to the fore. In some ways, having to limit one's listening to whatever music is on a particular device seems so ... retro, when the universe of music is available on an Internet service like Pandora.

• Newspapers: As just discussed, the speed of the breakdown of this industry is amazing. I stopped subscribing to the Chronicle when it became visibly thinner and, at the same time, become markedly more expensive to subscribe to.

• Television: Mutter's postings discuss this in detail (and you should definitely read them), but the jist is this: if I can download shows at my convenience from services like Hulu (or Netflix, for that matter), why do I need a local TV station between me and the content?

In each of these cases, a formerly wealthy market is being deflated by new entrants built on a new technology ill-suited for the previous economic victors — but well-suited for the way the new entrants come to market. In a sense, a rich profit pool is being drained by upstarts innovating on the back of new capabilities. The metaphor of draining an existing profit pool is one I've heard used by both Dell (DELL) and Amazon, both of which disrupted an existing market by being willing to operate in a different fashion from the then-current market leaders.

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