Stephen Foley: Micropayment revenues for TV companies may be just that, microscopic

 

Outlook What Rupert Murdoch did to his UK newspapers, he is doing now to US television. No, this is not a point about collapsing ethics. It is about paywalls. Fox, News Corp-owned home to The X Factor and The Simpsons, is pulling back from an experiment that made just-aired shows available for free on the internet via the website Hulu.com. ABC, the American network owned by Disney, is contemplating following suit.

Meanwhile, on the other side of the Atlantic, ITV says it will introduce a micropayments system to enable it to charge for shows on its online player from January. The launch is already behind the original schedule, and Adam Crozier, chief executive, says there will be an initial period of experimentation as the company wrestles with the question of what viewers are willing to pay for. As SeeSaw, which tried to sell episodes of South Park and Spooks to the UK public, discovered, the answer to that question seems to be: not a whole lot.

Can either of these experiments spare television from the fate of the music industry, and turn the internet from a threat to a source of new, sustainable revenues? The omens do not look good.

Mr Murdoch is a Cnut, almost single-handedly trying to hold back the tide of free content on the internet, and such is the might of News Corp it is tempting to think that if anyone can, it will. BSkyB in in the UK is about to launch an experiment of its own, with monthly subscriptions to Sky Go, a digital player for its programmes online and on mobile devices.

But The Times and The Sunday Times traded influence for minimal extra revenues when they put up their paywalls, so it will ultimately prove it is down on the deal.

And Fox's latest pull-back from Hulu is a defensive move, designed not to generate new revenues but to protect hard-won existing ones. Cable television operators, who include Fox in their bundles of television channels, pay News Corp for the privilege, and they are angry that the same content turns up elsewhere for free almost instantaneously, To assuage them, only authenticated cable subscribers will now be able to watch Fox shows on Hulu until eight days have elapsed and they become free to all.

All of which is to say that Mr Murdoch has learnt that making money from his TV content is best done by dealing with the intermediaries. These content bundlers, big companies all, are the ones who really can be squeezed. Charging viewers directly would be a costly pain, even it worked. Much more likely, most users would tune out, and dedicated fans would be driven to piracy.

As ITV works to sweat its assets and generate more money from its programmes, micropayments look the least likely route to success.

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