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Not so sick after all?

This may seem an odd topic, but stick with me. Yesterday Disney’s ABC television network said it was licensing two canceled daytime TV soap operas to a production company that would be moving the shows to the Internet. I seem to be the only one who thinks this is a brilliant move. In fact it might be the Internet’s next killer app.

All My Children and One Life to Live as killer apps? Yes.

A killer app, remember, is the Silicon Valley term for an application that all by itself justifies to certain users the acquisition of hardware needed to run that app. People will go down to the store and buy hardware just to be able to use that application, whatever it is. VisiCalc was the killer app for the Apple ][, Lotus 1-2-3 was the killer app for the IBM PC, Halo was the xBox killer app, and Bonanza was the killer app for U.S. color TV.

Every new platform needs a killer app to get beyond the early adopters and reach a broader audience. Some experts are arguing that Netflix is the killer app for Internet TV, which might be right. But I think it might just as easily be All My Children.

ABC had nothing to lose in this deal. The two soaps in question were already canceled, winding down their casts and story lines. I’m sure they were acquired for a dollar each or less. If moving online saved ABC some costs from closing-down the series they may have actually paid Prospect Park to take the shows off its hands. So these iconic brands were cheap to acquire.

But they are expensive to produce, right?

Not so fast.

Nobody outside the shows and their networks knows for sure but a $50 million figure is often thrown out as the annual production cost of a major soap, so let’s work with that.

Fifty million dollars is $192,000 per episode or $4,370 per finished minute based on 44 minute shows. That’s a lot of money but a lot less than primetime TV budgets. It’s also the absolute most any soap has ever cost with most costing less. Certainly there are some savings to be found in there. Let’s claim a 20 percent labor savings from moving to the Internet, bringing per minute costs down to $3,496.

Actually, there are plenty of additional savings. Some savings will come from lower labor costs as actors accept smaller paychecks as an alternative to retirement or unemployment. But an even greater savings will come from any Internet soap’s ability to offer online every episode ever broadcast — the long tail — at an effective production cost of $0 per hour.

If a third of Internet viewers are watching old episodes that drops the effective cost of new episodes by a third, so we are down to $2,342 per finished minute.

Don’t forget potential subsidies from hardware companies. As a killer app for Internet-connected TVs, for example, All My Children might get some cash from TV manufacturers. Bonanza got money from RCA that way and many popular shows were moved to HD production with financial support from HDTV makers. Why not the same for Erica Kane?

Our All My Children budget is now down to $26.8 million per year, so let’s figure $4 million of that might come from Samsung or Panasonic or maybe even Google TV if any of those platforms can be somehow uniquely linked to the shows, possibly through additional or interactive content.

Heck, what if All My Children could be accessed solely through its Facebook page? How much would Mark Zuckerberg pay for that?

I don’t know what Zuckerberg would pay, but I do have one number to work with — the rumored production budgets at YouTube’s upcoming professional channels. According to Variety, YouTube will shortly bring some professional channels to its service with budgets of $1000-$3000 per finished minute.

Our straw man budget for All My Children, which now stands at $22.8 million per year, just happens to work out to $2000 per minute — right in the sweet spot of those rumored YouTube numbers.

I am not saying that All My Children and One Life to Live are headed to YouTube as the basis of a Soap Channel, but I am saying that they’d be profitable both for their producers and for YouTube if they were headed there.

Each show has about 2.5 million daily viewers — each a potential buyer of an Internet-connected TV. That’s $2.5 billion worth of TVs and well worth a $4 million production subsidy.

If YouTube or any of its competitive services could reliably get 2.5 million viewers per original episode they’d see that as well worth the money, too.

This is long form video with commercial breaks going to a dedicated audience which can now be global (that last part could be huge). Remember 2.5 million viewers of a 44-minute soap opera is the equivalent of 36 million typical three-minute YouTube video views. As professional content with a 40 year heritage that’s an easy sell to advertisers — a no-brainer for P&G.

So contrary to all the skepticism, moving soaps to the net could easily become a goldmine — one with a lifespan far longer than that of VisiCalc.

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These boys need bikes!

New York Magazine wrote recently that YouTube was planning to throw large sums of money at celebrities who would then make short form (three minute) videos for the site. The numbers mentioned were staggering (up to $5 million per celebrity channel) but the business model is crazy. It’s the three minute thing that makes no sense. I’m sure if YouTube is planning something like this it is specifically for videos that are not three minutes long.
Youtube already owns the Internet market for three minute videos. While there are probably instances where YouTube might throw some significant money into getting the odd celebrity to do something in this space, it is traditional TV-length videos and movies where Youtube actually needs help.
Looking at total video views, Youtube is the clear winner, but when it comes to longer-form videos, both Netflix and Hulu have more viewers than does Youtube. And Youtube can’t really afford to lose this battle, hence the emerging strategy.
Now let me tell you exactly where this is going, because if you are a couch potato it is important.
The big risk (or big opportunity depending how you look at it) has always been that Apple would spend $1 billion optioning TV pilots and by doing so effectively grab control of television. I’ve written about that right here. But somehow Steve Jobs was too cheap or didn’t have the confidence to know which pilots to choose (I suggested buying online rights to ALL of them, solving that problem). Only now it’s YouTube, not Apple, and it’s Netflix and maybe Hulu because once one does it they’ll all have to do it — even including Apple.
And the one to dominate in this land grab will be the one that spends the most money, with the key being to grab control of longer formats. YouTube already controls the three-minute video. It’s Netflix- and Hulu-length videos they’ll want next.
New York Magazine says Youtube is putting $100 million into such productions, but I can’t believe it will be that little, especially if other players choose to compete. We’ll easily hit that $1 billion number.

If that happens, the TV industry in the United States will be thrown on its head, because producers will be selling online rights first, denying those to the traditional networks. That opens the possibility that TV series may succeed online while never even making it to TV. Or they could succeed online and only later make it to TV.
In one sense it is the beginning of the end for traditional broadcast and cable TV, though visionaries might see it more as the end of the beginning. That’s how I see it.
The result will be an even more fragmented video market that will see lots more hits of all sizes from little vertical shows aimed at specialty audiences right through to Glee-sized hits that will work well because they have global reach over the Internet and can aggregate huge audiences without having to be a hit everywhere.
Some see emerging ISP bandwidth caps working against this but I don’t. AT&T is the first to impose such a cap in the USA for hard-wired customers but I am sure we’ll see exceptions for AT&T-provided content. Just as Comcast has bought NBC-Universal, AT&T will get in the content distribution business, too, if only to better compete.
Netflix is already rumored to be commissioning a TV series from Kevin Spacey. I’m sure we’ll see a lot of this happening and I think it is all good. After all, more video outlets probably means more Cringely, and all three of my kids need new bikes.

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This week more than 20 million people watched on YouTube and other video sharing sites a single performance from the ITV show Britain’s Got Talent in which a frumpy spinster from Scotland sang like an angel. You can see her astonishing performance here.

It’s not the singing that makes me write this, though the singing was good. I lived as a boy in the north of England and knew ladies like this Susan Boyle. What makes me write about it is the effect she and her singing had on the Internet and the Internet in turn had on the performance and its aftermath.

The video file as presented on YouTube is just over seven minutes and 26 megabytes long. Twenty million (and counting!) times 26 megabytes is 520 terabytes or approximately half the size of the Internet Archive. That’s 520,000 gigabytes or the equivalent of maxing-out in a single week the monthly bandwidth allotment of 260 co-lo servers at Rackspace.com. Running at top speed for a week would require 1040 such servers to do the job and we haven’t even made it to a week yet. That’s 520 million-million bytes.

Okay, so it was a nice lady singing a nice song, but what’s astounding is the performance had been round the earth twice or three times before the broadcast in the UK was even over. It was one of those seminal moments of mass-communication that showed the world was different than it used to be and thank God it didn’t require a wardrobe malfunction to do so.

What resonated with audiences about this performance was that it hit everyone – everyone – the same, as a long-coming reward for a life of good cheer and choir practice. I make documentary films from time to time and this performance is one of those emotional moments that every documentary director dreams of. It’s not the facts, you see, or even the stories that matter, it’s the emotional state of the people on-screen and how the viewer relates to them that matters. Real feelings count.

And thanks to the Internet in this instance such feelings count everywhere, it seems. For one happy moment we’re drawn together as a single audience to share a single emotional high that involves, for a change, no losers at all.

Think how rare that is, which explains its power.

Marshall McLuhan, who seems smarter every day, called it The Global Village. He said communication technology would link us together in ways we couldn’t imagine and those ways would lead to common experiences and shared values. McLuhan didn’t know about the Internet when he wrote that and he sure as Hell didn’t know about Twitter. But his prediction came true.

This Susan Boyle experience doesn’t come along very often, but with the growth of broadband technology it can’t help but happen more and more. It’s not the Super Bowl or the World Cup — it’s better. That’s because it is personal – a moment we all can share, well so far 20 million of us, one at a time.

Now the folks at Google are no doubt scratching their heads, as are the TV producers back in the UK, trying to figure how to put this effect in a bottle and make a living from it. But it can’t be done.

This is an event that was created for TV but not really anticipated by its creators, I’m guessing. They couldn’t reliably repeat it if they tried.

If they did try, it wouldn’t work.

That’s the beauty, because every time this happens, every time our Global Village comes together in this way, it’s because of a shared delight that makes us feel more alike and less apart.

We could all use more of that.

And the next time it happens, now we all know what to do.