Do it [social].

Falling behind at giving free TV content away on the web may not be a bad thing.

TV producers’ content is paid for by advertising dollars. Advertisers put their money into content that reaches the eyeballs of their target audience. We, the audience, are the variable—as are advertising budgets in this economy and digital media revolution, I suppose.

According to the Uses and Gratification communication theory, we choose media channels that best fit our desires.

Our TV habits are determined by content, channel, cost:

We want to choose what we watch. We prefer to watch it where we want, when we want, without interruption. And many of us are getting used to it being “free.”

To experience live TV shows and events live, media consumers will submit to program schedules and advertisement interruptions. Today consumers need a digital cable provider, and service can cost as low as $20/month for basic channels and up to $130/month for premium channels—formerly known as “cable.”

To watch TV content on a custom schedule and to skip interruptions, sometimes consumers use a digital video recorder (DVR) to fast-forward through ads and watch almost live, or at a later and more convenient time. DVR devices can be rented for about $15/month.

Other times consumers choose from a selection of TV content available online at anytime they want and with less advertisements—”limited interruptions.” To watch online TV consumers need an Internet provider, and service can cost as low as $20/month (not to mention access to a computer that is able to connect to the Internet).

“The television market is $120 billion. And of that, $700 million, half of those [ad buyers] are spending 90 percent of their time doing Google keywords, not buying online video,” said Quincy Smith.

But in September Hulu earned 38.5 million unique viewers who watched 488 million videos—average viewer watched more than 12 videos totaling more than 1 hour, compared to average 3.7 minutes for all web video.

The “web-based storytelling economic model” is a little broad of a subject to tackle in a blog post. I will take a stab at the future web Television economic model—it is basically determined by us, the viewers.

A common prediction: As future generations rely more on the Internet for their media needs and free content increases to be available online (or cheaper and same or better content by cable providers), online TV viewers will likely increase and transcend age demographics.—What if  online advertising, then, saves the TV networks (who provide free content online) and the habits of future media consumers disrupts cable providers?

Now: We are watching TV on TV and online. Just because we’re watching online doesn’t mean we stopped watching on TV. I would argue that we watch more TV than we ever have before—because it is incredibly accessible and we have the freedom to control time and content.

NBC, News Corp. and Fox may have jumped the gun with a free video-viewing platform (maybe they should have started slow and maybe with micropayments?—is there any going back?, probably no) and they will probably have to earn their rent with advertising.

CBS may be a little bit of a paranoid control freak, and a little behind—but not by much (should they offer full episodes of their shows free on their website with weekly lifespans?).

I wouldn’t hold tight to anything right now. I’d stick to what’s working ($120 billion) and strategically experiment with what’s emerging ($700/$350 million)—maybe that is what CBS is doing after all.

Quincy Smith (CBS) one year ago