"The TV networks already seem, grudgingly, to see where things are going, and have responded by putting their stuff, grudgingly, online. But they're still dragging their heels."

The TV industry is a complicated business, with a lot of buying and selling instruments that technologists outside of the industry generally don't understand. So, the industry is brushed off as a bunch of "laggers" as was describe to me by one VC group.

And because the new media channels (GOOG, etc) brush off the vagaries of the business (selling methodologies, the role that Nielsen plays, service and relationships), they're failing miserably at getting their hands on any significant portion of that 30b annually that TV ad revenue is putting on the books.

If GOOG is supposed to be setting the example for a new media channel penetrating the legacy media industry, so far they're doing a lousy job. TV booked 18b up front during 2008 buying season, while Youtube struggled to clear 200m by year-end. http://www.rbr.com/media-news/advertising/12912.html

And now GOOG flopped on radio: http://www.rbr.com/media-news/advertising/12895.html

The problem is that while the technology is there to change the face of media consumption, traditional media still produces the best content, and content is still king. If traditional media is not convinced that the new channels can protect spot value, there's no way they're going to give up prime content on a first run basis: http://www.siliconvalleywatcher.com/mt/archives/2009/02/goog...

Don't confuse prime re-runs that you might see on Hulu with real value content. The real value of that content was determined when it was running on TV, which is why we get to see it at all on Hulu.

GOOG recently did a deal with NBC for some inventory. Here's how I imagined the negotiation went down.

GOOG: Hey NBC, let us help you sell some of your inventory. Just imagine the reach your advertisers can achieve!
NBC: Ok, how do you plan to sell the inventory.
GOOG: By auction, using our online TV Ads application.
NBC to assistant: Ok, hand 'em that bag of crap (remnant inventory) over there and let them try to sell it.
GOOG: Come on, can't you give us anything better than that?
NBC: Look, four things are sold by auction: 1) art, 2) heirlooms, 3) foreclosures, and 4) crap. There's no way we'd let you touch our gold inventory with that model.

It was easy for TV technology to take off originally 70 years ago, but it won't be nearly the same cakewalk this time around just because the technology is superior and people are using it. Like with the oil-based economy, there's a huge amount of infrastructure in place for creating and selling content that was built and refined around a legacy technology. So suggesting that TV is dead is every bit as wrong as suggesting that the oil industry is dead.

And approaching the problem from this point of view is I think a much better business move than as PG suggests, "Now would be a good time to start any company that competes with TV networks." This is equivalent to suggesting that somebody needs to come up with a Tesla for the TV industry.

I love what Tesla is doing, but we know they're not going to rake in the bucks for their effort. Their best chance for some bucks is a fat exit.

The solution is the hybrid engine, developed by a group who know the vagaries of the business from the inside, but can help realize the technology that the new media channels offer. Shameless Plug: This is exactly the project that my team is working on.