Television is largely paid for by advertising. Many consumers—I suspect a majority in developed countries—have equipment that lets them record a program when it is broadcast and listen to it later, fast forwarding, if they wish, over the ads. The smaller the number of people who watch the ads, the less advertisers will be willing to pay broadcasters to run them.



Consider, however, a broadcast of a football game. Part of what the viewer is paying for is the excitement of seeing which team wins and how. That does not work very well if he knows the final score before he watches the game. So football fans are likely to have a strong preference for watching the game in real time, as it is played.



If they are watching it in real time, they don't get to fast forward over the ads. It follows that advertisements will get more viewers in that context, hence that advertisers will be willing to pay more for a minute of time in a football game, or anything else that television watchers prefer to watch live rather than recorded. From which it follows that the invention of the Tivo and similar devices can be expected to lead—very likely has already led—to a shift of resources away from made for TV movies and towards broadcasts of sporting events.



There are other implications as well. My wife suggests that the same change should lead to an increased effort to make ads entertaining and an increase in embedded advertising. It should also lead to an increased effort to make television drama more like football games, to create soap operas where the viewer is waiting on the edge of his seat to see whether she does or doesn't date/marry/divorce/sleep with him and wants to see it happen before hearing about it from another viewer.



This is one example of the indirect ways in which technological change changes the world we live in. A second and similar example, one that I have discussed before, is the effect of easy copying of digital intellectual property on what sorts of IP get produced.



A recorded movie is fully revealed in one viewing, so there is no adequate way of technologically protecting it; however good the encryption, the customer has physical possession of the machine it is playing on and so can arrange to record it as it is played. The same applies to any form of IP fully revealed in one use, such as a song or a novel. It does not apply to a database such as Lexis, since what the user gets is not a copy of the database but only the answer to a particular query. Nor does it apply to a massively multiplayer online game. What the user wants is not a video of my adventure in World of Warcraft but an opportunity to have his own—and he will have to pay Blizzard to get it.



Hence we would expect improvements in the technology for making and distributing copies—higher capacity storage, the increased availability of high bandwidth connections to the Internet—to result in a shift of artistic effort out of movies and into online games.

