The solution as I see it is for the entire industry to wake up to the fact that they do not need to be structured as they are now in order to be profitable.
You have 5 groups here.
Production companies: People who make shows.
Sponsors: People who pay for advertising.
Viewers: People who watch shows.
TV Networks: People who distribute shows via established television networks.
Pirates: People who distribute shows via non-sanctioned illegal means.
Thanks to Online Peer to Peer Distribution technology, one of these groups is obsolete.
Fact: Companies pay dearly to have their products advertised. The prices they pay are generally enough to fund the making of a television series. Often even a movie. Instead, much of their money does not go toward the making of shows, but instead goes to support the Television infrastructure... cable, satellite, over-the-air broadcasting stations as well as pay the overly high salaries of TV Network Executives.
Lets look back at the early days of television. Commercials were done on the set, by the actors in the show. Product placement was a big deal, as it is now (is it just me or is TV Land some alternate universe where everyone uses a Mac?) In the middle of the show, a short segment would feature an actor or announcer giving the advertising spiel for the product. In return, the sponsor would pay a fee that would enable the show to continue being made.
It was easy for the viewer to connect the show and the sponsor together in their mind and see the symbiotic relationship that exists there. Now lots of commercials interrupt a show to try to sell products that have no connection to the show whatsoever. So now the viewer does not have an appreciation for the sponsor and what entertainment that sponsor has provided, but instead views the sponsor's ad as an annoyance and an interruption.
People in the pirating scene cut those annoyances out. Sure, why not? They have the technology and the skill, and the product is much more enjoyable without the interruptions. Simply put, they refine the product into a more enjoyable form. They give it portability by encoding it into formats that fit on phones and PDA's.
The catch-22 here is that by doing this job in an unsanctioned manner, they are removing the value of advertisement. Also, online popularity data for a particular show is not easily gathered. People are downloading stuff from thousands of different sources and those sources do not want to give up numbers, for fear of legal reprisal. So good shows do not get credit for their online viewers and may end up looking less popular than they are. Executives giving the heave-ho to shows like this receive a much bigger backlash than they initially anticipated. But the real tragedy is that really good shows get cancelled.
If Television programming can be called an art, then I postulate that the current distribution model is hurting the art of television. Shows are overly condensed for length. Cliffhangers happen at predictable intervals because they don't want you to change the channel when the commercial comes on. This gives shows an unnatural cadence of action that hurts the viewer's ability to suspend their disbelief and enjoy the show.Sanctioned online distribution is a new media landscape with different rules.
The biggest problem as I see it is that intermission-style advertisements would not work in this new media landscape. Anything that interrupted the story would be cut out by people in pirate scene. Even sideliner ads and overlays that are too garish and distracting would be blurred out. Get back to making ads using the cast of the show, or if that would hurt the seriousness of the drama, just use the set. Either way, it is cheaper and it ties the two things together in the viewer's mind. People would buy products based on their love and loyalty to the show. Packaging can be specialized to become show memorabilia. There are a lot of tie-ins that are possible when show and sponsor are in a more symbiotic relationship.
What needs to happen is that commercials need to change. They are annoying obnoxious interruptions that people only enjoy once or twice (at best) and then become increasingly less enamoured with as time goes by.
On the other hand, product placement still fits just fine, and would not be cut out. Also, watermarked intermittent messages and logos that decorate screen edges would likely be kept as well... unless they are really really annoying. A black bar over them, or blurring them out is just as distracting from the material as the original message likely was except in extreme cases. And honestly, it would be healthy for everyone if the "scene" agreed to leave these alone. Taking up the attitude that it is "paid for" space, and without it the show would die, would be a good thing. Also consider leaving in commercials that actually acknowledge the show (Target's LOST Smoke Monster advert was enjoyable and fit with the show)
Another thing about commercials like this is their longevity. Advertisement embedded this way will last for the life of the show, not just flash in the brainpan of millions of viewers for a forgettable squidgeon of time.
How many people watched Firefly when it came out? Obviously not enough. How many have watched it since then? Millions. If Pepsi or McDonalds had embedded an ad into that show, instead of doing it like they currently do, then all of the millions who have seen the show since it went off the air would have been viewers of the ad as well.
As it stands now, who knows what company was paying for ad time during that show's airing? Definitely not me, the version I watched had the commercials removed.
The torrent model is a distribution dream. The production company does not have to pay for expensive amounts of bandwidth, that fee is paid for collectively by all of us when we pay our monthly Net bill.
"Ok, smarti-pants, back it up" you say.
During the last Superbowl, 2.6 million US Dollars were paid to air a 30 second commercial. with a total U.S. audience estimated to be around 150 million viewers. Curiously enough, that's around the same amount of money it cost to produce an entire season of the HBO show "Carnivale" which was cancelled due to high production costs. Season one averaged 3.54 million viewers across 12 episodes (42.48 million views) and Season 2 averaged 1.7 million viewers for 12 more (20.4 million views) In season one, with four embedded ads per show, there are as many or more views than a superbowl commercial.
This is JUST the people who watched it on HBO. This doesn't count DVD sales or pirated distribution. Television shows now have a long tail of viewership. Shows can get surges of popularity years after they have left the airwaves.
By this math, Two or three sponsors could have kept this show alive. And this was an abnormally expensive show to produce, yet also a show that won 5 of the 7 Emmys it was nominated for.
It comes down to a question of which is better. 150 million ad views by different people, or 150 million ad views by 20 or 40 million people who view the ad repeatedly. There is also the long tail of online distribution to think of. Ads embedded into TV shows would get viewed continuously as new people start watching the show long after the show has been ended. So money spent in advertising this way would continue to produce product recognition for a long long time.
Which is better, paying for a distribution model that cost millions to build and maintain, is operated by self-aggrandizing jackasses (Ted Turner, Rupert Murdoch, etc) who think it is their personal vehicle to program you to think and act how they want you to, and is constantly cancelling shows to the disappointment of millions of loyal fans (Firefly, Carnivale, Surface, Heroes)??? Or is it better for production companies to cut out the middleman and put a server in the basement seeding their show on an officially sanctioned torrent with a legitimized tracker whereby they can keep accurate records of how many times the show was downloaded? Include a question before the download link as to how many people are expected to be viewing that copy, and you get accurate numbers with which to shop around to prospective sponsors.
This way of doing things lends itself to web based social networking buzz-building as well.
To the "Industry"
Stop trying to outlaw piracy. It is a part of global culture now. Embrace change and survive. Ignore change or try to legally regulate change and you'll go the way of the dodo. Learn to embed commercials in your web-based offerings in ways that are unobtrusive but effective.. Set up RSS feeds of sanctioned torrents for shows. If a show stops being economically viable on the air, look toward continuing the series via online only distribution. Realize that flash sucks balls. It really does. Streaming is expensive on your end and limits the visual quality NOT necessarily to the capabilities of the viewer's home theatre setup, but to the viewer's bandwidth capabilities. Torrents are cheap as the bandwidth cost gets borne by the viewers and you can host multiple files of your product (with corresponding differences in filesize) to further meet the needs of your viewers and hence remove the need for someone in the "scene" to re-encode your product for phones and ipods. One way or another, your way of life is ending. Embrace change and you will continue to play a part. Also, stop doing cocaine, your family is really worried about you.
To the production houses
Start learning to cut out the middle man. If the industry doesn't pick up your show, have your agent stop talking to NBC, ABC, FOX and HBO, and instead have them talk to McDonalds, PepsiCo, Sears, FedEx, and Toyota. Get in touch with your fanbase and stay in touch. Be good to your writing staff. Don't sign away your reproduction rights. Keep your options as open as you can. Do not agree to a clause in your contract that would prevent you from continuing your show by alternate means should a network decide they no longer wish to carry it. And for the love of Pete, unless you are writing a sitcom, have a freakin ending planned. The 4th season of Andromeda was a train wreck. Learn from it.
To the viewers
Get out there and check out the Web based shows. This stuff has already started happening, and you are missing out. There's some good shows already using this model. Google the word "vodcast" and you should be able to find something along these lines. Get involved. Support your favourite shows by buying their memorabilia and letting advertisers know that you appreciate what their dollars provide. Pay the extra 30 cents for the name brand if that name brand is supporting your show.
To the advertisers
Gather a team of people who can judge the viability of script ideas. Don't worry, lots of people with these skills will be out of work soon as the old media edifice starts to crumble. You are now in a position of greater power than you've ever been before. Don't screw it up. Good shows will be watched for decades. Thanks to the new media landscape, investments in direct sponsorship advertising have a very long tail of returns and brand recognition. It also gives a more positive mental association to the viewer if they know that watching the show is a gift made possible by your monetary contributions. Understand that with advertising, less is more. Get too gung-ho about making flashing banners that can't be ignored and someone will likely remove them from the product.
To pirates and "scene" people
If the industry and production houses do make changes like these, respect the shows and their sponsors and be forgiving of sideliner ads. If you enjoy watching shows, realize that making entertainment programming is expensive and the money has to come from somewhere. If you devalue the show to sponsors by removing all advertising material, then you are in effect hurting the possible longevity of the show. It'll get cancelled. You've seen it happen to shows you loved dearly. The more people embrace non-sanctioned, non-profitable distribution, the more good shows will die. We all love the Pirate Bay. But honestly, the Pirate bay has never had to pay to create any of the content that it purveys. Unless you want to watch re-runs forever, let the production companies make their money.
To the reader of this
Sorry I was so longwinded. It happens.