The backlash to the backlash against NBC’s tape-delaying of its Olympics coverage is well underway. Derek Thompson at the Atlantic and Kevin Drum at Mother Jones both argue that, having invested billions in the rights to televise the games, of course the network wants to air its product at the optimal time for maximum television viewership. And fair enough as far as that goes. But the true blunder here is NBC’s refusal to sell—at any price—the right to watch the events live over the Internet.
The network is, quite sensibly, pairing its normal television broadcast with a comprehensive set of streaming broadcasts. This has not exactly gone off without a hitch, but it represents a very sensible two-pronged approach to the games. A primetime broadcast aimed at the center of the television market and a vast array of live Internet streams for niche fans.
But the structure of this Internet service is bizarre. On the normal Web, there are two kinds of business models. There are services you can access for free—Slate, Gmail—that rely on advertisers for revenue, and there are services you have to pay for such as Dropbox or the Financial Times. But NBC’s Live Extra, like HBO’s online service HBO Go, is in a strange third category. You can’t buy it, but you can get it for free if you happen to subscribe to cable television.
The issue here at first blush is that NBC is owned by Comcast, which is a cable company. And that is clearly the decisive factor for this free-for-cable-subscribers model on some level. But the more you think about it the more it looks like an ideological decision than one motivated by greed.
After all, it’s insane to think that any of the small number of broadband-but-no-cable households in America is going to subscribe to a cable package for the sake of Live Extra. The Summer Olympics only takes up two weeks out of every four years and the most popular events are shown on over-the-air television. Meanwhile—confession time—it’s trivially easy to do what I did and ask a cable subscriber to share login information with me. It’s most likely so easy to cheat because NBC knows nobody is losing money this way. Since NBC doesn’t sell an Internet-only subscription to Live Extra, my cheating doesn’t cost them any actual revenue.
What would fill their coffers would be agreeing to sell Live Extra to people who want it. It could be handed out free to cable subscribers and offered to non-cable households for a one-time fee equal to about one month’s worth of a cheap cable teaser rate. Or they could stop giving it away to cable subscribers and offer it to the general public at a cheap $5 or $10 rate. Neither decision would hurt Comcast’s bottom line in any way. But either decision would involve contradicting the prevailing argument from the cable industry that nothing will ever have to change about their business model.