Apple May Have Found the Chink in TV's Armor: Pay-for-Ad-Skipping

Apple TVApple has been shopping networks and studios a service that would allow users to skip commercials for a fee. The negotiations represent a new spearhead from Apple to bring a premium TV platform to market, with the company seeing revenue-for-ad-skipping as an opportunity to get its corporate foot in the door.

The report comes from Jessica Lessin, a former Wall Street Journal reporter, who cited unnamed sources that had been "briefed on the negotiations."

Apple has long been known to have designs on the living room, either with a dedicated television set or an enhanced Apple TV-like settop box that would offer users an-Internet connected TV service.

Recently, Apple was reported to be close to a deal with Time Warner Cable that would allow the Apple TV (or its successor) to be the settop box for that company's cable subscribers, the first success Apple has had in its effort.

The company has been stymied by network and studio executives who aren't interested in giving control of the user experience to Apple and who are very interested in protecting their existing business models.


That's because the TV industry makes a lot of money. A lot of money (at least if you're not Apple). It seems they want to continue making lots of money, even though everyone and their brother knows that the Internet is in the process of messing all that up.

Most TV Suits—like Suits everywhere—would rather ride the gravy train until it wrecks than risk a disruption that could put them ahead of the game or fail.

Contrast that to the music and publishing industries, which were both in disastrous states when Apple approached them with its disruptive iTunes Store and iBooks (respectively). Their need was Apple's opportunity, which is almost always the case with anything disruptive.

The music industry signed up for Apple's (then) Mac-only iTunes Store and was subsequently saved from the folly of its own inept digital strategies. The publishing industry turned to Apple because Amazon was rapidly devaluing the publishing world's products (books). The DOJ rained on that parade, but the point is that the execs signed on because they were desperate.



That's the irony of the situation. Desperate industry execs sign on with Apple and then get upset that Apple owns the customer experience. They are oblivious to the reality that Apple is able to do this because the executives are very poor stewards of that experience and they resent the fact that Apple saved them.

It's irrational.

Back to the TV market: executives aren't desperate and fear change, but if Jessica Lessin's sources have it right, Apple found a chink in the armor, and that's DVR commercial skipping. Almost everyone with a DVR routinely skips commercials, and even TV execs know this will eventually erode advertising revenue as commercials become less and less effective.

Getting money for something that will eventually cost them money—and for which they are getting zero dollars right now—could be just the ticket to get TV Suits to let Apple in.

Think Differently

The question is whether or not customers would pay for this considering the fact that they don't have to pay now. Many will not, especially the enormous class of people who feel entitled to everything for free.

Apple has to understand this, too, and my assumption is that Apple believes its service would be compelling enough to get enough people paying to make it worthwhile. As with every disruptive product and service Apple has brought to market, you can be sure that Apple has a good reason to believe it will be successful.

In the meanwhile, people that enjoy good television programming should be willing to pay the ability to skip commercials. There is a tipping point where DVR (and pirate) behavior will begin to erode those profits we mentioned above. When that tipping point is reached, programming will suffer unless something else (like Apple's service) is there to replace or augment that revenue.