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Speaker 1: Brought to you by the reinvented two thousand twelve camera.

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Speaker 1: It's ready. Are you get in touch with technology? With

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Speaker 1: tech stuff from how stuff Works dot com. Hey there, everybody,

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Speaker 1: Welcome to the podcast. My name is Chris Polette. I'm

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Speaker 1: an editor How Stuff Works, and sitting next to me,

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Speaker 1: as usual, is senior writer Jonathan Strickland. How do folks?

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Speaker 1: And today we were going to talk about a couple

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Speaker 1: of things we've been keeping our eyes on. Yeah, actually

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Speaker 1: one thing, and that would be the Internet, not so

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Speaker 1: much television, right, Yeah, there's Um, it's interesting. I've always said,

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Speaker 1: or since we started these podcasts, I've said that the

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Speaker 1: internets were going to be the future of distribution for

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Speaker 1: entertainment and information and in all formats, not just you know,

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Speaker 1: text or music or whatever, but also video, and um,

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Speaker 1: we've seen that continue to escalate over the past year.

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Speaker 1: We've seen you know, of course, you know, YouTube has

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Speaker 1: been popular for years now. YouTube. I feel like I've

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Speaker 1: heard that somewhere before. Yeah, I don't think you edited

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Speaker 1: that one, did you. I don't know know that was

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Speaker 1: one of my articles too. That, but things like Hulu,

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Speaker 1: you know, Hulu being a service that does streaming deliver

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Speaker 1: streaming video, and it's commercial streaming video. It's not just

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Speaker 1: you know, it's not user generated, it's studio generated video

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Speaker 1: um ADS supported in most cases. And uh, you know

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Speaker 1: that that's become very popular over the last year as well.

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Speaker 1: So part of the conversation we wanted to have today

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Speaker 1: was sort of about is this an increasing popularity and

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Speaker 1: streaming video and online delivery, is that making an impact

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Speaker 1: on regular television viewing trends? So, in other words, should

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Speaker 1: should television executives be scared of the Internet? No? Al right, excellent, Well,

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Speaker 1: I'm glad we had this conversation. It's a little more

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Speaker 1: complicated than that, actually, um well, one of the things

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Speaker 1: about Hulu was it when it came out, it was

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Speaker 1: sort of rushed out the door and people people weren't

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Speaker 1: really sure of it. A lot of the critics I

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Speaker 1: remember reading a lot of the critics saying, you know,

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Speaker 1: what a dumb name, This thing is never going to

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Speaker 1: take off, very dismissive. Uh, you know, the the TV

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Speaker 1: executives at the time, we're really concerned about this because

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Speaker 1: they said, well, you know, this has taken eyes away

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Speaker 1: from our our TV screens, you know, but it won't

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Speaker 1: really matter because it's this little bitty screen and nobody's

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Speaker 1: really gonna care ha ha. Yeah, people cared a lot.

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Speaker 1: I mean, I use Hulu. Yeah, I viewed quite a

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Speaker 1: few shows on Hulu. UM. And I think part of

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Speaker 1: the uh, the reason why Hulu really got popular very quickly,

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Speaker 1: besides the fact that a couple of studios started to

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Speaker 1: actually support it, like NBC and Fox, UM, was that

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Speaker 1: you it gave users what they really wanted, which is

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Speaker 1: the the opportunity to consume entertainment on their own schedule.

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Speaker 1: So you weren't tied down to your TV at specific times.

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Speaker 1: You didn't have to sit down in front of your

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Speaker 1: television at eight pm on Thursday night to catch you

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Speaker 1: know whatever. You could catch it on Hulu at your

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Speaker 1: own convenience. And granted, yeah, you're watching it on a

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Speaker 1: computer screen. It's not in high definition. UM. If you

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Speaker 1: had a high definition television at home, you might be saying, well,

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Speaker 1: you know, this quality is much lower than what I'm

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Speaker 1: used to. But at the same time, you can watch

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Speaker 1: it whenever you want it. And it's the same sort

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Speaker 1: of philosophy as the DVR right where you can use

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Speaker 1: a DVR to record a show and then watch it

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Speaker 1: at your own convenience. You're not You're not a slave

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Speaker 1: to the programming schedule of a cable or broadcast television station. Yes,

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Speaker 1: I'm the proud owner of a DVR and have been

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Speaker 1: for many years. Yes that's a TiVo Series one, as

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Speaker 1: I do have a TVO Series one, and I also

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Speaker 1: have a Dish Network. Uh, Dish Player five twenty two. Um,

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Speaker 1: and my former co workers at Dish Network will probably

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Speaker 1: wrect me because I don't think I got the name right,

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Speaker 1: but it is a five two um, and uh, I

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Speaker 1: gotta say it completely changes the way you watch TV because,

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Speaker 1: as you were saying this, this frees you from the

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Speaker 1: broadcasters schedule. And I would think if I were a

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Speaker 1: TV executive, yes, this would be a little scary at first,

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Speaker 1: but when you realize that the schedule becomes a little

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Speaker 1: less important. Um, you can run things at different hours

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Speaker 1: and have people still tune in because their DBR is

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Speaker 1: going to automatically schedule it and record it for them.

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Speaker 1: Then you're still getting a lot of the uh the

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Speaker 1: advertising revenue. You're still getting the eyeballs, but you don't

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Speaker 1: have to have it in that you know, particular time

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Speaker 1: slot to to make that work. But that that does

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Speaker 1: raise another problem, and that traditionally it was easy to

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Speaker 1: designate which slots UH cost more money for advertisers to

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Speaker 1: purchase time on UM. You know, the the eight o'clock

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Speaker 1: and nine o'clock hours traditionally, I would say, would be

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Speaker 1: the most expensive, apart from special events like the Olympics

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Speaker 1: or Super Bowl or something like that. UM. But you know,

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Speaker 1: you would say, like, okay, well a thirty second slot

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Speaker 1: at eight pm costs you know, two dollars whatever, you

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Speaker 1: know on this major network. Well, if you have DVRs

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Speaker 1: in play, then suddenly people are going to say, well, now,

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Speaker 1: it's not so much the time slot that's important. It's

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Speaker 1: the specific programming that the advertisement is tied to. So

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Speaker 1: the programs that are the most popular would be the

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Speaker 1: ones that would UM, that would that advertisers would want

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Speaker 1: to get connected to. Also, the other problem is that

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Speaker 1: a lot of DVRs allow you to fast forward through

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Speaker 1: commercials UM, so that adds a new element to it.

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Speaker 1: And on top of all of this, we in the

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Speaker 1: United States and actually most of the world really we're

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Speaker 1: entering a recession and UH and so consumer UH confidence

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Speaker 1: is way down. Um purchases are way down. That means

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Speaker 1: that a lot of companies are looking very seriously at

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Speaker 1: their advertising budgets and tightening up. You know, they're saying, Okay,

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Speaker 1: we gotta be a lot smarter with how we spend

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Speaker 1: our advertising money. Uh. And so that's got television executives

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Speaker 1: worried too, because suddenly their business model isn't as as

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Speaker 1: tenable as it used to be. I mean, it was

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Speaker 1: before people were clamoring to get this time, and now

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Speaker 1: they're saying, well, if the Internet and DVRs are becoming

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Speaker 1: a big deal, you're becoming less relevant. And why should

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Speaker 1: I pay this much money for what you offer when

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Speaker 1: when people are consuming their entertainment in different ways, shouldn't

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Speaker 1: I really look at other ways to spend this advertising

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Speaker 1: money that will reach viewers instead of just be you know,

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Speaker 1: it just happens to be there product product placement, that's

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Speaker 1: one of them. It turns out consumers don't like that. Really,

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Speaker 1: I find it difficult to believe there was a I

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Speaker 1: looked at a lot of studies before we did this podcast,

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Speaker 1: and one of them specifically said that the the overwhelming

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Speaker 1: preference among viewers of of online content at lea East

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Speaker 1: was that you would have either a pre roll or

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Speaker 1: a post roll or both advertisement, but you wouldn't use

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Speaker 1: advertisement in the middle of your programming, so there will

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Speaker 1: be no interruptions and there wouldn't be like obvious product

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Speaker 1: placement throughout the entire show. So yeah, that uh well

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Speaker 1: a big surprise there, right. I mean, come on, who

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Speaker 1: wants to have their favorite show interrupted by commercials? If

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Speaker 1: you are given the choice of watching it all the

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Speaker 1: way through with no interruptions or with with interruptions, I'm

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Speaker 1: pretty sure you're gonna pick no interruption option. True, Drew

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Speaker 1: well like it sort of harkens back to the early

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Speaker 1: days of television when you had the you know so

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Speaker 1: and so are presented by sponsored name here you know, yes,

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Speaker 1: various hair creams, true, among other things. But um, yeah,

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Speaker 1: I mean this is this is one of those things.

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Speaker 1: I don't I don't think you're gonna be able to

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Speaker 1: to kill off the advertising. But you know, services like

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Speaker 1: Hulu are able to put ads at the beginning and

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Speaker 1: end and in the middle. And you can actually see

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Speaker 1: if you if you haven't watched a video on Hulu yet, um,

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Speaker 1: you'll be able to see a little dot in the

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Speaker 1: stream and that's exactly when the break up and you

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Speaker 1: can't skip over it, and uh, you know you have

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Speaker 1: to watch it if you're watching the Hulu video, as

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Speaker 1: I recall. But the question is, if you're getting access

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Speaker 1: to some of this programming for free, are you willing

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Speaker 1: to sit through three or four ads? And I have

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Speaker 1: the answered to that yes. Again, another survey says that

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Speaker 1: that that viewers of online content are more than willing

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Speaker 1: to sit through um ads supported content. They're not as

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Speaker 1: thrilled at purchase having to purchase content. So in other words,

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Speaker 1: we're looking at people favor Hulu the Hulu model where

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Speaker 1: you have these ads in the middle of some programs. Um.

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Speaker 1: For instance, I think I tend to every now and

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Speaker 1: then catch an episode of the Office on Hulu and

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Speaker 1: it has three ad breaks. It's one ad per break.

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Speaker 1: UM so it's you know, a fraction of what you

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Speaker 1: would see on televison. But then they prefer that model

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Speaker 1: to say, the iTunes model, where you would purchase a

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Speaker 1: television show and then poured it over to your iPod

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Speaker 1: or watch it on your computer. Either way, they prefer

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Speaker 1: they add supported one. Again, not a big surprise, because

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Speaker 1: in essence it's free to the consumer and free versus

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Speaker 1: having to pay for it. Again, not a not a

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Speaker 1: big puzzler there, So I have a question then, okay, shoot,

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Speaker 1: what well? Okay, with streaming services like Hulu, you have

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Speaker 1: your watching this once and you have two or three

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Speaker 1: ads to watch, versus something like the Apple Store and

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Speaker 1: other services like that, where you spend three or four

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Speaker 1: dollars to buy this particular episode and you can watch

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Speaker 1: you can watch it as many times as you want

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Speaker 1: with no commercials. Does that not make a difference. I

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Speaker 1: think it probably would normally make a difference. But because

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Speaker 1: again we're going into this recession period, people want to

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Speaker 1: spend less money on their entertainment budgets. They're trying to

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Speaker 1: find ways where they can they can still they still

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Speaker 1: want entertainment, especially in our recession. Actually, entertainment's very important

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Speaker 1: because it helps keep your mind of the fact that

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Speaker 1: you're in a recession. Um, otherwise you have, you know,

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Speaker 1: go from recession to depression. I guess. But uh, yeah,

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Speaker 1: the so people still want entertainment, but they still they

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Speaker 1: want to pay less for it. So they're looking at

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Speaker 1: the best opportunity to get entertainment without paying very much. Money. Um,

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Speaker 1: I've read a study. It was on the website Seeking

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Speaker 1: Alpha as Actually it was an article written by Diane Mermagas.

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Speaker 1: I hope I'm saying that name correctly. Um. She pointed

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Speaker 1: out that DVD sales are down four this year compared

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Speaker 1: to last year the third quarter when they that's when

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Speaker 1: the economy was really starting to tank. They were down

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Speaker 1: nine uh for the third quarter compared to the third

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Speaker 1: quarter last year. And the higher price titles, the stuff

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Speaker 1: like you know, the big DVD sets and the special editions,

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Speaker 1: they were down twenty. So we're talking about you know,

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Speaker 1: that's obviously a format that what you you buy it

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Speaker 1: and then you can watch as many times as you like,

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Speaker 1: and you know it's yours. People aren't buying that as much.

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Speaker 1: They're going into the streaming content stuff more because it's

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Speaker 1: it's free, and you know, of course again also the

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Speaker 1: DVR route as well, where they can record they then

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Speaker 1: they can record something and watch it as long as

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Speaker 1: you know, they want to keep it on the DVR,

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Speaker 1: or they could if they have the right equipment, they

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Speaker 1: can burn that to DVD or you know, transferred to VHS.

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Speaker 1: If anyone still does that, stop looking at me. Like that.

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Speaker 1: How many VHS machines do you have? One? Too many? Um? Yeah, okay,

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Speaker 1: But the question is this going to cause I mean,

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Speaker 1: the recession is something that could have a profound effect

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Speaker 1: on this whole thing, because it could actually make this

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Speaker 1: a permanent change. People get used to doing this. When

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Speaker 1: we go back to a normal or more normal economy.

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Speaker 1: You know, people might get hooked because I mean they've

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Speaker 1: got access to classic TV shows and in some cases movies,

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Speaker 1: music videos, music videos TV un of the MTV exactly. Yeah.

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Speaker 1: MTV found out that they can make more revenue and

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Speaker 1: keep audience members engaged longer by switching from music videos

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Speaker 1: to too longer format work. So that's kind of why

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Speaker 1: you saw all these shows pop up and MTV and

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Speaker 1: all the music video shows kind of disappeared because people

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Speaker 1: then they'd see one of their favorite videos and they're like, Okay,

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Speaker 1: let's watch something else, and uh, you know that only

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Speaker 1: keeps your attention for like ten to fifteen minutes, whereas

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Speaker 1: a full length show can keep you there for a

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Speaker 1: half hour or an hour or whatever. So um, they

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Speaker 1: launched the service online where you can actually go to

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Speaker 1: MTV's web page and watch hundreds of different music videos there,

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Speaker 1: and uh and MTV, you know that was that was

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Speaker 1: the right choice for them from a business standpoint. From

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Speaker 1: those of us, for those of us who remember and

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Speaker 1: seem like the right choice. But now, again convenience, we

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Speaker 1: watch music videos and you can, you know, pretty much

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Speaker 1: any music video you can think of, you can type

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Speaker 1: it in there and there's a good chance it's going

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Speaker 1: to be there, So you can watch the ones you

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Speaker 1: want when you want. You don't have to sit there

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Speaker 1: and say, uh, and it's another Pink music video. I

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Speaker 1: was trying to get my grunge rock on and now

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Speaker 1: I'm watching Pink. I figured all of them were going

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Speaker 1: to go to Rick Athletes, never gonna Yeah, that's you know,

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Speaker 1: April one, totally. Yeah, except for the fact that that

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Speaker 1: that that meme has to be dead by now. I mean,

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Speaker 1: if nothing else, the Macy Thanksgiving Day Parade killed it

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Speaker 1: this year. Um, but you know what had died an

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Speaker 1: honorable death. But getting back to the idea of this,

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Speaker 1: this whole television issue. Um, you make a good point.

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Speaker 1: I mean, this recession could irrevocably change the the very

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Speaker 1: nature of entertainment. It's kind of crazy to think about that.

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Speaker 1: But according to uh, to Diane again, there was the

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Speaker 1: penetration for broadband is something like of the US households.

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Speaker 1: So is that of all Internet households or households you

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Speaker 1: know what? It doesn't say it just has of US Holmes.

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Speaker 1: I bet it's Internet, because I can't imagine that of

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Speaker 1: all homes have broadband. Maybe they have access, but not

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Speaker 1: necessarily have it installed. I mean maybe, I don't know,

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Speaker 1: because that that does seem rather high to me. But

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Speaker 1: at any rate, it does mean that there's increased access

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Speaker 1: to this kind of entertainment. And that's what really starts

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Speaker 1: to get people worried in the in the TV biz,

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Speaker 1: because once you reach that tipping point where you're no

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Speaker 1: longer in the majority, you're no longer catering to the majority.

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Speaker 1: Now you're playing you know, catch up or you're eventually

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Speaker 1: petering out in dying you know. Uh, since you mentioned

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Speaker 1: the tipping point on through a different tech business book

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Speaker 1: in there and ay, but the long tale as as

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Speaker 1: a really good aspect of this, because this is going

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Speaker 1: to enable companies to make money off of properties that

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Speaker 1: they've had in their vaults for so long and haven't

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Speaker 1: really been doing anything with them. Um, you know. And

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Speaker 1: I I think anything that allows time shifting or place

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Speaker 1: shifting you know where you can it gives um viewers

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Speaker 1: more opportunities to watch TV on their terms. I just

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Speaker 1: I can see where they might be a little concerned,

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Speaker 1: But ultimately, the copyright owners have the control over this,

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Speaker 1: and they set the standards for the most part, um,

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Speaker 1: you know, because they're broadcasting the original content uh for

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Speaker 1: people to watch, so you know, and and nobody I know,

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Speaker 1: people can take video cameras into the movie theater and

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Speaker 1: then put them up on YouTube for the you know,

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Speaker 1: don't do thirty minutes that they can get away with

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Speaker 1: it before getting caught. But it's just you know, awful video.

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Speaker 1: Nobody really wants to watch that. And having high quality

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Speaker 1: video from these companies you know, offered to them on

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Speaker 1: their own terms, I think that's a win from studios.

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Speaker 1: I think piracy is is much Yeah, it's a much

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Speaker 1: smaller issue than the studios would necessarily have you believe. Um,

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Speaker 1: the big issues are things like, well, just recently, back

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Speaker 1: in November of two thousand and eight, they had there

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Speaker 1: was a Future of Television conference and um, this conference

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Speaker 1: they had some real doom and gloom panel titles things

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Speaker 1: like is there a future for television? Which I think

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Speaker 1: might have been a little pessimistic, But um, there were

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Speaker 1: a couple of interesting surveys that came out of this.

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Speaker 1: IBM did one what that found that a lot of

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Speaker 1: younger viewers claimed they were using the internet uh more

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Speaker 1: often than they had in the past to get entertainment

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Speaker 1: and it had impacted their television doing so. They were

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Speaker 1: saying that we are consuming more entertainment online, not not

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Speaker 1: necessarily more than they were watching on TV, but then

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Speaker 1: TV watching had decreased as a result. Um, Whereas CBS

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Speaker 1: and NBC Universal came out and they said, that's kind

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Speaker 1: of silly because our figures show that television viewing is

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Speaker 1: up the among all age groups. So it's two surveys

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Speaker 1: that are contradicting one another. Now, Grant. The IBM survey was,

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Speaker 1: like I think, it's survey people in six different UM countries,

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Speaker 1: So it was slightly different than Nielsen, which was looking

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Speaker 1: at television ratings and that's what CBS, uh, NBC we're

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Speaker 1: kind of quoting. But and Nielsen says that the average

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Speaker 1: household still watching eight hours and eighteen minutes per day

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Speaker 1: of television. Yeah, it's a lot of TV. That's a

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Speaker 1: whole lot of TV. Four hours and forty five minutes

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Speaker 1: per person per day. I just like to add one

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Speaker 1: little thing that I thought about as we were preparing

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Speaker 1: for this podcast, and that's um, even if you believed

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Speaker 1: that people were turning to the internet to get away

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Speaker 1: from TV, or maybe not necessarily to get away from

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Speaker 1: and getting away from let's say, and then they turn

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Speaker 1: to the internet and are getting away from TV, uh,

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Speaker 1: they're not. Because you know, if you go to virtually

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Speaker 1: any content provider's website, for example ESPN, the first thing

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Speaker 1: that happens after the page loads is a little TV

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Speaker 1: window pops up and they start playing you know, a

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Speaker 1: Sports Center clip, or if you go to uh uh

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Speaker 1: you know, I went to a newspaper website just the

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Speaker 1: other day and you know, click on a story, it's

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Speaker 1: got video clips. Uh. They're partnering with TV stations, local news.

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Speaker 1: I mean, there's there's TV on almost any website or

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Speaker 1: at least some kind of moving video. Um. So you know,

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Speaker 1: I think there is a future for TV, it's just

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Speaker 1: not necessarily going to be long form and coming from

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Speaker 1: that box. And also, I mean, again you know my

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Speaker 1: favorite little little theory of convergence. I do think that

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Speaker 1: that computers and televisions are getting closer and closer together

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Speaker 1: to the point where or before too long, you know,

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Speaker 1: Internet will be delivering our television to our TV sets,

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Speaker 1: which essentially will be a computer monitor. Well, actually it

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Speaker 1: really is depending on who your provider, right, And I

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Speaker 1: mean you know, just look at all the TVs that

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Speaker 1: have HDMI inputs now. I mean there's if you buy

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Speaker 1: a television now, Um, I bought one recently and it

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Speaker 1: had I think three h d m I inputs. Um.

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Speaker 1: And you know the television I I bought four years

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Speaker 1: ago didn't have any at all. So it's definitely you know,

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Speaker 1: it's it's it's getting there. And I think the main

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Speaker 1: thing television executives need to keep in mind is that

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Speaker 1: Internet isn't going away, that that video delivery system is there.

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Speaker 1: People have become used to being able to to consume

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Speaker 1: entertainment when they want, where they want, and the important

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Speaker 1: thing is not to try and hold onto an old

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Speaker 1: business model that used to work in an old environment

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Speaker 1: and hope that it's still in the new one. But

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Speaker 1: to develop new business models that specifically take these things

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Speaker 1: into account and uh, you know, adapt and and then

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Speaker 1: you'll thrive. If you don't adapt, you will eventually find

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Speaker 1: yourself without any customers. Change is a good thing. Yes. Wow,

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Speaker 1: that was a heck of a conversation. Yeah, alright, well,

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Speaker 1: I guess we can wrap this up. I would like

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Speaker 1: to to do something new though, that we haven't really

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Speaker 1: done before. I'd like to give a shout out to

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Speaker 1: some of our fellow podcasters here at How Stuff Works. Yeah,

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Speaker 1: so I'm giving a shout out to our buddies Josh

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Speaker 1: Clark and Chuck Bryant. It's so, it's not Brian and Chuck.

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Speaker 1: I hear that that's a big problem. That's Chuck Bryant

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Speaker 1: and Josh Clark. It's true. It's problematic because their names

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Speaker 1: all sound like first names. I blamed them anyway. They

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Speaker 1: host a show called Stuff you Should Know, and it's

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Speaker 1: an excellent podcast. Uh, it's so good that they kicked

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Speaker 1: me off. Chris used to be a host on Stuff

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Speaker 1: you Should Know. Um, and now he's been relegated to

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Speaker 1: tech stuff with Me. One might ask, what did he

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Speaker 1: do wrong? But uh, no, Stuff you should Know is

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Speaker 1: an excellent show, and uh, there are tons of episodes

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Speaker 1: already live on iTunes if you want to start with

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Speaker 1: one that kind of ties into what we've been talking

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Speaker 1: about today. There's this great episode called is the free

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Speaker 1: market free if it's regulated? And they answered that question

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Speaker 1: and uh, and very well, I might add, so definitely

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Speaker 1: go check that out. And remember there's we have tons

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Speaker 1: of content on how stuff works dot Com that that

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Speaker 1: ties into what we've been talking here today, including things

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Speaker 1: like DVRs and streaming video, and you can read all

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Speaker 1: of those articles live on our site how stuff Works

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Speaker 1: dot Com right now, and we'll talk to you again

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Speaker 1: really soon for more on this and thousands of other topics.

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Speaker 1: Is it how stuff works dot com? Let us know

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Speaker 1: what you think, Send an email to podcast and house

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