This post is in reference to Bob’s post on Internet Video and TV. It started out as a comment, but quickly became too big for that. So here is my $.02. The problem isn’t technological at its heart, it is the content producers and distributors that are at fault, and here’s why.

Just look at what has happened with CableCard, and especially as it affects Vista Media Center. When I upgraded to Vista (and I actually do consider it an upgrade FWIW) one of the main selling points was Media Center, and the integration it offers for my Xbox 360. I have to say Vista Media Center is awesome. By far the best DVR interface I have used, and I love how it works on my Xbox 360. There is one major gaping hole in it though: getting high-quality digital (HD or standard-def) content. It isn’t Microsoft’s fault either, as all the reliable unencrypted sources (NTSC, and OTA ATSC) work great.

Content producers require DRM, and that leads to pretty much all of the technological problems. In fact, all of the technical problems I encountered in my previous posts were DRM related. I won’t use (read: pay for) Vongo or CinemaNow again because it was too much trouble to always troubleshoot the DRM issues, and I’m someone who can actually troubleshoot it, what about regular people like my wife? Here I am, a paying customer who just wants to hand over my money for some entertainment, and the content provider’s arbitrary decision to force DRM is stopping me! I know it makes sense to all of us “regular” people why this is incredibly stupid, but the content people still haven’t gotten it. They should read this paragraph ten times.

So what about getting my content fix through my digital cable subscription? Well, again even though I am a paying customer, that doesn’t really matter. The content providers require encryption, so CableCard came into existence. But CableCard is done by CableLabs, which is basically owned by all of the cable companies, who have their own interests to protect. The net effect? I can’t get digital cable on VMC without buying a new PC (instead of just a USB/PCIe/Firewire add-on) with a special $300 tuner that handles encrypted QAM channels because CableLabs says they have to “certify” the entire setup.

My PC’s TV tuner (AverTV Combo PCIe ~$90) can handle non-encrypted digital cable (unencrypted/clear QAM) without a problem, but that only covers the networks (ABC, CBS, NBC, Fox) because the FCC requires it. To get around that, the cable companies constantly change the channel location on the clear QAM channels so that it continueally messes up the programming guide. Again, I’m a paying customer just wanting to enjoy the entertainment I have paid for and arbitrary technical requirements are stopping me. The only thing stopping me from just dropping my cable and stealing all of the same content is my ethics.So the content business model is relying on the ethics of their customers and DRM? Sounds like a good plan… Honestly, I would love to have someone try to explain that one to me.

So the technology is there for affordable and convenient digital cable to my PC, but it won’t work because they require encryption. The technology is also there to easily consume video from the internet, but you either have to pay for DRM’d junk, or you can steal the video via P2P. Think about how convenient Divx formatted videos on P2P are. They will play on the Xbox 360, Playstation 3, Windows, Linux, and Mac, and even some DVD players. The same holds true for MP3, it plays anywhere because it has no DRM. Using RSS and BitTorrent I could even have my computer automatically download all the shows I want to watch, it just isn’t legal. If there wasn’t the arbitrary technological requirement to have DRM, companies such as Tivo or Netflix would be able to deliver the true mass-market media consumption products that would actually deliver what people want.

In the startup world, it is really common to run into entrepreneurs (or probably wantrepreneurs) who are so worried about giving up equity to partners or investors that their business fails. Essentially they ended up owning 100% of nothing, instead of 10% of something. The content producers are the same as these naive entrepreneurs, and if they don’t change their ways they are going to end up owning 100% of nothing. They will be continuing in that trajectory so long as it is more convenient to consume stolen content than to willingly pay for it. Final note to the content companies: get your head out of the ground and stop worrying about keeping people from copying your content, and start worrying about getting people to pay for it; they are two very different things!