When we talk about the future of television, much of the conversation tends to concentrate around subscriptions as an old solution to a new problem. When network television ratings are diving, guaranteed revenue from users seems like a surer bet than ad sales, especially if advertisers begin to worry that their dollars are buying them fewer eyeballs per show. Upstarts like Netflix, Hulu, Amazon and even PlayStation have tried to emulate premium cable, collecting regular fees from a stable subscriber pool, rather than their network counterparts, which rely heavily on ad sales.
Until now. Amazon is expected to announce that the company will launch a free streaming service supported by ads, making it a lot more like Hulu or networks like NBC than like Netflix. (Disclosure: Amazon chief executive Jeff Bezos owns The Washington Post.) Amazon now bundles two separate businesses together. Through a subscription to its Prime service, customers get free two-day shipping on many of the items Amazon offers for sale and access to a large library of streaming video content, including shows and movies Amazon licensed, and the original shows it has in production.
When the new service launches, Prime will still exist for those of us who are heavy Amazon purchasers. And while it is not yet clear which streaming content will continue to live behind a paywall and which will be part of the new free service, early reports suggest that Amazon original shows, like tech comedy “Betas,” Garry Trudeau’s “Alpha House” and Jill Soloway’s new family dramedy “Transparent,” as well as some licensed shows and movies, will be available without a subscription.
The move is a nod to the power of the traditional television business model. And that model makes even more sense for Amazon, which has a number of advantages that broadcast television networks and its streaming competitors do not share. Amazon’s television network is housed in a giant retailer that sells all sorts of products and collects enormous amounts of data about customers. Last week, my colleague Catherine Rampell suggested that the National Security Agency and Facebook should just team up already to give her relevant advertising that does not make her feel horrible about herself. Amazon can serve those personalized ads in a way that broadcast networks cannot and that Hulu is trying to do with much more limited customer data. And it serves them to consumers who are already watching content in the very same browser window they can use to purchase the products on offer.
That may mean that Amazon has to solicit many more ads to cover its huge inventory or that it will have to develop an in-house template for cheap ads to cover products Amazon knows could pop through targeted ads, even if the companies selling them do not have huge promotional budgets. But the experiment seems worth the hassle. One of the truisms of the Internet age has been that while we may not pay for content for dollars, we pay for it in data. Amazon seems like it may have found a way to get us to pay in data, and then turn that data around on us to get us to spend real money, too.
Update (8:23 p.m.): Amazon spokeswoman Sally Fouts wrote to me Thursday evening to deny reports in the Wall Street Journal and elsewhere that the company is planning a free streaming service.
“We have a video advertising business that currently offers programs like First Episode Free and ads associated with movie and game trailers, and we’re often experimenting with new things, but we have no plans to offer a free streaming media service,” she wrote in an e-mail.
Oh, well. It would have been an interesting experiment, especially if Amazon served up something more interesting than those incredibly irritating ads for Cricket Wireless, currently in heavy rotation on Hulu.