The Wall Street Journal has a great cover story today on the changes that are coming in the broadcast TV market thanks to place shifting enabled by the Internet and devices like the Slingbox. The bottom line is that the ability to watch content globally ends up shutting out a lot of revenue when it comes to reselling syndication and much of the business model for local stations to exist. Instead of selling an episode of "Friends" to one distribution company, it can be sold to hundreds of regional broadcasters, according to the article.

It seems to me that the broadcast industry needs to wake up to the fact that much like other industries such as banking and retailing, the Internet will alter the way they do business. In the case of banks, loans became much more competitively priced and margins shrunk, but fees and other attempts to make up for lost revenue were found. For retailers, the strategy has ranged from ignoring the Web to shifting business to it and increasing sales while lowering inventory.

For broadcasters, I think we might see a flattening out of the distribution system, much like middle management was flattened out of hierarchical organizations in the early 90s. Yes, it's painful, but in business the status quo is always shifting and asking government to hold the line is a bit silly. Not that government doesn't listen (especially if you've got a giant lobbying organization behind you), but it isn't productive.

There are a few things worth fighting for when it comes to regional broadcasters like the local news and advertising forums for local businesses, but technology and business are even making it possible for those things to survive at lower costs. A company called Network Foundation Technologies has created software that's being used by a former division of Clear Channel called Live Nation to broadcast live events using far less bandwidth than normal one-to-many Internet broadcasting systems currently in place. That could be used to efficiently recreate the local news on the Web at a set time every day. People could subscribe to it, or watch ads to keep it free.

As for advertising, a company called Spot Runner allows small businesses to create personalized ads and will help place those ads on cable and broadcast networks in certain regions. The service is reasonably priced and the creative element is far better than the typical local salesman jumping out at viewers with a fistful of cash saying something along the lines of "Discount Dan really will save you MONEY!!!!"

So while there's a lot of money at stake here, I think a shift in television as we know it today is coming and local broadcasters (and the big networks) need to take a hard look at how the economics of their business is going to change and start to refine their cost structures and distribution. It's not as convenient as lobbying Washington for protection, but it's perhaps a longer-term solution for staying in business. — Stacey Higginbotham

Go to story from SiliconBeat