"Apple May Be On The Verge Of Kneecapping the Cable Industry." That's the headline from M.G. Siegler in Seeking Alpha, an investment zine.
Siegler has written a smart piece, noting that Steve Jobs' Apple seems to be moving in the direction of bypassing the cable companies, using its iTunes and Apple TV products to allow consumers to directly purchase content from content providers. As Siegler explains:
The cable companies suck. All of them. Some suck less than others. But they all suck. We need someone to whip them into shape. And that someone may be Apple (AAPL).
Apple may be on the verge of gaining two key television network agreements, according to The Wall Street Journal. Specifically, CBS and Walt Disney (DIS) (which runs ABC) are said to be considering a proposal by Apple to offer a subscription-based TV service over the Internet. Presumably, this would work through iTunes like all of Apple-based content, but also presumably it would work over Apple’s Apple TV device (though maybe a new version of it) to bring this content into the living room, where people are used to consuming it. Simply put: This could be huge.
But “could” is the keyword. Just as Apple transformed the music industry in the earlier part of this decade thanks to the iTunes/iPod combination, and the mobile industry thanks to the iPhone, a device that offered all the television content over the Internet could force the cable companies to stop sucking. Of course, Apple already offers a ton of television content over iTunes, but there are a few big problems. First and foremost, you have to buy all of this content. I don’t know about you, but I have no desire to buy 99% of the television shows I watch. I would much rather pay a fraction of the purchase cost to “rent” them, as it were, for a time being. iTunes currently has no such option — it’s all or nothing.
So there's much to be figured out here--including what Apple's true intentions might be; the company is, after all, notoriously secretive.
But this much is clear: The cable companies are middlemen, providing the pipeline between content and the consumer. As such, as middlemen, the cablers are naturally vulnerable to the slings and arrows of consumer complaint. In Siegler's caustic assessment of the cable industry:
For too long we’ve put up with their sub-par service, their crap hardware, and their rip-off offerings. A change of the channel would do us all good.
My only quibble with Siegler is headline: What Apple has in mind--may have in mind--is not "kneecapping." Kneecapping implies an isolated bit of nastiness, aimed at, say, intimidating a witness. What the cable industry needs, and will eventually get, is something more profound: It will get a massive dose of disintermediation, which is to say, it will eventually be cut out of the content-to-consumer equation.
That's the logic of Comcast's purchase of NBC-Universal, and it makes the Comcastians look smart--even if they have yet to prove they can manage their new product (yes, I am talking about you, Jeff Zucker! Fourth place is nothing to be proud of, especially when there is no fifth place!).
In a disintermediated media world--we might recall what happened to music, where the big labels have been hollowed out to mere shells of their former bloated selves--there will be just two players: The consumer and the content-providers. The consumer may be sovereign, but content is king.
Apple is not itself a content-provider. It is mostly a hardware creator, which, in this case, becomes a proxy for the consumer--the consumer uses Apple products to complete the disintermediation process.
So Steve Jobs is the king of content-disintermediators. A glorious mission. Hail, King Steve!
