Used to be, consumers watched mostly broadcast channels. The technology required that the media be broadcast (TV, Radio from terrestrial towers using a lot of spectrum to broadcast analog signals). Consumers like to be programmed. It allows you to sit back.
Then came limited on-demand programming over proprietary cable networks and finally internet-based on demand programming. With the Internet, since multi-cast never really took hold, the “media host” must stream an individual stream to each consumer. It costs essentially the same whether each person is sent the same stream or a completely custom stream.
With the costs the same, you might be tempted to build a full on demand system (hulu, YouTube). But the reality is that the cognitive load is fairly high to have to find all your own media.
Hence, the Pandora answer. Use an algorithm, versus a program director, to program an individual stream for each consumer. The bandwidth and compute costs are about the same and development of the algorithm and software is a fixed expense that you can amortize across all the viewers or eyeballs.
Pandora has literally replaced the traditional Network Program Director with a computer! But rather than the program director needing to figure out the best compromise to entertain the market segment he holds, the algorithm can program each consumer individually.
Truth is, while on-demand is fun at times, for music, most people prefer a lean-back passive experience most of the time. Pandora hence makes perfect sense.
It is likely that long form TV will go the same way. I mostly liked watching the shows that I choose, but discovering new content requires that I be programmed to some extent. Given that you watch TV for 30 minutes at a time, it won’t just be a sit-back stream like Pandora, but instead an amazing recommendation engine that will be able to show me any piece of professional content based on what they believe I would enjoy.
Tivo attempted this, but I never found its recommendations very compelling. Plus Tivo is simply too expensive for most people to use. Maybe it needs to be more like Amazon: Viewers who watched this also watched this. TV first needs to go over to be delivered entirely by IP. Maybe Boxee can be this software.
In any event, it is interesting how the changing technology from broadcast to packet-based IP made the evolution of custom channel-based programming possible and cost effective.