The Tennis Channel and ESPN have teamed up to offer live coverage of the US Open online. Not only is this a wonderful thing for consumers, but it also demonstrates just how easily content creators (including traditional television programming networks) can completely bypass cable companies, who once supposedly used their “bottleneck” power to act as “gatekeepers” over the content Americans could receive. If this was ever true, it certainly isn’t true in the era of Internet video!

The venture will, of course, be ad-supported. But just how much content such a  model can support will depend  heavily on whether Internet video programming distributors like this venture (or Hulu.com) will be able to personalize the ads shown on their videos based on the likely interests of users.  Ad industry observer David Hallerman has predicted that spending on behavioral advertising:

is projected to reach $1.1 billion in 2009 and $4.4 billion in 2012 [a quarter of U.S. display advertising].The prime mover behind this rapid increase will be the mainstream adoption of online video advertising, which will increasingly require targeting to make it cost-effective.

The problem isn’t just the expense involved in streaming online video, it’s that contextually targeting advertising (based on keywords) is easy when the content is text but far more difficult when the content is video.

So if you’re hoping to cut the cord to cable and save the expense of a monthly cable subscription, you’d better hope the privacy zealots don’t wipe out advertising model necessary to make Internet video a true substitute for traditional subscription video sources!

A coalition of ten self-described “consumer and privacy advocacy organizations” today demanded legislation that would restrict the collection and use of data online for customizing advertising based on Internet users’ interests. I’ll have more to say on this but here are my initial comments:

These so-called “consumer advocates” are actually anti-consumer elitists.  Not only do they presume that consumers are too stupid or lazy to make their own decisions about privacy, but they ignore the benefits to consumers: more relevant advertising plus more and better content. Advertising has been the “mother’s milk” of media in America since colonial times and the future of media depends on the ability of publishers to replicate that revenue model online.  Micropayments, donations, subscriptions alone simply can’t fund a vibrant marketplace of ideas.  Only personalized advertising can sustain publishers through the Digital Revolution. Regulatory advocates haven’t demonstrated any harm to consumers that would justify such sweeping preemptive regulation.  By strangling funding for new media, such regulations would amount to an “Industrial Policy” for the Internet.  Instead, policymakers should focus on educating consumers and empowering them by promoting development of better privacy management tools.