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There is nothing stopping the traditional advertising model working in this distribution model. Show say a tiny Coca Cola (or whatever) logo in the top left corner of episode or movie that you are showing, and the advertiser would be happy!

I think this could be a win win situation for everyone, and could also spill over into the p2p distribution market en masse.

That's my hope anyway, as I'm sick and tired of internet distribution channels being demonised as for pirates only... meh

Remember, Mark Cuban also claims to have made his saving throw to disbelieve the Safe Harbor provisions of the DMCA. If I were Google, I'd rely on my own attorneys for legal advice, and not some self-important blowhard who pretends that important legal concepts don't exist when they don't protect his own financial interests.

1. Cost of Production
2. Cost of Distribution
3. Customer Price Sensitivity and General Interest

1. Cost of Production is still high and will remain high, though the bang for the buck is certainly increasing. While I don't enjoy police procedurals, you'll note that the production values are easily eclipsing movies in all but ginormous action set pieces. Shows like the original Battlestar Galactica were prohibitively expensive even with recycled special effects. The new Galactica, while the scripts still suffer from cranial-rectal inversion, it looks fantastic. Hollywood would have had an impossible time churning something out like that with models, Babylon 5's CGI looks dated now. Fans in their bedrooms are turning out CGI better than what a professional studio was doing ten years ago. Funny point: when that new B5 Lost Tales DVD was being put together, the new effects crew was scrambling for models. All of the original files were turned over to WB as per contract and were lost. The fans stepped in and provided a station model better than what was in the original show. You can only imagine what we'll be seeing in another decade. Still, it's going to cost money to put a proper show together and that will be the biggest barrier to entry.

2. Distribution. The Internet is a dagger in the heart of the conventional network business model. The suits are desperately trying to coopt it. Right now, the Internet's biggest vulnerability is that service is provided by telecoms and cable companies so the suits are looking to these companies to serve as gatekeepers. The suits would like to see the Net tamed into a comfy AOL model, putting up barriers to entry, filtering people only to approved and partnered sites, making sure they can start extracting profits again. I'm not sure if what we're looking at here is Tienanmen Square or the fall of the Berlin Wall -- I don't know if efforts to stop democratizing forces will succeed or fail. If they do fail, the networks will fall into ever-decreasing relevance.

3. Price Sensitivity and General Interest. The vast majority of people are casual fans of whatever they're into, they're usually not obsessive geeks. Miss an episode of a series? Not care if you don't see it? I never could understand that. But I'm a geek. Geeks are the ones who were buying Trek on tape back when it worked out to something like $10 per episode. DVD's finally made it feasible to distribute archived shows from the past and distribute new productions directly to the customer. While there have been direct-to-video schlockfests for years, Disney being a prime offender, there hasn't been as much interest in distributing things like episodic television content directly to DVD. Of course, with digital distribution, the DVD angle becomes only an interest if someone wants to keep the show permanently.

I suppose you can also throw a fourth category in here, generational adaptation of technology. People my parent's age would tape a show and play it back, not fast-forwarding through the commercials. Even more likely, they'd not be able to figure out how to record it and just watch it live. But the younger the viewer, the more readily they will adapt to the new technologies. Fast-forward another decade and you'll see middle-aged people perfectly acclimated to watching content on their laptops and ipods and cell phones. And I think that this sort of independence of choice in both content and viewing behavior will create a demand that the suits will be unable to control.

Right now there's really a conversation going on between viewers and content producers/distributors. The producer/distributors are saying "Shut up and pay what we demand, you cunts" and the viewers are saying "no thank you. We don't want your commercial-laden television, we don't want to pay $12 to go watch a movie that has 20 minutes of commercials in front of it, we don't want to be limited to just your approved content. And what you have that we like, you charge too much or you dick with show's creator to mess it all up."

Especially for a google property, I find their flash player to be of really poor quality. The seek bar (or whatever it's called) never goes to where you drop it, and there are really only a handful of places you can seek to if you want to see a part over again. It seems like every other flash video player I've come across behaves as I'd expect it to.

And it's annoying as hell to have the dock-esque related videos pop up any time my mouse goes near the vid.