IPTV in 21st Century TV

The radio and television networks born and raised in the last century are a consequence of a medium in which broadcasting is the natural way of working. From one to a fickle many it has been a matter of finding material with mass appeal which has occupied generations of commissioners.
Recently, I went to the exhibition of the IPTV World Forum 2008 show. Quite a mouthful but luckily I took my own sandwiches.
What struck me most about the show was how much of what was on offer looked like broadcasting. There were lots of different players there. Some providing end to end solutions and others making components like set top boxes or test equipment. But the common thread was one of providing a walled garden of streaming programmes and video on demand products.
One idea I heard mentioned was that extended services like the ability for your TV to display who's calling you on the phone are bundled with your Internet Access, Phone and TV package. The reason? To lock in customers and to reduce churn. Sounds good from the providers' perspective.
Probably not making many friends I asked about whether consumers would be able to download programmes from other sources like BestFrontSeat.com. It seems that the concept of broadcasting which underpins most IPTV offerings ring fences content so you're probably only going to get material that has mass appeal because the model only works with the economy of scale.
I asked several exhibitors how, as a production company, I could get the films that we make to the consumers of IPTV. The answer was the same as trying to get them on to telly; you have to appeal to a critical mass of that distributor's audience. So it's unlikely that a film that might appeal to only 100,000 people worldwide will get scheduled. Not even if those 100,000 people would pay say £3 to watch it. Shame that, because £300,000 is not a bad budget and profit for a niche documentary maker.
So in a world where economies of scale are just beginning to fall into disfavour and the economies of scope are the rising star how will IPTV's model appeal? My view is that it can't with any but the most sedentary of couch potatoes because it's flawed.
If you want to see successful models for monetising digital assets you have to look at the music and pornography industries. Both have liberated the creators of content by circumventing the distributor, the middleman whom we don't trust much. For books, films and music it's been the middlemen, the distributors, who have made the most money. And we don't trust them because we know how little the authors and musicians get for their labour compared with the distributors' slice of pie. The success of independent bands like Arctic Monkeys and others has shown that if you have good content then the Internet can facilitate you getting it to the consumer with a minimum of friction.
And it appears that someone agrees with me - at least DivX and D-Link appear to. Their take on TV over the Internet is rather clever and quite liberating for the consumer. It's a set top box that connects to your home network either wirelessly or by Ethernet cable and plugs into the TV with a SCART or HDMI cable because it does HD as well as SD. Thus, it effectively turns your PC into the server end of SKY, BBC, Canal+ etc. You load up your PC with songs, pictures, films and point it at YouTube, the BBC or any other source you want and instead of sitting under the stairs watching on a screen designed for one you can enjoy the content on the telly designed to be viewed by the whole family.
And I think they're onto something. If producers can make niche programmes for tiny but global markets cost effectively then this is going to widen choice. It won't hurt the major programme makers or their advertisers either. Maybe you don't get the range of drama, documentary, sports and other fodder of mainstream TV yet but the channel is getting better and the Quality of Service has improved a lot. And it should allow the small producers access to market too.