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Memo to Networks: Eat Hulu Before It Eats You

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How to keep TV from going the way of the music industry.

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This is the most transformational period in the history of media. It is the true conversion from analog to digital and from individual channels to a converged media landscape. Oftentimes, I live in the past as my proxy for the future. For those who remember PointCast, BMW films or the launch of Instant Messenger, you can hopefully relate.

Looking to the past, the year was 1994, when I first truly fell in love - with the Internet, that is. It combined so many aspects of what I like: technology, writing, creative development, design and business, all rolled up into one. But the Internet was young, and I don't think it was ready for our love. The internet eventually grew up and became a digital platform. One day, a glimmer of what it would ultimately be showed up: Hulu.

Every media channel today has or has had its Lindsay Lohan - something with so much potential that everyone wants a piece of it, but to which they have fleeting loyalty, at best. Napster was the Lindsay Lohan of music, the free edition of the New York Times was the Lindsay Lohan of the newspaper business, and Hulu is the Lindsay of TV.

The form and function of Hulu is great - but it may also represent the greatest destruction of media value in our lifetime.

In April, Disney/ABC (DIS) joined the Hulu parade, along with NBC (GE) and News Corp (NWS). It's a joint venture between what are arguably the 3 most ferocious competitors in media today - a network "uberbrand," if you will. The driving concept behind this consortium is that we need to be where our viewers are: Hulu increases our distribution.

But the Internet and the digitization of media aren't just about distribution. They're also about efficiency, immediacy, innovation, creativity, commerce - and most importantly, about creating and maintaining a brand.

So how might this represent a massive destruction of media value? Start with the premise that Hulu is creating the uberbrand of media, and that networks have simply consigned themselves to being content producers. In essence, the networks have quit. What happened to the value of a network brand?

The value of NBC isn't in a show like Heroes or Friends. The value of NBC is the more than 70 years it's taken the network to create expectations for generations. Expectations that a network will be a leader in comedy or drama or variety or reality programming. The years it's taken to train consumers to expect a level of quality that can't be matched. NBC has earned my respect.

By joining Hulu, NBC is essentially saying there's no value to those 3 letters. (And I'll give you $100,000 for the peacock!) Fox and ABC are saying the same thing. It will be interesting to see what happens with CBS (CBS). (So far, CBS is sticking with TV.com, which, by the way, closely resembles a site called…Hulu.)

Here are other examples to support the value of brand: The NFL and MLB -- the 2 premier sports leagues -- have both created their own networks, effectively saying: We don't need the networks anymore. And the networks have acquiesced.

Seth McFarlane is on Fox because it pays him $100 million a year - but what about the channel he's incubating on YouTube (GOOG)? What's keeping him from simply launching his own network in the years to come?

So what's a network to do? Stand by your brand. Keep your shows on your digital networks. Don't discount the value of the name that been built over decades. Build expectations that the shows you produce won't be the same-old, same-old.

There is one last resort. I was talking to a former top media analyst who has a unique opinion: The reason all three networks have taken a controlling interest in Hulu is because they are going to build it up and then kill it! Brilliant! Eat your young. Who said there wasn't a place for cannibalization?

The music industry has never recovered from Napster. Eat Hulu before it eats you!
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