Nestled beneath an exterior of partying, drinking (I'm told the former is independent of the latter) and self-promotion (dependent on both), there lies a festival of ideas and their expert thinkers at SXSW. Last night I watched Mark Cuban and Avner Ronen debate the long term sustainability of Pay TV, brilliantly. Every subsector pundits who can readily trot out the policy line on why the industry is struggling and who's to blame, but Mark and Avner's debate transcended the same old story. I wouldn't dare suggest they reached agreement.

Broadcasters are keen to sustain a closed market where, even though the number of channels has grown, choice is limited and therefore marketing budgets can be kept down. As choice proliferates, such as online, content producers need abigger microphone to rise above the noise. Close the network, control the market, restrict choice, reduce marketing spend, make more money. The Internet is reluctant to be closed, and while it may not always deliver video at the same quality (res and QoS), anyone can broadcast to anyone with an IP address.

This open-closed debate is not new. The history of media is littered with examples of incumbent providers being challenged by new innovative upstarts. 20 years ago Sky and Virgin (by another name) built TV networks, satellite and cable respectively, to challenge terrestrial analogue TV. Theirs was not the only network; you could post films on tape to people before LoveFilm/DVD! Now the emergence of the Internet makes them the laggardly incumbents, but their revenues are consistently larger than their challengers.

If the Music Industry is a good indicator, large companies with a business model that is rendered outdated by changes in the way their content is distributed, do not go gently into that good night, but rage against the dying of once profitable revenue streams. Listening to Mark who made a stronger incumbent argument to Avner's, they rage very articulately.

Other notes
Mark made a really interesting point cable companies having a 4Gb network. They make $80/user out of the video part (3.9Gb) and $60/user out of the broadband part (100Mb). The value per bit is higher for broadband, so cable companies want to sell more broadband and less TV.