ITV bets its future on the thing that will kill it stone dead

News that Ofcom is to change the rules on product placement in British TV programmes has apparently been greeted with enthusiasm by commercial broadcasters, especially ITV. 

Commercial broadcasters should really think this one through. 

Like local newspapers, like HMV selling albums on CD, like Blockbuster renting out videos on every high street, TV broadcasting is fundamentally a pre-digital bundling strategy. You leverage technical and logistical channel distribution scarcity to pull a bunch of the most popular stuff together in one place. Maybe you produce some of that stuff yourself, maybe you outsource the lot (it doesn't matter). Sometimes the package you end up with is best exploited as a gateway monopoly as you bundle that unique audience up and sell it on to advertisers (local newspapers, ITV); sometimes it's simply an opportunity to sell them physical products. 

Digital fragments those bundling models - news is consumed as single articles or single tweets, albums become tracks, a weekly trip to Blockbuster becomes minutes or even seconds spent on YouTube. Successful digital content businesses have succeeded by monetising those fragments, not the destination or the channel - so iTunes won the second round of music's shift to digital when it worked out a way of selling individual tracks online instead of albums out of a shop (the first round, of course, went to Napster who simply gave the tracks away). 

Monetising the digital TV fragment is and will be all about product placement. No-one watches the ads (we never did, but now it's trivial to prove it). The producers, not the broadcasters, of programmes will face the challenge of charging marketers to get products into their shows and then distribute those shows as individual programme fragments via YouTube and BitTorrent and Lovefilm and Amazon (and yes, sometimes maybe even on a terrestrial broadcast channel if they want their gran to see what they've been working on).

Once that floodgate opens, the broadcaster's role is finished, or at best automated and commodified. The TV programme with product placements can be pushed anywhere, as fragment, without restriction, for free. The endless, disastrous fight against "piracy" can be abandoned for the more interesting technical challenge of simply measuring the total audience for a show, regardless of how people happen to acquire and watch it. And insofar as broadcasters will still have a role to play as the arbitrarily-mandated stewards of national broadcast spectra, it will be as one of many automated marketplaces on which content producers (many if not most of whom will of course really just be the advertisers themselves moving down the value-chain) bid to publish shows monetised through integrated product placements that work anywhere. So an odd change for ITV to get excited about...unless they're thinking of launching Newton and Ridley as a real brewery and using the Street as the launch platform.