How has time shifting changed how people watch TV?

In some parts of the world, like the U.K., television is paid for by the government and the license fees people pay for the right to watch it. In America, broadcast TV is paid for by advertising. In fact, the term "soap opera" derives from the first advertising model, way back in the days of radio, when radio dramas were paid for by detergent companies, dishwashing liquid companies and others. This was because the people most likely to be listening to daytime dramas were stay-at-home mothers and homemakers: The advertising was targeted to the audience.

That's why ratings are so important decades later. Advertisers pay for the TV we watch for free and take special care to make sure they're getting the kind of viewers they want for the products they're advertising. These measurements are called ratings, and the Nielsen Company has developed several different ways to figure out who's watching, every minute.

But one of the most powerful aspects of time-shifting technology is the fact that we can skip those advertisements when we're watching our favorite programs. Suddenly, the audience for a show has become completely different from the one the advertisers have always paid for.

While there are still plenty of live viewers -- especially for event programming and reality competitions like "American Idol" -- the advertising industry is scrambling to figure out ways to reach, and measure, their time-shifted audience. Popularity is no longer the only key to a show's success, because if the viewers aren't watching the ads during a show, there's no reason for companies to pay for them.

Right now, we're in a transitional period. The Nielsen Company has diversified its measurements to include categories like "live" viewers, "same day" viewers who watch the show within 24 hours, and even "same day + 7" audiences who watch the show within a week.

But advertisers aren't as interested in time-shifted audiences because of the likelihood that they'll skip the advertisements. To account for these changes, broadcast television has evolved plenty of new strategies to pay for programming that don't involve the old ratings and advertising model, and they're central to the future developments in paying for and producing television programs. We'll look more closely at this in the next section.

Did you ever wonder why premium channels like HBO can create such lavish productions without ever advertising other products? The subscription fees we pay for those channels are more than enough to pay for those beloved shows -- without ever having to worry about ratings. This model started in the 1980s, when HBO was known as the cable channel for catching films that you'd missed in the theater. It's also one of the best indicators we have for where television will be heading in the next decade.

Internet and cable services are also integrating themselves into joint ventures like online streaming TV, such as Hulu or Netflix's online service, in order to share costs and generate old-fashioned ad revenue. By attaching ads that can't be ignored or fast-forwarded to the shows, they can target specific demographics while still providing streaming, time-shifted programming. Hulu Plus takes this concept even further by combining paid subscriptions with advertising to take advantage of both kinds of revenue.

Now that broadcast TV has been converted to an all-digital format, our Internet and television can only become more integrated as time goes by. Internet TV services, such as Apple TV or Xbox Live programming, provide Internet-fed television that is cable-TV -- and even HD -- quality.

DVD and merchandising sales are another way to generate revenue for shows that can't always rely on advertisers. Most shows now release their previous season on DVD in the months leading up to the new season's premiere. This means the new season's marketing does double duty: Not only is the station advertising its upcoming programming, but it's also generating interest in past seasons.

Ratings and advertisers still determine a lot of the programming we get to see. A show without ratings, or one that's popular solely among the time-shifted audience, may not survive. But as these strategies develop, we'll see a welcome change in the way our TV gets paid for, and we'll see the survival rate for beloved -- but low-rated -- shows increase.

Until then, your best shot at keeping your favorite shows alive is to make sure that you watch them, buy DVDs to increase awareness and remember: Always keep your eyes on the bottom line. It's more important that a show demonstrate its popularity in dollars and cents, because without the money from advertisers and subscription models, our favorite shows can't be produced to begin with.

For more great information, check out the links on the next page.