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So… you're watching the latest Walking Dead spinoff and your spouse says to you, "How come there are commercials on this channel? We pay to get these channels. Does that sound fair to you?" And you think about it, and it really begins to get you angry. You know your spouse is right and you begin to wonder how this injustice has come about.

So, you switch over to your Netflix, Hulu, or Disney+ subscription. Like most people you try to manage your streaming costs. So these apps have commercials too. You're still paying for them, but they have commercials in addition to that. The injustices continue to mount, and your spouse is only going to get angrier.

Trying to make sense of it all

In the early days of cable television, most channels were free to the cable company. These channels were known as "advertiser-supported" or "ad-sup" channels and they got all their revenue from commercials. In those days they were trying to get on as many cablesystems as possible to get as much commercial money as possible. The fact that these channels were free explains how cable companies in the 1980s and 1990s offered TV service for under $25 a month.

As the years went on, these content providers got greedier and greedier. In fairness, the programs usually got better and better (the current crop of reality shows notwithstanding.) In order to line their pockets and improve their programming, channels like AMC and TLC started charging a small amount, like a penny per subscriber. That number kept growing, and now retransmission and carriage fees are a big part of every channel's budget.

Local affiliates like your city's ABC, CBS, or NBC stations started getting in on the act in the 2000s. Federal rules allowed them to charge cable and satellite companies for carriage as long as the pay-TV company had the right to say no and drop the channel. Previous laws were set up so that the pay-TV company was required to carry the channel.

Why this all changed so radically

Getting a penny or two for each pay-TV subscriber didn't stop these channels from including commercials in every hour of programming. The simple fact is that the commercials just weren't paying the bills and that's why they started charging. But they kept including them. In response, the cable and satellite companies started doing what's called "insertion."

Insertion is where the pay-TV company will put in commercials of its own that cover up the original channel's commercials. This practice has been going on for decades but it's a lot more common since computers can be trained to tell the difference between commercials and content. In the earliest days, master control techs with big video tapes sat there waiting to push a button. These days of course it's all hands off.

Because of insertion, the actual commercials put in by these channel owners are rarely seen. You might see a second or two as the pay-TV company's commercials end abruptly, but that's it. The way it works now is that pay-TV companies actually pay extra to keep the commercial slots in there so they can put their own ads in.

And then there's ad-supported streaming

You might remember how, a decade ago, streaming was supposed to save us from big TV bills. And then slowly, we all began paying over $100 a month for streaming apps, which is just what we'd tried to avoid. Rather than trim some of the unnecessary fat and stop producing extremely stupid programs (I'm talking to you, Netflix), streaming companies relied on an old tactic: commercials.

Typically, there are fewer commercials per hour in streaming than in broadcast. An hour of broadcast TV (which includes those cable channels) can have an astounding 16 minutes of commercials in it. An hour of streaming typically has about 7 minutes, sometimes less. Streamers can get away with this because there's no such thing as insertion for streaming channels (yet.) You know someone somewhere is working on this.

Greed is the X factor here

There's nothing wrong with a little greed, of course, but if you're thinking that they're playing both sides of the field, you're right. In a perfect world you wouldn't have commercials in programming that you pay for. Of course, at this point if they cut out commercials your bill would probably double and if they relied only on commercials they would run 40 minutes of commercials an hour. These people are going to get their money one way or another, that's pretty clear.

So, at the end of the day, your spouse is right, but it doesn't make a difference, those commercials aren't going away.

The post Why are there commercials on channels that you pay for? appeared first on The Solid Signal Blog.

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