Industry news has recently been dominated by various issues that point to the fact that the media we consume and the manner in which we consume it is in a transitional period. As entertainment professionals recover from the writers’ strike and brace for another possible work stoppage (SAG/AMPTP talks recently broke down), much of the speculation surrounds the future of online content distribution – with copyright issues, residuals, and effective advertising methods still major unknowns at this point.

Mark Cuban posted on the topic on his blog last Sunday, quoting from Craig Moffett’s report “And Now for the News…The Emperor Has No Clothes.” In it, Moffett suggests that there is no realistic way television can migrate to the Internet without losing most of its revenue. Viewers tolerate fewer commercials when watching video on their computer than they would on their TV set, cutting revenues by as much as 88%. Also, since most popular Internet videos gain popularity through viral distribution and have no lead-ins, the number of viewers who will tune in is wildly unpredictable.

From a business standpoint, these are sound observations. I would agree that current Internet platforms inadequately support an effective and profitable means of distribution, but I feel less pessimistic about the future. TiVo and on-demand programming has tempered viewers’ patience when it comes to sitting through three- or four-minute periods of commercials several times throughout the length of a program. That’s not only a problem with online distribution – it’s becoming increasingly problematic for broadcast television as well.

What’s needed is some effective outside-the-box thinking and copious experimentation (easier said than done, of course). The networks need to be willing to lose some money in the process, as they work to iron the wrinkles out of any system they devise. And in turn (as much as it pains me to say this as a content creator myself), the unions need to be flexible in their demands for residuals in the online arena. I am a firm believer in financial incentives for our brightest creative minds, but the networks are not going to be generous about handing out residuals until they’ve developed a lucrative and predictable distribution method.

That being said, there are numerous paths the networks can take, but the ideal solution would involve an advertising method that utilizes the internet’s strengths to target more specific areas of the population than broadcast television could ever reach. I envision a web site (or a stand-alone downloadable application) that tracks users’ media-watching preferences, coupled with a Netflix-like ratings and recommendations system. Taking into account users’ basic profile information (age, sex, zip code, etc.) and previous clicks on various advertisements, this detailed profiling would create an advertiser’s dream – the ability to narrowcast their advertisements to an ideal demographic with specific interests, to a very controlled degree (18-to-22-year-old men from New England who are in the market for a new car, for example). Viewers would see different advertisements than other people watching the same program, based on the information included in their unique profile. In return, advertisers would pay a premium for this luxury to make up for an overall decrease in advertising that would go along with each program. This system works better for the viewer as well. Imagine only seeing one or two commercials per program, and they’re always for your favorite beer or department store.

Another possible revenue stream could come from ad-supported special features not available on the television broadcast, similar to the DVD special features of a feature film. I, for one, am usually unenthusiastic about the use of product placement and other advertising that intrudes upon the content of a television program, but it’s possible that “Behind the Scenes of Tonight’s Episode, presented by Coca-Cola” could be successfully profitable without being annoying.

Maybe contests and promotions could even be included (“Correctly answer these three trivia questions about the episode of ‘Lost’ you just watched, and you’ll be entered to win a Caribbean cruise, sponsored by Old Spice!”). I, for one, am more open to commercial messages that offer me something in return, rather than merely hawking their product. If advertisers could work with content creators to deliver engaging, target-specific ad campaigns that are intertwined with the content itself (without being obtrusive!), I think there is hope for the Internet as a lucrative distribution method.

Would my ideas work? Who knows? I’m no business expert, and I’m sure there are economic and technical hurdles to implementing many elements of my plan, but my point is this: If the few hundred powerful people in charge of the media were to think in a creative vein as to how to overcome the internet distribution problem over the coming months and years, it could be done. It might mean the end of the 30-second spot, but it also might save television as we know it.