Paul Graham Proves (Again) That He’s an Idiot

Paul Graham sees source code everywhere he looks. Unfortunately, it has blinded him to reality, as I’ve pointed out in the past.

In a recent “essay” (read: blog post), Paul Graham explains why the TV lost out to the computer. There’s a problem with Graham’s argument, however and it’s this: TV hasn’t lost out to the computer.

Late last year Nielsen found that Americans watched more TV than ever before during the period spanning September 2007 to September 2008 – 8 hours and 18 minutes a day. In the third quarter of 2008, Americans watched a whopping 142 hours of TV a month.

Remarkably (or not so remarkably), this amount has only grown since then. Nielsen’s recent A2/M2 Three Screen Report, released in February, found that “the average American watches more than 151 hours of TV per month, an all-time high.”

Americans who watch video on the Internet consumed approximately 3 hours of online video and those who watch video on mobile devices consumed approximately 5 hours of mobile video (per month).

According to Susan Whiting, vice chair of The Nielsen Company:

It is clear that TV remains the main vehicle for viewing video, although online and mobile platforms are an increasingly important complement to live home-based television.

But wait. Paul Graham wrote:

About twenty years ago people noticed computers and TV were on a collision course and started to speculate about what they’d produce when they converged. We now know the answer: computers. It’s clear now that even by using the word “convergence” we were giving TV too much credit. This won’t be convergence so much as replacement. People may still watch things they call “TV shows,” but they’ll watch them mostly on computers.

Perhaps Graham has inverted his numbers?

While there’s no doubt that online video has a future, Graham’s asinine argument overlooks something important: reality. And reality happens to backed up by Nielsen’s quantitative data, not Graham’s delusions.

The first important fact to consider is that in Q4 2008, the average American spent just over 27 hours on the Internet each month. That’s just 17% of the total time the average American spent watching television. For computers to have even the potential to become television’s replacement, Americans will need to more than quadruple the time they spend online.

If you consider that a real possibility, you still have to deal with the fact that the average American still spent just under 3 hours a month watching online video. That’s about 11% of the total time they spent online.

So if you assume that the average American isn’t going to lose his appetite for mindless entertainment on one screen or another, for online video to replace the television, the time spent on the Internet would have to increase significantly, as would the percentage of the time spent watching video online. Even if Americans were spending 25% of their online time watching video, they’d have to spend 604 hours jerking off to PornoTube to produce 151 hours a month of online video viewing. Plug in any numbers you want: it’s not going to happen anytime soon.

The second important fact: as people age, they tend to prefer television. It’s not hard to see why. When you come home from a long day at the office that was filled with hard work, it’s nice to sit down on the couch and get a blowjob from your wife while watching Dancing with the Stars on a big screen television. Perhaps Graham should try it sometime.

Even when you factor in young people, Graham is left with an argument less substantial than a hot plate of the Top Ramen that’s his currency of choice for investments.

Nielsen found that adults 18-24 spent the most time watching online video (5 hours per month out of the 13 hours per month they spend online). Online usage increases and peaks between ages 35-44 but after 18-24, online video consumption slowly declines.

One could argue that as the 24 and under set age, they won’t follow this pattern but you’re still faced with a statistical improbability: that the time spent online is going to increase exponentially as required for online video to replace the television.

No matter how you slice it, Paul Graham is playing the role of deluded fool.

He writes:

Now would be a good time to start any company that competes with TV networks. That’s what a lot of Internet startups are, though they may not have had this as an explicit goal.

Like Justin.tv, which had resorted (for a brief time) to peddling an affiliate program for sexytime webcams (and a shitty one at that)?

The networks used to be gatekeepers. They distributed your work, and sold advertising on it. Now the people who produce a show can distribute it themselves. The main value networks supply now is ad sales. Which will tend to put them in the position of service providers rather than publishers.

I love the idea of online-focused video production but the bottom line is that if you’re in the storytelling business (read: content business) you can’t compete with the benefits television distribution provides. You don’t want to. By all means leverage multiple mediums including the Internet but do recognize that integrated media isn’t myopic media.

People like Graham simply don’t understand the business of content production and distribution beyond their false “distribute it on the Internet, people will watch and advertisers will flock” belief system. The distribution channel has a huge impact on the viewership and thus on the advertising – these things are all inexorably linked. One need only consider that a television ad deal on MTV might sell for what online types would consider a hefty sum while YouTube apparently can’t strike a licensing deal where it doesn’t lose money on each stream.

Apparently Graham doesn’t want to believe that nobody (outside of the adult entertainment industry) has really found a scalable way to monetize video online. Reading Graham, one might get the opposite impression – that independent content producers are thriving online. But that’s not the case especially in these troubled economic times. Just look at the plight of poor video bloggers.

The reality is that distributing your work on the Internet is an option, but it’s not the best option. As Chris Rock once said, you can raise a child without a father. Doesn’t make it a good idea.

The money is still in television, and given Nielsen’s numbers, for good reason. Not everyone is unemployed, tweeting and playing with their pricks.

Graham might also be interested in how another screen is doing – the silver screen. That’s right. Americans are drowning out their sorrows by heading out to the movies. Ticket sales are up 17.5% so far this year. $1.7 billion in ticket sales is quite impressive. That’s one YouTube acquisition in two months to put it terms Graham can understand.

What’s going on? How could this be? Perhaps we can explain it to Graham in this way: user experience.

Watching television and movies on a shitty Dell CRT monitor isn’t quite as nice as watching it on a 52″ flat-panel LCD HDTV with a surround sound system.

Of course, don’t expect Graham to fully comprehend this. The “entrepreneurs” he’s funding don’t make enough money to buy nice entertainment systems. They’re living lean and mean while they build web apps they hope to flip to Google. It’s okay though. Desperate Housewives probably isn’t much better than Desperate Techies.

On the next episode of Tap Ramen, Paul teams up with Justin to build a wearable video camera but realizes that he has nothing worth recording. Tune in live this Friday night at 9 pm on Twat TV – the only online television network that tells you where to stick it. Produced by YCTV and sponsored by Top Ramen.