Apple Has Destroyed 490,000 American Jobs

Eric Platt and Ben Duronio | May 1, 2012 - Business Insider

After taking heat for shipping jobs to China and contracting to employers with questionable labor conditions, Apple (rather publicly) took credit for creating more than half a million jobs in the U.S.

514,000 to be exact.


That figure included nearly 50,000 employees in its retail network and its corporate headquarters, where products are designed.

But it also included FedEx and UPS employees who deliver its products and employees at Corning who make glass for iPads and iPhones.

So Apple basically counts anyone vaguely associated with the company or its products as a job that Apple created.

But what about the competitors Apple has bumped off in its relentless move to the top? What about the once-profitable markets, products, and companies it has destroyed? What happened to those jobs?

Business Insider analyzed data on Bloomberg, went through dozens of 10-Ks, and read through layoff announcements to see how Apple's peers have done.

What we found:

Apple has destroyed nearly as many jobs as it helped create, eliminating some 490,570 positions.

Click here to see the jobs that Apple has destroyed >

So even if Apple had created all the jobs it takes credit for creating, its chest-thumping would be misplaced, to say the least.

The truth, of course, is it is not "companies" or "entrepreneurs" who create jobs--it is healthy economic ecosystems that create jobs. (If Apple's customers couldn't afford to buy Apple's products, Apple wouldn't create a single job, no matter how cool Apple's products were). Companies are an important element of those ecosystems, but to credit them for job-creation is to give them a lot more credit than they deserve.

But that's another story.

For now, let's take a detailed look at all the jobs Apple has destroyed or helped destroy.

Here's our methodology:

Business Insider identified some 50 companies that Apple's success has impacted, including big names like IBM and HP, and smaller ones like Barnes & Noble and Adobe.

Some companies and peers prospered. Most did not, announcing a combined 306,606 layoffs over the past several years.

In choosing the companies, Business Insider took a liberal approach to the businesses hit by Apple. Could you attribute all of Circuit City's problems to Apple? Probably not. BI used similar definitions as Apple to identify these companies.

Apple was unresponsive to repeated request for comment.

Those layoffs include direct competitors like Cisco's flip camera business, which the company shuttered after poor sales, and companies like AOL,  which lose out on lucrative search traffic because of Apple's choice to default to Google.

We also looked at Apple's decision to contract to private companies like UPS and FedEx instead of using public services like the U.S. Postal Service, as well as loopholes it uses in U.S. tax law to save billions of dollars a year.

The figure above does not include the jobs Apple could have created had it manufactured its products in America — instead of at Foxconn plants in China — because the corporate mantra to cut costs and build products overseas is not simply tied to the Cupertino, Calif., based company.

Business Insider also considered the ripple effect of layoffs in the U.S. When a company fires hundreds of employees, it curtails regional spending, causing restaurants and retailers to close their doors, decreases tax collection at the state, local, and federal level, and can trigger other rounds of layoffs elsewhere in the economy.

Using data from the Economic Policy Institute, coupled with average pay in industries that saw lay offs because of Apple's success, Business Insider estimated the additional loss to the employment picture at some 180,000 jobs.

Taking that into account with the 306,000 layoffs from competitors, Apple has destroyed some 490,570 positions in the U.S.

Circuit City Layoffs: 42,974 

At its peak, Circuit City employed more than 42,000 people in its stores and corporate offices, offering the only real competing electronics network to Best Buy. But as Apple took greater share of the PC market, and had sustainable margins, Circuit City had difficulty keeping up. Add in the collapse of LCD TV prices and by the holiday season in 2008, Circuit City filed for bankruptcy and laid off its staff.

Source: Bloomberg and Company Filings

Federal Government Layoffs: 42,105

One of the biggest revelations from the recent New York Times piece was the amount of money Apple saved by using tax loop-holes. Sullivan estimated that number at $2.4 billion in 2011 (Federal Taxes). Divide that by the average rate of pay for public employees in 2011 and you get to some 42,000 lost jobs.

Source: Economic Analysis by former Treasury economist Martin Sullivan 

Kodak Layoffs: 28,000

Kodak has had problems for a number of years - with total employment declining from more than 100,000 to just 17,100 today. The iPhone and other mobile devices have eliminated the demand for stand alone cameras, and Kodak was a company that suffered greatly from the link between cameras and phones. The 131-year-old company filed for bankruptcy in January. 

Source: Company Filings

Hewlett Packard Layoffs: 16,995

The iPad has made what was once a dominant PC builder an afterthought. HP attempted to enter the tablet game, but their touchpad was a disaster and they have laid off thousands of employees over the past few years (especially after costly purchases like Compaq).

Source: Bloomberg

Motorola Layoffs: 16,474

Motorola has had a painful decade after the success of its Razr - only recently regaining some strength in mobile. But after the Razr fizzled, Motorola hemorrhaged money, as well as headcount, as it tried to create a product that could compete with the iPhone.

Source: Company Filings

Borders Layoffs: 16,600
Apple hardware made a number of businesses obsolete: including the need to buy physical copies of books, movies and music. Borders went bankrupt after consumers moved to digital downloads and streaming online, all fueled by Apple.
Source: Company Filings

Sprint Layoffs: 14,600
Sprint struggled to gain post-paid subscribers for years because it did not offer a device comparable to the iPhone. After AT&T and Verizon exclusivity deals finally expired, it gained the iPhone and saw some growth in subscribers.
Source: Bloomberg

IBM Layoffs: 12,668
IBM conducted a number of layoffs over the past several years, including several thousand people in research in development roles and those in certain hardware businesses that it could not compete in - on the consumer side, that was fueled by gains at companies like Apple.
Source: Bloomberg

Musical Group Layoffs: 12,500
Performing art and spectator sport employment declined from a peak of 415,000 in 2007, to a preliminary estimate of 402,500 in March of 2012. The music industry has faced substantive difficulty since Napster hit (and continues with the lower share groups are paid on iTunes), making it harder for music groups to sign with a label and get backing.
Source: Bureau of Labor Statistics (ID: CES7071100001)

Ericsson Layoffs: 10,690
GlassdoorIn the 1990's Ericsson actually had abot 35 percent of the cell phone market. Needless to say, they did not keep up with the technology to compete with Apple and the rest.
Source: Bloomberg

U.S. Postal Service Layoffs: 10,615
Apple attributed part of its 514,000 job creation figure to shipping giants UPS and FedEx. But the truth is, it just moved the needle away from the U.S. Postal Service by using the private providers. According to Bloomberg estimates, Amazon accounts for 1.9 percent of big brown's revenue. Using that as a reference point, and the fact that Apple revenues are more than twice Amazon's, Business Insider constructed the number of jobs Apple could have sustained if it shipped its products through the USPS.
Source: Business Insider Estimate 

Barnes & Noble Layoffs: 9,000
The Nook has kept Barnes & Noble around as competitors like Borders failed, but its core business remains significantly challenged as Apple's products have moved consumers away from traditional physical units. BKS has closed a number of stores and employs 9,000 fewer people today than it did in 2007.
Source: Company Filings

Blockbuster Layoffs: 7,200
Streaming services have butchered the DVD and VHS business, and Blue Ray has not been the boon many industry analysts thought it would. Since 2007, Blockbuster has laid off more than 20,000 employees. BI attributed a third of those who lost their jobs to Apple.
Source: Company Filings

CompUSA Layoffs: 6,300
It's a repeat of Circuit City, just on a smaller scale. The computer superstore withered in the face of intense electronic retail competition and closed 126 stores, as Apple prospered and gained share.
Source: Business Insider Estimate

Sony Layoffs: 6,000
Sony once held a dominant market position in the portable music business with the Sony Walkman and other entertainment devices. The iPod made the Walkman the new 8-track player, and Apple has pressured Sony in the laptop market as well with the iPad and its Mac lineup. (These figures do not include mobile layoffs, attributed to Ericsson).
Source: Bloomberg

RadioShack Layoffs: 6,000
This retailer has faced significant challenges over the past few years as its main wireless offerings (Sprint, T-Mobile) did not sell the iPhone. RadioShack did have AT&T, and recently switched T-Mobile for Verizon Wireless. Still, its shelves are purgatory for HDMI cables and old electronics Apple seems to have made obsolete.
Source: Company Filings

Microsoft Layoffs: 5,827
Microsoft has struggled in the ancillary businesses Apple is prospering in, such as mobile, portable music, and the tablet industry. These struggles forced the software juggernaut to make cuts over the past few years.
Source: Bloomberg

Yahoo! Layoffs: 5,780
Yahoo! has struggled over the years as it has been outmoded by Google. So why is Apple to blame? The default search engine on all of Apple's products are Google, which gives the search giant a nice leg up.
Source: Bloomberg

Xerox Layoffs: 5,400
Xerox has laid off thousands of employees as its printer business steadily declined. Part of that has to do with difficulty within both the PC and inkjet sectors — industries you don't need when you use a Mac. The Xerox layoffs are based on total company announced firings, multiplied by the company's long-term asset base in the U.S. as a percent of global operations (to exclude impact to its international offices).
Source: Bloomberg

AMD Layoffs: 4,460
Apple uses intel chips in their Mac computers, which means AMD misses out on a huge potential market.
Source: Bloomberg

Best Buy Layoffs: 3,400
With Apple retail stores opening (and intense competition from Amazon) Best Buy has struggled to turn weak comparable store sales around. The company recently announced 400 layoffs in corporate as well as the closing of 50 stores.
Source: Company Filings, Business Insider Estimate

Tower Records Layoffs: 3,000
Apple's assault on the music industry hit retailers particularly hard, with stateside closings of Virgin, HMV and Sam Goody. The iPod greatly accelerated the losses of record stores as consumers switched to digital downloads (whether legal or through sites like Napster and LimeWire).
Source: New Reports

Trans World Entertainment (Sam Goody, F.Y.E.) Layoffs: 2,900
Tower Records part two. Trans World, the owner of chain stores including Coconuts, Sam Goody, and Record Town, has closed hundreds of stores and laid off thousands. Blame the iPod.
Source: Company Filings

Gateway (Acer) Layoffs: 2,500
Gateway once ran quite the successful retail chain, but a crowded environment made its PCs seem outmoded and overly expensive. Gateway ultimately closed its entire 188-store division, invested in eMachines and was then bought out by Acer during a period of consolidation. Apple did not have the same problem with its growing Mac business.
Source: News Reports

EMI Layoffs: 2,000
EMI is another record label drastically hurt by the world's move away from CDs. As the big five record companies became four, and now three, EMI had to layoff thousands and cut costs. Universal Music Group purchased EMI as greater consolidation became necessary to eek out some profits from online sales. Apple's role in the shift to digital (even as it offers a new revenue source) is pretty clear.
Source: News Reports

Lenovo Layoffs: 2,000
Lenovo was on the up when it purchased the ThinkPad unit from IBM with the goal to turn it into a dominant PC player. Unfortunately, PC sales were challenged during the recession, even as consumers scooped up Apple's Mac line up. Lenovo announced more than 2,000 layoffs to prop up margins (not included in figures for IBM).
Source: Bloomberg

Adobe Layoffs: 1,950
Adobe's issues with Apple are well documented. The company started a viral campaign to convince Apple to put Flash in its mobile devices. But Steve Jobs didn't warm to that approach, firing off a memo on his thoughts of Adobe (not too flattering). Adobe ultimately had to layoff some 1,950 as it focused on core operations and curtailed special projects.
Source: Bloomberg

T-Mobile Layoffs: 1,900
T-Mobile has lost share without having the iPhone in its device lineup, a sore point for the company that pinned its hopes on joining forces with the carrier that first offered it. But with the FCC blocking the AT&T merger, T-Mobile has had to pare back its operations to invest in 4G technology.
Source: Bloomberg

EMC Layoffs: 1,476
The very profitable cloud computing company has had to issue job cuts after competitors gained share in the market it helped create. Those competitors, like DropBox, have leveraged Apple's iOS platform and taken share through strong offerings on the iPad and iPhone.
Source: Company Filings

Palm Layoffs: 1,247
Palm hoped that the Pre and Pixi smartphones could compete with the iPhone and that it could offer some semblance of a comeback. After first sales looked promising, the products withered as Apple (and Android), continued to grow. Palm was then purchased by HP, before the company decided to shutter the whole unit. (Palm layoffs not included in HP figures).
Source: Company Filings

Virgin Megastores Layoffs: 1,060
Virgin Megastores had a surprisingly profitable run, with giant stores in Times Square generating healthy margins. But when digital sales decimated book, movie and music sales, Virgin decided to cut its losses and sell off its coveted real estate holdings which housed the Megastores.
Source: News Reports

Dell Layoffs: 905
Against Apple's strong gains with its Mac computers, Dell has seemed staid. The company has difficulty competing with Apple's premium offerings, and when demand for its PCs slumped, it saw margins substantively pressured. Dell has yet to find a way to successfully compete with any of Apple's other products — including mobile, mp3 players, and tablets.
Source: Bloomberg

AOL Layoffs: 800 
AOL was supposed to be the darling of the Internet age, until it wasn't. Torn up by larger competitors like Google, AOL has forged ahead with a push into content. But what the company used to bet on, search, is stymied by Apple's choice to default to Google on its iPad, iPhone and MacBook lines.
Source: Bloomberg 

Cisco Layoffs: 500
Networking giant Cisco has tried to push into the consumer sphere for sometime, and it thought it had a hit with the well priced flip camera business. But the camera never took off as consumers defaulted to their iPhones to take photos. Cisco ended up closing the business and laying off the employees in the division.
Source: Bloomberg

Warner Music Group Layoffs: 300
Warner Music Group is yet another music company hit by the move to digital and purchases on iTunes (you could argue that it performed better than most of the industry during the transition). Warner was forced to lay off 300 employees as revenues struggled.
Source: Company Filings

Hasbro Layoffs: 200
Who needs board games when you can use an iPad or iPhone to entertain yourself? Hasbro decided to close its board-game manufacturing plant in Massachusetts after demand dried up. You can blame that on the success of games like Words With Friends on your iPhone.
Source: Bloomberg

IAC (Ask.com) Layoffs: 170
Ask.com was once a powerhouse in search (depending on how you define powerhouse) but as the iPhone and iPad grew mobile search, Ask lost out. The company decided to axe some 170 employees over two different periods as it gave up on the product.
Source: Bloomberg

Universal Music Group Layoffs: 110
Universal, much like Warner, is one of the three main remaining music companies. The company has laid off some 110 employees as traditional CD sales tumbled. Recording companies have been upset with Apple's pricing strategy for some time, but that has lessened as Apple changed it's $0.99 per song requirement.
Source: News Reports

TV ratings in the age of digital TV

Who watches the watchers?

By Mark Slutsky | Ars Technica

This year has seen two major developments in the TV market: 3D and the Web. TV makers are betting that consumers will flock to stores this holiday season to upgrade their plain old 2D and Web-less panels with models that will let them bring the Internet into their living rooms without requiring them to add another box to their entertainment center. In this four-part series on the Future of TV, Ars takes an in-depth look at the major transition that TV is currently undergoing.
 
We take a look at the past, present, and future of TV ratings. How do networks, advertisers, and agencies measure audience sizes in a world of DVRs and BitTorrent? Will DVRing kill your favorite show? 

 
TV used to be so simple. Everyone had the same basic equipment (the only real qualifying factors being whether your set was color or black-and-white, and the size of the screen), and choice of programming was limited to whatever was on one of the three big networks at the exact time you were sitting on the couch, at least for those in the United States.

Boy, have things changed.

Now what we call TV includes everything from the old-school, over-the-air broadcasts, to cable programming, to video-on-demand, to the spiraling variety of video content available online. "Television" as a descriptor has become amorphous, its meaning constantly changing depending on its context. And what's changing even more drastically is the way we watch it; we have more options than ever to watch programming whenever and wherever we want.

That's terrific for consumers, at least on the surface level. But what does it mean for the business of TV—and the future of the programs we love? As common as pay TV is these days, most broadcasting is supported largely by advertising. With viewership fragmented between on-air broadcasts, video-on-demand, Hulu, Netflix, iTunes, and—importantly—illegal downloading, is it possible for networks and producers to get accurate data about who exactly is watching their shows? Are shows with niche appeal losing out because their numbers aren't being counted accurately? We decided to take a look at how the business of TV ratings is changing in the digital age.

The 5000-Channel Universe

Before we get into the sometimes-tricky business of ratings, let's take a look at the fragmented state of television audiences, and how we got here.

In television's real heyday in the 1950s and 1960s, practically all viewers were limited to what they could pick up on their "rabbit ear" antennas, which for the most part meant their local ABC, CBS, or NBC affiliates. It's hard to overstate how incredibly concentrated audiences were at that time. The Beatles' first appearance, on February 9, 1964, was watched in about 22 million households. Compared to a modern-day, big-ticket TV broadcast like American Idol's season nine finale, watched by 16 million households, that doesn't seem like such a big deal, even when you remember that the population of the US was about two-thirds of what it is today. But look at the percentages: 14.2 percent of households watched Idol, while an amazing 60 percent had their TVs tuned to the Fab Four in 1964, a figure that's simply unimaginable today.

Things began to get a little more complex with the widespread adoption of cable, which really took off in the '70s and '80s with the popularity of stations like TBS (Ted Turner's famous "superstation"), CNN and HBO. Widespread adoption of cable, along with both legal and grey-market satellite TV, opened up the "500-channel universe," a term coined by TCI executive John Malone, whose aggressive tactics (Wired called him the "Darth Vader of the Infobahn" in 1994) helped bring hundreds of new channels into American's homes.

The Internet would provide the next comprehensive, disruptive change in the way we watch TV, but it's worth mentioning two other developments that just predated the Internet video explosion by a hair, and which happened about the same time.

But how are Nielsen, and by extension, broadcasters and advertisers, keeping track of what you watch on your computer or download from torrent sites?

The first would be the DVD home video format, born in 1995 but adopted by consumers around the turn of the century. How did DVDs change the way we watch TV? Well, in the long and painful VHS era, people rented a lot of tapes, and they occasionally used them to record TV shows, but the market for actually purchasing movies on VHS was relatively small. In fact, movies were often "priced to rent"—sold for up to $100 for a single movie, and meant to be purchased by video rental stores. That changed with DVD, which were priced to sell to consumers—a smart bet, as for various reasons (size, quality, special features) people were willing to purchase DVDs in droves.

The culture of the DVD had an intriguing and unintentional side-effect on television. With some notable exceptions (like soap operas), TV prior to the DVD was largely single-episode-based—you'd have your rare season-ender cliffhanger or two-parter, but plot arcs were largely stuffed into individual episodes. (Watch an episode of Star Trek: The Next Generation some time and marvel at just how much story they could fit into 42 minutes.) Whether it caused it or not, the mass DVD purchasing phenomenon dovetailed perfectly with the shift towards long-arc stories—plots lasting multiple episodes or even whole seasons—on shows like The Sopranos and 24. DVDs seemed perfect for that kind of entertainment: who hasn't lost whole weekends to bingeing on seasons of Lost or The Wire? As viewers showed they were willing to shell out for whole seasons at a time, programmers surely took note.

The second major shift in the way we watch TV was the introduction of the DVR, or digital video recorder (also called the PVR—the "P" stands for "personal"). Made popular by TiVo, which released its first consumer device in 1999, the DVR allows viewers to do what's known as "timeshifting" in the industry—fancy terminology for "watching it later." You could already timeshift with VHS tapes, but that involved the world's least favorite task and butt of many a punchline, VCR programming. TiVo made it easy to keep track of your favorite shows automatically—even recording them while you watched something else. The technology became so popular, in fact, that TiVo itself became a victim of its own success, and fell by the wayside as cable companies rushed to make their own DVRs. From of a high of 4.418 million subscribers in July, 2006, TiVo reported only 2.272 million in their October 2010 earnings letter.

One of the other real advantages to consumers—but not advertisers or broadcasters—was the ability to fast-forward through commercials. In fact, one TiVo competitor, ReplayTV, offered the ability to skip them entirely, but was stopped by lawsuits from the major networks and removed the feature. But that ability to avoid commercials—one of the big selling points of much (but not all) of the TV you can watch on the Internet—is still an issue today, and as we'll see below, is very much taken account of by the TV ratings people. That's also true of VOD, or video-on-demand, which allows customers to watch stuff whenever without having to even set it up in advance (although Nielsen claims VOD numbers are small enough to be negligible).

The most recent—and most unpredictable—change in TV-watching is, of course, the boom in Internet video. Everything prior to Internet still involved sitting on the couch and looking at the same piece of tech; but now you can watch stuff via the Internet on your laptop, your phone, your tablet, or even… your television. Officially sanctioned stuff plays on sites like Hulu or network websites, albeit without the regular commercials, though some broadcasters are switching to a format called "TV Everywhere" which streams everything—including ads—exactly as it would appear on your TV screen (in your local market) to your computer. Show clips are uploaded to YouTube, with and without official permission. There are Web-only shows and downloadable video podcasts—do we even call that stuff "TV"? And finally, there's the elephant in the room—illegal or questionably legal streaming and downloading, the ultimate in convenience for those who don't want to pay. There are more ways to consume TV content today than ever before. So who's keeping track of it all?

The ratings game

In the middle of the first-season run of his show Louie on FX, comedian, writer, and star Louis CK tweeted (@louisck) "If you want LOUIE (on FX Tues. 11pm) to have a 2nd season, don't DVR, don't HULU. Watch it when it's on." The assumption was, of course, that only "live" TV viewing counts to broadcasters and that Internet viewership can't support a show. Was he right? Well, the answer is a little unclear.

Television ratings as we know them are synonymous with one company—Nielsen, which created the famous "Nielsen ratings" that measure television show's viewership. For broadcasters—and the advertisers who fund them—this is crucial data, determining the desirability, and thus price, of commercial airtime.

Nielsen's most famous methodology is the "diary," in which members of selected households record their viewing habits. Frankly, it's not the most reliable-sounding method, for a variety of reasons; you might forget to keep track of the shows you're watching, you might make mistakes, you might even deliberately keep false data if you'd rather have the ratings guys think you're watching PBS NewsHour than Keeping Up with the Kardashians.

Happily, while the diary system is still used in smaller markets, the national rating system has become much more sophisticated in recent decades. The company still picks a sample of Americans (about 20,000 households in total, totaling around 50,000 people)—not a random group, mind you, but one carefully selected to represent the country's demographics.

Every time a member in a Nielsen household sits in front of their TV, they're instructed to "check in" with the meter the company installs on the set. The meter logs what's being watched—and importantly for advertisers, who's watching it—by keeping track of Nielsen audio codes, silent to human ears, that are encoded in pretty much all programming and repeated every 2.6 seconds. Then, every morning at 3am, that data is sent back to their facility and processed, with the fresh ratings spit out to their clients. The crucial info is the "C3 rating," which measures how much any specific piece of programming has been watched in the three days from when it airs.

The code system allows for extremely granular data collection. For example, if you record a show on your DVR and play it the next day, it will still show up on the C3 rating, even if you didn't watch it "live." And, most importantly to advertisers, every commercial has its own unique code, which allows Nielsen to track whether you're fast-forwarding ads or not (according to the company, DVR users still watch about 45% of the commercials).

And DVR use keeps growing. "DVR penetration is growing dramatically," says Matt O'Grady, Nielsen's Executive Vice President of Media Product Leadership. "The biggest trend we see in TV is timeshifted viewing. In 2006, 6 percent of the TV-viewing country, which is pretty much everybody that's got cable, had a DVR. In 2010, we're almost up to 40 percent."

So that's how it works for the TV in your living room. But how are Nielsen, and by extension, broadcasters and advertisers, keeping track of what you watch on your computer or download from torrent sites? Well, in April Nielsen plans to being tracking what they call "extended screen," services like TV Everywhere. But here's where it gets a little tricky: services like Hulu or Xfinity (and of course, pirated shows) won't be counted in those numbers because they don't show the same commercials as the regular broadcasts. "You can't make up different rules for different screens, unless you want to treat that screen completely independently," O'Grady explains. "So the extended screen definition is, if you want credit for traditional TV—what we call 'commercial credit' or C3 credit—and you want that for your online contribution, then your telecast online has to match what you showed on TV."

"Hulu, Xfinity or NBC.com, whatever the site is, may have lower commercial loads," he continues. "We are committed to measuring that as well, but that moves away from currency, as we say. It moves away from the ability to monetize it just as TV is monetized—but there's great value in it."

It does raise some important questions though—for many, watching TV online is a way to get away from the restrictions (and ads) of the cable model, and TV Everywhere seems like a way to just transplant the current infrastructure online. (It's already getting flack from groups like Free Press, who claim it's anti-competitive.) Whether it will take hold or not among consumers is still in question. If broadcasters make their decisions based on regular and extended screen numbers only, they might not be working with representative data.

So was Louis CK right? Yes and no. If you DVRed episodes of Louie, you probably weren't doing much harm to his show's chances. Whether watching it on Hulu had impact either way is debatable—those numbers won't go to the advertisers that are responsible for most of FX's income, but the broadcaster will be seeing some revenue there. (Either way, someone must have explained that to him, because the tweet was deleted some time later.)

But, it should be added, according to Nielsen's studies (and they don't seem to really have a horse in this race either way), the overwhelming majority of viewing is still done on TVs. "There's a very interesting phenomenon happening in the marketplace, with online video garnering so much attention—and rightfully so, a lot of concern about how people continue to monetize their content on different screens," O'Grady says. "But the majority of the viewing today is still on the principal first screen. When you look at our numbers, for TV vs. online viewing vs. mobile viewing, it's predominantly TV. That makes sense; the 'best available screen' is what we call it, meaning the best viewing experience." Specifically, Nielsen's data shows American viewers each spending on average about 158 hours a month (sounds like a lot, doesn't it?) in front of the TV, with about three to four hours each for online and mobile.

The piracy factor

What Nielsen doesn't—and probably can't—measure is the number of people watching TV via "unofficial" channels online, such as bootleg streaming video sites or p2p file-sharing. "We could probably engineer that, but we're not in the business of doing that. We don't want to be the police," O'Grady says.

And, he adds, "What Nielsen takes very seriously—which you have to in this business—is representative samples. It would be very hard to get a representative sample of people who are readily admitting themselves as viewers of pirated content! [laughs] So I don't know how we'd do that, but you never know how the world's going to change."

One person who does have their eye on those often-murky waters is Ernesto Van Der Sar, the pseudonymous blogger behind torrentfreak.com, whose weekly "Most Pirated" Top 10 lists are reprinted by industry journal The Hollywood Reporter. Van Der Sar's weekly lists mostly focus on films; he used to follow TV on that schedule but now only does round-ups only annually, because, as he says "there were generally only a few small changes from week to week."

Nonetheless he does keep track, albeit with a methodology a little cruder than that of Nielsen's—though given his resources and the data he's working with, that's by necessity. "Public BitTorrent trackers report the number of downloads," he explains. "What we do is poll all of the public trackers we can find every day and collect all the data in a huge database. We then use filters to group similar titles and extract the most downloaded titles at the end of the week. For some trackers that do not report the actual downloads, we use a combination of downloaders and the file size to accurately estimate the number of downloads."

In his year-end roundups (such as this one), Van Der Sar then compares the downloading numbers to Nielsen's. The results vary from show to show; some attract more downloaders than viewers, some quite the opposite. Torrentfreak.com's pick for top-downloaded show last year, Heroes, for example, was downloaded 6,580,000 times, while Nielsen reported 5,900,000 US viewers. Number 10 on the list, True Blood, saw 1,600,000 downloads for its estimated 12,400,000 US watchers.

It does imply a sort of shadow audience; if those numbers are accurate, Heroes was only slightly behind True Blood, despite the latter show's numbers being almost double. But that's not the whole story—it's not accurate to assume these are all US-based viewers who would otherwise be watching Heroes on cable.

"This is a difficult question, because the effect can go both ways," Van Der Sar says. "Piracy might hurt the ratings of a show marginally because people do not watch the episode through official channels, but it is doubtful that these downloaders would have seen the show at all if it weren't for piracy."

And, importantly, he adds, "Most of the downloaders come from outside the US, so these have no impact on US ratings. On the flipside, one could argue that BitTorrent has actually helped TV-shows to build a stronger, broader, and more involved fanbase. People can catch up with a missed episode quite easily, in high-quality video whenever and wherever they want. The rise of unauthorized downloading of TV-shows is a signal that customers want something that is not available through other channels. Availability and convenience seems to be the key issue why people turn to BitTorrent." In other words, the very factors that are driving DVRs and time shifting are underlying piracy as well.

According to Van Der Sar, TV piracy is not necessarily an industry-crippler the way p2p mp3 sharing was for the music industry, but possibly an opportunity in disguise. "I don't think TV networks should be afraid of BitTorrent or piracy in general," he says. "But they shouldn't ignore it either. Piracy is a market signal, an opportunity. If interpreted correctly, TV-networks may hugely benefit from piracy by selling their shows to regions where the demand is highest. On the other hand, if they want piracy to decrease they only have to make their content available in user-friendly format. Hulu already decreased TV piracy in the US significantly, but there's still a lot of work to do, especially outside the US."

Whether that takes the form of region-specific viewing options that duplicate the TV experience completely, like TV Everywhere, or more à la carte options like Hulu, Netflix, iTunes/AppleTV and Xfinity remains to be seen. What's clear though, is that while the audience may be fragmenting, they're after the same thing—the shows they love, in a format that's easy and convenient to watch. That's simple enough, but keeping track of TV viewers' often-fickle desires is more complicated than ever before. And as viewing methods venture more towards the unconventional, broadcasters' methods of tracking their audiences will have to follow.