The internet leaves no business model untouched and unchanged, especially when it comes to media consumption. Whether music, movies, journalism, publishing, or TV, the impact of having high-speed, always-on connectivity has revolutionized how we interact and entertain ourselves. But in the wake of these changes, media companies are left struggling to monetize their efforts, all of sudden discovering that their old business model now looks like a square peg getting hammered into a very round hole.

TV viewing habits are just one example of this change. Not only are companies like Comcast and Time Warner experimenting with on-demand online viewing initiatives, the networks themselves now post their top shows to the web. The major TV networks have featured streaming video on their websites for years. Meanwhile, several networks and studios, including NBC Universal, FOX, and ABC, have banded together to offer Hulu, a popular destination for commercial-supported streaming video.

But putting shows online has its drawbacks, as networks are finding out. Without solid measurement tools, making the shows available on other platforms is, in the short term, hurting the bottom line. In a recent issue of TV Guide magazine, for example, it was noted that networks are specifically facing problems with re-runs. Where before a second airing of an episode from a popular show could make decent money, they're now finding less viewers tuning in thanks to on-demand offerings and online viewings. According to one unnamed network exec, this presents a huge challenge for the networks. "We're not like cable, which has a second revenue stream from subscribers," the exec said. "We need to amortize these very expensive shows."

Measuring the Web TV Audience: A Tricky Prospect

Through anecdotal evidence, we know that more people are watching TV online these days. It comes up in conversation among friends, especially when someone laments how they "forgot to record" a program. They now know they can go online and get caught up. Others find themselves relaxing in front of their laptop's screen nearly as often as they hang out in their living room to watch the big screen. In fact, thanks to the recession, more people than ever have decided to cancel their cable TV subscriptions to save money, realizing that many of their favorite programs are available through alternative methods, including online streams. Need proof? Just look at the Google Insights chart for the term "cancel cable."

Then there are the recent statistics from the nonprofit Conference Board that show how online viewing is on the rise. According to their findings, nearly a quarter of U.S. households now watch TV online, up 20% from last year. New shows are most popular, watched by 43% of viewers followed by 35% of viewers who watch sitcoms, dramas, and comedies. And 90% of the viewings take place at home.

Unfortunately, there hasn't been a good way to effectively monitor and measure the online TV viewing audience. When Nielsen previously reported on Hulu's viewing numbers for instance, Hulu lashed out at the company claiming the numbers were wildly inaccurate.

At the time, Nielsen was using a combination of web beacons to determine when streams started and stopped while also measuring the web use of a panel of 200,000 online users. Hulu themselves, however, preferred to quote numbers from measurement firm comScore, especially since that company reported a much higher reach even as Nielsen noticed a slight decline. The problem here, as we noted at the time, is that online measurements aren't standardized, making it difficult to accurately determine audience counts.

A brand, whether Hulu or any other online video provider, could look at the measurements from major firms like comScore, Compete, or Quantcast, and then pick the company whose estimates were the highest when crafting their "look at us grow!" type press releases. In all honesty, it's probably better that Nielsen gets involved to more objectively report the online traffic through their representative sample methodology. It may not be entirely accurate either, but at least you know that it's coming from an unbiased third party.

The "Internet Meter" Will Deliver Hard Data

At the moment, the Internet Meter software resides in a test group of 375 People Meter households, which has allowed the company to evaluate its capabilities before rolling it out to the remaining group. In addition, the software has been deployed to the company's online panel (as mentioned above) which now measures over 230,000 individuals. Installation of the software will be completed in 2010 but full implementation won't be seen until the following year. If that seems like too slow of a pace, it's only because the company is being very careful, fully knowledgeable of the major impact this technology will have on the TV industry. According to Sara Erichson, President, Media Client Services in North America, Nielsen will not take "any actions that would dilute the reliability of the core television ratings data."

Once the Nielsen data goes live, it will reveal a plethora of information regarding not just viewing numbers but also the demographics of who watches what and when. The information can then be used by advertisers and marketers who want to target niche audiences like the hip crowd who watches sci-fi shows but never stays home on Fridays to view them live on TV when they air. Or the group of people who are too embarrassed to set their DVRs to record "Ugly Betty," but sneak in the guilty pleasure online in their free time. Expect the online ads interspersed with the online content to soon become more precise and more targeted than they are now, thanks to these sorts of reveals. Perhaps the networks will even be able to charge more for ads, once they have numbers to back them up. That would be a good thing for the industry as a whole as well as consumers, since it could lead to more shows being put online. Who knows, maybe one day we'll even be able to purchase online-only cable TV subscriptions, too.

Remember Web TV? It's still around, believe it or not, now rebranded as MSN TV. With a set-top box and keyboard, you can browse the web from the comfort of your couch. For whatever reason, it didn't take off. From personal experience, after some initial oohs and aahs, our household quickly grew bored with our Web TV box. If you used the service, too, you probably felt the same.

Why didn't it work? Perhaps people didn't really want to use a keyboard in their living room. Or perhaps it just launched too soon. Its heyday was in the 1990's, a time when there wasn't as much compelling content to view. This was long before the launch of sites like YouTube and Hulu. Because of this and more, Web TV never became the revolution that it intended to be.

But today we're seeing a new attempt to revive the the goal of bringing the "internet to your living room." Instead of Web TV, what we're seeing instead are televisions being dubbed "connected TVs."

The New Connected TV

Sans set-top box, these new "connected" TVs have all the web-enabling components built right in. This apparently is what will be the reason for their success this time around...if you believe the hype.

One of the better integrations involves Netflix's deal with Korea's LG Electronics, Inc.Their partnership which will deliver a new line of high-def TVs with the Netflix service built directly into the set itself. With 12,000 titles to choose from at launch, this connected TV is one that's sure to become quite popular if the company can get the pricing right.

Other TV manufacturers including Samsung, Sony, LG, and VIZIO introduced sets with Yahoo widget technology integrated into their products. These widgets don't just provide Yahoo content like Sports and News, but rather deliver a platform on which widgets can be built. Says Yahoo, their platform allows developers to extend their "brand, services, and content" to new users by creating TV widgets using Yahoo's Widget Engine.

Yahoo Widget Engine, Now for the TV

The Yahoo Widget Engine evolved from the Konfabulator platform, a product that delivered some of the very first web-enabled apps that floated on your computer's desktop. These widgets give you quick access to information and news which you can see without having to keep a browser window open.

Now those same web-enabled widgets can be ported over to digital TVs. The Widget Engine provides an entry-level framework and Widget Development Kit (WDK) which allows developers to code for the constrained hardware capabilities of these new connected TVs. In addition, Yahoo's Widget Channel API will provide access to internet technologies including Konfabulator's JavaScript and XML as well as HTML.

There are already a few Yahoo! TV widgets available now and several more have been announced as coming soon. In the upcoming section, widgets from Showtime, Netflix, Blockbuster on Demand, CinemaNow, The New York Times, USA Today Sports, CBS Fantasy Football, Rallypoint Fantasy Sports, Acedo Funspot Games, Flickr, and, of course, Yahoo (News, Weather, Finance, and Video), have been announced.

Twitter from Your TV

Lest we forgot: there will also be a Twitter widget available. That widget alone could usher in a whole new area of interactive television. As we've already seen on channels like CNN, some reporters are currently using Twitter to gather real-time information about events from TV viewers. Imagine how many more people could participate if Twitter was enabled on the television itself. Outside of news, other shows could potentially use Twitter for entertainment purposes, enabling a live back channel where you could Twitter your thoughts or questions about the content you were viewing.

MySpace Brings Social Networking to the TV

Among the widgets available today, Yahoo has announced an eBay widget, a CBS Entertainment widget, and a MySpace widget. It's the MySpace one that's garnered the most press so far as it will enable two-way interaction with the social network and your friends while watching TV.

MySpace widget users will be able to receive dynamic updates from friends, read and respond to messages, browse friends' profiles, photos, and requests, and see status and mood updates. It takes the solitary act of watching TV and turns it into what could be a more social experience. It's easy to imagine groups of friends watching shows together, messaging each other throughout the viewing.

The MySpace widget, like several others, will be ad-supported. That raises the question if these new widgets could become a source of advertising revenue for content producers. As more people time shift TV shows for later viewing, skipping through the commercials with their remote, TV shows' advertising revenues have been affected. Now, TV networks could easily create and deliver widgets for their most popular shows, letting fans interact with each other whenever they watched, as they do on the numerous forum-like TV message boards found across the internet today.

Of course, we could be getting ahead of ourselves here with that last idea - nothing of the sort has been announced. Still, we think it would be a great idea. (Who wouldn't want to join a live backchannel of ABC's "Lost", for example? What is that smoke monster?)

Will Connected TVs Succeed?

Will the new internet-connected TVs work where Web TV failed? It's possible. For one thing, this time we're not just transplanting the internet in its entirety to the living room, where many people already stash their netbooks and notebooks for the quick Google search or email check during their TV viewing.

Instead, the TV experience is simply being enhanced by the web-enabled technologies - which you can choose to use or not use as you wish. If you're just relaxing, you may want to just enjoy the normal passive TV experience. But for certain events - favorite shows, sports, breaking news - you may choose to interact with others via the widgets over social media like MySpace and Twitter. Other widgets like News and Entertainment listings will also be convenient ways to get bite-sized information without having to pull out the computer.

The key point here with these new connected TVs is that the widgets don't interrupt what people think of as the "TV experience." Explains Genevieve Bell, an anthropologist and director of the user experience group in Intel's digital-home group, people have extremely strong bonds to their TV sets. "Any effort to add internet content needs to be just as simple and not interfere with the experiences and behavior patterns the users enjoy." What that means, she says, is that the interaction needs to take place using a conventional remote control - not a computer keyboard or on-screen web browser.

The only question that remains is whether people will buy a new TV just for the widgets? Probably not. This is a fun addition, but not a major technology breakthrough like HDTV. Still, if you're out shopping for a new TV anyway, a connected TV may certainly make your list as one of the sets to consider.