But a week later, the David Fincher-produced political drama has raised a number of questions about the current state of television — and what impact the Netflix model of distribution might have upon it.

Spoiler Alert!

Spoiler etiquette — otherwise known as “When is it okay to openly tweet about what just happened on ?” — is a touchy subject for television fans who worry about being ruined for a show’s best twists. A few months ago, Sam Biddle at Gizmodo proposed the following rules, which work well for serialized fare:

1. A seven day grace period for new episodes.
2. Putting major spoilers on Twitter is a no-no.
3. If it’s off the air, it’s fair game.
4. Even outside of the grace period, a heads up about spoilers in mixed company is polite.

But how does the grace period work when everyone’s watching at their own pace? If, a month from now, I tell someone why the ending of House of Cards‘s “Chapter 7″ is [SPOILER ALERT] very creepy, would they have the right to be upset?

Informally, many I’ve talked to are about halfway through the first season — and even if a friend says to me that they just finished Chapter 5, one of the consequences of binge-viewing is that episodes have a habit of blending together: Only the most attentive of viewers are able to remember exactly which episodes contain which plot developments (though the creepy sex scenes do stand out).

There’s no good answer for this yet, which means for the duration we’re probably going to see a lot of articles like Aymar Jean Christian’s at Televisual, which goes into detail about a character revelation from “Chapter 8,” but only after being heavily couched with spoiler warnings.  It’s not terribly efficient, but ultimately the prudent approach — unless you want to be Miss Know-It-All from Netflix’s own ads.

Binge-Viewing: Bad for television?

The Onion AV Club, that sprawling nexus of television commentary, is approaching House of Cards with a two-pronged approach: Reviewing episodes on a week-by-week basis, while allowing commenters who have already binged a spoiler-soaked forum for discussion.

But the AV Club also ran a piece this week entitled “Could Netflix’s programming strategy kill the golden age of TV?”, in which TV editor Todd VanDerWerff observed that he may have liked House of Cards less if he was watching it on a weekly schedule:

Binge-viewing has advantages over watching episodes one at a time… Individual episodes’ flaws become magnified when viewers have a week between episodes to stew over them, but in the middle of a binge, those flaws are diminished, simply because it’s always time to move onto the next thing…  I wouldn’t give any of the seven House Of Cards episodes I’ve watched higher than a B+, but I also wouldn’t go lower than B-. The show neatly splits the difference between being just good enough and never trying anything risky enough to turn off large portions of its audience.

A counterpoint by critic Jaime Weinman suggests that the new world order pushes us to evaluate shows as complete seasons, rather than on an episode by episode basis, which may ultimately create a stronger viewing experience:

After watching something for 13 hours, it’s difficult to know what the good parts or the bad parts are, or even to follow anything beyond the basic plot; everything blurs together. Yet that in itself is a possible argument for binge-viewing. Watching an episode a week tends to inflate the importance of every episode, sometimes beyond what a single TV episode can sustain. This, I think, is part of the reason that we’re more likely to be disappointed by new episodes of a series when they appear once a week, and why seasons often look better when they go to DVD or to daily syndication. The shorter the wait between episodes, the less of a life-or-death proposition every episode becomes.

But what definitely suffers is be the discussion of television online (which is probably one of the Top 10 internet recreations, right after pornography, fantasy football and cat videos). After all, it’s tough to talk about a show when everyone’s on a different episode — controlling their individual viewing, but at the expense of the communal experience.

House of Cards: Available on DVD and Blu-ray?

Speaking of internet commments — the question I’ve been seeing a lot of places is will the first season of House of Cards be released in disc form anytime in the future?

While yes, the market for physical media may be dying, it’s not dead yet: In 2012, according to the Los Angeles Times, DVD/Blu-ray sales actually increased (by a fraction) to $18 billion. People without Netflix subscriptions, whose binge-viewing is enabled by box sets, still exist — even Netflix still makes 50.1 percent of its profits off the DVD rental side of its business.

According to a Netflix spokesperson, Netflix currently has the first window of exclusivity for the series, but when that window is complete, Media Rights Capital (the production company behind the series) will also be able to pursue a home video release for the show. So, the odds are good that you’ll be able to give your thriller-loving grandparents Season 1 on Blu-ray as early as this summer.

This is just the beginning of Netflix’s 2013 of original content, and at the very least House of Cards is an exciting way to kick it off. Because love it or hate it, one thing is definitely true: It’s got people talking.

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

Driven by significant revenue growth from subscription streaming as well as Blu-ray disc sales and rentals, U.S. home entertainment spending rose 2.5 percent to around $4.45 billion in the first quarter, according to the Digital Entertainment Group (DEG), a research operation funded by Hollywood’s major studios.

It was the second out of the last three quarters that DEG talled growth for the sector — a third-quarter uptick of around 5 percent in 2011 was the industry’s first black ink in three years.

Since peaking at around $21.8  billion in 2004, the U.S. home entertainment industry has seen steady declines, descending to $18.4 billion last year.

Blu-ray, which has long under-performed in its expected role as the high-definition successor format for the aging DVD, has finally started to deliver on some of its promise. Revenue from Blu-ray sales and rentals increased 23 percent in the first quarter, according to DEG.

In fact, sales increases of Blu-ray titles almost offset the continued cratering of the traditional DVD market, with physical media sales dropping just 0.62 percent in the quarter. Overall, Blu-ray accounts for about a quarter of the sell-through disc market now. And with 2.4 million Blu-ray player devices sold in the first quarter, the format has reached 40.8 million U.S. homes.

Subscription streaming was another big driver in the quarter, with DEG tabulating a 549 percent year-to-year increase to $548.6 million. Netflix, of course, accounts for the lion’s share of this bounty, reporting subscription streaming revenue of $507 million during its first-quarter earnings call last week.

As Netflix builds its streaming business at the expense of online disc rental, the overall home entertainment rental business has taken a hit — it was down nearly 18 percent in the first quarter.

That number would have been much worse if not for the offset provided by the red-hot kiosk rental business led by Redbox, which was up 30 percent during the three-month period. Last week, Coinstar reported 39 percent first-quarter revenue growth of $502.9 million for its Redbox division.

Of course, having in-demand titles helps — DEG reported that the total box-office performance of new home entertainment movie releases in the quarter was up 12.5 percent compared to those titles put out in the first quarter of 2011.

Meanwhile, with the DEG also providing a marketing role for the home entertainment industry’s digital cloud endeavor, UltraViolet, the group reported that the initiative now has 2 million subscribers, doubling its tally from February.

On Thursday, Redbox’s parent company, Coinstar, reported a 34 percent uptick in revenue to $568.2 million during the first quarter, driven by 39 percent earnings growth of Redbox to $502.9 million.

In January, Netflix CEO Reed Hastings said his company would no longer invest resources into growing its DVD operation. The result of that posture may have emerged just three months later. On Monday, during its own first-quarter earnings report, Netflix revealed that it had lost over 1 million DVD/Blu-ray subscribers in the quarter and that disc-rental revenue had gone from accounting for 52.4 percent of total earnings in Q4 to just 45.4 percent in Q1.

Redbox, however, seems to have become the beneficiary of Netflix’s strategic moves regarding DVD/Blu-ray dating back to July, when Los Gatos, Calif.-based Netflix controversially upped prices on online disc rentals.

In an Oct. 12 research note reported on by Home Media Retailing, for example, Michael J. Olson, senior research analyst with Piper Jaffray, noted that web traffic to Redbox.com was up 46 percent year over year during September, when the price change took effect.

“Search trend data from Google supports a dramatic uptick in web activity surrounding Redbox as consumers look at alternatives to replace or supplement new-release movies from Netflix,” Olson wrote.

UltraViolet, which went “live” last month, is the new digital locker scheme — backed by Hollywood studios including Warner Bros. (NYSE: TWX), Universal, Sony (NYSE: SNE) and Paramount (NYSE: VIA) — that lets buyers of physical media also own a cloud-based digital version for no extra cost. The initiative is intended to curtail a rental and streaming trend among movie consumers, and re-kindle a demand for good old-fashioned disc ownership, with home entertainment revenue falling every year since 2004.

Samsung’s new players will support the new “disc to digital” feature that allows owners to authenticate their existing DVD and Blu-ray titles and store digital versions of them that can be played on devices like laptops, tablets and smart phones – for an extra “nominal” fee.

This authentication plan was concurrently announced at CES by Samsung and the technology’s developers, Rovi and Flixter, the latter of which is owned by Warner Bros. The feature will begin showing up in other home entertainment devices from other manufacturers in 2012.

UltraViolet is in its early stages, but Warner, for example, has already published several Blu-ray titles, Horrible Bosses and the Green Lantern, that include digital-locker versions that a purchaser can share with up to six members of their family. DECE, the consortium of consumer electronics companies that created Ultraviolet, says that about 750,000 people have signed up for accounts so far. It claims that consumers are 47 percent more likely to buy rather than rent an Ultraviolet-supportive disc.

On Wednesday, the Los Angeles Times reported that a number of early adopters are having compatibility issues with the new technology, with necessary UltraViolet software downloads not compatible with the player software they use on their devices, for example.

Addressing those issues to reporters at CES Tuesday, Mitch Singer, Sony Pictures chief technology officer, said, “The best way to describe the launch is we built this great house, it had an incredible foundation, and in our excitement to move in there was some finished carpentry that still needed to be done.”

– Alternatives to DVD sales, including Blu-Ray, online downloads, and other rental methods like Netflix (NSDQ: NFLX) and kiosks are growing at a double-digit clip, albeit from a small base.

– Recent estimates by researcher Global Media Intelligence of 300 percent Blu-Ray growth in 2009 are probably “slightly aggressive,” she says, suggesting that Reif-Cohen still believes that triple-digit growth is feasible this year.

– Blu-Ray currently represents only 4 percent of the home-video market, but for popular titles can represent 20 percent of all purchases.

– While DVD sales were awful in the fourth-quarter of 2008 (down 15 percent) some of the declines were likely due to serious belt-tightening among consumers and deep discounts from retailers; DVD sales are down in the first quarter of 2009, but have stabilized some, declining in the mid-single-digits.

Reif-Cohen does point out there are risks to her forecast, namely worse deterioration of the DVD market than expected and continued competition from video games.

Photo Credit: /pitzyper!

What the Blu-Ray backers are banking on is merging these new discs with online content: the story says the group will support for a feature called BD Live (as in Blu-ray disc live), which lets people download additional material from the Internet and interact with friends in text chats that appear on the TV while playing a movie. But again, where did we hear that before…

The goal is to move Blu-ray past the early adopters, Bob Chapek, president of Disney

– Dealing with the price problem: Although BD Live, which was developed by Sony (NYSE: SNE), is viewed as key for Blu-Ray’s wider marketplace acceptance, there is only one player currently available — Panasonic