"Why TV Lost" is an excellent article by Paul Graham on why broadcast lost to the internet and computers.
What decided the contest for computers? Four forces, three of which one could have predicted, and one that would have been harder to.
Graham captures the appeal of piracy, which is not because it is free:
The third reason computers won is piracy. Users prefer it not just because it's free, but because it's more convenient. Bittorrent and YouTube have already trained a new generation of viewers that the place to watch shows is on a computer screen.
He states in very simple terms what misconceptions industry leaders have long held about their industry and what the internet offers as an alternative:
Whether they (the television industry) like it or not, big changes are coming, because the Internet dissolves the two cornerstones of broadcast media: synchronicity and locality. On the Internet, you don't have to send everyone the same signal, and you don't have to send it to them from a local source. People will watch what they want when they want it, and group themselves according to whatever shared interest they feel most strongly.
Give it read. It's worth the visit.