How streaming should work in 2012: a provider-agnostic protocol allows any video producer to place content online, either for streaming or download. There are no codec wars or patent issues. Digital video "warehouses" collect all these sources of video, providing bandwidth and an open API for purchasing streaming and/or download rights to a video, with a simple algorithmic pricing structure. Frontend websites and applications then compete for user attention, mixing and matching video from any source they please, with the only requirement that they pay the streaming rate to the video aggregator. Any video, any time, with any UI.
Instead we have ever-increasing ad durations, limited episode selection, proprietary players with terrible video quality (e.g. some of them use nearest neighbor scaling in fullscreen, there's no vsync so there's massive tearing and jitter, the latest versions of Flash for Linux and YouTube swap the red and blue color channels, etc.). Television as a medium is broken, IMO: advertisements are timed to start right at the point your mind starts to get absorbed into a show, causing frustration and a desire to change channels or close the tab.
I'm completely on board with everything you're saying, but algorithmic pricing is non-trivial; were it to be achieved, it would fundamentally rewrite the rules of economics as we know it.
Prices aren't decided by value or fairness, but by negotiating leverage. If Mad Men knows they're in high demand, they ask a high price or walk; if Netflix knows that a horror B-movie is in low demand, they offer a low price or walk.
Getting content owners to cede their negotiating power in either case to a universal formula will be nigh-impossible without fundamentally rewriting IP law (which for the record, I am enthusiastically in favor of).
It is my opinion that in an ideal world (ideal as in, most pleasant for humans to inhabit), pricing of video would be constant, and high demand would be its own reward through higher sales volume.
Instead we have ever-increasing ad durations, limited episode selection, proprietary players with terrible video quality (e.g. some of them use nearest neighbor scaling in fullscreen, there's no vsync so there's massive tearing and jitter, the latest versions of Flash for Linux and YouTube swap the red and blue color channels, etc.). Television as a medium is broken, IMO: advertisements are timed to start right at the point your mind starts to get absorbed into a show, causing frustration and a desire to change channels or close the tab.