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On the face of it, the unexpected renewal of the late-night TV wars is a pretty trivial matter. As The Tonight Show with Conan O'Brien itself points out, there is a lot of real news that's a lot more important - health care, Haiti, Google versus China, network neutrality, and discussions of the Digital Economy bill (my list, not theirs). O'Brien wrote in an open letter a couple of days ago that he has been "absurdly lucky". Even so.

But Conan-versus-Leno is personalization; at heart this story is about the future of broadcasting and its money. Given today's time-shifting choices, few things lure viewers to a particular TV channel at a precise time. Two are live sports and breaking news. A third is the run of talk-variety shows that start in most parts of the US at 11:35pm (10:35 Central) and run until around 2am.

The kingpin of all of these is The Tonight Show, broadcast on NBC every night following the 11 o'clock news for nearly 60 years. For 30 of those years it was presented by a single host, Johnny Carson, probably the biggest star television has ever had - and quite possibly the biggest television ever will have. They make talent like Carson's very infrequently; they don't make broadcasting like that any more. According to Bill Carter in his book The Late Shift: Letterman, Leno, and the Network Battle for the Night, many years Carson's apparently effortless comedy and guest interviews generated 15 to 20 percent of the network's profits.

Every one of today's late-night hosts grew up watching Carson, and probably all of them dreamed of one day having his job. Carson's job, on The Tonight Show on NBC, not a similar job on a similar show at the same time on another network.

The roots of today's mess go back to 1991, when Carson announced he would retire in May 1992. At the time, David Letterman was hosting NBC's 12:30 show, while Jay Leno was Carson's regular substitute host. In a move that seemed to surprise everyone, NBC appointed Leno Carson's successor, fatally assuming that Letterman wouldn't mind. He did mind. The net result was months of uncertainty, politics, and legal wrangling, not least because Leno's early months in the job were unpromising. By 1993, Letterman had begun a competing show at CBS and every other network had tried putting up an 11:30 talk-variety show, most of them dreadful and quickly canned. Since then, Leno has usually won the ratings - but Letterman the awards. Arguably the biggest beneficiary was O'Brien, who landed Letterman's old 12:30 job with barely any performing experience. After following Leno for 16 years, late last year, as per an agreement announced in 2005 and intended to avoid a repeat of 1992, O'Brien got The Tonight Show.

Now, NBC is doing to O'Brien almost exactly what it did to Letterman, apparently filled with panic over declining revenues and shrinking ratings and completely self-destructing (just as Comcast is trying to buy it from GE). As Kansas City critic Aaron Barnhart writes, late-night is about the long haul. In restoring Leno, NBC is hanging onto its past and at best a couple of years of present at the expense of its future. All hosts - almost all entertainers - eventually find their audience is aging along with them. Even Carson seemed old-fashioned to younger viewers by the time he retired at 66: my parents watched Carson; I watch Letterman and Conan; my 20-something friends watch Conan and Jon Stewart.

In his letter, O'Brien says holding The Tonight Show to 11:35 is vital. He is almost certainly right: people go to bed, watch the news and the opening monologue, and progressively drift off to sleep during the guests. By midnight, half of the Tonight Show's viewers are gone; the latest shows are seen by insomniacs and people without kids and early-morning commutes.

Most likely NBC will shortly find out there is no way back to Leno's ratings of 2008. Diehard Leno fans will stick with him but Conan fans will tune out in protest; if they watch anyone it will be Letterman or Stewart. The younger people the network needs for the future watch online.

You may think none of this matters very much outside the US. The shows themselves have never traveled very well, though the format has been widely copied throughout the world. But of all the businesses having to cope with the digital revolution, in television it may be the broadcast networks who are most under threat. Those who copy and share TV shows buy DVDs; they do not return to watch the broadcast versions or consume advertising. Shows have fans; networks don't. The focus on file-sharing ignores the wide variety of streams copied live from broadcasters all over the world that are readily accessible if you know where to look. It is far cheaper to subscribe directly to the tennis tours than to pay Sky Sports or Eurosport, for example - and often free to pick up a stream.

When the history of the digital revolution is written, historians may pinpoint the day Carson announced his retirement as the broadcasting equivalent of Peak Oil.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, follow on Twitter, or send email to netwars@skeptic.demon.co.uk.