We’re seeing a media shift away from traditional
outlets like print and TV towards outlets like mobile and digital devices. One of the
huge implications in this is that our very stable economic model of
advertising-driven content is starting to disappear right before our eyes.
Newspapers can no longer afford to pay journalists to cover news far away from
their cities. Somehow we think citizen journalists will make up for foreign
correspondents. TV networks have shifted to more reality based shows because
they’re cheaper to produce and thus less dependent on advertising dollars. None
of this will improve over the coming years. The advertising model is on its deathbed.
But the online model hasn’t shown us a new solution. In
fact, online advertising, and even paid search, hasn’t come close to replacing
traditional ad dollars. Content may want to be free, but as a smart person once
said “There is no such thing as free content.”
So unless we all settle for user generated content of
various and dubious quality, how will we get that great content we’ve grown
used to? Here are some possible models for the future:
There's nothing new here. In fact we hear all the time that
people just will not pay subscription money for content anymore, especially
online. Salon and the NYT tried it and failed, although the WSJ still plays
that way. While it may not work for news, I think it still can work for
entertainment. Just look at HBO.
HBO started selling subscriptions back in the 1970s and
they’re still doing it. And guess what? For $15/month, I get what I think is
the best content anywhere. Hands down. I gladly pay them to watch True Blood,
Entourage, Big Love and all of those other amazing series.
From a content standpoint, HBO shows that standing from a
place of high quality, and demanding that people pay to consume its product,
can work. I think the issue with content subscriptions is quality. People won’t
pay for mediocre quality because we can get that anywhere.
In the future, watch for more premium content subscriptions
to pop up
Back in the early days of radio and TV, we didn’t have
commercials. Instead, brands like Chevrolet, General Foods and even tobacco
companies sponsored entire shows. Talk about product placement!
We’re starting to see examples of that, like when General
Motors sponsors an entire show of Medium and then builds a new SUV into the
plot. The big question is whether brands will have the guts to sponsor
just one show and stand for it, rather than spreading advertising dollars
across the board like a nervous roulette player.
I think they will for a couple of reasons. With words like
sustainability and authenticity swirling around the brand-o-sphere, people want
to know what a brand stands for. By standing behind quality content, a brand
can take a stand while promoting itself and its products. Branded content itself is a goal for
many companies and there’s no better way to control this than by sponsoring the
Whether this looks like old radio, or PBS or something else,
I think we’ll see more brand sponsored content in the future. Again, the
question of quality will play a huge role here. Personally I’d love to see
brands fight over talent like baseball owners fight over free agents.
One of the holy grails of digital, the idea of micro
payments seems so simple and logical that it’s amazing that it hasn’t happened
yet. Actually, given the state of our decentralized economy, it’s not so
The idea of micro payments is that you pay a little bit each
time you consume content. Watch John Stewart online and pay a dime. Read a NYT
opinion piece and pay a nickel. It adds up based on the number of people who
consume all of this content. The problem is that there is no central system
and clearinghouse for gathering all of these payments and then disbursing them
to content producers.
We need the type of Giro system they have in Europe, which
acts as a centralized payment system for everything and has the buy in from
every financial institution and business on the continent. Who will do that?
Best bet is Google, but you know everyone will kick and scream if they do. Look
instead for a consortium of Google, Microsoft, Apple and other major players to
smoke that good peace pipe in the name of green (or gold).
Overlays and AddOns
The worst solution we’ll see is that everyone tries to tack
on advertising to existing content. Upload a YouTube video and someone will do
an advertising pre-roll. We’ll see more interstitials and bigger ads. Actually,
this is already happening but the question is whether this is working or not.
I heard an old VC guy say last week that as long as the
Internet can build eyeballs, someone will figure out how to monetize it. I
think this solution is part of what’s dying in media. We don’t want
interruptions, we want to get our content and get out of there.
There are two problems with all of these. If pay for content
wins out, we might see a content haves vs. have-nots situation, where some
people pay to consume where others simply view bad content and read about the
good content. It’s almost an undemocratization of media. The other problem is
that people will go to great lengths not to pay, if they can get away with it.
In Sweden, for example, if you had a TV, the state expected you to pay a TV
license, or tax, to pay for national programming. While perhaps half of the
citizens there did paid, the other half did what they could to avoid it. It
wasn’t that much money, either.
If you look at what’s happened to the music industry,
though, it shows that smaller payments direct to consumer works. The big
studios lost, bands and music fans won. Of course it’s cheaper to produce music
than, say, a movie or TV series, but the model seems to work.
Personally, I’d like to see micropayments win out, but I
think the branded sponsorship and all that means to content control will
probably play a bigger role in content over the next few years. That is, unless
the new Bergman or Welles shows up on YouTube and changes the whole game.
Follow Rich Nadworny on Twitter: www.twitter.com/rnadworny