I wrote a post on my personal weblog several months ago called The Future of Media where I invited anyone to take my content (actually my RSS feed) and do anything they want with it. I suggested that there were four things that content owners needed to do to maximize the value of their content. These four things are:
1 – Microchunk it – Reduce the content to its simplest form.
2 – Free it – Put it out there without walls around it or strings on it.
3 – Syndicate it – Let anyone take it and run with it.
4 – Monetize it – Put the monetization and tracking systems into the microchunk.
I still believe that this is the best formula for maximizing the value of content online.
But since writing that post, I have been contacted by many different content owners and participants in the media and entertainment business and through the ensuing conversations, I have learned that there are a myriad of reasons that content owners aren’t going to free their content as easily as I will free mine.
As I have engaged in these conversations and listened to the business reasons, legal reasons, fears and concerns of content owners, I have come to the conclusion that my nirvana scenario isn’t going to happen anytime soon.
So I have spent some time mulling over these conversations, mixing my views with the realities of the marketplace and I have come to the following conclusions:
1 – Content owners should make all of their content available online as soon as possible and they should make it available in both free ad supported media and paid media with no advertising. The surveys are being done as we speak and its clear that many more people want free ad supported content, but there is certainly a significant market for paid downloads that content owners should support.
2 – Media type doesn’t really matter. The same business models will work for audio, video, text, games, etc. There really isn’t any distinction between various forms of media when it comes to online business models. Bits are bits. This means that music MP3s should be made available as free ad supported content as well as paid downloads. That’s already happening with podcasting, but it should happen with all music content. If Pepsi will pay a $20 cpm for a pre-roll ad in the latest Beyonce track, I should be able to get that track for free as long as I listen to the ad before hearing the song.
3 – Free ad supported content should not be DRM’d. And it should not be possible to fast forward through the ads. Just like many DVDs come with previews that cannot be fast forwarded, so should ad supported content. If you don’t want the ads, pay for the content. The ads should be delivered in real time and targeted and should be measurable. This model will support pass along (ie file sharing) as content owners will make more money as more ad impressions get served. These free ad suppored files should support a payment mechanism that strips the content of ads if you want to “own the files”.
4 – Paid content models are going to require some form of DRM (at least in the near term) to enforce the payment mechanism for many content owners, but the current state of DRM technology isn’t going to cut it. The existing DRM technologies do not provide for enough portability (they really need to support every playing device that a consumer would ever want to use and they aren’t even close). And many content owners will live without DRM as companies like eMusic are demonstrating in the music market. Over time, many content owners will move away from DRM as they make more money with free ad supported content and the value of paid content declines. Ultimately DRM’d content will be limited to very high value niche media.
5 – The market must move to variable pricing. David Pogue wrote a critque of Google Video in today’s New York TImes where one of his complaints was the lack of a consistent price point (as compared to the $0.99 for every song in Apple’s iTunes store). But in this regard, Google has got it exactly right. Online content needs to be a marketplace just like everything else. Reruns of I Love Lucy are not worth the same amount of money as the latest Extras episode. The same is true in music. Beyonce’s “Check On It” is worth a lot more right now than The Foundations Build Me A Buttercup. But they are priced exactly the same in iTunes tonite. It doesn’t make any sense and it won’t last as a business model.
6 – Content must be made available in RSS so that consumers can subscribe to it. If I do a Google video search and find Charlie Rose and realize that he’s really great, I should be able to subscribe to his show right then and there. RSS needs to support both the paid and ad supported business models described above. Not all content is going to get consumed in a streaming mode and RSS is vastly superior as a delivery mechanism than manual downloads.
We are witnessing a seismic shift in the distribution of rich media content right now. In the past five years, we have gone from no legitimate marketplace for rich media content to a world where almost all music is available online and where video is moving online very quickly. For the most part, it’s a paid download market. But that isn’t going to last in my opinion. Ad supported business models will take off in the not too distant future and will co-exist with paid downloads. Consumers are going to get the choice, not only of what media they want to consume, when they want to consume it, and where, but also how they are going to pay for it and what they can do with it.
It’s an exciting time with a lot of change afoot. And that should be a recipe for some good venture opportunities. If you see this world evolving similarly to us and are building a company to take advantage of this opportunity, we’d like to hear from you.