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Wednesday, October 27, 2010

Media Companies are WRONG

I frequently hear discussion about the media creation/consumption business model.
I, even more frequently. see news articles on the rise of piracy, etc and how that is costing the media companies billions of dollars a year.

My response to all of this is that the media companies are wrong in nearly every important way.

First: the concept of a "channel" is obsolete.
I don't care about channels. I don't care about the network brand. I care about the specific shows. I may not be the average media consumer but, in this, I think I am well matched with the average consumer. Consumers want the content; they do not care about the network it is on.
One of the reasons that DVD sales of TV shows are so popular is that people want to purchase THAT show. They do not care when/where it airs. They want the show.

Second: the idea of a programming grid is obsolete.
I don't care when a show airs anymore. I have not watched live TV in YEARS. I don;t know what channel (see point one) or what time any of my favorite shows air. I have a TiVo. I LOVE my TiVo because it makes TV watchable again. I don't LOVE my TiVo because I can skip commercials (skipping commercials, ESPECIALLY terrible ones is an added bonus - but NOT the primary reason for having a TiVo). My TiVo (and other DVRs) free us, the consumer, from the oppression of the programming grid. That is why they (and VCRs before them) are so popular. People just do not want to re-adjust their schedule to align with what's airing on TV. They want TV to fill the gaps in.

Third: bundled packages are obsolete.
One of the reasons the iTunes store is so successful is that people can buy ONE song on an album. The day of an artist producing an album with 3 good songs and ten or twelve garbage songs is over. People only purchase the GOOD songs now.
One of the reasons that DVD sales of TV shows are so popular is that people want to purchase THAT show.
The comment above about DVD sales also applies here for the same reason.

This means that media companies that believe they need to provide entertainment to us using a programming grid where programs are delivered serially on channels where we can only purchase channels in bundles are not simply obsolete: they are obsolete to the third power. These companies are the most wrong because each fundamental pillar of their business is based on forcing their customers to use a delivery method that they do not want to be locked into.

Media piracy is NOT a business killer; it's a byproduct of doing the business badly.
Content consumers are not asking for much. They simply want the entertainment they want WHEN they want it  at a reasonable price. Again, I come back to the success of the iTunes store as an example of providing content at reasonable prices to consumers when they want it and with a selection that provides them most of what they want.
Piracy became rampant when technologies were created by people who wanted content that they were unable to acquire through legitimate means. Piracy grew rampant among the average person when those technologies became easy to acquire and use.
Piracy has declined in its rise and in its general use since the advent of technologies that make it easier and reasonably priced to acquire the desired content (again, back to the iTunes store as an example).

The old model of media business is also the new model. They are not different. They are not in conflict. They are not in opposition.
First: People are used to free TV programming that is paid for by advertisements.
Second: Media companies are used to having their content paid for by advertisers who advertise during the commercial breaks.
Third: Advertisers are used to paying to have their products shown to audiences that meet their general demographics.


The specific execution MUST change, but not the model itself.

Working backwards:
Advertisers LOVE having better data on their targets.
Advertisers LOVE greater granularity in their target audiences. It generates higher value per ad placed.
The proof in these statements lies in the success of Facebook and Google. Both of these companies tailor their advertising at such a granular level that they target individuals instead of groups.
Advertisers LOVE data on who is seeing their ads and when.
With the model I will outline below you will see how the new technologies facilitate ALL of the advertisers' needs.
Media companies are used to two revenue models: advertising and direct sale of the content.
Currently media companies sell access to HUGE blocks of consumers with mostly generalized demographics.
With the model I will outline below you will see how the new technologies facilitate ALL of the media companies' needs.
I am used to ads. You are used to ads. We both hate the ads, but we are used to them. We may skip them from time to time, but we're used to them. I am often multitasking while watching TV (Tetris) so I let the ads play unless they annoy me; then I bother to pause my game and fast forward through ALL the ads in that block. One annoying ad punishes ALL of the ads in the block with it.
With the model I will outline below you will see how the new technologies facilitate ALL of the MY needs for a wide selection of inexpensive content on MY schedule.

The model is VERY simple.

Abolish ALL channels. Abolish the programming grid.
Replace all channel-based, serialized technology with a single interface that is easy to use (I suggest the interface developed by TiVo) where users can search for content by name, actors in the content, directors, etc.
Allow users to "subscribe" to new episodes of their favorite content so that it appears in their inbox/queue/"Now Playing" list automatically when it is available.
Have THREE methods of paying for the programming you are watching:
    1. Ads that interrupt the program (like what we have now).
    2. Direct payment (like the iTunes store, Amazon store, NetFlix, etc) per view.
    3. Ads that frame the program (e.g. the program is shrunk and silent ads are displayed AROUND the program while you watch it.

Make sure that ALL ads are clickable (e.g. you can pause the program and click on the ad to learn more and then return to exactly where you left off in your program).

Users would pay a base subscription rate for their raw bandwidth (like the internet and cable bills now).
Users would have access to ALL content EVER produced at ALL times.
Advertisements would be embedded by user/family NOT by programming type.
Payments for the advertising would go to the media producer and media delivery company (I suggest 85% / 15% split). In the event that the content is in the public domain then the payments would differ by type as follows:
    1. fewer ads to interrupt the program.
    2. smaller payment
    3. smaller reduction in the size of the screen used for the content / smaller volume of ad space around the programming.

Furthermore, it would be possible for users to cache programming "credits." If I watched a "block" of programming with both the embedded ads AND framed ads then I would, essentially, have a credit with the media delivery company. I could apply this credit to have an uninterrupted, non-framed "block" of programming in the future. (Some additional work on this is required to determine which content provider gets the payment for the "blocks" consumed).

What are the major benefits for media companies?
    Media production companies continue to gain revenue from EVERYTHING they have ever produced every time it is watched. This is true until the copyright on it expires.
    ANY media production company can get their content in the available content: not just large production houses.
    Media delivery companies cease to have to build programming guides that make no one happy.
    Media delivery companies get their base rate PLUS some cash for EVERY program watched.
    Media companies will have EXACT "ratings" numbers on their content instead of estimated numbers based on sample audiences.
    Media production and delivery companies could state that "credits" are ONLY good on future media consumption and only valid within a certain time frame from when they are earned. This means that unused "credits" would turn into permanent additional revenue for them.

What are the major benefits for advertisers?
    EVERY ad is targeted specifically for the audience.
    Advertisers will be able to know exactly which demographics are viewing their ads.
    Advertisers will have EXACT "ratings" numbers on their content instead of estimated numbers based on sample audiences.
    EVERY ad is clickable and leads to more information on the product. This makes the customers of the advertising agencies VERY happy.

What are the major benefits for me?
    ANY content I want whenever I want it.
    Cheap, reliable content access.

The media companies are wrong in their stubbornness. The specific model they are desperately clinging to is obsolete and leads to us, the consumers, filling our needs elsewhere.
The new model works the same way ONLY BETTER. Better for us, better for them. Better for everyone.

Why is it that this seems so simple to me, yet the major media companies can't see it?

Note: yes, I am fully aware that YouTube meets many of the criteria for functionality of my model. I had this idea many years ago, when YouTube was online, but it holds true still. Sadly, major media companies are fighting the idea of their content ending up there rather than embracing it and monetizing it. If YouTube were attached to a TiVo front end AND it had ALL content ever produced it would be the perfect model for the technology levels we have available right now.

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