Making Content Pay

 

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"We're not going from a world of Business Model A to one of Business Model B, we're going from Business Model A to Business Models A to Z." Clay Shirky

Every now and then you read a post that really stays with you. In early January last year, Ian Rogers (ex Head of Music at Yahoo and now CEO at Topspin media) gave an account of his talk to the CAA music industry conference in Aspen. It was one of those 'wake-up-and-smell-the-coffee' kind of presentations, but it contained loads of nuggets that I've referred to again and again ever since. 

Like Ian, my view of the future of media is an optimistic one. Like him, I think that what's happening in media (and music) is full of change but is also full of opportunity. Ian talks a lot about ubiquity and scarcity, and refers to a deck that Umair Haque put up on Bubblegeneration all the way back in 2005 in which he writes about how mass media captures value from scarcity - particularly scarcity of distribution (costs of broadcasting, transportation, inventory) and retail (limited shelf/screen space, spectrum scarcity) - and how if old media was about 'blockbusters', then new media is about 'snowballs'.

In the Blockbuster world, says Ian (and Umair), there’s a point where investing more in quality delivers diminishing returns and marketing delivers the audience:

"If you are making Pirates of the Carribean 12, do you spend $2M extra dollars on that actress or on getting Johnny Depp’s face on the cups at Burger King? Burger King, of course, you’re not trying to make the best movie in the world, you’re just trying to get people to go to theatre A instead of theatre B this week"

In the Snowball world however the opposite is the case - there's a point at which you get diminishing returns from spending more on marketing, especially when attention is the scarcity, but quality is "hyper-efficient". If something is good enough, people will see it.

The relevance of all this to making money from content is right there in that balance between ubiquity and scarcity. Quality and relevance have never been more important - as Ian says: "Our jobs are still the same...making stuff people love". Making content ubiqitous - making it easy to find, scalable, portable - enables it to be spreadable (as opposed to 'viral') and act as cultural material for people's own conversations. The sweet spot is where content meets context.

Ubiquity gives you the platform from which you can create a new kind scarcity, and creating scarcity is important because when something is scarce it has value. Ian talks about the 'digital packaging' of music. Scott Karp talks about how media owners need to be experimenting with new ways of packaging content:

"An individual content item on the web, without a package, has marginal value approaching zero - and attempting to charge for an individual item of content is unlikely to change that. What you CAN charge for is the package."

This is not about applying print subscription models to digital content. It's likely not putting up pay-walls around existing content either (at least not without adding other value of some kind). Its a new kind of scarcity. The kind that adds value, rather than subtracting it. The kind that is more enabling than it is restricting. What I'm talking about is turning content into a service. About how you apply producer expertise in new ways. About making content useful as well as entertaining. If it is of sufficient value, people will pay for it.

As Gareth has pointed out before, culture is what we all compete with for people's time. Which is partly why, I suspect, a lot of focus is going on trying to crack THE model, or THE idea that will change the world. But to quote Clay Shirky "Culture is a huge thing to be worried about...there's only one thing that you can posit as almost universal: Start small and experiment from there...you can affect culture in a small way". What Mark calls 'lighting lots of fires'. One thing's for sure though - it ain't nothing without the platform.

Comments

[Charles]

I would caution that as members of the digital aristocracy i.e. Access to a number of computers, smart phones, at a pinch internet cafes and thus free services such as search, blogging, twitter and so forth its easy to lose sight of the atoms that aren't free. They are mostly food based and those on the other side of the digital divide would find the emergence of a free economy somewhat bitter given their circumstances.

Much like the aristocrats of any era. The more we have. The more we have.

[David Vogel]

Interesting analysis! I've come up with an addition to this approach, which is to not only make news more relevant and contextual, but actionable. I'm hoping to present this idea at TEDx Ansterdam.

http://www.youtube.com/watch?v=hpvQQxaCq7Q

[Joakim Vars Nilsen]

Great post Neil. Action do speak louder than words. Instead of the big idea, I would go for the big ideal...

[Doc Montresor]

Three questions:

1. iTunes is paid content. No package. Works. Why?
2. What if the "package" is also ditigally reproducable and copied by others?
3. Who is paying you? (I mean you personnally. Advertising?)

Thanks for the answers.

[neilperkin]

Thanks for the comments all.

Doc M - You're right in that i-tunes separates context from content but I'd still say that (like Ian also says) the winners are more generally those who find the effective meeting place of the two. Although the internet is the great 'copy machine' (to paraphrase Kevin Kelly), I'd say that it's pretty difficult to replicate experience in the same way and that's kind of what i'm getting at - using content to create services and experience. Advertising is one income stream of the company that pays me, but it is not the largest (by some measure)

[glen]

I found this through another blog.

To offer a reply to Doc M, Apple isn't just selling music, but legal music. It is a legal service when almost all of its content is available elsewhere for no upfront cost. The service is in the mode of distribution and not so much the music itself.