Dreaming of new business models for content – may the best one win!

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Last night I had a fascinating dream. In some off-street parlour people were being offered a fantastic immersive experience. They could step into a world that would be tailored to them in every way, catering to their interests and tastes, creating what for them would be the most entertaining experience imaginable. And it was entirely free! However the producers inserted advertisements into the experience, which you could choose to skip for a payment. What actually happened was that people were so entranced by the experience that they continually skipped the ads, distraught by the idea of being taken away from their entertainment. As such you regularly had people racking up bills of over a million dollars. I, as many others, was sure I had the fortitude and self-discipline to be able to handle the ads and time away from my entertainment, so I could experience this wonderful entertainment for free. Yet I was aware many who thought they could do it ended up paying fortunes to skip the ads. I entered the immersive experience, and found that I could direct my character how I wanted, interacting in an amazing world. I recall thinking that the personalization of the entertainment left something to be desired, and that it needed more development, but it was certainly a fabulous experience. By the time the ads arrived the dream had taken another turn into the fantastic, so I wasn’t able to test my resolve.

When I woke I thought immediately of the extraordinary book Infinite Jest by David Foster Wallace. In the book, a film titled Infinite Jest is so entrancing that anyone who sees it watches it in continual loop until they die in ecstasy. Some saw off their fingers in order to see it again. It is difficult for content creators today to make content as compelling as Infinite Jest. But perhaps they should be aspiring to do so.

My dream sparked off many thoughts about content business models, including the evident one of replicating the model in the dream – getting people to pay to skip ads. If you extend this far enough, you get to a model where you can price advertising by how much people are prepared to pay to skip it. Consumers should be able choose how they pay for content – by payment or attention. Ultimately we should be able to move to dynamic content markets, where there is a different cost depending on whose attention you are capturing, and the context in which it is embedded. Perhaps people will pay a lot of money not to have an ad inserted in the middle of a chase scene in a movie, but they will even be prepared to pay to see the ads during the break in the Super Bowl.

Over the last few days there has been substantial discussion on newspaper and print business models. David Lazarus of the San Francisco Chronicle made a staggering suggestion that the newspaper industry should collectively agree to charge for all online content, and that anti-trust legislation should provide an exemption to allow this. Dan Gillmor, among others, responded in detail. Immediately following this, Tim O’Reilly reported that there are rumors the Chronicle is in deep financial trouble. InfoWorld is said to be closing its print edition. Dave Winer and Doc Searls have some great ideas on what newspapers should be doing to build their online presence and content models.

I find some of this discussion amazing. People create content and try to make money from it. There are now a multiplicity of old and new ways to make money from content, and consumers (or participants) of content will consume the content they like if the price is right. If content creators can charge for their content, they probably will. If they can’t, there is an advertising and referrals model (among others). We are in the middle of a phase of great experimentation of business models, and we don’t know yet how different kinds of content will best be able to make money. The bottom line is that the best business model (associated with the best content) will win. The only possible other argument is one of public good, that is that journalists need to be supported because they create something of societal value. There is a case to be made (as David Lazarus was implicitly doing), but I refuse to believe that quality content cannot be supported by an industry on which people spent $1,350 billion dollars last year, and where the pace of growth in spending doubles the rest of the economy. There’s fantastic money to be made out there, so I’m not interested in listening to whingers, only to those who are seeking to give people what they want. Because if you do, they will pay.

1 reply
  1. Dean Collins
    Dean Collins says:

    Hi Ross,
    There has been an interesting court case here in the USA this week that i blogged about at http://www.collins.net.pr/blog where Cablevision have lost the right to “network centralise” their time-shifting set top boxes on behalf of their customers.
    http://deancollinsblog.blogspot.com/2007/03/cablevision-loses-network-dvr-case.html
    It’s obvious content providers are scared of control but without adopting new revenue methods they are fighting a losing battle, better to steer with ‘the current’ to determine your future than struggle against it and waste energy.
    When you consider that the average USA 30 second spot costs $150,000 (on the big 4 networks) and reaches 10m people (of course prime time costs are closer to $400,000 with superbowl events costing $2.6m)
    So by my back of the envelope maths it would cost the average viewer 1.5c to skip each 30 second commercial (sounds like a bargain to me but thats why i have a DVR) BTW I’m totally guessing here but that would equal 30c per hour (4×30 sec each break with 5 breaks per hour) or $1 a day or about what people pay for cable in the USA.
    Hmmm I think you might be on to something, just purely through minimising the volume of ad spots available you would reduce supply and therefor through the theory of supply and demand drive up the amount product vendors would pay per slot….we could actually turn watching tv into a money spinner….sponsored by J&J or Procter & Gamble….of course then we would have someone from India undercut our hourly rate and all those TV watching jobs will be exported to India 🙂
    Cheers,
    Dean

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