Paid content – everything old is new again!
Apple can do it.
Rupert wants to do it.
The world-wide music and movie industries are desperately searching for a model that will work for everyone.
Even the SMH’s Richard Glover seems to think it’s a good idea.
User pays content is back in the news. In the crazy days when digital advertising was growing at 50%, 60%, 100% per annum inventory was king. Get the content up there – get the eye-balls viewing it and damn the torpedos.
In our post-GFC world some of the shine seems to have come off this approach. Sure, people are still making money from advertising and revenues are still growing. But the argument for “pay to play” content is that we pay for everything else we consume – someone has to be paid to create it after all – and if the producers can’t make the right margin, the quality will fall.
The vanguard of the fight for user pays content are the music and movie industries. At least they have the benefit of having had a clear user pays model for the content they produce from day one.
Money for nothing?
CDs, DVDs and trips to the multiplex were never free.
The newspaper and magazine industries however, bought into ad supported model in a big way. The mantra between 1997 and 2001 seemed to be “build it and they will come” – and while they are here we can at least throw some ads at them.
The issue is that many of the costs of producing quality content (music, journalism, TV, art – whatever) are not subject the one of the central tenets of the web-based economy: that it reduces costs of creation and distribution, and therefore, the cost of the content to the consumer can be reduced to near zero – and advertising will provide the revenue.
But advertising revenue isn’t growing at the stunning rates it has been in previous years. For the 2008 calendar year US internet advertising grew only 10.6% (to US$23.4bn) according the the US IAB. Australia fared marginally better in FY08/09, growing 18.5% to AU$1.8bn, according to the local chapter of the IAB.
Compare this to the growth of 61.5% for calendar 2006 and 34.5% for calendar 2007.
So what does this all add up to?
In my view the time is ripe for the digital media industry to move to the next level. Advertising is not going away – but it is not the “golden hammer” that will allow content to be free. New commercial models are needed – models in which some hard decisions are made about content quality, access and pricing.
I believe that consumers will pay for content – as long three key conditions are met:
1. Simple, low cost subscription pricing models
2. High quality, differentiated content – personalized, localized and in real time
3. Some means (technological, legal or moral) of discouraging consumers from accessing this content without paying something for it.
And when these are in place I believe we see some enormous leaps forward in the ways in which content is created and consumed in the digital world.
