Media Cos: Put Your Egos Aside, Think Like Users
The fracas over how to extract payments (and profits) from the torrent of content streaming to connected consumers is taking some intriguing twists and turns.
The players involved are the mega media, but the mega egos are getting in their own way. For business, it's about remaining the gatekeepers of owned or licensed content. For consumers, their only concern is relevance.
And that's where the major rift lies in solving what I have long called the great content conundrum-finding the sweet spot where consumers will pay for unlimited access to content that is relevant to their work, personal life and interests.
Most of the problems and approaches generating headlines exhibit little sensitivity to this fundamental tenet. Most of the plans costing millions to develop, in some cases, treat consumption like a mass commodity measured in volume or weight. This is contrary to the natural law of consumption: an individual's willingness to pay a premium -- or at all.
A column I penned last fall pointed to the immediate and overwhelming popularity of apps as evidence of the power of personal relevance. Apps are the ultimate shortcut through clutter to precisely what a consumer wants and will pay for. In the six months since then, social networking has emerged as another filter for personal relevance. Clearly, Facebook founding CEO Mark Zuckerberg gets this, rapidly integrating video and search, as well as product and service information triggered by consumer call-to-action from which revenues inevitably will flow.
That is a very different from what continues to be television approach to appeasing and reaching critical mass, and defying the new interactive rules of play.
Time Warner Cable's scuffle with mega content providers (not unlike its former corporate parent) has everything to do with which company as the toll-taker. Their filter is corporate interest, not consumer interest. It is not unlike the rift between Apple and content providers, which are miffed over CEO Steve Jobs taking 30% of revenue generated by what promises to be the infinite growth curve of his powerful iPads, iPods, iTunes and iBook stores.
By comparison, even as the country's second-biggest cable operator, Time Warner Cable, has a finite user base. Little wonder that Time Warner Cable wants to beam broadcast and cable TV channels to iPads and other connected devices. TWC is taking its cue from Jobs and his walled garden, which is looking more like an electronic fence.
Content owners and distributors, including Scripps Networks Interactive, Viacom and Discovery, claim those streaming video rights were never part of their cable licensing agreement. They must be negotiated separately - and for more money. That will be a protracted TV Everywhere battle; it will rage while consumers look on in disgust, grumbling under their breath, "This is about us; not you!"
But these physical gatekeepers are hardly alone.
The metered model template builders recently weighed in big time. Gordon Crovitz (former head of WSJ.com) and Steve Brill (the entrepreneurial newsman who started American Lawyer) has sold their 2-year-old Journalism Online to R.R. Donnelley for what paidContent estimates is $35 million minimum. Under the two men's continued management, Donnelley plans to offer the Press + tools toolbox to its 2,000 smaller publishers, even though Journalism Online's several dozen smaller clients haven't been able to adopt the pay-wall-to-micropayment options to build much value during the lingering recession.
Chances are Journalism Online would have experienced more robust business had they just used more real-life connected consumer need to pull the pay trigger.
For all the nay saying over The New York Times' pay-wall plan, it could succeed for reasons that, sadly, have little to do with mainstream media. Since the NYT already is one of the world's most-cited sources of original news reporting behind the Associated Press, the powers that be figured that no good would come from insisting on paid options from consumers finding NYT content from search and other aggregators. Without going into detail, the NYT will capitalize on loyal readers, some of whom read it all. After everyone accesses the first 20 articles each month , however, the meter starts running. Just think how much more money the newspaper would likely make if it was plucking the heartstrings of readers' specific affinities.
In a strange way, Netflix comes closest to that approach. Despite the lumps it us taking for scandalously entering original program production (to compete head-on with Time Warner's HBO) and embedding itself in every social and operating platform available to allow individual consumers to select the video they want -- one at a time. The Netflix subscriber, like the new NYT paid subscriber, will pay a reasonable monthly fee to consume in bulk for all they can read and watch. That is their voracious MO.
Most consumers won't necessarily want to pay-per-view, but they will want to pay for the personal relevance that connectivity can provide. Until content producers and gatekeepers can view the digital marketplace through the prism of consumers delirious with the palm-sized power to instantly get what they want, they will continue to miss vast opportunities for value creation.