• by Erik Sass  @eriksass1, May 10, 2006

Fee-based media services of all kinds will increasingly give way to ad-supported models in the next few years, according to media execs on a panel discussion titled "Defining the Next Generation of Mobile Consumers," part of the Mobile Entertainment Symposium hosted by Banc of America and Interep at the Grand Hyatt in New York City.

Surprisingly, this transition will be driven by consumer sentiment, panelists agreed, as individuals come to find countless small fees more and more burdensome in aggregate.

"People are going through subscription burnout," said Andy Lipset, managing partner of Ronning Lipset Radio. "The telephone company's looking for X amount of dollars, the cable company's looking for more, you've got all these things coming after you. And eventually as everyone is reaching in their pocket for five dollars, it gets to the point where the consumer says, 'enough is enough.'" The solution, Lipset asserted, was short, targeted advertising: "If you provide...compelling content and ease of use... in exchange for a reasonable amount of advertising, people will come to the product."

Searching for a model for the future, Lipset pointed to Internet radio broadcasters, noting that "there are online radio stations that do have subscription models... but at the end of the day you're looking at a chunk of the audience that's one, maybe two percent who subscribe."

Nonetheless, fellow panelist Laurence Norjean, CEO of Norstar Media Entertainment, noted: "Service providers are stuck in this subscription mode: 'Let's see how much money we can pump out of this subscriber every month'...They're still just organizing their plans, and they're not thinking about an advertising model as important to their success... For example, [cable provider] Comcast, when you look at their revenue sources--dvertising is number nine on the list."

But Norjean also warned that advertising will have to change to succeed in reaching younger consumers including teens, which he labeled "Generation M": "They'll watch advertising as long as it's short-form, five or seven seconds, but if the content of the commercials is not relevant to their generation, they reject it... You have to ask them what kind of advertising they want to see."

Titus Levi, an emerging media research consultant, was quick to pick up where Norjean left off: "The key word there is 'ask!'" Levi predicted that digital technology will allow marketers to target consumers with advertising that's relevant to their habits: "I'm saying, 'send me what I can use." And Norjean concurred: "Anyone who's downloading, anyone who's streaming--is going to be able to feed back to us what they want to see... And literally, with real-time insertion, you can feed the right ads to the right person at the right time."