Commentary

Don't MAKE Them Pay; SHOW Them In

It is time to pay the tab that digital media executives have been muttering about for the past few months. Pretty much like clockwork, the current downturn in ad revenues online inspired another round of "make'em pay, this stuff ain't cheap to make, ya know" arguments from publishers. This time around I would hope media executives learn from past mistakes. The last time we heard this lament, publishers often branded their online customers "freeloaders" and tried clamping down subscription walls with the hard clunk of a vault door. The NPR approach seems to be au courant now. Support quality journalism, keep us afloat, get some good karma.

To their credit, some publishers recognize that users will not simply start paying for access to content that has been free all along, so they are trying to package added value. After watching Tiki Bar TV for several years, the series sent me an email the other day asking for me to become a paid member. TBTV is one of the few Web/podcast video series I find bearable to watch for more than an episode. This indie project was among the "Video Podcast" demos Apple used to promote its video iPod several years ago. The show poses as instructional segments about mixed drinks, but it is driven by three characters in a makeshift bar and their surreal misadventures with strange guests. Outtakes, blown lines and a lot of fourth-wall-busting punctuate the five-minute segments. The unique and fitting charm of the show is that it all feels mildly drunk. But TBTV is apparently sober enough to want some cash now.

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The Tiki Bar crew is smart enough not to drop a sub wall around the show. But it is piling on the added value. Paid members will get the show in HD with 5.1 Dolby Digital, outtakes and deleted footage, and even entrée to personal happy-hour meetups when the cast take road trips to major cities.

For loyal but not passionate viewers like me, being part of this "club" is not worth the $49 annual bar tab, but it seems to me the drunken crew has their hearts in the right place. They have located a core of viewers with a passionate attachment to the show and offer them more for a fee. An allied but more promising model is cropping up as virtual good ecosystems in gaming communities both online and on mobile. IPhone/iPod Touch users may notice new apps that are described as "points" they can buy to enhance the play of several massively multiplayer games like iMob and Kingdom Live. Players of these games purchase the points to upgrade characters, buy goods and guns or open access to new gaming areas. It is a more targeted version of what Tiki Bar TV is trying to do with me: locate the users' passion with free material and then sell into it. Other mobile media companies, like social gaming provider Cellufun, are about to roll out virtual goods systems that let community members upgrade their avatars or send gifts to other members.

Apple itself is about to legitimize this model by integrating it more fully with the App Store. Part of the summer iPhone 3.0 operating system refresh is an incremental payment system within applications. This model lets users buy upgrades, additional content, virtual items, etc. from inside a single app and via the usual App Store billing system. This should open up a ton of paid model experimentation.

The virtual goods model fascinates me because it reverses the polarity of the old "make 'em pay" argument into "let 'em pay." The Internet economy has already told us what digital content people will pay for: experiences and entertainment they are passionate about. Fantasy league sports and "World of Warcraft" have no trouble drumming up paying customers, because people look past the ticket price to the experience it gets them. They are eager to pay up. You aren't pushing a subscription wall at people so much as pulling them over a low-lying "fee bump" on their way to a deeper engagement with what they already love. Interestingly as well, in most of these cases the virtual goods are not in and of themselves providing the value. The real value is being provided by other users, which the virtual good allows the user to access.

I don't know whether and how these models can move to non-gaming mobile content, but it seems to me the early success of the virtual goods models suggests some paths to follow. First, people who won't pay for your content may very well pay for access to other people and their content. I wonder if the virtual goods model in games has a corresponding one in mobile community and even media. Will people pay to enhance their standing/identity? Will they pay the publisher not for content but for the service of facilitating relationships?

For marketers, a virtual goods economy of incremental upgrades is a golden opportunity at long last for the true sponsorship model to flourish. Again, the game world offers the precedent. A number of brands have understood that the way to get into the gaming platform is not necessarily via the usual routes, in-game advertising or advergaming. Instead, they are sponsoring free extra levels, special equipment, and power-ups that players can use within the games they already love. These marketers are learning that you don't try to interrupt people in the pursuit of what they love to do; instead, you facilitate and underwrite it.

For mobile marketers, think of the possibilities. Sponsors can underwrite the cost of incremental upgrades in mobile communities, mobile games, perhaps even news and lifestyle content apps? Mobile content doesn't even need to be a pay system, per se, so much as a system where content has an ascribed or tangible value. The user gets something tangible that can be identified specifically with a brand's sponsorship. The brand gets not only the halo effect, but likely also an email or an opportunity to offer more through an SMS opt-in. In other words, the consumer mobile world could get what the b2b trade publishing world has thrived upon for years: genuine lead generation.

3 comments about "Don't MAKE Them Pay; SHOW Them In".
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  1. Patrick Boegel from Media Logic, May 12, 2009 at 2:35 p.m.

    Would be fascinating to see a progression towards a mashup of the sponsoring of bonus/add on features with produced content such as TikiBar.

    The approach WSJ is taking with their iPhone app is really interesting, but would make more sense eventually for them and Oracle is serving sponsorships up that are more relevant to the end user. Clearly this is early phase for WSJ.

    Major League Baseball's "at bat" app is really intriguing but $9.99 to get what amounts to rehashed data from their TV network and website? Seems if I was a sponsor of MLB I might be willing to say hey let me purchase a block of 500,000 app downloads to sponsor for the summer, the sponsor and MLB can decide what the cost really is $9.99 per unit or whatever, but they get an engaged consumer from April thru October and MLB gets SOV on iPhone decks.

    Content providers and marketers have to get more creative about how they deliver content as smartphones grow.

  2. Steve Smith from Mediapost, May 12, 2009 at 3:03 p.m.

    Patrick,

    Exactly. I think what is valuable about the mobile platform in this model is its own fee-based tradition. Even if ad-supported media is challenging the pay model on and off decks, it has that precedent, which I think gives all mobile content a certain tangible value that Web content may not have enjoyed. Web pay models try to slam the sub door shut on a barn that has been wide open from the start. The ad model opens the door on a market that until recently pretty much made you pay for anything you downloaded. That gives the sponsor here the ability to truly sponsor something of perceived value. There should be a lot of room for experimentation.

  3. Christopher Payne-taylor from sAY-So, May 12, 2009 at 3:37 p.m.

    While gaming may support sponsorship as a means of underwriting, other areas won't. Sponsoring "free extra levels, special equipment, and power-ups that players can use within the games they already love" is predicated not on a base of consumers, but addicts. And there IS a difference.

    Increasingly, consumer purchases are impulse buys, i.e. things you can so live without, you'd never even think about buying them unless they were screaming at you from the grocery store cash register rack. But as we all know, World of Warcraft is not like that, particularly for those who imbibe to excess (as adverse to social imbibers, i.e casual gamers). Consequently, these folks will pony up for just about anything that comes down the pike. It's like offering new rainbow-colored rocks and a better class of bunsen burner to a crack addict.

    The reality is that most of us are like you, Steve. We may watch Tiki Bar TV because it's light, fun and distracting, but we're not going to get so hooked that we plunk down extra money to get the HD version with 5.1 Dolby Digital, outtakes, deleted footage, and entry into happy-hour meetups. Way TMI (Too Much Involvement).

    Thus, the challenge for new media marketeers is to monetize the casual zeitgeist by offering quick and easy tastes of a brand experience to the casual user for a nominal sum. This is the kind of thing that recreates the grocery-store-cash-register-rack-impulse-buy-paradigm.

    For instance, offer a Valentine's Day Victoria's Secret mobile app that features VS models and the ability to pose them for an extra $.99 with each purchase. Offer additional content downloads for half that price and the men who came once to buy for their wives or girlfriends will keep coming back. But it won't be because they are paying to "enhance their standing/identity" or "facilitate relationships." They'll be paying for quick, easy fun with inherent brand reinforcement and minimal risk of contracting TMI.

    Interestingly enough, the latest wave of self-help books and seminars on the market has been centered around the idea of "de-cluttering." The theme that runs through all these offerings is that the way to live a more contented life is to toss excess baggage, not accumulate more.

    Who knows? Maybe a greater percentage of homebound WOW players than ever before are starting to grow up and move out of their parents' basements. Or maybe an increasing number of us media-lite imbibers are just starting to get wary enough of signing up for the next best thing that we're more concerned about getting hooked than getting off.

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