Commentary

Feels Like 1980: Media Companies Aim To Sell Paid Content Model Again

by Wayne Friedman , Staff Writer, January 4, 2010

The big test for media companies in 2010 will be how to get consumers to pay for content -- perhaps on a monthly basis. Does this sound familiar?

It should.

Media companies are publicly throwing down the gauntlet because revenue keeps dropping as consumers look to spend money elsewhere for their entertainment and information -- or, in their dreams, not at all.

While the recession has a great deal to do with consumers looking for that cheap or free ride, entertainment business executives are saying the buck stop here. Perhaps in 2010 free, advertising-supported content by itself won't be the future TV model of the future.

News Corp. has been thinking this way - along with Hulu.com (of which News Corp. is one-third owner) and Variety.com; even YouTube is considering dipping its toe in the pay-for-fee waters.

If this strategy fails, industry pundits might look to it as media companies' biggest blunder. Then again, no media company wants to miss the next big boat, wherever it sails.

Decades ago the one big craft that did sneak out of the harbor, and cruise the high seas, was cable. About 30 years ago the gamble was that people would pay a monthly or regular fee to get content, after years of getting TV programs for free.

Turns out, this wasn't a problem. The cable industry gave consumers more content and better connections - or at least the perception of those benefits.

Now comes the hard part: How to work the same trick again. How to persuade consumers that paying for content again, in a different way, means getting much more than they currently get for free (sans that broadband access fee).

Media companies will fail if the sales line is: "We owned the content; and now you pay for it." Just ask the music industry how this marketing premise has worked for them. Even with iTunes, there are still massive piracy issues.

All this requires a strong marketing campaign -- or at least a perception that a free "Desperate Housewives" episode you watched last night on your laptop (or through your laptop onto your big screen TV) is now worth 50 cents, or 99 cents, or $1.50 tomorrow.

Consumers are a keen lot - and as the U.S. economy still teeters, perhaps through 2011, they'll be throwing more stuff overboard, all to lighten their load.

You want consumers to pay again? More so than in 1980, media companies will have to come up with some really good reasons to keep their boats afloat.

5 comments about "Feels Like 1980: Media Companies Aim To Sell Paid Content Model Again".

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Robert Smith from VNA, January 4, 2010 at 11 a.m.
The promise of subscription-based cable television to consumers in 1980 was that it would be virtually free of advertising, unlike broadcast television with its "annoying commercials." That was a chief selling point. Will viewers fall for that again or not care because of being conditioned by a bombardment of advertising in daily life?
Reply

Howie Goldfarb from Blue Star Strategic Marketing, January 4, 2010 at 11:24 a.m.

This is something I have been a proponent of. Using the Movie's hourly rate and assuming Movie's get a premium as a baseline, Pay for Content could work. I think it would reduce channel inventory by shutting some weak performers down, but increase the quality of content across the remaining channels. And I think a reverse price incentive, where the more people watch a program the less it costs each individual to encourage more vs less viewing.

Peter Schankowitz from Joe Digital, Inc., January 4, 2010 at 1:01 p.m.

Interesting article that raises a Hail Mary proposition. Will we pay? Let's see. As Robert Smith points out, I am guessing we won't be sold on the "commercial free" lline. Consumers were sold that before and, even recently, that was one of the key sales points of Sirius and XM. We all know how long they went commericial free in earnest on their most popular, tent pole programs.

With the onslaught of a platform agnostic distribution scheme and an exponentially growing raft of content (good and bad) the dilemma for content companies dwarfs the one they faced thirty years ago. What can they sell?

Let's see. When it comes to content, my gut is that consumers want "better", "more personalized", on demand, contextual advertising if any, and content that invites interaction (I am sure I am missing sometthing). Problem for the Nets and the large players? All of this is being offered and has been in development by the upstart platforms and niche cable for a long time already. So what can they offer to make the consumer want to buy in? I have to think about it.

As Wayne Friedman notes, the analogy to the music business is VERY telling. It might foretell the fate of Murdoch and others' attempts to do the same, i.e., ask humans to do a 180 degree turn and pay for what they have grown entitled to free of charge.

Marion Guthrie from Gut3Marketing, January 4, 2010 at 1:55 p.m.

Did you see Joe Flint's article from the LATimes (http://www.latimes.com/business/la-fi-ct-predictions28-2009dec28,0,2942337.story?page=2)? He has a similar take on the status of Media in 2010, more exact but not as funny.

And in regards to Hulu, as a big fan, does anyone take into account that their 30 second breaks aren't enough time to get a sandwich or hit the head? As a result, I watch their commercials...perhaps there's something here?

Paula Lynn from Who Else Unlimited, January 4, 2010 at 2:15 p.m.

There is going to be a point where the masses will cry uncle and cannot afford to keep shtupping out the money. Continue to ad the $.50 here for a program, a buck there and the family (one person or many) says they do not have a few extra hundred dollars a month to watch movies and televison anywhere. In turn, viewership for those programs will also decrease dramatically. The masses counted upon to watch and pay go far beyond a couple of million people who the extra dollars are not a problem. Another point, advertisers STILL want and need an outlet. Maybe libraries will become more popular than ever as in read a book or only the strong will survive and the separation of classes will be more distinct. What do you think?