Whether those folks can actually make money from those plans, of course, is a function of the marketplace: how good their content is, how rare and/or substitutable it is, how perishable it is, how broad its appeal is, etc., but you at least have to start with a plan.
Lately, it seems to me that no one has a plan -- a genuine long-term vision -- for how they want to make money from their video content. Instead, their tactics seem to be simply poking about, changing direction, and going knee-jerk until something sticks. In other words, they haven't got a clue.
This surprises me, because when you think about it, the business models for media content -- especially video content -- should be pretty simple. In fact, one of the best lines I ever heard to describe the model's simplicity was said by industry consultant and pundit Shelly Palmer. Speaking at an OMMA Global conference some years ago, Palmer quipped, "There are only three models for making money with content: I pay, you pay, someone else pays."
I thought that was brilliant, and it has stuck with me in recent years as I've watched some of the biggest media conglomerates struggle over how to monetize some of the best content ever made. But lately, I've begun to wonder whether there isn't actually a fourth model: We all pay. Let me explain.
The reality is that there never has been a singular model for monetizing video content, and almost every successful video franchise has actually exploited multiple streams. Think about it. We all call the "free," over-the-air broadcast TV model a singular, ad-supported one. Still, the reality is that with very few exceptions, the broadcasters or suppliers that have created broadcast television have always relied, in part, on other models too, including, "pay" ones.
Take the traditional broadcast networks. Yes, they derived the bulk of their revenue from selling national advertising time to big advertisers, but they made money in other ways, too. Networks owned local stations that sold advertising to local advertisers, and in some cases, packaged their advertising inventory to create local events and merchandise that tapped nontraditional advertising budgets. But they also made money in other ways, especially through licensing their content and/or signals via: international markets, off-network domestic syndication, and more recently, on-demand, and even iTunes.
And while it has been rare, broadcast networks also got money from consumers paying directly for their content, including home video/DVD repackages, and by selling their signals to third parties (cable, satellite and telco operators) that charged consumers subscription fees.
OK, so retransmission deals have been rare, but if Fox's recent ones are any indication, I would expect see more. And I would also expect to see some of those models begin to migrate online, onto mobile platforms, and to just about any other platform where end users view content.
Other broadcasters actually charge consumers even more directly. Public television stations are primarily supported by viewer donations, as well as corporate underwriters. They also have licensing deals, and even more lucratively, merchandising deals. And they even have yet another revenue stream that comes directly from consumers, though most of us don't think about it that way: taxpayer dollars.
I use broadcast TV as an example, because it illustrates how diversified its business model actually is for a form of video distribution that we think of as being fairly one-dimensional. And I think it is a good one for people developing online video to think about, too, because when you have content that people want, there are many ways to make money from it. It's just not an either/or proposition.
The first time I began thinking this way -- and the first time I started thinking about the "we all pay" model -- was just before the dot-com crash of 2001. I was lucky enough to be invited into a project that former Advertising Research Foundation executive Gabe Samuels organized to help big advertisers, agencies, media content and technology companies get a handle on how things might change as digital platforms began to propagate.
Gabe called the project D-Map, which stood for "digital mapping," and he teamed with Russ Neuman, who was then a professor at the University of Michigan, as well as the MIT Media Lab. He also got some big companies to help sponsor it -- Microsoft, CBS, H-P, and even a couple of agencies (Grey/Mediacom and Universal McCann).
The main feature of the project was to develop an "operating system" that could be used by the sponsors to model and plan for changes in the media content ecosystem affecting how they do business and make money. These changes included technological innovation, policy and regulation, and especially consumer behavior. The project was successful in doing that, though for the life of me, I have no idea what became of those models, and/or how those companies applied them.
But the real reason I'm mentioning it in this column is to highlight another element of the D-Map project: a summit the organizers held inside MIT's Media Lab, in which all the participants, and some invited guests, discussed the various scenarios and their likely outcomes. It was fascinating, and not without some disagreement.
Still, if there was a consensus there, I would say it was around the unlikelihood of a singular business model emerging for the future of monetizing media content. Instead, participants concluded that the future was likely to be an array of hybrid models -- and not necessarily hybrids within companies, or forms of content, but hybrids among different consumer types. In this scenario, the experts said, some consumers might be willing to accept a form of media content chockful of advertising, so long as they got it for free. Others might be less price-sensitive and might prefer to pay to receive the very same content without commercial interruptions. And various other models in between.
In other words, the media content marketplace -- and the consumers who ultimately underwrite it either directly or indirectly -- would continue to behave pretty much the way they always have, even if we don't think of it that way. The big difference is that the creators, packagers, distributors, and underwriters of media content would have to be more flexible in the way they thought about their models, and far more fluid in how they executed them. Kind of how they actually are behaving, despite the rhetoric you hear at industry conference keynotes, or in the media and technology press.
So I'm going to amend Shelly Palmer's brilliant observation about the simplicity of media content monetization models to say that, no matter what you call the model, and no matter how many of them you envision, ultimately, we all pay.
And there's one model I assure you will absolutely not work: the one in which no one pays.