Posts Tagged ‘business model’

Nine Inch Nails Case Study

February 5, 2009

Last year the name Nine Inch Nails or Trent Reznor was mentioned a lot, when someone was talking about the future of music marketing. Trent has developed a complete new way for music marketing using the whole potential of web 2.0.
He demonstrated on how many ways you can connect with fans and how you still can give your fans a reason to buy in the digital age. There is more than MySpace, there is more than just giving your songs away for free in hope the audience comes to your live shows.
Mike Masnick was summarizing the NIN Campaign in his presentation given to MidemNet this year.

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Pricing Models For The Digital Age

September 15, 2008

I already quoted Chris Anderson yesterday and must once again. He brought to my attention this great paper by Prof. Hal Varian (for all of you who have had not the honor to study a few semesters of economics… he is “god” … well my professors told me so… by the way Mr. Varian is the “chief economist” at Google at the moment…)

In this paper, Varian describes 14 business models that allow content creators to make money even if they cannot stop the content from being distributed for free.

  • Make original cheaper than copy.
  • Make copy more expensive than original.
  • Sell physical complements.
  • Sell information complements.
  • Subscriptions.
  • Sell personalized version.
  • Advertise yourself.
  • Advertise other things.
  • Monitoring. (ASCAP monitors the playing of music in public places, collects a flat fee, which it then divvies up among its members.)
  • Site licenses.
  • Media tax.
  • Ransom. (Allow potential readers to bid for content. If the sum of the bids is sufficiently high, the information content is provided.)
  • Pure public provision.
  • Prizes, awards and commissions.

Some of these models are better than others… some only work for a very specific kind of content, but they are all options.

Sony Ericsson Comes With Music…

September 10, 2008

So, after Nokia, now Sony Ericsson starts with this subscription, or better, bundling pricing model (see Financial Times).

As you know I’m a fan of these business models… they “feel like free” and if there is enough added value they will have a chance to compete with the “free” alternatives. A crucial feature will be, if there is any portability of the music. Is there any chance to get this music from my mobile phone also on my big speakers in the living room? Is there any chance to hear the music in the car? et cetera… but of course the most important point is the price question: Where is the price point to have still this “feeling” “like free”?

Rafe Blandford did a bit of pricing research and showed that Nokia’s Comes With Music adds about 70 to 85GBP (US$123 to $150 or 85 to 105 Euros) to the price of a handset for a year music. That´s less than 10 Euros per month. For someone who is not an active “darknet” downloader and maybe iTunes customer… this is a reasonable price, if there is this mentioned portability. We will see.

Well, now we are waiting on the reaction of apple. When does the ipod or iphone come with a music subscription? I hoped Steve would announce it at his September keynote… but unfortunately not. Anyway there are this rumours it will come soon and the price will be around $130 per year…
It would be a lot of fun to use this new recommendation system “Genius” on ITunes 8 with a subscription model on a iphone…

The time of “a la carte models” in the music industry is ticking…

It’s All About A Music Entertainment Experience

May 21, 2008

There is a quite interesting Digital Media Wire interview with Chris Allen (COO Napster): “It’s all about a music entertainment experience and not about a buying experience… “I agree!

Vodpod videos no longer available.  

Video A La Carte –> A Disaster?

May 12, 2008

There was this Marc Cuban post a view days ago… and today I read again a post on Digital Media Wire by Paul Sweeting on the same theme: The report of Bernstein Research written by analyst Craig Moffet: “And Now for the News…The Emperor Has No Clothes”
I would love to read this report… but can´t afford it… so I’m just writting about what is posted out there in the blogosphere…

Craig Moffet made two important points in his report:

  • Consumer tolerance of advertising is much lower online than in the traditional TV channel and that it simply is not possible to support the sort of professional production values expected on TV through advertising online.
  • The web’s ability to let users select only the most desirable programs, or only the most desirable portions of programs–means programmers will not be able to leverage popular programs to support less popular programs through bundling

Don`t know what you think… but both points I don`t see as “dramatic” in the future as its discussed here (maybe it´s more dramatic in the shorterm):
First: People are already do something like “cherry picking”, not as much as they will do in the future but they already can choose their program format … under round about 50 Channels… the best format will win… now and in future. Zapping is no new thing.
Second: We can expect that people will at least watch the same amount of time video content now or in future irrespective of the media channel. So we have the same amount of attention, what means the same amount of value that can be monetized.
Third: People maybe don`t accept as much advertising online than on TV, but we will know the customer who is watching. We don`t have to believe on research based TV ratings… we will know the exact numbers and in future we are able to personalize advertising, the wastage of media money will be minimized, every user, every content view will be more valuable..
Fourth: The quality of watching video content will rise considerably – watch what, when, wherever you want – that means people will watch more video than ever before… so there will be even more attention to monetize.
Fifth: Bundling will definetely be an important tool in the digital age, like it is in the music industry. There will be just new kind of bundles…

And this is the real question: Which bundles could work? What kind of online platforms are able to monetize the content? What services or added value is needed? Who can compete with the “free” competition?

But the discussion in the blog posts mentioned above is more about the question: Are TV stations making a huge mistake by putting their current schedules online for free?

Marc Cuban added to the discussion the following point:

  • “The ala carting of video on the net will benefit those who enable the search for content and can monetize that search.”

Paul Sweeting made these points:

  • “What Moffet is describing is a process very much like what the record companies went through: a radical reorientation of the dynamic between producer and consumer. You do not “publish” or “distribute” content on the Internet, although publishers and distributors like to think they do. You make content available on the Internet for others to access and aggregate as they will. The process is fundamentally, always and ineluctably user-driven.”
  • Like it or not, the web simply isn’t very kind to publishers, packagers and distributors. It rewards enablers. Search is an enabling technology. (…) The challenge for publishers is not to figure out how to force the web to reward them. It’s to figure out how to capture the value created by enabling technology.

So far so good. I fully agree to all three points.

But then I was a little bit confused by conclusions like this from Paul:

“In that sense, Cuban is right. It may not make sense for the networks simply to make their schedules available for free on the Internet. That doesn’t really create any new value; it mostly just drains value from linear platforms.”

As Paul wrote himself, when the content is “public”, than it is available… Anyone know websites like “surfthechannel.com”? So, why shouldn`t they publish it online? It`s out there anyway. They can`t stop the technology! Said thousands of times…. There is the “free” (legal or not) competitor, so compete with it! Try to build your brand in the online world!

And to the question of Marc:

Will shows be forced to introduce different versions of shows, say with different ratings as a means of differentiating TV from streamed shows ? The R rated version of Friday Night Lights online and the PG version on TV?

I think content creator even have to go further: Transmedia Storytelling! Why shouldn`t there be complementary content for example at the daily mobisode, on the weekly TV show, the online version and the online game?.

And I fully agree with Paul:

“What the networks need is to figure out how to capture the value created by enabling consumers to access, select, aggregate, transform, embed and share content–in a word, to use it. Anything else is just TV with buffering.”

So please, don`t stop making content available for free online. But that`s not enough! There has to be more to monetize your content in the longterm. Video a la carte is not a disaster, but it`s just a small part of a new “business model” to monetize your content online. Try to find new ways to increase the consumer experience. Use the chance to present your content idea deeper and in more detail and extend than ever before to your fans. Not long ago you had just 40 minutes per week…

Transmedia Storytelling

April 17, 2008

I think it´s a big thing in the future. Everybody has been talking about crossmedia campaigns in the ad industry for years… but what about the entertainment industry… what about telling stories crossmedia, transmedia. A story plot not just in one medium… cinema or TV…. a big chance especially for TV series`… with complex and long story plots. Why not tell an additional story plot or part of the story exclusive on another distribution medium than just video/tv episode —e.g. mobisodes, comic books, games etc… or why not even develope interactive story elements… for example with a ARG – Alternate Reality Game –

Engagement television … give the viewers more chances for talking at the watercooler, at the chat rooms, the social networks… let them be part of the story.

I can´t wait to see the first real great concept.

The new technologies of digitalisation give writers and producers more opportunities…

Series like Heroes and Lost were a first step in this new storytelling…

But more than just a new viewer/user experience it can be a great business opportunity to capitalise a brand – content concept in more ways, in new ways, in ways that don’t have to “compete with the illegal free options”…

In November last year there was a great panel discussion at the MIT organized by the MIT Communications Forum titled:

NBC’s Heroes: Appointment TV to Engagement TV

The discussion was moderated by Henry Jenkins (Director of Comparative Media Studies Program).
He talked with Jesse Alexander: Co-Executive Producer and Writer, Heroes NBC (Alexander on the Heroes wiki)
and Mark Warshaw: Writer, Producer, Director, Heroes, NBC (Warshaw on the Heroes wiki)

about transmedia strategies for Heroes.

“Jesse Alexander helped usher in this transformation. He says Heroes was “conceived to take advantage of every possible media platform to tell stories, to make the brand viable and important in the world.” Nowadays, to generate such “AAA franchise content,” creators must incorporate “transmedia into the DNA of (their) concept.” With Heroes, this has meant spinning off DVDs, greeting cards, comic books and webisodes with distinct narrative threads, and providing spaces online where core enthusiasts can opine on plot and character.”

The video (Real Player) is a bit long (1:58:29)… but worth watching… especially for fans of Heroes…

2012 Music Money Goes Digital – Now There Is Movement

February 20, 2008

Forrester Research has a new report with the titel “The End Of The Music Industry As We Know It“. According to this report digitally downloaded music will surpass physical CD sales in 2012.

Here are some free slides (ppt) of the teleconference to the report release.

Perhaps it´s numbers like that, why labels finally are talking now with a lot of people in the digital area about new distribution models … and about more serious conditions…
So for example there a rumours since last week that MySpace is making a deal with the labels to get DRM free ad supported downloads on their site. Omnifone launches a new mobile music subscription service bundled with a handset (similar to Nokia’s model)… not mentioning the Last.Fm thing, the Google China talks… and so on… news coming in weekly… there is movement now…
What about Apple? I am looking forward to here some news from there…

So fact is, in the next months there will develope a lot of new ways to experience music, legal music, and often free or feel like free music. What could happen?
Customers could get confused. Which model is the right one? Where do I get a good deal? What is free what not? What is legal and which services or applications are not? Is there any difference? Do I have to pay for music?

Studies like this (from KRC for Microsoft) show that most of the young users still don`t think they do something like stealing in the net.

So this new developement, this confusion, won`t change this “thinking”. So … Do pay per download models have any chance in the future?
And here we are back at the Forrester Research report. They say subscription services won`t make it till 2012 – Digital downloads will make the race.

forrester-digital-music.gif

Well, I am not sure about that. I don`t know when subscription services finally can handle their problems, but I am sure that “feels like free services” and ad supported models will grow. Why should digital pay per download models grow so fast?

Well… but what do I know…

Making Things That Are Better Than Free

February 11, 2008

free-sky.jpg

I am posting  a lot around this theme at the moment… sorry for that…

Kevin Kelly,  founding executive editor of Wired magazine, had a great post on his blog.
Like his colleague Chris Anderson he thinks: “When copies are free, you need to sell things which can not be copied.”

So, what can`t be copied?

“A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold. “

He suggests eight generative values which are better than free:

  • Immediacy
  • Personalization
  • Interpretation
  • Authenticity
  • Accessibility
  • Embodiment
  • Patronage
  • Findability

Find more details to every of his values in the full article.

Great thoughts!

Media Products Influenced By The Cumulative Advantage

February 8, 2008

Found a few days ago this NYTimes article from April 07 by Duncan J. Watts. He is a professor of sociology at Columbia University and he did a quite interesting experiment on consumer behavior.

He analysed consumer behavior around the assumption:
“People almost never make decisions independently.”

This has big consequences on the success of products and especially media products.

“The reason is that when people tend to like what other people like, differences in popularity are subject to what is called “cumulative advantage,” or the “rich get richer” effect. This means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still. As a result, even tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors — a phenomenon that is similar in some ways to the famous “butterfly effect” from chaos theory.”

So far that`s not really new, it`s also a bit comparable to “network effects“. But the experiment showed, that it isn’t possible to predict the success of a product, when there is something like “cumulative advantage”.

The experiment was simple:

“In the webbased experiment participants were asked to rate songs of bands they had never heard of. Some of the participants saw only the names of the songs and bands, while others also saw how many times the songs had been downloaded by previous participants (social-influence group).”

With the result:

“In all the social-influence worlds, the most popular songs were much more popular (and the least popular songs were less popular) than in the independent condition. At the same time, however, the particular songs that became hits were different in different worlds, just as cumulative-advantage theory would predict. Introducing social influence into human decision making, in other words, didn’t just make the hits bigger; it also made them more unpredictable.”

Find detailed information on the experiment here.

What does that mean? In a world of web 2.0, Facebook, Myspace and Last.fm this effects get stronger as ever before, and is much more complex than in the old mass media age. There is now more than just the weekly music charts, or the playlist of your favourite radio and music television channel. That`s why there will always be a “high peak” at the beginning of “the long tail”.

What does that mean for the media industry?

“The implication for marketing executives is that they should de-emphasize designing, making and selling would-be hits and focus instead on creating portfolios of products that can be marketed using real-time measurement of and rapid response to consumer feedback.

In a short article in the Harvard Business Review Duncan J. Watts and Steve Hasker recommend five strategies in more detail.

Last.Fm makes the deal!

January 29, 2008

lastfm-shirt.jpg

Sorry, i was out skiing for a few days and missed nearly a really big thing.

Last Fm  signed a big deal with the majors (see WIRED blog). Now you can play songs in full length three times for free “outside of your customized last.fm internet radio station”. all majors are in.

that`s great! that’s huge.

For me last.fm was already the paradise. You get “your kind of music” customized for free . The perfect radio! Perfect when you are in the “lean back” mode. But then there were some of these moments you want to hear a special song, a special artist- when you are in the “lean forward” mode – well, then it was time to change to itunes. The problem was – a new song, a song you got recommended often isn`t there in your library yet … – Now you even don’t have to change to itunes… you can stay at last.fm.

Well, the last.fm library isn`t complete either yet, but they are working on that.

The ultimative jukebox. We are one step closer to it.

Commenting on this new last.fm deal Gerd Leonhard had a nice thought about making a new business model running in these times.

“if you want to succeed in next-gen music ventures, do this:

a) just use the labels’ music in any way that you see fit (provided that is in some sort of way legally defensible, at least in some instances, sometimes, somewhere)

b) build your audience based on that attractive ‘free music’ availability (remember… that’s the idea behind radio!) and make the best of any and all those gray-zone licenses.

c) get a huge company to either buy or back you, and

d) THEN do a deal to get the rights to use the music in the way that you wanted to, to begin with. “

He is right. That’s the way you will get it running.
Why? Cause most of the copright holders would like to stay in “good old world”. They don`t want to take any risks. They don`t want to accept that content – their content – in the information age is “nearly” a public good now.
So it seems it’s impossible to build a revolutionizing business model with a “legal” deal from the beginning. The conditions would be insane.
So… you have to develop in the “grey zone”.