Normally I’d be taking the opposite point of view here, cuz like everyone else, I like my shit for free. I’ve loved the free music, the free TV on the web, free access to news, and nearly unlimited free access to content.
There was a generational expectation that all things Web related would be free. Too much Napster for those kids warped their brains a little. But there was little repercussion – at least until recently – for violating copyrights and stealing content, and mainstream media companies eventually explored the free, ad-support only model.
However, free is really only good if the company providing the content can stay in business. And ad support didn’t quite cut it for everyone. After dozens (hundreds?) of newspapers have gone out of business, and the tolerance for Web properties hemorrhaging money is dwindling, media companies that have premium, desirable content are once again exploring a paid model.
What do I have to say about that? Its about fuckin’ time.
Sure I like my free music, but I can still get plenty of it. And my Rhapsody subscription is still one of my favorite $15 a month to spend. I don’t know what people are bitching about when it comes to their DRM. I’ve got unlimited access to their entire library at home on my desktop and my HTPC, at work, when I take my Zune (yes, a Zune) in the car, and that still leaves me 2 more computers that can access my subscription (perfect for my mom.) My other favorite $15 per month? My Netflix subscription. Movies delivered to my door, plenty more I can stream on demand. Whats not to like?
The majority of my frustration is with three constituencies. First, greedy consumers who, for the most part, do not understand the value chain. It costs money to make this music/movie/tv show, and we can’t just give it away. I’ve said for years that someone (a company) needed to stand up and say, “Tough shit, kid. That ain’t how it works.” Or, “The cast of Friends each taking home a million bucks an episode is the biggest expense to this production.”
Second, the companies who did give away their content, thus devaluing it, and making consumers think that its next to worthless, dollar-wise. These companies were too stupid or too pig headed to protect their own businesses. Why did so many magazines put all their content on line – for free – and then expect people to pay for it at the news stand? Why didn’t the record labels tell all those Napster downloaders that those 96kbps MP3 SUCKED? They could have, at least, still moved albums that way (before broadband really kicked in). There’s way too many mistakes the music industry made that it gives me a headache just thinking about them.
Third, and most importantly I think, are the market researchers who constantly told media companies that people don’t like advertising. Hey, no shit. These companies artificially warped the perception of market conditions. I saw very few reports that emphasized the fact that people were willing to pay for quality content. They only emphasized that people didn’t like ads, or that they wanted ads in exchange for free content. But they never explained the dynamic to the consumers.
More free content = More ads. Apparently the companies that pay for these studies didn’t want to hear any bad news. Nobody said, “Do you know that you’d need a $100 CPM to break even? But you are currently only getting $15, and still only filling half your inventory.” The writing was on the wall the whole time. But they just didn’t want to see it. Hey, just increase the ad load on people who are reading and watching. Oh, and lets find some ways to get the advertisers to pay for ads that aren’t even seen!
So here we are, a few years down the road, with ad networks and ad exchanges commoditizing the value of online advertising down to the mid-single digits for all but the most premium of publishers.
Where does that leave us? Simply, if your content is good enough to pay for, you are in pretty good shape. If you were making money in your previous business model – even if it was ad supported – then you’ve got a very good chance of retaining your audience and moving them towards a blend of pay and ad support.
For all of those web publishers who produce anything else, good luck. Original web series that get less than 100k views? Trouble. What about 500k views? Aggregators that produce nothing on their own? Trouble. Have you ever done the math on a $10 – $15 CPM for less than a million views? It ain’t good.
The Web people have had enough of shitty content and shitty ads. The media and content people have had enough of getting shit on by consumers and watching the value of their content decrease. Premium content producers want to do what they do best. Create great content. News outlets want to do in-depth reporting, not just scream at people with different points of view. Imagine that!
If you want free shit, check out all the software listed on this site. Its all free and does everything you need it to do. Listen to Pandora. Watch Hulu. Get your news from Yahoo or Google while you can.
But ready yourself now. Be prepared to pay for the best content. Why? Because its worth it.