SubscribeFree as the Price Tag and the Inadequacy of Today’s Metrics
Posted in Advertising, News on September 21st, 2007. By Eduard F. Vinyamata.
We’ve been advocating for some time now the need of a paradigm shift in media, a fundamental change in approach and underlying assumptions. Our theory is that we’ll only find a successful business model for online media by thinking under such radical a change of assumptions.
One of the profound changes the media industry is facing right now is the fact that the consumer can get contents for free completely disregarding any artificial barriers such as delayed broadcasts, regional limits or rights restrictions. At the bottom of it we find the end of scarcity, either real or manufactured, or as Wired puts it:
As scarcity becomes obsolete and bandwidth, storage, and processing grow ever cheaper, old-fashioned vendors will face increasingly skeptical customers asking, what are we paying you for?
The pay for content model is on the news: this week with The New York Times opening it’s pay per view access. Two weeks ago with with the NBC leaving iTunes…a move that had bloggers and journalists seriously wondering (even if for just a few days) if it’d be easier to get pirated contents of NBC TV series than legit ones. Actually, easy instructions to do just that were just published.
In the end it’s all about customer respect. For example, consumers are not as tolerating towards traditional advertising or for that matter anything having to do with the old, traditional and established ways of monetizing media. Call it a conversation, call it add it to add value, it doesn’t matter. Traditional advertising models in media are based on scarcity or exclusivity, not on a free, empowered, self targeted consumers.
iTunes’ success is however proof that companies can compete and profit even under this circumstances. The following is another less known example (source) following a similar philosophy:
Warner Brothers’ China division, in a rare act of intelligence on the part of a major media company, demonstrated significant savvy last year when they began selling cheap, legitimate, high quality DVDs of movies within days of the theatrical release. By pricing the discs at around 12 yuan (approximately US$1.50), Warner is hoping to make cost a non-issue, thus allowing them to compete in one area where they hold the upper hand: Quality.
Nevertheless, those examples don’t reflect yet another problem the industry faces when creating and evaluating business plans: the fact that the way audiences and success is measured today doesn’t fit and is not ready for new media. The metrics must change as well. For example, What constitutes an online hit, an article we highlighted last week, is an unproductive attempt to apply and to try to understand audiences on a new medium using outdated ideas. The following article from Publishing 2.0 goes into detail into this issue and concludes:
It’s not that traditional advertising is more “accountable,” but rather it’s more “comfortable,” more “familiar.” Just ask media companies how uncomfortable the transition to digital can be.
But as the media industry has painfully discovered, the advertising industry is now discovering that making the case NOT to change is no longer viable.
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