Monetising Digital Platforms & Rights

I went to an excellent 1/2 day session on Monetising Digital Platforms & Rights on Wednesday at Vision & Media. The day was led by two top flight guys in this sector, Justin Judd - director of i-Rights Ltd and formerly ran Granada TV's digital division and Peter Cowley from Spirit Digital Media, who I heard at the Nations & Regions Media conference earlier this year.

These are some notes of things discussed that appealed to me. But it is by no means an accurate record of everything that was discussed!

I Pay, You Pay, Some else Pays
We looked at these 3 business models.
The I Pay obviously isn't a viable long term business model as putting your own money into a business for ever will end up in certain failure, but it may be necessary to get a business going.
You Pay - is where the consumer pays you for a product or service, in this context subscription models are a good example.
Someone else Pays - this is usually some form of sponsorship or advertising funded model which usually means the product or servie is free at the point of use.

The best model is probably the I Pay turning into You Pay. The problem with the Someone else Pays is that to get advertising funding you need proven scale before advertisers will support your product and as a new start up proven scale is hard to come by!

Scarcity is important
You can't make money from anything that is easily available. The music industry has learnt this the hard way and now puts the product out  but makes money from the live experience where they can control the scarcity factor. The news industry is in the process of learning this. A number of newspapers have put most of their content behind a pay wall. The FT may be able to make it stick because they have a niche market in financial related news, but The Times is going to find it harder. The Guardian is producing excellent free content but it still isn't clear how they will make money. The Daily Mail is making a go of the Someone else Pays model by producing news people want,  like celebrity news and gossip, which drives traffic to their site and they get a income form the advertising they can sell on their site because they have 'proven scale'. So simply put don't try and monetise a product which isn't scarce.

You need to understand the digital world.
This includes the scarcity issue because it is largely the digital world that has made things like music and news freely available but also the digital world has produced new routes to the market place. We were given the example of John Locke who was able to publish his book direct to the market without a conventional publisher by producing a digital version of his book using Amazon's Kindle platform and Amazon's site. He sold 1 million copies in 5 months priced at 99 cents, even based on the Amazon business model he still cleared just over 1/3 million dollars, he now has many more titles and has even written a book on how he did it, but remember no publisher, no marketing, but he will have got a major free publicity push from being an early adopter which is another thing you need to understand about the digital world. Being an early adopter brings you scarcity.


So if you can bypass the big guys and get your product or service direct to market and avoid the middle men you can make a good return. Now harness some key middle guys like Amazon or Apple and you can really make some money but you still need a good product!

Strictly Sexual was another example. It was a movie made for $100,000 and distributed through Hulu in the US, so no DVD or broadcast release, direct on line and then have cleared $200,000 already. But again it had to be a good product, with a good story, clever plot and title angle etc and despite the title isn't a porn movie. I haven't seen it because unfortunately Hulu is only available in the US . It is geo-blocked elsewhere just as our iPlayer service is blocked outside the UK.

Facebook Games
Games on Facebook is another example of making money in the digital world and often use the Freemium model. The game is free to download and use, but the free version runs slowly. So you can buy add ons that make the game run  faster and also buy add ons that help you play it. A typical example was one of the more popular games which has been downloaded 7.5 million time. If only 1% buy anything, a typical pickup ratio fror the freemium model, then then 750,000 people pay $5 brings you in a lot of money, to carry on supporting that 99% of your market doesn't pay for. Again it is much easier for the early adopters to make money.

Apps
We were shown some examples of the iTunes App chart and it was interesting to note that there were a number of audio related Apps doing very well in the chart, like Keith Lemon's Mouthboard and also an app called Fonejacker which is an app based on the radio spoof prank phone call model, but people are paying good money to listen to prank phone calls.

The ABCD of media revenue options
A for Advertising - a 'some else pays' model
B for Broadcasting revenues - the traditional broadcaster conmmisions and pays for you to produce a product but you probably won't retain all the rights to. Again 'some one else pays' either through the license fee or advertising revenue.
C for Consumer - this is the 'you pay' model, and includes services that are funded using the subscription model like Sky. One interesting fact is that in the TV world the value of Subscription TV worldwide far out values the value of advert funded TV. So the 'you pay' model is the way to go.
D for Data - this is becoming a fourth business model where you can provide a product free at the point of use but the data you collect has value which you can monetise. The new buzz phrase is 'Data is the new Oil'. This can include data like email addresses, Facebook likes and Twitter followers.

It was interesting that in the discussion of projects people were looking at, Justin & Peter were strongly recommending that a Mountain Sports Film Festival didn't set up and expensive web site to promote and sell the films that were presented at the festival. They were suggesting they use the data to make money.

Thoughts after attending Media & Digital Futures workshop at Salford University

I have just taken part in a very interesting, simulating and thought provoking workshop where as industry representatives we were asked to work through and comment on two scenarios as to how the Manchester city region might look in 2017. One had a positive slant and the other a more negative one. I was in one of two groups looking at the more negative scenario which was called the 'noise' scenario.

In a nutshell this scenario says that the UK will still be in recession, technology has advanced but businesses are struggling to make good use of it. The lack of variety of industries and decline of manufacturing has made the region unsustainable with the emphasis being on service and knowledge based.  It is difficult to generate revenue on line as consumers expect it to be free and although there are a large number of digital startups the business models are generally unsustainable.  There is a skills gap with the education system not geared up to produce students with the skills needed and so young people are not making the transition from education to employment. Digital technologies have disrupted rather than helped our everyday lives and people have become overwhelmed by the amount of information, communication and 'noise' coming at them. On top of that the city's digital infrastructure cannot handle the demand with rural areas only having limited access. Finally the region is over regulated, public transport is unreliable and expensive and although everyone is talking about the problems there are no radical strategies being put forward.

I have to say this scenario is not to far from where I feel we are now.

So to start with we were asked as a group to come up with 5 key points from the scenario to start the discussion. I came up with 4 which were..

1. There is no space for the little guy.
2. Education is not delivering equipped young people.
3. 'Free' is stifling innovation as it hard to produce a return on investment. Which is why we no longer make anything.
4. Both the transport and digital infrastructure are failing.

Others thoughts included a negative impact on families and society. We discussed how the use of computers smart phones and other devices has continued the impact on family cohesion, that eating in front of the TV, had started. Family members occupying the same space but back to back looking at screens rather than face to face round the dinner table. Another point was the lack of a 'ladder' structure where larger companies support and provide small businesses with work and then we started to explore more sustainable business models. The current funding cuts are already causing the social businesses to revisit their mix of commissions to social work proving free or subsidised services, with the need to make  a profit to replace the grant funding to support the social work.

Next we looked at placing these issues, as well as a number from a previous group, onto a matrix made up of more or less likely to happen against being harder or easier to resolve. These other issues generated some debate including one about people not able to understand the technology they were using which got us into 'digital natives' versus 'analogue grans'.

Then we looked at how some of the 'easier' & 'likely' issues might be resolved with the suggestion that the tech one would get resolved without too much intervention because more and more of the population will be digital natives. I made the point that although more and more people have access to the technology they don't necessarily have the skills to use them creatively.  However it was interesting to note that most of the points we placed in the 'likely' and 'hard' quadrant of the matrix and we didn't really have an opportunity to discuss how some of those could be resolved other than a consensus that education is key. One comment was our education system is still based on victorian principles and when you consider Carole Vorderman's report on Maths recently and the need for two different maths qualifications,  if you extend that out to all the other subjects we have a major issue with not preparing our young people for a life in a 'post modern' society, our education system at best is still turning out 'moderns'. With my apprenticeship assessors hat on I am only too aware that most of the graduates from the mountain of 'medja' degrees aren't ready to work in our industry, their degrees haven't given them the skills to work as new entrants but has generated the expectation that they can come straight in as directors or producers. So the industry has set up an apprenticeship scheme to take on 16 to 22 year old and give the training and experience to become valuable team players in the industry.

I then brought up the whole collaboration issue and coined the phrase 'collaborate or die". One of the repeating threads in all my research into how our industry is changing is the mantra of 'you must collaborate'. Unfortunately although we encourage our children to collaborate at an early age, once they hit primary school the concept of collaboration is pushed out and so we now have several generations that just aren't interested in collaborating on creative or business projects which is a real shame.

Then we were given the opportunity to identify 5 issues for our own business, again I came up with 4...

1. 'Free' on the internet makes developing viable business models more challenging!
2. How do I get above the 'noise'?
3. I need to create links with other businesses and collaborate.
4. The challenge is to persuade potential clients to buy my skills, as they feel more and more that they can do it themselves or they just don't value them. Just look at most corporate videos, the sound is rubbish!

Finally we all came back together and we shared the findings of all 4 groups and although we had been looking at two different scenarios the findings were remarkably similar.  One comment that struck me was we live in a 'greed economy' where the aim is to make as much money as possible so I can have the latest this that or the other, instead of the motivation being, doing what is best for the community whilst making enough money to be OK with my lot, going from a 'me based culture to an 'us' based one. In the light of the recent riots etc this really hit home with me.

I found the whole morning a very enlightening experience and I look forward to the outcomes of this research and hope that Salford University can take it further.

Thoughts on 'Free' by Chris Anderson

I have read this book as part of my research for the programme I am taking part in, called Radio Revisited. You can read some more about the reasons for this and what Radio Revisited aims to do on the Vision and Media blog.

There is no doubt that the work is changing and the reduction of digital storage and delivery to an almost un-metered price means a change in what can be charged for and what will become 'free'. Chris Anderson in his previous book The Long Tail showed how cheaper and cheaper digital storage means digital stores can hold a huge inventory and still make money from selling just a couple of units from their many lines.

Atoms v bits
Now in Free, Chris compares anything that is made of 'atoms' as something that has value and can be traded for real money and anything that is made up of 'bits' is perceived as not worth spending money on.  But my problem is that anything I make, as a sound designer, is in 'bits' and so how do I make a living in this 'atoms v bits' world? What I have is intellectual property (IP). So my challenge is to monetize my IP and how to go about making money around 'free'?

Anderson outlines that to compete with 'free' you have to produce something better, or at least different from the 'free' alternatives and quotes examples like people passing the free office coffee machine to go to Starbucks to buy a coffee there. Or in the digital world he compares Microsoft Office with the open source 'office' equivalents, where if you want a relatively reliable product with customer service you buy Microsoft. If you want a 'free' product and can put up with it not being as reliable and can spend the time hunting on the net for the fix, then the open source option offers a low cost solution. Also if what you are doing is being replaced by software and/or 'on line', like travel agents, real estate agents, or stockbrokers then you need to move upstream to use your IP to resolve the more complex problems which people will still pay for.

Journalism
The newspaper industry is being decimated in this 'information free' world. So journalists need to adapt to survive. The top tier newspapers will survive but most journalists aren't employed by them. They work in the 101 magazines and trade journals, local papers etc. The journalists that are prepared to adapt will need to move upstream and become editors and gatekeepers of the information overloaded world of the internet. They also need to become coaches and editors to the growing amateur journalists, bloggers etc.

So it is looking as if the phrase 'time is money' is looking less and less secure....

If you are interested in buying the book then please consider using the links below.

The UK's media consumption habits from an OFFCOM report

We are social have posted an interesting summary on media consumption habits...

Ofcom released its seventh annual communications market report last week. Its a goldmine of information about media consumption habits in the UK and is worth reading in full, the internet section in particular. In terms of social media usage, it reveals interesting data such as:

• Social networking (in blue) is an all day long activity, filling the gaps between traditional media:

• The data above illustrates the popularity of television in the evening, when over half (52%) of all media activities undertaken involves watching television on a TV set. In the morning, radio is more popular, but declines by the evening when TV is at its peak. Text communications (including social media usage) and voice communications both make up a fair proportion of media activity during the daytime and after the end of television peak time

It is interesting to see how the text based communications in blue stay fairly constant throughout the full 24 hour cycle. There is alot more interesting analysis on the we are social post including...

• Proportion of media use through device by age group radio usage is holding up except in the 16 to 24 age band.
• Proportion of computer use by activity - interesting to see the percentage of phone and video calls at around 30%
• Internet and PC take up - which is levelling off  although the move to mobile internet is growing.

Do take a little time to look at these results. If you have more time then you could look at the original report.

Change Happens

Wow, another video with some incredible figures in it. You might want to be ready on the Pause button to take some of the figures in!




Social networking has outstripped email ages ago, for example. The church needs to take this on board ad it seems as if MediaLit is having an impact on this.

Thanks fro DigitalFingerPrint and JohnnyLaird for finding it.

What does it all mean

I am watching the #medialit tag on Twitter following the Media Literacy course run by Codec in Durham with Pete Philips, Andrew Graystone and Bex Lewis amongst others. Pete Philips has used this excellent video in his presentation on Communication Conviction. There are some scary numbers in this video.