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.
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.
