The growth of the internet over the last decade has seen the crumbling of the content industries previously sitting pretty behind value created as much by the cost and resultant scarcity of distribution and manufacture. When it was expensive to produce CDs, DVDs, and newspapers and even more expensive to distribute them around the world – the media and its power was consolidated into the hands of a few media moguls and major corporations.
The internet may not have had much of an effect on the cost of producing the content, but distribution costs have fallen to zero with the cost of serving a webpage negligible and even video down to pennies per user. Copying content is also basically free, with music, videos, pictures, and text a mere ctrl+c away from appearing on another, unauthorised site and earning the owner nothing for their work.
The music and film industries are seeing massive upheaval, but whilst they complain that profits are being devastated, much of this bleating is from seeing a much needed shake-up in the industries that had grown fat and lazy through the boom-time of the last two decades. They saw home taping (on cassette or VHS) as the harbingers of doom just a few years ago, but as they adapted these technologies swelled their coffers to record levels. Yes the internet is far more of a threat than home-taping could ever be a reproduction and sharing is now of perfect quality and free, whereas analogue tape rapidly degraded, but this should force those industries to re-evaluate where the admittedly reduced profit in their industries lies.
The public’s appetite for live performances by bands and DJs has not diminished, and people still love the cinema – two sources of revenue where the internet’s promotional use can be managed to increase profits. But the industries need to look beyond trying to squeeze the customer for every penny, and instead look for the relationship that they can continue to tap in future years. Rather than continually pushing the price of cinema tickets and popcorn through the roof – why not attract more people to the cinema by offering a better service – not offering slightly better seats for a 100% premium – but offering a more intimate theatre, with seat service an popcorn for free. Yes this will eat into profits, but it would entice people to visit the cinema more often and get into that habit.
Record labels have already learned that giving away a couple of mp3s for free to help promote an album is the norm, but to really get people talking they should offer more than just the ability to listen to a song which most could listen to on Spotify for near nothing anyway. EMI recently commissioned some fantastic immersive web experiences to coincide with their releases with ro.me (Danger Mouse & Daniele Luppi) and the-bea.st (Laura Marling) which have worked wonderfully as promotional material – but they could offer customisation options for a fee. Add personalisation of the dream sequence in ro.me and you have a fascinating piece of personalised art that people will pay for.
The pricing of digital goods also needs to be addressed to combat piracy. Amazon appreciates that digital goods should be their nature cost less to the consumer than physical goods and prices its MP3 albums at about half that of the CD versions – but in a time when you can legally stream albums on demand for free, even £5 can sound too much. Either the album should offer content that the labels do not provide to the likes of Spotify (even just a few tracks), or they could offer incentives to buy the album such as offering a 20% discount when you purchase gig tickets. The labels took so long to come around to the idea that music should be available as non-DRM MP3s that they forget that they need to give people a reason to purchase. Offer people who have bought the album the first chance to buy tickets for intimate performances – that queue-jumping extra is scarce and therefore worthwhile. Offering discounts or extras for a limited time to coincide with a memorable event such as seeing a live performance should funnel people towards buying the content.
Digital services such as Netflix and LoveFilm have seen impressive growth online by offering very reasonably priced subscriptions to watch TV shows and films online – but the networks and studios are increasingly trying to squeeze these companies as they feel they have too much control and are starting to effect sales of box-sets and DVDs. They do not, however, offer users any incentive to purchase a box set. The first couple of episodes of each show could be made available for free online along with the first 10 minutes or so of a film – it is all about drawing people in to the sale. People can get addicted to a show after watching just a couple of episodes, but currently to watch those episodes the user has to look to pirate sites and once there, they can access the whole series for free. If the studios offered the first few episodes online for free with obvious links to buy the series in the webpage surrounding the stream and as post-roll ads, then they could stop people looking for pirated copies and instead turn them into a sale.
Newspapers have a harder time proving the value of their content, as many of the stories are available elsewhere on the web for free. The problem, however, is not that people do not value journalism, but that much of the content published by the newspapers are reworked stories from the wire services or so called “churnalism” in which the author simply reworks a press release from a company. In his interview in the Leveson Inquiry today, Ian Hislop, editor of Private Eye, made a salient point that there is a generation that expects all content to be free online, and newspapers should protect their work – noting that Private Eye had not embraced the digital revolution. What he fails to mention, however, is that Private Eye makes its trade in original investigative journalism and analysis – something which is simply not true of the majority of news organisations today. Yes most major news organisations have reporters stationed around the globe, an expensive part of the industry, but the majority of their content is produced much closer to home. For example – if we take a look at the frontpage of The Daily Telegraph’s website today (and other newspapers are generally similar) – out of the 22 headline stories (including those for each section) there are only seven that are original reporting (including two sport stories); ten which are based on press releases from companies and thinktanks; two based on national and international governmental reports; one re-written from another newspaper; and one asking for user-input. To say that all this “reporting” needs protecting or in fact would be worth paying for behind a paywall is simply ignoring the facts. The original reporting may have value, but I’m not sure how much value one could put on simply re-hashing a report that is similarly covered elsewhere or re-working another news organisation’s story albeit with attribution.
Private Eye, like the Financial Times and The Economist are focused on original content, and as such can offer their content behind paywalls or simply still in print in the case of Hislop’s paper. Their business model is discovering original stories or performing distinct analysis that is not available elsewhere – and as such charging for access to this content seems obvious. For more general newspapers – both broadsheet and tabloid – they are in the business of getting content in front of as many eyeballs as possible and then selling advertisers access. Volume is the metric they focus one rather than originality, and that is fine except when they complain that users should also pay for access to their content – content which mostly is generally available for numerous other sources for free. If you are in the volume business, then limiting volume by imposing a paywall seems counter-intuitive. These companies are trying to squeeze their current customers who are in the habit of buying a newspaper rather that trying to work out how to sell their original news that has value, whilst using their general rehashed stories to generate pageviews and acquiring new customers.
Mr Murdoch is seeing how difficult it is to put a general newspaper behind a paywall, as whilst he managed to secure a number of subscribers at launch and will continue to add digital subscribers as the number of print subscribers fall – he will not be acquiring any *new* subscribers anytime soon. If you have a paywall you need to entice users to part with their cash with originality – news and analysis is everywhere, but originality is a scarcity that has value. Moreover, whilst newspaper companies had the power of publication in the dead-wood industry as they offered personalities and columns from their journalists – digital newspapers will have to adapt to the personalities having the power, and selling access to them and their writings. The value of content may have fallen, but access to personalities have maintained their value as the public pick their coverage based on the quality of their curation and their linguistic style.