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New Consensus: People Will Pay for Quality Content
A consensus is emerging among the leaders of the digital media industry, and it’s an encouraging thing.
At conferences -- which seem to have spread like some upper class disease across the land (when does anyone do work anymore?) -- in Palo Alto venture capital conversations, around the pools in Malibu...a light seems to be rising along the content horizon.
Here’s the word: quality content matters, and people will pay for it.
This is a complete reversal from the conventional wisdom of a year ago. Last July, I was busy presenting business plans for this news organization to potential investors.
The elevator pitch: high-quality niche content to a high-value audience -- but the financial experts assured me that everyone knew that content had no value.
Really? No value? And news content in particular had no value. This verdict usually came with a sheepish shrug from a guy in a suit with an MBA from Wharton who wished it were otherwise, really.
He’d love to pay for The New York Times. Or TheWrap. But no one else will.
Just look at the music industry, everybody said. Look at the failed experiment of pay-walls at the Times, and anywhere else companies dared to charge money for content.
Quality has no value on the Internet, I was assured. It’s become commoditized (everyone loved that word.)
Guess what -- in 2009, it's a whole different story.
Now the Times is going back to considering charging for content.
At the Fortune Brainstorm conference this week, I heard the "people-will-pay-for-quality content" argument from no fewer than three speakers, including Disney’s Bob Iger, NewsCorp’s Jon Miller and AOL’s Tim Armstrong.
It’s a message that is being reinforced from different kinds of content makers across the board -- movies, news, TV shows, music.
Here’s what I’m hearing:
-- Internet content is undermonetized in general, and charging for content is a trend that’s coming.
-- The world of content is beginning to be divided into two parts -- the broad, "commoditized" stuff that you can find anywhere (celebrity shots, the bloggerhead in his pajamas commenting on events) and premium content that people will pay for.
-- “You’re seeing the world split into a premium world, and a broader attentionally-monetized world,” said Miller.
-- People will tolerate ads to get quality content they want to watch for free. (Hulu!)
And it’s not killing subscription competitors, says Iger. "There was a fear that a cord cutting was going on…because they are getting everything online and didn’t need it anymore.” They didn’t. Now Disney is considering a website that would charge a subscription fee.
This falls along the lines of an argument that I heard Wired editor Chris Anderson make a week ago, in discussing the future of content on the web. (See “Chris Anderson and the Economics of Free”)
If you give away a large quantity of good content, he argues, you can then charge money for the premium content.
For a lot of content companies, that’s going to mean that both subscriptions and advertising will be required to create sufficient revenue streams.
Like ESPN, which has display advertising and subscription fees. In fact, I hear ESPN is considering starting to charge for its website.
It seems we are coming around to the understanding that not all content is equal; that people will pay for something they really want.
Exhibit A: With iTunes, consumers pay for music they can get illegally. But they pay to get music of good quality and for a reasonable price.
The Wall Street Journal figured out long ago that people will pay for content. So did Bloomberg -- smart guy, that Mike.
I believe we’ll start seeing such models implemented in the coming months. As Iger said: “We’re at the beginning of the beginning.”
Comments
Brad Williamson - The Virtual Biographer™ Says
Let's stop pretending that audiences are supposed to be the people who are monetarily responsible for supporting news organizations, because, as evidenced by the past 150 years or so, it's been advertisers who paid the bills. And don't tell me that subscription fees are what helped these organizations turn a profit, because those dinky sums of income were primarily used to cover operational costs. Seriously, this is how things have operated for the past 150 years, and big media knows this.
Now big media is trying to pull a fast one on us as they try and make us believe that CONTENT should have a price tag, instead of their AD SPACE (or some other new and innovative way to monetize content). The fact of the matter is that, for the longest time, content creators within traditional media (newspapers, radio, tv, etc.) have been incredibly GREEDY with their ad rates and this has caused their financial downfall. How does a newspaper honestly expect a small business to be able to afford THOUSANDS of dollars for a weekend's worth of ads!? That money, for most small businesses, accounts for an entire month of their revenue!
So, media orgs... don't punish your audiences for your inability to fairly charge the businesses that have ALWAYS financially supported your business model - it's YOUR fault the Net's killing you. All web companies have done is simply charge their advertisers a fair price, and THAT'S why ad dollars are turning digital. So stop trying to dig yourself out of your own grave, just lay there. You don't deserve to play the media game anymore, because your greed caused you to forget how to win without breaking the rules.
Stop searching for ways to fix the problems your greed caused and hit the streets with affordable ad rates, or find a new way to monetize your content that has nothing to do with implementing subscription fees! Agh!!!
R. F. Stinson Says
Same song, umpteenth verse of "Whistling Past the Graveyard."
It is increasingly difficult to understand how seemingly intelligent people can delude themselves enough to write such nonsense.
Joe.is.a.tv.junkie Says
I do pay for quality content, all the time. It's called my cable bill, I pay it monthly and I get do read stuff like this and watch the occasional clip online, I get to watch shows on my big big TV on my big couch or bed with my dog next to me.
I'm not paying Bob Iger to watch Disney product on my computer. At least not right now I won't. The experience must be seamless and easy, and all I see is companies suggesting that I buy some doodad to port stuff from my computer to my screen that may or may not work based on my wireless router, some server being maintained properly or some nasty li'l piece of spyware written by a teenage hacker that downloads with each file.
(And this desk chair is not comfortable enough to sit here for 90 minutes to watch The Chronicles of Narnia, even if I was interested in watching The Chronicles of Narnia. Which I'm not.)
Until that seamlessness is achieved, I'm not interested in this conversation.
Because the problem is that these big picture guys never deal with the practical realities of said big picture.
Visit my blog at http://IAmATVJunkie.typepad.com
Jan Simmonds Says
It always amazes me how big media who on the face of it should have the luxury of objectivity, still sees things so subjectively!
Years ago now, I remember having a conversation with a rather well known head of one of the big record labels who was very excited that their new corporate website project would offer people the chance to buy records online. I said at the time the idea was flawed because it would be impossible to attract audiences to all the labels individually and sure enough Napster ensued not so long afterwards and subsequently iTunes!
This period in terms of video, news and even social content is no different and all of the big media brands are currently kidding themselves that they can create chargeable ecosystems within their own portfolios. It is true that people will pay for quality content and also that big advertisers are also yearning for an elegant online home, but it won't be found within any individual platform owned by one media company, rather with the most successful aggregators of that content! (No prizes for guessing who I'm hoping one of them is!)
I think Bob Iger is a pretty smart guy, but he's trapped by corporate responsibility and duty to Disney as are the innovators at TW, Newscorp et al to their own brands. The principals are sound, but even in the clouds, it's all about execution. Regretably I anticipate more AOL type disappointments before these guys learn how to be portably profitable rather than waste so much time and money competing with each other building fortresses.
In the meantime of course it leaves the floor wide open for us humble entrepreneurs.
Jan [at] famebook [dot] com
PS. Nice offices btw
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