Connect with Fans (CwF) and give them a Reason to Buy (RtB). CwF+RtB=$$$.
techdirt is trying out with price points ranging from $5 in return for their gratitude and a badge for your profile to $1,000 for which you get to hang out with Mike Masnick and the Techndirt staff for a day, have breakfast and lunch, come to the techdirt offices, get a t-shirt and more. Techdirt goes so far as to consult their community about what promotions to offer as part of the CwF+RtB initiative.
Jack White of the White Stripes has tried the model too. His label, Third Man Records, has an online subscription service called The Vault that gives fans exclusive access to the artists. They get first dibs on tickets, exclusive videos, photos and more.
But Nine Inch Nails and Mike Reznick are really the masters of this technique. Here's a great video featuring Mike Masnick presenting a case study on Reznick's business models. Reznick applies this to music, but it can apply to any content.
Over at in shot, there's a post on why TV must change its revenue model -- and fast.
Broadcast television is about to be turned on its head. While many media proprietors (including free-to-air, pay-tv, cable and satellite operators) are still breathing a sigh of relief from the costs to switch to digital, the real battle for supremacy has only just begun.
At stake, is control of the entire television advertising business model, worth globally in hundreds of billions of dollars. With it, is control of the global television syndication and distribution business as we know it.
The problem lies in the ad spot.
The problem with television is that it has not changed its engine in more than fifty years. What started out as shows brought to you by, resulted in the highly successful, albeit conventional 30-second spot commercial.
The spot is stale and completely out of date in an on-demand world. If television continues with it, it risks alienating audiences even further, who have all but grown accustom to personalising their viewing habits and time shifting their favourite television programs, all thanks to a device called TiVo. Moreover, if television fails to ignore the fundamental audience shift away from advertising interruption to one of invitation, then it will surely risk the very livelihood of its own industry at its own peril.
Brand integration is no solution. Consider if you will, the typical hour of tv. How many ads are there? At least 10. Do you want to write 10 products into your episode? What kind of a nightmare would that be?
So what are the solutions? The in shot piece, suggests a few that can overlay onto the story-viewing experience without interrupting it. Widgets and technology will allow viewers to click on parts of the screen and "pull" in information about products and services. This is the "click on the character's dress and a new browser tab opens with the shopping information" idea.
Also coming is more Social TV; television events that we can share. Socializing TV isn't new. It's throwing an Oscar party or joining live a Twitter conversation while watching the Olympics. Advertisers and marketers will be looking for ways to share their messages with the communities that form around social tv events.
While these are solutions that will help to monetize television content, they can be done without the networks. Nor do internet ready TVs which can get content direct from the web without any network involvement at all. Some of the TV makers seem to be moving into the content creation business.
In fact, Ridley Scott Associates' new series Parallel Lines is produced by Philip's Cinema TV. Neat premise: five directors make films in five different genres using the same dialogue. Here's a trailer:
Vint Cerf, sometimes called the father of the Internet, has a few thoughts on watching video on the web. Watch for that word "blur"; everything gets blurry in the new environment.
The Age of Stupid is a documentary film about the oil industry and climate change. It was directed by Franny Armstrong and produced by Lizzie Gillett. I haven't seen the film, but I've watched the making of (embedded below) and perused the web site and I suspect it's a very good film.
The business model behind it is brilliant; totally amazing. Much of the financing was raised through crowd sourcing which has reulted in Gillett and Armstrong owning all the rights to their film. They have used a distribution agent for some territories but they have made a lot of deals on their own, managing to organize a global premiere of over 500 screenings in 40 countries with live transmissions via satellite from New York.
Gillett and Armstrong have created web-based software that allows anyone to book, license and organize a screening.
Anyone in the world is now able to buy a licence to screen The Age of Stupid whenever and wherever they like. Our cunning software will calculate the license according to who you are, where you plan to screen, how many people you're screening to and where you are in the world. You can even keep the profits for yourselves or for your climate campaign.
In the Power to the Pixel 2009 video (below, the filmmakers talk with great excitement and charm about how they raised the money for the film and how they are profiting from it. They give numbers. But according to them, the biggest advantage of retaining all the rights has not been the profits (although they seem quite delighted with those), but the total editorial freedom they enjoyed.
The video is long (23 minutes) but totally worth viewing because it offers a glimpse to one possible future of entertainment, one that is artist controlled -- and in which the artists actually make a profit from their work.
Based on the making of video below, it looks like The Age of Stupid is a terrific film.
Tubefilter has an interesting piece about iTunes getting into original content production (ironically the same day Ink publishes an interview with me in which I lament not being able to get Hailey Hacks onto iTunes).
We’ve learned that the first ever original project is a short film about the fictional cult rock band Spinal Tap, dubbed Fade From Black.
This is a significant development for Apple, which is finally flexing the iTunes distribution muscle it so carefully built up in the past eight years—a massive pipeline for Hollywood’s music, TV and film businesses accounting for billions of dollars in annual revenue for the industry. The company has traditionally steered cleared of placing bets on entertainment content, but now it’s putting its own risky production dollars into play.
...Apple CEO Steve Jobs is no stranger to the life of a hollywood mogul, having founded and sold animation studio Pixar to Disney while on his resignation-hiatus from the company (he is now the single largest shareholder in Disney).
We hear that Suzanne Varney at Apple is overseeing the original content for iTunes, and her LinkedIn profile lists her as “Mgr, iTunes Original Content at Apple.” Not much else we know about her or her team, other than she has some entertainment background, coming from a stint at William Morris.
Check out Rich Baldwin's interview with little old moi over at Ink Canada. Here's a taste to whet your appetite; my comments on why I built a micro-payment system into Hailey Hacks:
We have two business models for TV. There’s conventional network TV where the advertiser pays and the viewer gets the programming for free (-ish) and we have the HBO model where the user pays for the programming. They generate distinctly different types of programming. Your business model [for digital production] is going to reflect the kind of programming you’re creating.
In the long run, the user-pays model is probably better for the audience and for the creator because they are the only two players in the equation. The storyteller tells the story that the consumer wants to hear in the way they want to hear it.
Networks, distributors and advertisers are third parties to this transaction. But in network TV, storytellers and their audience are the ones who are tangential to the real business. Network TV is all about delivering eyeballs to advertisers’ messages. That’s where the money is and that’s the truth that underlies the creative decisions.
When it comes to the web, I think it’s incredibly important that we explore and develop the user-pays model despite the fact that Chris Anderson of Wired and others believe the web should be free. That’s why we set up Hailey Hacks to have a micro-payment system. I wanted to explore this as a possibility. Really I wanted to sell Hailey Hacks on iTunes – every tween girl in the world has an iTunes gift card and is in control of what she buys. But iTunes isn’t ready yet to work with independent web producers (who aren’t named Joss Whedon) so I had to look for an alternate way to put this idea into effect. I built an e-commerce site with a link to PayPal. It means my audience of tween girls can’t buy the product themselves, so they have to turn to a parent who might be reluctant to put a credit card number into the computer. Plus, the project hasn’t been marketed to parents. There are still hurdles to making the micro-payments work for this project.
I’m developing a new site for Hailey Hacks using a web solution out of Vancouver called XL Suite that will hopefully overcome some of those hurdles.
Despite everything I’ve said that is pro-user-pays, I believe web creators have to pursue every method of financing and revenue generation available. So I am also talking to brands about sponsorship and product integration. I’m looking into mobile distribution. I may also look at conventional advertising as well (e.g. Google ads).
You can read the entire interview on Facebook on Ink Canada.
Disney plans to offer a broad array of its content, including movies, TV shows and games, online to those willing to pay for it -- possibly at a single Web site that requires a subscription, president and CEO Robert Iger said Wednesday.
"The notion of going online at some point as a subscribe-to, robust entertainment experience is pretty attractive to us," Iger said. "We are developing such an experience."
Disney already is bringing in revenue online. It has joined NBC Universal and News Corp. as a content provider and equity partner in Hulu, which sells advertising. Disney also sells content on iTunes and charges a subscription fee for its Club Penguin site.
But Iger said much more money can be extracted from Web surfers seeking quality content. He noted that consumers spend $5 an hour at theaters to see movies, 75 cents an hour to read books, newspapers and magazines and 50 cents an hour to watch cable and satellite TV, but only 25 cents an hour to surf the Internet.
"There's plenty of room for people to spend more money on things that they're doing online," Iger said.
Pretty amazing that Mr Iger can pinpoint the cost of consuming TV, reading books and watching movies so well... Or maybe it's not so amazing considering it's Disney. Anyway interesting stats to add to the collection and also confirmation that the user-pays one will shape up to be a viable business model in the long run.
Clickz has a fantastic interview with Justine Bateman who you remember mostly as an actress, albeit one with incredible range (on Family Ties, Arrested Development, Californication). She's also one of the web savvy women building a new entertainment model on the web. She's doing branded entertainment through her company FM78. Here are some of the juicier quotes from the article that is definitely a must read.
We realized during the strike that the bottom of the distribution pyramid had dropped out and that the Internet had crushed the stranglehold on distribution that the media corporations had held for decades. We knew that the studios and the networks would fold in on themselves and that the entertainment business as we'd known it would never return.
When the U.S. government relaxed the rules governing how much a media corporation could own, everything became vertical. And very tall, at that. The result was very few corporations owning the entertainment outlets and too many people in that vertical-ownership silo having a say in the creative process. Both are bad news for the creative community and for the ultimate consumer of the product. For the creatives -- the writers, directors, actors, and crew members -- we entered a season of not being paid our worth, receiving too many notes [changes to the script] during the process, and seeing fewer opportunities.
Sponsor-funded scripted content is one of the best ways advertising dollars can be spent right now. When a sponsor is organically integrated into one of our projects, not only are we accomplishing a favorable association for our audience of that product in that we will always present the product in a good light and make clear to the audience that the sponsor is the reason we are able to bring them this entertainment but it's [also] the gift that keeps on giving for the sponsor.
There are no continuous bills for future ad buys. There is only a distribution model that involves copious amounts of press (an incredible ROI before the show even launches), distribution on all the top sites online, and an involvement of the online community. The show will be passed around, re-blogged, scraped, and shared. And that is one of the ways content is distributed online and is to be embraced.
When we incorporate a brand or company into one of our scripts, there has to first of all be an organic fit, and then the placement in the plot has to add to the story. Sometimes we are dealing with one of our existing scripts on our slate and sometimes we are creating something new for the sponsor. In those cases, we like to discover first what the sponsor needs, what kind of impression are they hoping to make on their customers, and then we create a narrative story that either covers that theme or captures the qualities that the consumer may associate now with the product. Always, the story and narrative are paramount.
In the digital realm you can try to keep Free at bay with laws and locks, but eventually the force of economic gravity will win.
Information wants to be free in the same way that life wants to spread and water wants to run downhill.
From the consumer’s perspective, there is a huge difference between cheap and free. Give a product away, and it can go viral. Charge a single cent for it and you’re in an entirely different business. . . . The truth is that zero is one market and any other price is another.
When you let people upload and download as many videos as they want, lots of them will take you up on the offer. That’s the magic of Free psychology: an estimated seventy-five billion videos will be served up by YouTube this year. Although the magic of Free technology means that the cost of serving up each video is “close enough to free to round down,” “close enough to free” multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube’s bandwidth costs in 2009 will be three hundred and sixty million dollars.
So how does YouTube bring in revenue? Well, it tries to sell advertisements alongside its videos. The problem is that the videos attracted by psychological Free—pirated material, cat videos, and other forms of user-generated content—are not the sort of thing that advertisers want to be associated with. In order to sell advertising, YouTube has had to buy the rights to professionally produced content, such as television shows and movies. Credit Suisse put the cost of those licenses in 2009 at roughly two hundred and sixty million dollars. For Anderson, YouTube illustrates the principle that Free removes the necessity of aesthetic judgment. (As he puts it, YouTube proves that “crap is in the eye of the beholder.”) But, in order to make money, YouTube has been obliged to pay for programs that aren’t crap.
Broadcast television—the original practitioner of Free—is struggling. But premium cable, with its stiff monthly charges for specialty content, is doing just fine.
There's a lot of appeal in Anderson's argument. I do want stuff for free.
BUT I also want to get paid. And as someone who writes, creates content and generally profits from her ideas, I can't really see how I'll ever pay the rent in the future that Anderson foresees. His model tells us to build an audience and monetize it later -- by selling t-shirts, presumably. But I'm a writer and I want to make my living selling writing, not t-shirts.
Both Gladwell and Anderson are speculating, of course. Yes, lots of people are getting ideas and art for free on the web. Partly because they can. But also partly because they sick of the big corporations making money hand over fist. They feel robbed and see nothing wrong with taking a little back. If you've already paid for Sgt Pepper on vinyl, 8-track, cassette and CD, maybe you don't think you really need to fork out money to get an MP3. If your cable bill is several hundred dollars a month, maybe you figure that it's perfectly reasonable to download a torrent of show you watched. I think many people feel that they have already paid or that the money only goes to making big corporations bigger.
Would they be more willing to pay if they felt the money was going to the actual artists who created it? If it wasn't going to make the rich richer but would keep workers working? I think it would make a huge difference to people.
The obvious question is "why Anderson's book, Free, free?"
Connect with Fans (CwF) and give them a Reason to Buy (RtB). CwF+RtB=$$$.
The Age of Stupid
Anyone in the world is now able to buy a licence to screen 
Tubefilter has an interesting 
