If something is going wrong it is and it always was popular to blame a technology for it (mostly because a technology can not response to it). The church did it for example when printing was invented and Andrew Keen is doing so in his blog post The Great Seduction: Confessions of an Internet iconoclast. He is blaming the Web 2.0 for destroying our culture and business. He is right in his analysis, but wrong in his conclusions:

The biggest financial problem is that the supposedly new media economy of blogs and YouTube videos isn’t making the content creators much money. That’s because today’s digital technology has made almost all content free, thereby undermining media’s historically successful business model of selling content to consumers. [...] The greatest losers, then, in this great cultural transformation are our traditional creative class – professional musicians, journalists, film-makers, photographers and animators — who are now struggling to monetize their talent in an advertising saturated economy where all the serious cash is being channeled to technology providers like Google, YouTube and MySpace.

Yes, people are not willing to pay for content, because the content does not provide an added value to them! In the past, information was restricted. It provided a competitive advantage or it gave you social status. In the Internet age, information is available everywhere and everytime. Thus our old business models fail and companies that relied on these old business models will fail too! That’s economy. That’s evolution. Don’t blame technology for it!

I do not agree with Andrew Keen that the creative class is suffering from these changes. The opposite is true. Never in history there have been such possibilities for creative persons to show and to monetize their work without the need of large corporations. The Internet democratizes the media distribution. Thus more people will profit, but in less quantity. It’s bad for a few, but good for many.

I agree with Andrew Keen that technology providers like Google, YouTube and MySpace profit most from the new business paradigm, but only because the existing market players are not willing to invest in new market ideas. The media companies have to overcome their fear and to reconquer their markets. They know better how to serve the consumers’ needs than a technology provider like Google. They have the content that consumers are urging for, but they have to unclose their content.

So take the risks and have a good time!

Martin

On Netzwertig I found a survey about the future trends on the Internet. 51 media experts were interviewed, in which direction the Internet is developing during the next few years. The market research instituts AGOF, IVW and INFOnline presented the results of the survey on the OMD – a fair for digital marketing.

One trend on the Internet is paid content. Here are some selected facts:

1. Social networks have problems with the montetization

2. Paid content as a future trend

3. Paid content as one of the three future business models

Good bye and stay tuned.

I have relocated two weeks ago:
Bigger map

(click here and read more…)

My monthly column (in German):

Die Social Networks sind auf Talfahrt. MySpace, Facebook & Co. verlieren Zeit: die Zeit, die ihre Nutzer durchschnittlich auf ihren Seiten verbringen. Immerhin, die Nutzerzahlen steigen noch, aber auch längst nicht mehr so steil wie zu den Hochzeiten. Die sind endgültig vorbei. Das Neue ist verblasst, die Trendsetter ziehen weiter zum nächsten Hype und hinterlassen in manchen Social Networks eine gähnende Leere.

Read the full article.

To be precise, our blog should be titled “paid services are back”, because people don’t pay for content, but for services on content. If you want to sell content, you must offer services for this content. Take iTunes for example: their service is to provide a huge database, where people easily find their favorite music and even more easily transfer it to their mobile player. This is a real benefit for the user!

There are other examples, of course. XING has adopted the Freemium business model, i.e. the content (the business network and the profiles of its members) is free, but for additional services one has to pay. I pay for it! 100 $ per year. Why? As a premium user you can send people you don’t know messages and you have better search options. I need this service for my business and it is of great value for me, so I pay.

One last example: I’m a customer of Audible. I pay about 14,5 $ per month and get one audio book and one audio magazine for free. I love audio books (I’m a junkie, I admit!) and I don’t have the time to read my favorite business magazine brand eins, instead I listen to it and so I pay. 99 % of my audio books and magazines, about 166 by now, I only played once! Unfortunately, it isn’t possible to resell a book after I listened to it. It’s also not possible to give it to another Audible customer and friend of mine, e.g. my girlfriend. This is not a good service, but I pay for it. I pay for it, because most of the Audible content is exclusive and I don’t want to wait for a friend of mine buying it and then ripping it what costs me additional effort. So I pay. I pay for the service of availability.

Have a good time!

A 32 year old MySpace user said this about the ads on his favourite social network. He is not alone according to BusinessWeek and also MySpace is not the only social network whose growth is slowing and whose users are spending in average less time on their networks. The slowing in growth was to be expected, because there are already a lot of people who have an account at MySpace, Facebook & Co.

The decrease in user time and in click rates, however, is critical to the business model of most social networks, which is based mainly on advertising. The reasons for the decrease are:

• The laggards spend in average less time on social networks and so the overall average time decreases.
• The early adopter, which spend a lot of time with MySpace, Facebook & Co. are probably leaving as these networks become mainstream.
• The user are annoyed by the ads and so are moving to new sites, which don’t place ads on their pages, yet.
• The attention of the users stays the same, but the number of ads per user increases and so the average click decreases.

If the incomes from advertising decreases in the nearby future, companies will seek for alternatives, like Facebook, which sold in ten month 24 million virtual gifts (costs: 1 $ per gift). That’s why paid content is back.

Nevertheless, have a good time with your social network – online and offline.

We’ve interviewed a lot of people, especially people IDEO calls user experts, that is extreme users. When you look at the typical bell-shaped curve (e.g. how much people spend online against the number of persons who spend this money online) these are the people at the left or right end. The people in the middle, the majority, are the average customers. From those people you don’t get any insight in why people pay for online content. So we talked to people who spend a lot of money (30 – 70 $ a month), e.g. in Second Life.

Our insights: people pay for online content for different reasons:

1. They are addicted to a certain brand, e.g. Harry Potter. As a fan of Harry they love to spend money for Harry Potter related content because the buying is a special event for them. So they pay once and profit twice: from the buying event and from the content itself.
2. Convenience and safety. You can get any content on the Internet for free as long as you have enough time to search for. However, many people have money, but no time. They pay for content incase the convenience benefit is high enough. It’s all about service! Take iTunes for example. Buy online, connect your Mp3 player and play your favorite music on your way to work. The illegal way would be: search the P2P networks, download one or more different versions of a song, select the best copy, connect your player, copy it to your player and then play it. And even if you have the time to do so, you will have this bad feeling that the music industry catch and sue you.
3. People want to show what they have! This is the most important aspect. You exhibit your commercial CDs in your living room. The ones you copied you store in your working room. People identify and present themselves via the things they own and bought. The price reflects not only the social status, but also how much the product is worth to the buyer and so it says a lot about the person who bought it. For example, I spend most of my money on textbooks. So people who visit me (or my profile on Facebook thanks to the Visual Bookshelf), know that my interests are philosophy and science.

Do you think there are other reasons, too? Please tell us. And have a good time!