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

related posts

• February 6, 2008 -- “There’s too much when you sign on.” (1)
• February 4, 2008 -- Why people pay for content (1)
• March 19, 2008 -- A relocation, Ikea and the future of content (0)
• February 24, 2008 -- Es geht bergab – und anderenorts bergauf (1)
• July 22, 2009 -- SnipClip Publishes Teabook on Facebook and MySpace (0)

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.

related posts

• January 28, 2009 -- Trend in 2009: Mobile Tagging (0)
• November 26, 2008 -- 10 Tips for Monetizing Social Traffic Through Virtual Currency (0)
• November 16, 2008 -- New Trend: SnipClip (0)
• November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
• October 14, 2008 -- My Talk about Virtual Goods in Social Networks at the BarCamp Munich (0)

Don’t think this was an easy job! Just 45 meters, but on foot with boxes full of my computer, science and philosophy books we (Peter and Mirj, who are friends of mine and starting their own web company, and my girlfriend and me) worked up a sweat! Remember, the winters in Germany are cold! Now, we are living in a new home with a bigger workroom, but without a kitchen yet. No problem: we have nice friends who invite us to dinner.

Fritz did it, too. Btw: it was very delicious. Fritz is the face and brain behind bootsektor, a (or at least my) famous German blog about computers, the media industry and everything else. And he is my neighbour: he lives about 30 meters away from us. Finally, he was my boss during a project titled “Second Life Testlab”. We (Andi and I) build a Second Life building where we published reviews of virtual products and exhibited the reviewed products.

Fritz has a fascinating history in the media industry: as a musician he was a media producer. Then he wrote articles and blog posts about people and products from the music, the game and the computer industry. So the evening the dinner took place we also talked about content and how to bring it to market. (Another topic was Ikea, because he had the same kitchen, we bought a few days before! He gave us hints how to use the “Ikea modular platform” best.) Fritz isn’t a fan of paid content, DRM and all that stuff, but of DRM-free music, Open Content etc. Finally, I explained him our business idea and he said: “You sell service on content. That’s gonna work.”.

He was right: we do not sell content, because the value of content is zero in the Internet Age. With every copy the value of the original content decreases and with an infinite number of potential copies its value is zero. We sell services on content and people love service! Service means you know what the customer needs or wants and provide him the individual solution to his particular problem. Take Ikea for example: you are standing before a rack and you’ll find next to the rack wood paint and next to the wood paint you find sandpaper. That’s service! They don’t sell furniture, Ikea sells services.

Nevertheless, furniture is the key element of Ikea. The same is true for most media or Internet companies: content is the attractor of any website, but its adhesive is the service. The content is captured by search engines and the content is the reason why people visit the web. However, most content is not limited to one website, so you need a reason why people visit your website in particular. This reason are the services on the content you offer.

Huuh, quite a long post this time :) Have a good time!

PS: Thanks to our relocation and beyond helpers: Mirj, Peter, Ursula, Werner, Hans, Gerti, Stefan, Iris, Karen, Matze, Philipp, Ralf, Holger, Jutta, Richard, Annette, Michael and Fritz.

related posts

• November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
• March 18, 2008 -- Munich Online Network – or my opinion about WhatsYourPlace (2)
• February 15, 2008 -- Content is king. Service is queen. (0)
• February 6, 2008 -- “There’s too much when you sign on.” (1)
• February 4, 2008 -- Why people pay for content (1)

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.

related posts

• February 6, 2008 -- “There’s too much when you sign on.” (1)
• May 20, 2008 -- “Facebook Traffic Declines 10% in April” (0)
• May 14, 2008 -- Facebook Developer Garage Hamburg – a bullet point summary (0)
• May 7, 2008 -- Facebook vs. the rest (0)
• April 29, 2008 -- Social Networking Wars (0)

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!

related posts

• March 19, 2008 -- A relocation, Ikea and the future of content (0)
• February 4, 2008 -- Why people pay for content (1)
• November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
• October 6, 2008 -- Survey about the Future Trends on the Internet (0)
• March 18, 2008 -- Munich Online Network – or my opinion about WhatsYourPlace (2)

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.

related posts

• February 24, 2008 -- Es geht bergab – und anderenorts bergauf (1)
• May 20, 2008 -- “Facebook Traffic Declines 10% in April” (0)
• November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
• June 4, 2008 -- Social app metrics (0)
• May 19, 2008 -- “Myspace/Facebook App Platforms” (0)

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!

 

related posts

• November 11, 2008 -- Web 2.0 Is Not a Threat, It’s a Chance. (0)
• March 19, 2008 -- A relocation, Ikea and the future of content (0)
• February 15, 2008 -- Content is king. Service is queen. (0)
• February 6, 2008 -- “There’s too much when you sign on.” (1)
• January 27, 2009 -- Social Gaming & Virtual Goods (2)