From Staid Content to Paid Content
So speaking of advertising (ham-handed segue alert), I’ve been taking a lot of flak from my friends over my contention that ads are economically inefficient and deserving of death. The main counterargument is that advertising eliminates a potentially crushing financial burden by enabling many types of content to be made available free of charge. Advertisers win more revenue, cheapskate consumers get their content fix and no one loses. Why would a halfwit capitalist pig like myself want to butt in and ruin it for everyone else?
Well, I have news for you people: that content is not — I repeat not — free. It’s a well-known fact that consumer products firms spend a sizeable proportion of their budget on marketing. Where do you think that money comes from, the chief executive’s severance package? ‘Fraid not. It shows up right there on the price sticker of your Charmin Bath Tissue and Lean Cuisine Entrees. Yep, you heard right, without advertising everything you buy would be significantly cheaper.
Keeping this in mind, let’s take a closer look at the merits of the advertising-plus-“free”-content model:
- Content such as broadcast TV is defaced with huge quantities of unwanted and distracting material expressly designed to stick in our minds by annoying the hell out of us.
- Measurement of how many people consume ads can only be achieved by broad, unreliable means like Nielsen meters, so mass media content must either appeal to the lowest common denominator or die.
- For the privilege of getting to consume a lot of crappy programming for free, we pay a huge markup on our shopping bill whenever we visit the supermarket.
I for one would rather pay a small fee for programming that I actually want to see, vastly improving program quality through greater transparency (not to mention the absence of obnoxious ads). The aggregate cost to consumers would be no higher. Of course, this might lead to less variety in the supermarket since product launches would be driven by actual merit, not marketing hype. So no more 47 brands of cornflakes to choose from, I’m sorry to say. Boo hoo! The only real losers would be the advertising agencies.
The idea that media content has to be heavily ad-subsidized is an anachronism, just like the assumption that TV must absolutely positively be delivered in 30-minute chunks. We’ll get over it eventually.
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Very well said indeed. :o)
Comment by vlad — 5/31/2005 @ 8:38 pm
Ehm, I meant “fee” of course. How come people only comment on my typos!?
Comment by Matt — 5/31/2005 @ 11:06 pm
Well, I for one agree with many things you say. But what’s the point in saying just “I agree”?
Comment by vlad — 6/1/2005 @ 11:29 am
I and my partner pay UKP100+ annually to the BBC, who operate on precisely this basis. Hurrah for the BBC! Yes, the non-commercial model is alive and well at the BBC!
(I still think it’s the best (or least-worst) broadcasting model - but it still needs a bit of work.)
Comment by phil — 6/1/2005 @ 12:40 pm
Well then I would know that at least one person on earth agrees with me! Sometimes I wonder…
Also, it gives me a warm fuzzy feeling.
Comment by Matt — 6/1/2005 @ 6:05 pm
I completely agree with you, but you overlook one issue: the Corn Flakes people will still want their brand to be #1, so they’ll push and shove until they get their commercial in the shows anyway. Advertising serves an actual purpose, so even if you cut off its favourite outlet, it’ll find a way into your life. That’s the sad part of entertainment.
Comment by MCM — 6/1/2005 @ 6:20 pm
I actually completely disagree. The problem is that you are assuming that everyone will keep getting their TV through existing distribution channels (cable/satellite). This is simply not the case. Video is going to move to an Internet (ie open) distribution model within the next decade. Once it’s on the Internet you’ll find it complies with prevalent business model of the Web, as in free and ad supported.
I agree that broadcast advertising is not focused on my interests. It is designed for the common denominator because it is being broadcast over a closed network to millions of consumers. But do you think this will stay true once video migrates to the Web? Open distribution combines inexpensive delivery with bidirectional communication. It favors business models that focus on the individual rather than the mass market. Internet video advertising won’t be the 30 second spot; it’ll be integrated into the content in such a way that removing it without damaging the value of the content will be more trouble than it’s worth. But we won’t care because the ad will be highly targeted to our individual interests. Ideally, it will be indistinguishable in its value proposition from the content itself.
In other words, the ad and the content will be the same thing.
Comment by Alex Rowland — 6/2/2005 @ 1:03 am
I agree with the shift online, of course, but I strongly contest the notion that content will have to comply with the “prevalent business model of the Web.” Yes, in some cases advertisting “will be indistinguishable in its value proposition from the content itself”, in fact, that’s precisely what I hypothesized in my “Ad Lib” post yesterday.
But I also believe that a lot of content will be available on a subscription or pay-per-download basis. There is already a clear trend in this direction (iTunes Stores, Yahoo’s recent music service, the NYT and many publications switching to pay-per-download for some content, etc.). On the internet, the costs of advertising (in terms of time wasted, polluted enjoyment and sullied impartiality) will be more transparent, so there will be more motivation for people to pay this cost in some other way if this makes sense to them.
Comment by Matt — 6/2/2005 @ 10:17 am
The problem is that pay-per-view models assume that the content is so compelling that it is going to demand both time and cash. It’s just too easy for the consumer to see the thing costs money and spend their time elsewhere and spend no cash while being equally informed/entertained.
NYT’s is a classic example. Maybe a few people will buy access to the actual article once they go to a paid model, but most will just wait for someone to read that same content, paraphrase and comment. NYT will get some paying customers, but the vast majority will get 90% (or more) of the value for free from these secondary sources. Especially when these sources add value (unique perspective, filtering important material, providing other opinions, etc.) The problem in open networks is that it’s so easy to just wait for the same content to show up for free somewhere than to get access immediately for some fee.
Advertising will dominate, not because people love ads, but because it will be one of the few ways in which content owners can actually get paid. I don’t consider myself cheap (I spend $250+ in satellite, internet, netflix, etc.), but I can’t remeber the last time I spent a cent for acces to content (text, audio, or video) online. It’s just too easy to click that mouse and go elsewhere.
Comment by Alex Rowland — 6/3/2005 @ 7:53 am