Looking for a Business Model

Looking for the Proceeds in TV-on-Demand

For five decades or so, the television industry’s main mission has been to come up with hit programs, get them on screens, and hope people will stop and watch. Now, that is just the starting point.

As an era of ordering TV shows at the push of a button gets underway, new challenges are clouding the landscape in the year ahead: What business models are going to work and who is going to get paid what?

These questions loom behind attention-grabbing announcements in recent weeks from some of the biggest TV networks, cable operators, satellite companies, gadget-makers and Internet players, including Apple, Disney, NBC Universal and Comcast, offering what is expected to be the first of many new video-on-demand and downloading services.

What Idiot Is Running Sony These Days?

Where do they com up with these stupid ideas? And what does it say about how the notion of “art” continues to be debased? Sony Draws Ire With PSP Graffiti

Seeking to market its handheld game device to hip city dwellers, Sony has hired graffiti artists in major urban areas to spray-paint buildings with simple, totemic images of kids playing with the gadget. But the guerrilla marketing gambit appears to be drawing scorn from some of the street-savvy hipsters it’s striving to win over.

Coming on the heels of widely publicized news that Sony music CDs infected customers’ computers with security-hole-inducing spyware, the campaign for the PlayStation Portable is being derided on the internet as an attempt to buy the credibility of street art.

Pricing Digital Music

A cute story, but a difficult market to police without some serious architectural changes whose implications are not quite so clear: The Right Price for Digital Music – Why 99 cents per song is too much, and too little

The one bright spot for the industry has been Apple’s iTunes store, which has sold 600 million songs since 2003, accounting for 80 percent of legal downloads in the United States. Piracy is clearly here to stay, but as iTunes has shown, the record companies’ best strategy is to provide an easy-to-use service that offers music downloads at a fair price. But what price is “fair”? Apple says it is 99 cents a song. Of this, Apple gets a sliver—4 cents—while the music publishers snag 8 cents and the record companies pocket most of the rest. Even though record companies earn more per track from downloads than CD sales, industry execs have been pushing for more. One option is a tiered pricing model, with the most popular tunes selling for as much as $3. After all, the music honchos reason, people pay up to $3 for cell-phone ring tones, mere snippets of songs.

[…] What we need is a system that will continue to pack the corporate coffers yet be fair to music lovers. The solution: a real-time commodities market that combines aspects of Apple’s iTunes, Nasdaq, the Chicago Mercantile Exchange, Priceline, and eBay.

Here’s how it would work: Songs would be priced strictly on demand. The more people who download the latest Eminem single, the higher the price will go. The same is true in reverse–the fewer people who buy a song, the lower the price goes. Music prices would oscillate like stocks on Nasdaq, with the current cost pegged to up-to-the-second changes in the number of downloads. In essence, this is a pure free-market solution–the market alone would determine price.

[…] The big wild card here is the impact of illegal file sharing. David Blackburn, a doctoral student at Harvard, has argued that peer-to-peer systems increase demand for less popular recordings but dampen sales of hits. If that’s the case, charging extra for top sellers might just push legal downloaders back into the outlaw world of peer-to-peer file trading. If that happens, perhaps the record companies will start offering free digital downloads of top-100 hits (with ads embedded inside, of course), while charging whatever the market will bear for the rest. A Digital Music Exchange may not be a perfect solution, but who would you prefer to set the price of music: consumers or record executives?

Alternative Distribution Networks

Discs are the new soapbox [pdf]

In these polarized times, there’s at least one thing upon which liberals and conservatives can agree: The political potential of film. DVDs, in particular, are regarded as a way of sidestepping a risk-averse Hollywood establishment and getting the message out.

[…] But more are climbing aboard the pop culture bandwagon — and technology is greasing the wheels.

“The documentary ‘Michael Moore Hates America’ debuted at our festival and the DVD sold about 20,000 copies on our website alone,” Hubbard said. “That’s not a turn-of-the-head number for a studio executive, but it’s a huge opportunity for producers of low-budget films. Anyone with a camera and a good idea can compete these days because the cost of entry is very low.”

DVDs are cost-effective in terms of marketing as well, notes Govindini Murty, co-founder and co-director of the annual Liberty Film Festival, Hollywood’s first film festival for conservative and libertarian filmmakers. “If theatrical is prohibitively expensive, DVDs are a great way to get out a political message,” Murty said. “You can get free media play in such conservative strongholds as the blogosphere and talk radio.”

CB Christmas Profile

The ironic results of a confluence of creativity, culture and the marketplace: You’re a Good Magnet for Holiday Ads, Charlie Brown [pdf]

In a twist that might make its round-headed hero exclaim, “Good grief,” Charles M. Schulz’s “A Charlie Brown Christmas” — the animated television special about love conquering materialism that airs tonight on ABC — now fuels a $1.2-billion-a-year global publishing, merchandising and marketing machine.

[…] Powered by “Peanuts”-related products that include clothing, cosmetics, dishes, toys and stationery, Schulz has become the second-most-profitable “dead celebrity,” Forbes found, with only the estate of Elvis Presley collecting more.

“It is ironic that something so totally noncommercial has become so commercial,” said Doug Stern, chief executive of United Media, the licensing arm and syndicator of the comic strip that still runs in 2,400 newspapers five years after Schulz’s death.

“Peanuts” accounts for more than 90% of United Media’s licensing revenue, according to regulatory filings. Last year, United Media took in more than $100 million in revenue.

“In a sense, the financial success has been an unintended consequence,” said Stern, who believed Schulz was more focused on drawing his comic strip than on the merchandise it generated. “The artist’s soul shines through.”