Big Content Needs New Business Models
From Reuters, an article reporting developments in Big Content, including the possibility of $30M Comcast deal to buy NBC. Most of the article is business reporting, but the following quote goes a little farther:
“The problem is people don’t want to pay for anything on line,” said Paul Levinson, media professor at Fordham University in New York.
This is incorrect. The problem is that people on line increasingly understand that on line technology allows for effectively limitless distribution of effectively limitless copies of an ever burgeoning content catalog. Those same people have been raised to believe in the principles of a free market, wherein prices drop as supplies rise. By such principles, with content supplies approaching infinity, content costs should approach zero. This has already happened with data storage. Not so long ago A 1mb floppy cost a dollar. Today a free gmail account comes with over 7gb of space, a $7,000 value by not so distant standards. The cost of data storage been so completely deflated as to make a megabyte effectively free. It is true that those accounts, along with google’s free search engine, and services like facebook and twitter and youtube, are not completely free. Better to say they are free to users, having been subsidized by advertisers, much like television. This doesn’t change the central fact that today’s technology allows such subsidies of what formerly would be a $7,000 retail value.
A business model built a century ago in an era of content (and replication and distribution) scarcity simply will not survive the realities of the wealth we enjoy today, a wealth created by advances in communications technology. The beneficiaries of the old business model will not be able to keep all that wealth to themselves. It will be distributed to the masses by means of google and youtube and the descendants of napster and grokster, and no amount of wishful thinking or manufactured scarcities can prevent such distribution. The lid to Pandora’s box swings only one way, and the technology that provides our riches ultimately cannot be wished away. Instead, old business models will become increasingly less viable and new ones will supplant them. The people who profit most in the next decades will be those who develop the new models.
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