Monday, December 5, 2011

Media and Monetizing The Container


By James Curcio
Some of us still remember going to a store to buy a CD, a tape... a record! Or a book. Most of us don't want to buy just any book. We want to buy a book with certain content. A book associated with a certain author or idea we are attracted to.

A few of us bemoan the loss of quality that occurred with the containers themselves over the years. The decline of paper quality, the loss of craftsmanship in the process of mechanization, mass-market industrialization. They are the few who relish the feel of the material object in their hand, consider its craftsmanship a part of what it is. Books themselves used to be works of art. But this is unfortunately an even older perspective on media. Most consumers don't think much about the container, the packaging, or anything else. It is all to be discarded, it is all attractive junk. They want to devour the "good stuff" inside. Or maybe they just want to put the book on their bookshelf and make people think they read it.

You know the story of what's happened. Digital media doesn't require a container. You can download an album, a movie, and now a book, without needing a container. You can carry hundreds or thousands of them around with you. And so we have the advent of "piracy," because all these years we've been monetizing the container. This is not an entirely new point, even for me - I've weighed in on this subject many times in the past. 

What I want to ponder - what I want all of us to ponder - is the conundrum facing both the producers of media and the companies that "support" them. We'll also look at some of the ways that these companies have failed to sufficiently understand the problem they're facing. 
When you "steal" an album, there is one sense in which you are not "stealing" anything. It costs a band or label nothing for you to download their album, in terms of distribution. In fact, you've just saved them a lot of trouble. You got that music all up in your earholes without troubling them with distribution one bit.

But, the problem, of course, is that this stuff isn't "free" to produce. In fact, the number of hidden costs involved with producing media are pretty amazing, especially when you consider time and effort as the primary resources that humans represent, when viewed within the capitalist myth. As a producer of independent media in quite a few formats - not to mention working inside companies that have been burdened and seriously threatened by this change of paradigm - I think I can say I'm pretty well acquainted with the terror that drives labels to do idiotic things like suing potential customers

They want to frame piracy as criminal in the way that punching an old lady in the face and stealing her purse is criminal. But the sad fact is, it isn't. Instead, it is the painful reality of what could be an amazing paradigm shift.

Oftentimes, growth hurts. And so many of these companies (and artists) want to curl into a ball and pretend nothing changed.

Listen, I understand. As much as you might think it's an indulgence, working on this site and organizing it is itself a job. I put a lot of time into it. The other contributors put their time into it. I do so because I'm passionate about it, and I prefer to do things I'm passionate about as much as possible. But sales and ad revenue don't even come close to putting a candle to the hours we sink into it. And we all have rents to pay.

Monetizing digital media calls for an entirely new model and no one has discovered yet. Little indie operations are facing the same issue here that the "majors" are facing, and this is one of the interesting elements of this paradigm shift. The playing field has almost been levelled in a few ways. Or so it would seem at first glance. Labels have become little more than banks with PR contacts. The value of an agent or producer might just be their virtual Rolodex and the fact that the person on the other end will take the call.
It has also become the media advertising to itself, and, often no one is paying for anything. I know my buying habits are not indicative of the "average consumer" (the hell is that?) but 90% of my shrinking income is put into "real world" things like rent, utilities, food, transportation and services like acupressure and massage. Who pays for media anymore? I've got Netflix, and go to libraries or once in a while buy a book. Even if I'm not indicative of the average consumer, I can only imagine that all but the most established media producers are feeling the squeeze.

The solution to this problem so far has been some combination of advertising and paid or premium memberships. These two can even be combined. However, I'm not convinced this is a viable solution for many enterprises.

Let's look at why.

Advertisements on websites are generally produced with a similar mentality to how they are produced for magazines or television. Many publishers have given up on using magazines as an advertising medium because the returns simply aren't there. This is what I mean about it not being a viable solution for some enterprises. Advertisement in magazines works well enough when it comes to products and services that solve common problems, especially those a reader (user) may be experiencing while looking. And they help in terms of brand awareness. But drawing a straight line between brand awareness and profit is hard. You need to have a lot of assets to really go in for the long game on brand awareness, especially when you consider your competition.

Some advertisers and distribution venues (consider YouTube a distribution venue, for instance) think that by forcing the user to watch advertisements, they'll gain some benefit. "Your video will begin in 20 seconds."

How many of you have felt like those 20 seconds were the longest in your life? You sit there and wonder, "is this video really worth sitting through this?"

How many of you felt inclined to buy those products? In advertising, there's an adage about annoying the user. Annoy them enough, and they'll remember you. There's also the rule of seven. (People don't notice something until they've seen it seven times.)

I'd like to call bullshit on both of these, but they have data. Fine. Can you remember the last advertisement you saw on YouTube? Can you remember the last ad you've seen on a website that really interested you? My guess is that, if you're reading this, the answer is- "I have no idea" and "Not recently."

That caveat is important. "If you're reading this." Some advertisers see great profits in a business to business market for instance, and then they'll advertise on a site with considerably more traffic and see no clickthroughs. I know this because I've witnessed it.

Know your market:

Hey Look, An Ad. Did You Buy It?
Does That Prove or Disprove My Point?
Again, you can't monetize every operation the same way. So really there are two challenges facing media companies today, both the paradigm shift I talked about earlier, and this element of differing user behavior by market. Also, I think it is becoming increasingly true that we're learning to simply edit out the ad placement on web pages. I often read websites and am simply not aware of the ads that are staring me in the face. My brain has been trained to avoid them completely. And then there's pop-up blockers.

No, "traditional" advertising is not a magic bullet.

Then we come to subscriptions, paid memberships, premium memberships, and so on. One approach to this ties into the ads: make the advertisements as annoying as possible, and then offer an ad-free premium membership.

This is potentially beneficial to the distribution venue, but I can't imagine it's actually of any benefit to the advertised products or services being run through their ad channels. In other words, the advertising companies are kind of being duped into paying the distribution venue money to annoy their users into paying them more money.

That's actually pretty slick. Or sick. You decide. (It is also, by the way, the only sensible answer to the annoying pre-roll ads on YouTube.)

If you generate enough quality content, paid memberships are still possibly an option for monetizing. But you have to be able to put in an incredible amount of assets and sweat equity before you reach that point. You have to build a lot of trust too, and keep in mind that people are paying $10 a month for netflix so they sure as hell aren't going to pay $29.95 for your comparatively little indie outfit. Plus, you risk alienating your entire market if you put up a pay-wall. (And people will find a way around it anyway.)

This was, by the way, something I brought up in a strategy meeting at a previous employer that was still using a pay-per-product model for digital content. You can't compete with Netflix like that. I got laid off due to lack of funds not too long after, and last I heard the media / IT department has been slashed by more than 50%. So, there you go.

Can you start to see why the levelled playing field is still no better for small outfits?

A new paradigm doesn't call for ad hoc, desperate solutions. It calls for a reconceptualized view of user interactivity, of creating real ongoing relationships with users, and, not to be creepy, entering into their lives. I know that sounds vague. That's because though I have a view of how this would work, it would take a considerable budget, though it's potentially a goldmine for the right projects.

I will say this much: transmedia is the future. But if corporations only think of it as an advertising channel or marketing method, not only have they missed the point, they will ruin their one long-term way out of total annihilation.

Have a good night.

Pre-order a copy of The Immanence of Myth, published by Weaponized in July 2011.

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