Digital Distribution issues
Artists Make More Money in File-Sharing Age Than Before It http://bit.ly/a2ccxk
An extensive study into the effect of digitalization on the music industry in Norway has shed an interesting light on the position of artists today, compared to 1999. While the music industry often talks about artists being on the brink of bankruptcy due to illicit file-sharing, the study found that the number of artists as well as their average income has seen a major increase in the last decade.
Thinking about how to find your documentary’s audiences, Part I http://bit.ly/9zJv1V
This article parallels some content I’ve been teaching in my How to grow and monetize an audience for your independent production” seminar. (Not currently scheduled anywhere but got great attendance and review in New York (March) and San Francisco (June). I’ve also written on the subject Why is the First Audience so Important.
You must find that first audience, what this writer calls the “Insanely Interested”, for two reasons:
1. You cannot market to everyone, and films that are tightly focused perform better (the site with that reference http://thefutureofmovies.com/2010/02/a-target-audience-means-better-box-office seems to have lost its archives sadly). Key quote:
And it’s not that there is some big new trend of more women going to the movies. Rather, said Vinny Bruzzese, executive vice president of the motion-picture group for research firm OTX, the over-performance among women for certain films shows that “studios are catching on that you have to make the movie for a specific audience tend to overperform.”
2. Reaching a single target audience is easier because you can work out where they “hang out” online and in the physical world, making it much easier to target.
From the article, just ahead a graphic representation of the hierarchy of audiences.
Filmmakers are in many ways a romantic lot, embracing new advances while also clinging to the old notion of success: The opening at Sundance to rave reviews, the wide theatrical release, then national television and the Academy Award. For some, it’s still true, but for every Louie Psihoyos there are thousands of expensively-made documentaries that simply never got anywhere. And the reason for that has much to do with approaching audience.
Micro audiences can be of two types. One costs a lot of money to get, and the other costs much less. Filmmakers who can dispense with the dreams of grandeur can often find success and profit in the right kid of micro-audience.
Evidence Shows You Can, In Fact, ‘Compete’ With ‘Free’ http://bit.ly/aTRffo
Modplan points us to a recent talk given by professor Michael D. Smith at Google. Smith is fromCarnegie Mellon and is discussing some of his recent papers, such as one on whether or not “piracy” acts as promotion for movies and another one on how digital sales, when set up right, don’t actually cannibalize other sales. That latter one debunks the silly claim from Jeff Zucker and many others that they’re “trading analog dollars for digital pennies.”
If you can’t compete with “free”, you probably can’t compete in a digital era. This article is a pretty thorough debunking of the myth that you can’t compete with free, and highlights the importance of meeting customer needs, rather than your own needs.
One bit of research involved the natural experiment that happened when NBC Universal, due to a contract dispute with Apple, removed its TV shows from iTunes for almost a year before putting them back. So, what happened when the content got pulled? Well, first, piracy rates increased — and not just in absolute numbers. The research compared piracy rates against the other major TV networks, and found that the rates tracked almost exactly prior to the content getting pulled from iTunes… but the second it got pulled, NBC piracy rates were noticeably higher than the other networks. In other words, not offering consumers a way to buy your content legitimately increase unauthorized access. No shock there, but nice to see the data to support that. Specifically, the data found that the “demand” for unauthorized versions increased by 11%.
Iron Maiden Connects With Fans And The Fans Buy http://bit.ly/dbtEup
I believe that the secret formula for monetizing media is based on Techdirt’s CwF+RtB=profit. Connecting with Fans and giving them a Reason to Buy. Iron Maiden have known this for years as they had to connect with their fans instead of relying on radio promotion to get the word out.
Now that the traditional revenue channels are drying up because they don’t serve the market well, that fan connection seems to be working for Iron Maiden, where there latest CD is selling very well on CD and has limited unauthorized download.
Then again, when you consider the advice from the band’s manager on why they’re successful…
“Invest in the long term. Apply an image. Give the fans what they want. Tour and keep touring. Play the festival circuit. Embrace new technology. Be innovative. Be honest. Be original. Write good songs.”
…you realize that maybe the product from the MPAA studios and RIAA labels just isn’t that great any more.
Why Waiting Until A New Business Model Is Proven Doesn’t Work http://bit.ly/bcybin
Technology changes business models. That’s a given. The problem is, the business models that are being disrupted are often very big businesses, with good profits and the company doesn’t want to disrupt those nice, regular, current revenue streams in order to accommodate a new one. The new revenue is (at least during these phases of disruption) very much below what they are now. No doubt you recall NBC CEO Jeff Zucker’s fear that that the Web will turn “analog dollars†into “digital pennies”.
The examples quoted include Netflix (who innovated and disrupted because they had no stores to protect) and Blockbuster (who had stores to protect; and Kodak who saw digital coming, new it was important but failed to act in time leading to massive layoff and factory closures.
The problem with waiting until you see a clear path forward to the sorts of profits that will be available in a disrupted industry, it’s almost always way too late for the disrupted to catch up. This is why disruption does not come from the major players in an industry, but rather from the small innovator who has no legacy to protect.
There are a few reasons for this:
- Companies always misjudge the speed of trends, especially the rate of change. Things like digital revolutions start out slowly, and the quality seems bad. So companies in legacy businesses figure they have a long time to make the change. But the rate of change increases rapidly, especially once it “tips” and reaches a critical threshold. At that point, if you’re not fully invested in the new business, you’re, way, way, way behind.
- It’s difficult to really understand the new technology/market unless you’re playing deeply in the space. This is the same thing we noted with people who claim that patents are necessary because once a good idea comes along others will just copy it. In many cases, that’s not possible. That’s because the truly innovative ideas require some real hands-on experience. Watching others do it is not the same thing.
- It’s very difficult, culturally, to build up businesses that cannibalize your existing cash cows. The skill sets may be different, and people begin to recognize that these “new” people may be working on projects that replace the “old” people. That leads to a lot of resentment and makes it really difficult to actually hire the good new people — since they recognize they’re going to face those kinds of institutional restrictions. For them, it’s just easier to go to a “native” company that has bet entirely on the new offering.
How Many Times Will Content Industries Claim The Sky Is Falling Before People Stop Believing Them? http://bit.ly/bUNPOi
I think we’re ready to stop believing them now. From Jack Valenti’s infamous comparison of Betamax/VHS to the Boston Strangler to today’s complaining about unauthorized distribution, the content production industries have fought every technological change. And every time that technological change has opened new markets for them. Instead of VHS/Betamax and DVD being the death of the MPAA studios it’s been the salvation.
It may, in fact, be the case that the sky is falling. But, if you claim that the sky is falling whenever a new technology threatens an existing business model, the rest of the world can be forgiven for not believing you when you claim that this time around it’s going to be different than all of the other times. Now, let’s be clear, each one of these technologies changed the business model of the industry. They caused certain revenue streams to decline. But they also opened up new ones.
Piracy Is Promotion, Says CEO of Porn Multinational http://bit.ly/aAqEFN
Not your usual CEO approach to piracy but one that is consistent with his conclusion:
Milton believes that entertainment companies should look beyond piracy, and explore alternatives business models as the battle against piracy is one that can’t be won.
“I think it’s a lost battle,†Milton said, adding: “I look at my own kids, because that’s the best way to know where the market is going. It doesn’t matter if I tell them that it is illegal to download. As soon as they close the door to their room, they download.â€
“They are not afraid of someone who’s tracking their IP-address. They just don’t care, Milton said. “It’s a new world and we have to accept it.â€
So instead of following the RIAA and MPAA down useless fan-tagonistic approaches he suggests:
In the video Milton says that his company will focus more on selling the ‘private lifestyle’ which includes luxurious vacations with an adult theme, and toys and tools that may come in handy while reenacting pirated videos.
With slow progress on human cloning and the 3D-printer, Milton’s bet on selling the sex ‘experience’ rather than videos seems to be a safe one for now.
Rather Than A Record Label, How About A Musical Affinity Group? http://bit.ly/bKibhF
If the Record Labels have a future maybe it needs to be a different future?
I was reminded of this a bit, two years ago, when Topspin’s CEO, Ian Rogers, penned an open letter to Guy Hands, the head of (struggling) EMI, suggesting that rather than think of itself as a “record label” focused on promotion and distribution (two things that are easier and cheaper than ever before), it could instead focus on being the smart filter for music listeners today, struggling to find the music they love amidst so much musical abundance in the world. The suggestion was to take some of the key, iconic, bands under the EMI roof, and put them under affinity-based “mini-labels” with other less well known bands, that would appeal to people who liked the more well known band. It seemed like a great idea, which, of course, EMI has not done.
Then again, isn’t Apple’s new Ping in iTunes heading in that direction, but with a more social component that doesn’t really require the record labels?
Viral Video bad for producers and advetisers http://bit.ly/dqgBKi
Jim Louderback is one smart guy. Revison3 is doing well, building strong audiences and yes, getting enough advertising support to make a business. In this article he debunks the idea that going for “viral video success” is the wrong strategy for producers:
Let’s start with producers and show creators. Media is all about building habits. Successful producers bind an audience to their creation, building an insatiable hunger for the next installment, next episode, next post. But when you focus on viral success, you throw that focus on repeatability out the window. By its nature, viral videos are designed to surprise, titillate and entertain. They are, by nature, unique…
They do nothing for the producer long term (with some exceptions) but worse they’re not good for advertisers either:
Viral videos may be bad for creators and publishers, but they are actually worse for advertisers. Your typical viral video gets passed around, yes, and drives a lot of views. And yes, those can translate into impressions for an advertiser. But as we’ve seen at Revision3, advertising associated with viral videos has only a small fraction of the impact of an ad that runs inside, or alongside, an episodic video program. We’ve seen tremendous results from putting brands next to our long-running episodic programs — those with real communities, high comment-to-view ratios and predictable views. We’ve seen terrible results by associating the same brands and services with the few viral-focused shows we’ve tried out over the last five years. And if you try creating those viral-focused videos yourself, you are in for a real surprise. It is overwhelmingly likely that you’ll end up with closer to a thousand views than a million.
Concentrate on building an audience? What a concept.
Is $10 The Magic Number In Online Publishing? http://bit.ly/d9NS5x
Now that advertising isn’t going to be the only way to fund film and TV distribution, there are all sorts of ideas on how to fill the gap.
While this article is really focused on news, it’s not that removed from the idea of “1000 true fans” although with the true fans meme it is an average of $10 a month that you’re looking for from some “valuable consideration” – doesn’t have to be directly paying for content.
For example, as Shanahan notes in his blog, where he tries to compare ARPUs of public sites, People’s print magazine clocked a high $409 per customer in 2009 while Demand Media, many of whose users don’t hang around longer than to read a how-to article, notched just $1.60 per reader per year.