The April 24 issue of BusinessWeek has a special cover feature on innovation. Big picture concepts presented:
April 2006 Archives
In today's media news: ABC television network will offer some of its most popular shows, such as "Desperate Housewives" and "Lost," for free on the Internet in a two-month trial.
ABC already sells digital downloads of its highest-rated TV shows on Apple's iTunes and this is an opportunity for ABC to learn about the free-to-consumer paid advertising model.
From a macro perspective, this is interesting in terms of potential to create a viable "cable bypass", as CBS CEO Leslie Moonves calls it, by going through the Internet rather than over cable or satellite services.
From a paid content perspective, I'm asked all the time: should media companies offer their programs online to viewers free of charge, monetized through advertising embedded in the streams? Or should companies charge the consumer on a pay per view or subscription basis?
My answer: It depends on the type of programming - and the strength of the advertising market.
As Larry Kramer, president of CBS Digital Media, observes in an article on CNNMoney.com: what advertisers want is a large enough audience to matter.
Programming that is popular and mass market - think the NCAA men's basketball tournament, Desperate Housewives, and Alias - can attract a large enough audience and can work well with an ad-supported model online.
When you put such programming behind a pay wall online, you're typically cutting off 99% of the interested audience who won't otherwise pay for content - thus making the product less interesting to advertisers.
Like It's 1999?
One thing I don't hear a lot of people talking about: to what extent is free video enabled by an up advertising market?
Advertising has cyclical ups and downs. Today, video inventory is in relatively short supply for advertisers. When the advertising market drops again - will media companies find they set themselves up for excess inventory, bandwidth costs- and an audience re-conditioned to everything being free?
The rush to offer programming free to consumers monetized by advertising reminds me a little of 1999. Remember when the online ad market tanked in 2000?
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About
David Eckoff is a media and technology executive.
Views expressed here are his own and not those of his employer.
Views expressed here are his own and not those of his employer.
