Sunday, March 12, 2006

Getting clearer everyday

The ABC Network in the US was the first to offer programming via iTunes (including Lost and Desperate Housewives). That gave viewers a choice of paying for an ad-free version as opposed to programming VCRs or DVRs to achieve the same thing. It also allowed viewers who had missed past episodes to catch up. So there was a mixture of potential convenience and freedom from ads that may have driven purchases.

Now, ABC is going to offer streaming of its shows with ads but for frees. It will literally broadcast them over the Internet. As usual, what the quality of these is will be an issue but it will certainly make the iTunes versus ABC download choice clear -- ads or no ads. And the price to be free of ads -- $1.99. In the case of daily shows, such as The Daily Show with John Stewart it is less, aout 62 cents an episode (saving 9 minutes of ads in a 30 minute slot).

Here is an interesting Slate article about whether ads versus pay will dominate. It reaches no conclusions but states lots of fears that consumers will be worse off. I am not so sure and am working on this problem. I am haven't cracked it yet but one thing is for sure: don't expect to be paying for shows that are low quality. For those, the only way people will watch them is if they are free and the only way broadcasters might make money is by peppering them with ads.

Expect more updates on that research in the future.

1 comment:

Joe Yap said...

Hi Joshua,

If I may, I'd suggest that the ideal approach for the content producer would be to offer both.

The way I see it, either way, the content producer would derive revenue - either from the advertiser, or the 'fanatic' who would value having the content ad-free.

Of course, it would be helpful for the producer offering the content to glean as much information from the free viewers in order to provide valuable targetting information to their advertisers.

Having just one or the other would limit the value that content producers can capture by reducing access to the total pool of viewers.

Also, to increase the perceived utility that paid subscribers would receive, other discriminating characteristics such as a time lag before release for the free version, etc might be useful.

We could see it as:

Revenue from paid subscribers = Revenue from advertisers on the free versions

with a delicate balancing act using levers such as pricing, and discriminatory tactics (e.g. time delay)

Salon magazine started out being free, then they went for premium subscribers who would pay for their content. I suspect this move proved painful as they've opened it up again, with additional benefits for subscribers

Cheers and keep up the posts !

JY