Newspapers Again Thinking About Micropayments

Don't Tell American Idol You Can't Make Money From Free Content

from the see-free,-disengage-brain dept

Mon, Jan 19th 2009 11:08pm — Carlo Longino

As Mike recently pointed out, he gets a little annoyed when people say "free is not a business model." As he points out, free is really just part of the business model, and the challenge is in using free as part of the business model, and he's compiled example after example after example of people doing exactly this. Now add American Idol to this list. Building on its free content -- the TV show -- its producers have teamed up with the company that makes the popular teen virtual world Habbo to create an Idol-themed one. Habbo has built a solid business upon its virtual world by selling virtual goods to teenagers. The new American Idol world will be tied to the show and feature new activities and virtual goods as the show progresses, and will also feature tie-ins from Idol's sponsors. The main content is given away for free, and used to successfully generate further advertising revenues and create interest in secondary, paid products -- like this virtual world, but also the popular American Idol concert tours and other offerings. So why doesn't anybody blast American Idol's producers for giving their content away for free?

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Filed Under: american idol, business models, free, habbo hotel

12 Comments

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pwb, 19 Jan 2009 @ 11:52pm

When the marginal cost of your service is zero, it *MUST* have a free component!
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Michael Foord, 20 Jan 2009 @ 2:30am

But virtual goods should also be free right?
But wouldn't you also argue that as the marginal cost of the virtual goods is zero they should also be giving those away? ;-)
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Fentex, 20 Jan 2009 @ 4:02am

But it isn't free
I don't live in the U.S so I may be mistaken here but is not American Idol shown either on advertising supported broadcast or a cable network? Neither of which are free - one you pay for by the portions consisting of ads and the other by payment of a cable bill.

Actual free would be something like the show being tossed out to the world as unprotected torrents. But torrents of the TV show remain copyright breaches, do they not?
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Jack Sombra, 20 Jan 2009 @ 4:58am

"Now add American Idol to this list. Building on its free content -- the TV show "
As Fentex said, the show is not free, networks/TV stations pay for it, they recoop the costs from advertisers who pay to market their own goods, while viewers pay by having to suffer though Ad's, that generally these days take up about 20% of their viewing time
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Dave, 20 Jan 2009 @ 5:50am

Re: But it isn't free
It makes money that way and through the voting process which is a pay per call service. They make on average $7,000,000 per show on people calling in to vote.
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Monarch, 20 Jan 2009 @ 6:02am

Re: But it isn't free
It's still free to anyone just watching the show. Yeah, you have to sit through watching commercials if you watch it live, but there is nothing that forces you to purchase the products being advertised. So it is essentially free to watch.
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Monarch, 20 Jan 2009 @ 6:11am

Re:
If you are not paying anything to watch the show, it's free. Commercials are content too, so you're getting them for free also. So you are watching the episode for free.

It doesn't matter who is paying for the show, as nothing manufactured in life is completely free to everyone. Someone always needs to pay to have a product manufactured. The issue is, is the targeted consumer having to pay also, or is that targeted consumer getting it for free?

Plus, as an earlier post was referring. Not only does American Idol give away the main product for free to the targeted consumer, but they have a built in Micro-Payment system. The targeted consumer can actively participate in the show for a minimal micro-payment of a text message vote. So the producers of American Idol know how to get a portion of the targeted consumer to pay for part of the show via voluntary micro-payment also.

Now, on top of that, they are getting others in their targeted consumers to pay for other amenities of the show. These guys have some intelligent marketing people.
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hegemon13, 20 Jan 2009 @ 7:08am

Re: But it isn't free
You're right, in a sense. The show does make money off of advertising. However, the show itself is free to the viewer. The advertising space is a complimentary good that they can sell by broadcasting the show to the viewers for free. This is a perfect example of what Techdirt means when they say they're sick of hearing that "free is not a business model." No, free is PART of a business model, just like this one. Having free as part of the model does not mean you can't make money. If you do it right, you should make MORE money, as we can clearly see with American Idol.
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no name, 20 Jan 2009 @ 8:08am

snarky post
I thought free WAS the market value for Idol content.
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anonymous coward, 21 Jan 2009 @ 8:56am

What do you mean, free?
I don't understand your statement that American Idol is free content. Fox pays the producers of American Idol HUGE amounts for the necessary copyright licenses to broadcast the show. Advertisers, in turn, pay Fox HUGE amounts for the rights to advertise on the show. The fact that consumers aren't paying to view it doesn't mean that it either the producers or Fox are giving it away for free.
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ert43, 22 May 2009 @ 10:54pm

good,China printing industry developed this years, who can tell us? China based plastic injection molding services with low costs and supeior quality Steel and aluminum scaffolding for construction is a very useful tool.
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sprearson81 (profile), 8 Jun 2012 @ 7:05pm

Free works just fine for me!
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