EU Gov't Study: People Won't Pay For Content; New Business Models Needed
from the wow dept
Just as more and more European countries are trying to ban or block sites like The Pirate Bay, it seems like a few more politicians should take the time to read the new EU study on digital competitiveness (found via P2P Blog). In it, the authors study the question of paid content and "pirated" content, and find that an awful lot of people have absolutely no interest in paying for content, no matter what -- and that the entertainment industry is exaggerating the impact of things like file sharing, since so few people would actually pay for the content in the first place (even if it weren't available for free). Rather than blaming "piracy," the report properly notes that it's a shift in technology (from atoms to bits) that has created the business model problems today:De-materialisation of creative content distribution is shaking up the business models of the creative industries, with both potential opportunities and potential losses and bringing new players into the media industries' landscape.It goes on to point out that the answers to these questions aren't going to come from lawsuits, but by recognizing how people (especially younger generations) view such things and putting in place business models that work. Still, the report does hedge in places, talking about the need for a "favorable regulatory environment," though it's not at all clear what's meant by that. But it's good to see a gov't report recognizing this is really a business model (and technology) issue, rather than a legal problem as many in the legacy entertainment industry would have you believe.
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Filed Under: business models, eu, paid content
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The alternative is that the sources of this digital media die off. Without income, there will be little or no media interested in producing content that cannot be controlled and properly monetized.
The suggestions given by Gurus like Chris Anderson are all pretty much dead ends. The combinations of adblocks and ad blindness mean that advertising is all but ignored. Most of the other models require a small number of people to significantly overpay for other products or services to support the freeloaders. It isn't supportable in the long run.
So the discussion of "you need a new business model" is all well and nice, but when there are no models out there that function, what is left? Less content, or less good content and more amateur whatever content.
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Nice try
There. That's out of the way.
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Gee, sounds like our tax system here in the U.S.
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Re: Backend Payment
Stop suing your fans and maybe (if you are lucky) they will respect the product again. When pirates are considered a more reliable and trusted source for content and added value, yes there is definitely a problem in image and how you are selling your products....
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The duality of it all ...
This is where the big discussion begins .... I now understand mikes views... scary that
I will think about this and get back to you all...
Mona Lisa Style GRIN....
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same old whiners...
Take another example: Techdirt. Granted, I'm not personally familiar with Masnick's take home pay -- but this web site surely is not a nonprofit hobby. I personally read this blog on a daily basis. I don't pay a dime to do so. Yet, somehow, there's always enough for me to read, and the quality hasn't dropped. According to the doomsayers, either the blog will soon shut down, the quality of the posts will drop, or I'll start being forced to pay each time I read it. Let's see if they're right.
(the last 11 years would tend to make me think they're not...)
*I used to be a manager for Office Depot. I saw many printers sell for less than the wholesale price -- especially inkjet fax machines. They were typically $20-30 less than wholesale.
These are just two examples of this; I could go on. (Gas Stations, Sony Playstation,....)
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Re: Re: Backend Payment
This is the ultimate joke. What you are really saying is "stop caring about your content, just give it away and be done with it". Total crock, can you not see past the end of your nose? When there is no income, who will provide the music and movies you love?
Nobody. Or wait, you can listen to Amanda Facepalm Palmer all day.
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Simple answer
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Re: same old whiners...
If they model was really "true", they would give the printers away, and ink instead of being $39.95 would be $99.99. Except nobody would pay it! Most importantly, HP is happily making their margin on the printers as well, you know they aren't producing them and shipping them out of the factory for free either.
It isn't that everything has to have a "profitable" dollar value, but it has to have some sort of way to self support and self-sustain, or people will stop doing it alone.
As for printer ink, the ink refill places (Island Inkjet in my area) has pretty much blown the office depots out of the water, refilling for about 1/2 the price. If they are using ink sales to support cheaper printers, they are going to find the need to either raise the cost of printers, or blow up the refiller companies.
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Your joking right? You suggested an excellent proposition to begin with and that is adding value to content such as merchandise.
Think along the lines of Hannah Montana (Yes, I have little girls). What's really valuable her content such as a movie or the merchandising associated with it? There is always a way to make profit, even if you give your content away.
The most farcical of all suggestions is somehow we will have "no good content left" in the future due to sharing. If your version of the apocalypse is a future with no more crappy Hollywood blockbusters then I'll take that any day.
This EU report just highlights what every reasonable technological minded person already knows. It is time to hit the drawing board and re-think your business plans. It is the 21st century and you will fail if you think business as usual is going to keep working.
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When there is no income...
Hmm, that's interesting. I could have sworn this Government funded study mentioned something about that. Something about consumers not wanting to pay even if the junk wasn't illegally free? Sounds a lot like "no income" to me.
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Re: Re: same old whiners...
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What some posters here don't seem to grasp is this is not an either/or situation. This is Darwinian evolution. You wanted free-market capitalism? Then stand up like a man and act like a capitalist. Change your business model in the face of a changing marketplace, or get out of the business.
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Re: Re: Re: Backend Payment
The content is not and has never been what was "valuable", it was the method/medium of distribution. Otherwise we all would have been happy with radio (or even further back, going to taverns and just listening to singers/bards) and no one would have ever bought tapes/CD's.
Now the world has moved on and we no longer need CD's as we can get digitally what we want when we want
Now that distribution is virtually unlimited and free the Industry needs to take a page out of retailers play book and realise the "content" is the loss leader, it get's people though your door (in this case into your "brand"), your profit comes from the other things they buy once you get them "in the door"
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Go out of business then, see if I care.
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Re: same old whiners...
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Re: Simple answer
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Streaming Victims
Europeans are streaming victims.
Lack of portability and download-to-own mixed with high costs of bandwidth for delivering IPTV is a losing proposition. However, that does not mean paid content is a losing proposition.
The study goes on to state that about 30% of people say they are willing to pay and as many as 10% did in the last 3 months. This is basically consistent with other data coming out the US during the same time period.
Online video usage rates quoted by the blog author and the study are also inline with similar data in the US. About 20% of people are viewing video online. About 20% of people are viewing TV shows online.
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This, this, this!! Finally, one of you shills get it! This is what everyone has been saying! The content won't get paid for directly, it will be used to sell something else!
I wish I knew your name, so I could go out and have a nice button or trophy made for you; I'm so proud!
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I realized one day that I was spending a lot of money for junk I would never pay for under normal circumstances, so started downloading.
Now, I delete more than 70% of the movies I download before they are one-quarter the way through playing. I feel better about not being ripped-off.
As others have pointed out, the expectation level these days from Hollywood or the music industry is just more trash. It's not worth buying.
Once in awhile, we see something worth paying for, but usually it isn't distributed through the standard Hollywood distribution system anyway.
And yes, it's clear that the entertainment industry has a simple supply vs demand problem. I agree that the demand is not near as strong as the espouse, and that their "P2P" losses are grossly exaggerated.
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See, this is evidence that given a free market (ie: fewer intellectual property restrictions) people will produce content that others will consume. However, of course they see this as a problem because the status quo wants to find ways to take every penny that we earn just like they manage to regulate taxi cab driving by adding artificial scarcity like medallions to higher the price. Otherwise taxi's would be far cheaper because other players would be willing to join the landscape.
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there is a way
movies, however, have no such ancilliary income sources for the artists. A production company (be it studio or independent) may use merchandising agreements to offset some of the production costs, or a master distributor may buy the merchandising rights along with the rights to distribute a film in a certain territory (which is why you see indie films distributed by Sony Tristar or Fox - they didn't make the film, they just buy it to distribute).
When an artist gets involved with a film, whether as screenwriter, director, actor, etc. they are often promised a piece of the film sales. While many piracy advocates focus on the film where the stars get paid millions, they overlook that a) on those same productions the multi-million dollar talent is usually one or two actors; many of the others are just getting union scale, plus a promised percentage of the gross and b) most films are made for $20-$30 million with no one getting a huge paycheque.
When you take away the residuals (percentage of gross from box office, DVD sales, etc) screenwriters and actors are lucky to earn a base living at all - there can be months between work, and it's residuals that keep them fed and housed. If you download a film you clearly thought it was interesting enough that you wanted to watch it - but in doing so you're denying the artists that made the film income they're entitled to by their efforts to entertain you. They performed a service (acting, directing, writing, etc.) that you benefit from by watching, but you're taking their service illegally rather than paying for it. If you did the same to anyone in the real world it's theft and/or fraud.
But with downloading so easy, people will do it. Even if a film cost $0.99 v. free, people will go for free.
Happily there is a solution. Television has been giving away content for decades, using interstitial commercials to pay for it. The same can be applied to film; you get the movie for nothing, but there's some advertising on the site that covers the license cost of the download.
I've created a service to do this at http://www.cinestream.ca It's not actively allowing downloads yet because we need at least 50,000 members to show advertisers and content providers there's a demand for this model. But if my relatively small company has come up with a viable model and the technology to carry it out, what's stopping the big boys?
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The link to the study ...
Page 57
"5.1. Willingness to pay for content
Results from the 2008 survey reveal that less than 5% of Europeans had paid for online
content in the last 3 months. For the youngest age group (16-24), this figures is twice as high.
When looking at the individuals that did not pay for online audiovisual content, half of them
state that nothing would make them change their minds. For approximately 30% of them,
lower prices would be an incentive to pay, while other improvements (wider choice or availability, enhanced quality, better payment methods, the right to share material) or the lack
of freely available content would convince between 15 and 20%. Interestingly, the willingness
to pay of youngsters and the general population is very similar (Figure 1)."
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