Kindle's Overpriced Content

from the hello-walled-gardens dept

On Friday, I expressed skepticism that e-book technology has reached the point where it will overtake the paper book. Now Amazon's PR blitz has begun, and so we're getting more details about the Kindle's features and pricing. I'm not impressed. First, there's the obvious point that the device's DRM will make a lot of customers wary of getting locked into Amazon's proprietary platform. But the even bigger flaw is the pricing model. Apparently, Amazon will charge you $1.99 for public domain books like Bleak House. Kindle also provides you with access to blogs, but only 250 of them (including Techdirt), and you have to pay at least a dollar a month for the privilege of reading what you can see here for free. And you can subscribe to the New York Times, but you have to pay $13.99 per month for that. This really seems like a strange pricing strategy. A lot of consumers will balk at paying for blog content they've always gotten for free online. Likewise, giving away public domain books would be a good way to spur adoption of the device at very low cost to Amazon. And it's weird to charge so much for a digital newspaper at the same time newspapers are dropping their paywalls online. Even the price for new books, $9.99, seems too expensive. Publishers don't have to print, ship, and stock e-books, so their costs are obviously a lot lower. On top of that, the demand for a lot of books is likely to be quite elastic—cut the price in half and you could easily double the number of sales.

The one undeniably innovative thing about the Kindle is the free wireless EVDO access. The limits on access to Internet content may be an attempt to keep the bandwidth consumption down. But in a world where you can get an unlimited data plan for your iPhone for $20 per month, they should at least have an option for a flat rate "all you can eat" data plan, which would allow you to access Internet content and subscribe to an unlimited number of blogs, newspapers, and public domain books. Bezos obviously wants this to be the iPod of the printed word. But one of the crucial factors behind the iPod's success is that it gives you free access to content in open formats. You can rip your CDs and listen to them on an iPod. You can subscribe to an unlimited number of podcasts. With the Kindle, in contrast, Amazon apparently expects customers to buy an unfamiliar proprietary device, and then pay a premium to read content like blogs and public domain books that's available for free on the Internet. Somehow I don't think that very many people are going to go for that.

Filed Under: content, e-books, kindle, walled gardens
Companies: amazon

Hollywood Faces A Swarm Of New Competitors

from the video-startups dept

A lot of people seemed to be interpreting my post about the writer's strike a couple of weeks ago as taking the studios' side. That wasn't really my point. I don't know enough about the details of writers' compensations structures to have any opinion about which side is being more unreasonable in the dispute. Rather, my point was that a protracted strike is going to hurt everyone in Hollywood—studios and writers alike. There's a very real risk that a protracted strike will create an opening for outsiders to attract viewers who would otherwise be watching Hollywood fare, and that at the end of the strike a lot of those viewers might never come back. That would hurt the studios the most, obviously, but it wouldn't be good for the writers either.

Two recent stories illustrate the sort of threats Hollywood is facing. First, the New York Times profiles some of the many online video startups that have sprung up in the last couple of years. These sites develop a variety of different types of content and are built on a variety of different business models. Some are producing "webisodes": scripted, episodic video programs. Others are creating low-budget comedy clips to spread virally. For example, this silly clip of Will Farrell arguing with a 2-year-old has apparently racked up nearly 50 million views. At the opposite extreme, TechCrunch reports on Blowtorch, which has raised $50 million in venture capital to launch a new low-budget movie studio. The company plans to produce movies for about $5 million each, and has lined up 600 theaters near college campuses to show their movies. They're planning to solicit short films on their websites, and show the best short films on the big screen before their movies. It is, as TechCrunch puts it, "a movie company that is thinking like a cable channel": providing users with content whenever and whereever they want it, instead of trying to force users to watch content on the studio's schedule.

Now, it should be emphasized that it's far from certain that any given company will succeed. A lot of the content on these sites isn't that great. But with so many companies trying so many different approaches, it seems likely that some of them will create some hits. And if the flow of new content from Hollywood dries up, that's obviously going to create a huge opening for these sites. And once one of these companies creates a loyal following, Hollywood is going to find it awfully difficult to lure them back.

Filed Under: content, hollywood, movies, studios, writers' strike
Companies: blowtorch

The Chasm Between Saying You'd Pay For YouTube Content And Actually Paying For YouTube Content

from the that's-one-grand-canyon dept

There's been a bit of a discussion going on around a recent survey saying that 11% of people would pay for YouTube content if it meant they could avoid the advertisements. That has people estimating how much money YouTube may be leaving on the table, by not offering a "premium" tier. However, before people start counting this non-existent revenue, there are a few important things to consider. First up, this is a survey of what people say they would do, which often has little bearing on what people actually would do. Many people might think they would pay, but when the option comes up... they don't bother. Already it's pretty easy to avoid the ads on YouTube if you want, so the "cost" of seeing the ads isn't really that high -- and a subscription would have to compete with the ease of just installing an adblocker. On top of that, this discussion ignores how the rest of the market would react. If you were running one of the smaller video hosting sites out there, and YouTube announced a premium service, you would start promoting the hell out of the fact that you could get the same content without paying at your site. While it's true that some people would pay, it would probably serve to boost up some of YouTube's competitors and potentially stunt YouTube's growth. That's not to say there couldn't be premium services that make sense -- but they're probably more for the producers of content, rather than the viewers.

Filed Under: content, paying for content
Companies: youtube

Google's Ad Success Has Lessons For Television

from the ads-are-content dept

Patri Friedman points to a fascinating post by a Yahoo employee (speaking only for himself) speculating on the reasons Google is clobbering Yahoo in the search ad market. In a nutshell, Google was a lot quicker to figure out the benefits of ranking ads by ad quality rather than simply auctioning off the top slot to the highest bidder. Given that online advertisers pay on a per-click basis, more relevant and useful ads can generate more clicks -- and therefore more revenue -- than lower-quality ads. Because ads with higher click-through rates became more highly ranked, advertisers began to compete on relevance as well as price. They began to optimize their ads to generate higher click-through rates. The average quality of ads on Google began to improve. And here's the really important point: as the quality of Google ads got better, users started to discover that Google ads were actually useful and relevant, and they got in the habit of looking at them. This is an example of a principle Techdirt has been emphasizing for years: ads are content, and they're a lot more effective if they contain information people actually want. Google's experience belies the conventional view that ads are a necessary evil users have to put up with as the cost of getting the content they want.

Nowhere is that conventional view of advertising more entrenched than in the television industry, which is constantly wringing its hands (and filing lawsuits) over the detrimental impact of devices like the TiVo and Replay TV that include ad-skipping technology. I think the Google example demonstrates how short-sighted that attitude is. With a little ingenuity, TV networks could be using devices like TiVo the same way Google uses click-through statistics: as a way to gather data on user attitudes toward different ads. If networks priced ad inventory the same way Google does, giving a discount to advertisers whose ads had lower skip rates, advertisers would respond by trying to make more entertaining and relevant ads. And as ads became more entertaining and useful, viewers would be less likely to pick up the remote and push the "30-second skip" button.

Even more radical, the networks could be using TiVo-like devices to distribute shows and ads directly over the Internet. In that case, the device could display a different set of ads to each viewer, with the ads chosen based on the individual viewer's show-watching and ad-skipping history as well as some basic demographic characteristics. For example, users who frequently skip car ads would be shown fewer car ads. Viewers under 40 would never be shown ads for adult diapers, and all-male households would never be shown ads for feminine hygiene products. Such a system would be a win-win for both advertisers and viewers: viewers would find ads more useful and less irritating, while advertisers would be willing to pay higher rates for ads that were precisely targeted at relevant subgroups. And that would solve the "TiVo problem" once and for all: not by forcing users to watch ads they'd rather avoid, but by finding ways to show users ads they actually find entertaining and useful.

Filed Under: ads, content, relevancy, tv commercials
Companies: google, tivo

Why Did NBC Make Life Harder For People Who Want To Buy Its Content?

from the disconnect-with-reality dept

It really is amusing to watch how the companies who are most worried about "piracy" (which is a misnomer) always seem to treat their legitimate customers the worst. We've all wondered why the movie companies put up those annoying anti-piracy ads that waste the time of the folks who actually paid. But, what's most amazing is how many of these content companies are so focused on "piracy" that they miss the fact that they need to provide a reasonable experience for people who actually want to purchase their content. Making life difficult is only going to drive those legitimate customer prospects towards the very activity they were most afraid of. Take NBC Universal, for example. The company is so worried about the threat of "piracy" that it's making up ridiculous stories about the harm caused to corn growers due to piracy. However, at the same time, it gets into a petty argument with Apple and pulls all of its content from iTunes -- which is where the majority of folks who wanted to pay for NBC's TV shows would go. The end result? NBC Universal, for all their worries about "piracy," just made life much more difficult for legitimate purchasers, most likely driving some of them to experiment with unauthorized downloads, just to get the content they would have happily paid for. For some reason, you don't seem to see these types of actions from the companies who aren't freaked out about piracy -- but perhaps that's because they know the way to succeed is to offer a better customer experience and more value, rather than worrying so much.

Filed Under: content, copyright, downloads, piracy
Companies: nbc universal

Online Publishers Association Now Confusing Content And Communication

from the shift-in-strategies dept

For many years, the Online Publishers' Assocation (OPA), a trade group representing various online content providers, has tried to push a specific story in the media with incredibly misleading studies. In 2003, 2004 and again in 2005, the OPA wanted the world to believe that people were willing to pay for content online. That was the story that came out in their press release, and that was the story that many in the press ran with -- even if it was wrong. The problem was that the OPA was confusing services with content. Specifically, they included dating site subscriptions in their definition of content sites -- and that made up a huge portion of the "paid for" online content. But that's misleading. The people who subscribe to online dating services aren't buying "content." They're buying a service that connects them to other people they hope to date. Unfortunately, in pushing a bogus agenda, they really only succeeded in fooling themselves. It gave hope to a countless number of content providers who now thought the bogus model of charging directly for content was increasingly a sustainable business.

Of course, these days, with publisher after publisher realizing that free content is a better business model (hell, even the paid dating services are getting hit from below by the free dating sites), apparently the OPA realized they couldn't spin the same story this year. Instead, as reader David informs us, they're pitching the equally bogus story that the web is increasingly becoming a content platform rather than a communications platform -- which simply isn't true. The value of the internet is always in being a communications platform -- and the repeated mistakes that many companies (from the entertainment industry to newspapers) keep making are often due to their inability to understand that simple fact. Having the OPA come out with yet another misleading report on the topic doesn't help them get there any faster. It will simply encourage more bad business models.

Yes, it's true that content and communication are really closely connected. After all, communication is simply multi-directional content. So what's wrong with the OPA report? The full methodology isn't clear, but from the quotes, it sounds like they considered "communications" to be things like email and IM, but anything web-based was counted as "content." For example, the OPA claims that social networking services helped drive the growth in use of content sites. Say what? Social networking sites? Those are completely about communications, rather than "content" in the online publishers sense. It's the same thing as the dating sites from past years, just replaced now with social networking sites. Even sites like YouTube are often much more about the communications aspect, than the content. YouTube took off because it was easy to embed a YouTube video, allowing people to "communicate" with the videos on the site, and also because of the nice comment system that was included. Sure, the content is a draw, but it's the communications part that made it valuable. The OPA seems to totally misunderstand that fact in the blind hope that its "publisher" members will think that their online strategy is correct. And that's a problem, because such reports will lead more people to focus on bad business models that are about single direction "broadcast" content online, rather than real communications.

Filed Under: communication, content
Companies: online publishers assocation

NBC-iVillage Marriage Already Loveless And Dull After One Year

from the nice-and-functional dept

Last year, when NBC bought out iVillage, the women-oriented online content firm, it looked like a classic case of major media company thinking it could evolve by buying its way onto the internet. Predictably, the company tried to portray the move as something more than a land grab, trotting out terms like "synergies", as it extolled the potential for cross promotions between iVillage and the Today show. The New York Times reports on how the marriage is doing one year later, and not surprisingly, many of these lofty ambitions haven't panned out. Although ad revenue has been solid, iVillage hasn't shown itself to be a strategic asset. Cross promotions with Today have been a total flop and other attempts to put iVillage content on TV have also been a failure. At this point, the deal is panning out very much as we anticipated. From a purely monetary perspective, you could argue that NBC made out okay. But if it really thought that the purchase could help it successfully orient its business around the internet, iVillage hasn't had much of an effect.

Filed Under: content, internet
Companies: ivillage, nbc

NBC Universal Realizes That Ads Are Content Too

from the good-for-them dept

For years, we've been trying to convince people to stop thinking of ads and content as two separate things. Ads are content and content are ads. This doesn't mean that content needs to be infused with product placement, but just that you recognize that any bit of content advertises something. At the same time, it also should make companies rethink how they view ads. After all people will actively seek out good commercials because they enjoy the content. As has been pointed out repeatedly, people don't hate advertising, they hate annoying, intrusive and irrelevant advertising since it wastes their time. But good advertisements are content and people seek out good content.

NBC was actually one of the earlier entertainment companies to at least grasp this concept, and have experimented with a variety of attempts to make commercials more entertaining and interesting, from turning them into mini-movies with plots of their own to even doing product placement within commercials. Now, NBC Universal has announced plans to set up a new site called Didja.com, which is going to make tons of old commercials available online. The NBC execs quoted in the story seem a little too giddy about the prospect of people swarming to the site to see old commercials (and also in the semi-ridiculous idea of social networking around what commercials you like), but it does show yet another glimmer of realization that the barrier between "ads" and "content" went away a long time ago.

Filed Under: advertising, content
Companies: nbc universal

Apparently Web Content Is Hot Again

from the content?--really? dept

Every few years, someone announces that "content is king" online and that the next big success stories are going to be all about the content. Of course, that never actually seems to happen -- perhaps because the content business is a tough one, prone to fads and mostly beholden to a cyclical advertising market. A few years back, some people expected a wave of "blog buyouts" after AOL paid $25 million for Engadget and a bunch of less popular Weblogs Inc. sites. However, not much came of it. Lately, however, Hollywood is turning its eye towards online content, and with it, we're seeing a small wave of online content buyouts. This week first had the announcement that yet another batch of Hollywood insiders were launching an online video property, following the lead of folks like Will Ferrell, who launched similar properties in the last few months. However, what may be more interesting are the content buyouts. First, Discovery Communications, parent of The Discovery Channel, bought the popular TreeHugger blog for $10 million and now HandHeld Entertainment picked up the well-known (and often infamous) eBaum's world for somewhere around $15 million (possibly more with earnouts). None of these deals are really that big, but it makes you wonder if there's going to be a run on various popular independent content sites, and whether or not content really will be king this time around.

Filed Under: content

Future Of Libraries: Legal Providers Of Free Content

from the entertainment-industry-suing-libraries-next? dept

Quite often when there's a discussion about free content online someone will eventually bring up the library comparison, pointing out that libraries provide free access to books and it certainly never killed off the book business (though, there are still some publishers who mistakenly think that libraries are bad for business). At the same time, however, libraries have been struggling with how to update in order to be more relevant in this digital age. Well, apparently one area they could focus on is becoming the legal provider to all kinds of free content -- even beyond the areas of content they're already known for providing. This certainly won't endear libraries to the entertainment industry (at least those in the entertainment industry who are still convinced that their obsolete business model makes sense), but certainly could bring in plenty of younger folks who are interested in checking out the available content and experiencing new books, music, movies and data that would otherwise be difficult to access.

Filed Under: content, copyright, free, libraries