The million dollar question for content provides since the advent of the Internet has always been – how do we get paid for our content? The industry has tried many strategies over the years but we are still a ways off in figuring out this most crucial of areas in our brave new and robustly growing “Internet Industrial Complex.”
It may be fair to say that this industry is going through the same life-cycle as most new revolutionary ideas that dramatically change the way we live out our lives. Not trying to be overly dramatic here but; if we look at other revolutions that changed the game forever the pattern becomes clear. During the industrial revolution between the 18th and 19th centuries, the tipping point came once we figured-out how to mass produce products and get the price-point down to where the average person could afford unimagined luxuries. Back in those days, the incumbents (horse and buggy manufacturers) thought Henry Ford’s little idea was quite cute. In the end the cycle is always the same: start with a brilliant idea that improve on existing systems, get the product and/or service to market, bring your barriers to entry as close to zero as possible, make lots of money.
Fast forward to 2011: History repeats itself yet again. Legacy media did not take new media seriously until the “leak” became a “torrent” and advertisers started speaking with their feet. The challenge for Legacy media has always been a question of measurement; how can you tell me with any degree of certainty the “actual” number of people that saw my ad? Enter the Internet – did someone say web analytics? Hello! What a monumental improvement on the existing system of targeting and measuring penetration.
In any event; effective marketing is driven by high-quality data; new media has an uncanny ability to collect an incredible amount of data with each touch-point. Securing highly targeted databases with top quality demographic information has always been the holy grail for marketers. The ability to collect this highly prized information through really cool delivery platforms is where the sweet-spot lies.
So what does this mean in a “real terms” – let’s take a look. JESS3 Labs, an incredible creative interactive agency that specializes in visual storytelling has some really cool Infographics to illustrate this ever evolving universe. The numbers speaks for themselves, they are truly eye-popping; 4.6 billion cell phone users, 500 million face book users, 190 million twitter users, etc. (see JESS3 Labs illustration for complete breakdown). These are the kind of numbers marketers can “scale-up” to and investors can salivate over. And just imagine; the wired world as we know it is still a very young one.
Notice the number of cell phone users; by far the largest segment in the space. With these numbers can there be any argument as to where the real action will be – cell phones and wireless hand-held devices hands down. The FCC gave the wireless space a huge boost when it decided to give the segment free reign by not regulating it this past December.
For a long time; especially during the emerging phase of the industry, observers wondered if it was at all possible to create a revenue model for the web. To put the Internet in “play” in a big way, the industry had to giveaway it’s services and people naturally got accustomed to free stuff.
Well, the transition to paid content is finally well on it’s way! The Pew Internet & American Life Project did a study in the fourth quarter of last year that produced some interesting findings.
‘Nearly two-thirds of internet users (65%) have paid to download or access some kind of online content from the internet, ranging from music to games to news articles. Music, software, and apps are the most popular content that internet users have paid to access or download, although the range of paid online content is quite varied and widespread.
In a survey of 755 internet users between Oct. 28 and Nov. 1 2010, respondents were asked about 15 different kinds of online material that could be purchased or accessed after a payment. The online content assessed in this survey includes only “intangible” digital products such as software, articles and music that need not have a physical form. This is in contrast to previous surveys which were designed to measure the use of the internet to purchase “tangible” products such as clothes, CDs, books, or computers or tangible services such as hotel reservations or airline tickets.
In this survey we asked the following question: “Please tell me if you have ever paid to access or to download any of the following types of online content?” The findings show that:
- 33% of internet users have paid for digital music online.
- 33% have paid for software.
- 21% have paid for apps for their cell phones or tablet computers.
- 19% have paid for digital games.
- 18% have paid for digital newspaper, magazine or journal articles or reports.
- 16% have paid for videos, movies or TV shows.
- 15% have paid for ringtones.
- 12% have paid for digital photos.
- 11% have paid for members-only premium content from a website that has other free material on it.
- 10% have paid for e-books.
- 7% have paid for podcasts.
- 5% have paid for tools or materials to use in video or computer games.
- 5% have paid for “cheats or codes” to help them in video games.
- 5% have paid to access particular websites such as online dating sites or services.
- 2% have paid for adult content.
And 6% of internet users said they had paid for another kind of content not mentioned in the list of 15 the survey offered.
Of those internet users who have purchased online content, nearly half (46%) have purchased only one or two of the types of content covered in our survey. Some 16% have purchased six or more types of content.’
With hand-held wireless devices expected to proliferate in a robust way over the next five years or so combined with the ever increasing capabilities of the cell phone, the possibilities from a marketing perspective is off the charts.
Cash fo Content Study synopsis data (in large quotes) secured via Pew Internet & American Life Project; see citation and link directly below.
Jim Jansen. Cash for Content Online. Pew Internet & American Life Project, December 30, 2010, http://pewresearch.org/pubs/1842/internet-users-pay-download-access-online-content, accessed on January 3rd., 2011