April 12th, 2012
“The internet is a massive copy machine,” says media futurist, Gerd Leonhard. “We have to find a way to help people pay for what they want in a way that works for them, not for us.”
Or, to put it another way, as content providers (musicians, writers, TV producers, filmmakers, game developers, artists and more) hunt desperately for a viable economic model for the internet, consumers will increasingly be offered better, more innovative, more flexible – and much cheaper – ways to get their favourite entertainment products and services.
Gerd, a consultant on digital business for companies all over the world, says the majority of consumers are happy to pay for content from the internet – just not in the same way as they pay for, say, a hard copy newspaper, or a DVD. They’ll take it for free if they can’t pay for it in a way that suits them – or for a price they consider reasonable, he said during a recent visit to New Zealand. But set up an innovative payment system, and consumers don’t mind forking out.
Take the video/electronic gaming industry – arguably the most profitable internet sector over the last 10 years, he says. Instead of charging for games up-front, many game-makers let people download their product for free and play for a few hours before they hit a paywall. Great for poverty-stricken students. But if you want to spend money that’s easy too – you can personalise your character, buy virtual goods that make your gaming more fun, or upgrade to the next level. Around 80% of people convert, says Stephen Knightly, chair of the New Zealand Game Developers Association.
People will pay for what they are passionate about, Knightly says. In a survey of over 9500 New Zealanders last year sports and entertainment research and strategy company gemba found the top 10 “fanatic passions” for Kiwis included: movies (45%); live music concerts and rugby union (34%), food and wine events (28%) and electronic games (23%). Companies will have to be much more clever about their sales tactics around these passions once broadband (particularly fast broadband) is involved, Knightly says.
And that is good for consumers. In the same way that gamers (if they can resist the next level or the customised gear) can get their games for free, so in the music industry, bands have started giving their music away for free (or nearly free), hoping to sell merchandise or concert tickets once people are hooked. And you might get the first episode of a TV series for free, as a teaser for the rest.
Developing the fan model will also see sports and entertainment organisations customising content that aficionados will be prepared to pay for. If you are a National Basketball Association (NBA) fanatic living in New Zealand, for example, you don’t have to rely on your TV to watch the games you want. NBA.TV provides live or on-demand coverage for games, with added extras like being able to tune in to press conferences and events. There’s also a whole lot of free video stuff on the NBA site.
NBA.TV is also an example of another internet trend that will benefit TV and video watchers – unbundling. In the future, instead of having to subscribe to a package of channels, which probably includes some you love and others you never watch, consumers will be able to pick and choose individual channels – or even single programmes or series.
“It’s going to be a ‘mass of niches’, and that’s good news,” Gerd says. “It means even the small stuff has a chance of being distributed.”
Arguably the most controversial internet payment model is already here – you get stuff for free because in return you are providing data about yourself which is sold to advertisers. It’s the Facebook, Twitter or Google model.
“Personal data is the oil of the internet, the currency of the internet,” Gerd says. “For example, Facebook is going to use the [personal] information to connect advertisers to you. In return you get something from Facebook – free movies, free software, free music.”
So far, the rules haven’t yet been developed around how the information internet users are creating about themselves can and should be used – or how the money generated from that free stuff we get gets back to the people that created it (musicians, filmmakers, writers, artists etc).
But the solution, says Gerd, is in “permission” – working out cunning and economically viable ways for consumers to get content, not “restriction”.
“When five billion people are on the internet, you can’t threaten them”….”if they do something you don’t approve of,” Gerd says. “Instead you have to create frameworks for the legal use of content.”