Free Soap

When radio started shows were shows and ‘brought to you by’ meant sponsored by advertiser x. Simple and cost effective. People sat down for an hour or so and listened in small groups, meanwhile doing what they were doing. Listening, reading, knitting, playing.

When TV started they copied the same model. ‘Soap’, the worldfamous daily format, essentially was really nothing more then a tv show sponsored by a producer of, yes, soap. People sat down and watched, meanwhile doing what they were doing.

When online media started they copied the same model. People sat down, but the rest is quite different. This time the device was not in the livingroom, it was on a desk and there was only one person active. Not a group of people.  But let’s not think about the implications, this thing is a huge success, isn’t it?

It takes a generation to adopt a new technology, but it takes clearly more than one generation to change the revenue and business models to support producers of original content. Advertising based models do not work for producers of original online content. It works well for search. GOOG still makes quite a bundle, but how about the creative minds that produce the content. If and when it’s a hobby, or a passionate drive to share one’s thoughts, that’s quite okay. But things are different if you have to pay the people who produce the creative and intellectual works.

Recently I heard of a very successfull casual gaming website, attracting 1M unique visitors a month, playing for about 15 minutes. Not bad. CPM however went down to 1$. That amount of money unfortunately is not enough to pay the bills for electricity.

Why did this occur? The crisis, obviously. Advertising budgets have been cut. Advertisers stick to what they consider proven media and models. Money flowed into TV. And GOOG, of course.

In media industries the dependence on advertising, the mood swings of advertisers and volatile corporate spending patterns have become huge problems. Advertising based revenue streams do not offer conditions for a sustainable competitive advantage.

Spending might go up again, although I doubt it. But it certainly will go down again. It’s time for new and more sustainable forms of funding.

Even Chris Anderson had to admit it.

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