23 March 2010

That'll never work....even if it has

One of my favourite sites to read it TechDirt.... digging into the muck of copyright, patents and new business models etc.   
This is from a post of about whether you can use free content as a business model
It's really stunning to see people who obviously should know better continually insisting that content can't possibly be free to consumers. We've been seeing a lot of it in the news business lately, as newspaper execs who have built up an ad business for many years seem oblivious to the fact that consumers have almost never paid directly for news. And now that same sort of ridiculous thinking is showing up in the video market. Christopher Schneider points us to an article written by Dan Rayburn, who apparently is an analyst at Frost & Sullivan, but who appears to be wholly unfamiliar with network TV in claiming that video content can't possibly be free:
Frankly, I don't see where this idea of "free" comes from. Video content costs money to produce, to distribute and to consume. Yet even with those costs, many seem hell-bent on the idea that business models can somehow survive based on the consumption of free video content supported solely by an ad model. But in reality, that simply can't happen.
It comes from basic economics, Dan, combined with knowledge of how network TV has worked for many decades. In some businesses consumers pay for stuff. In others, third parties do it. In network TV, advertisers have always paid the freight. You would think that a big-time analyst would be familiar with that. But, of course, it looks like Dan doesn't get the economics right either:
If people are not willing to pay a content owner for their content, then it's not worth anything. That's the bottom line.
Dan, how much did you pay for the air you breathe? Ok. How much is it worth? Your "bottom line" is flat-out wrong. Value and price are two different things. Value plays into the demand curve, but price is set by the intersection of supply and demand. If something is priced at zero, it doesn't mean it's valued at zero.
 I'd also like to point out that good radio stations can make money providing content for free as well. 

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