http://www.opengardensblog.futuretext.com/archives/2009/04/can_we_unwind_t.html Wireless mobility - Innovation - Digital convergence - mobile web 2.0 Thu, 19 Jan 2012 13:47:14 +0000 hourly 1 http://wordpress.org/?v=3.2.1 http://www.opengardensblog.futuretext.com/archives/2009/04/can_we_unwind_t.html/comment-page-1#comment-1795 Russell Buckley Sun, 26 Apr 2009 16:16:17 +0000 http://dev5.indigocontenthost.co.uk/archives/2009/04/can_we_unwind_t.html#comment-1795 What this doesn't take into account is that currently digital advertising spend is considerably less than it should be. In other words (and in round figures) people are spending about 20% of their time in the digital world and yet digital accounts for only about 10% of ad spend. The recession will accelerate the trend towards digital ad spend because it's the most accountable medium. Thus, as more ad inventory is available, more ad dollars will be available to support it - roughly $250 Billion more dollars to bring it up to parity with time spent online. The challenge for the industry is to find better ways of engaging the audience, which in turn can support higher revenues driving towards the media owners. I do agree that ads aren't the only answer in every case. But for many media owners this will continue to be a vital part of their revenue mix - exactly as it is for most media owners in the traditional business model. Having said that, the old straight paid-for content (via subscription or micro-payments) are not likely to be the answer, with very, very few exceptions. Instead, the industry needs to develop new models for revenue generation in return for providing content, in addition to advertising. As an example, the Kindle, which you cite above currently has an interesting core business model with Sprint, whereby Sprint provide free downloads via their network and in return share revenues generated by the Kindle from book revenues. Perhaps, newspapers could negotiate free content for the Kindle (added value) in return for a slice of eCommerce revenues too. I realise that some newspapers are available via the Kindle already, but in reality, paid subscriptions via this channel are never going to scale in my opinion. Russell What this doesn’t take into account is that currently digital advertising spend is considerably less than it should be. In other words (and in round figures) people are spending about 20% of their time in the digital world and yet digital accounts for only about 10% of ad spend.
The recession will accelerate the trend towards digital ad spend because it’s the most accountable medium. Thus, as more ad inventory is available, more ad dollars will be available to support it – roughly $250 Billion more dollars to bring it up to parity with time spent online.
The challenge for the industry is to find better ways of engaging the audience, which in turn can support higher revenues driving towards the media owners.
I do agree that ads aren’t the only answer in every case. But for many media owners this will continue to be a vital part of their revenue mix – exactly as it is for most media owners in the traditional business model.
Having said that, the old straight paid-for content (via subscription or micro-payments) are not likely to be the answer, with very, very few exceptions. Instead, the industry needs to develop new models for revenue generation in return for providing content, in addition to advertising.
As an example, the Kindle, which you cite above currently has an interesting core business model with Sprint, whereby Sprint provide free downloads via their network and in return share revenues generated by the Kindle from book revenues. Perhaps, newspapers could negotiate free content for the Kindle (added value) in return for a slice of eCommerce revenues too. I realise that some newspapers are available via the Kindle already, but in reality, paid subscriptions via this channel are never going to scale in my opinion.
Russell

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