Thursday, December 11, 2008

The REAL Economic Tsunami - Part V

Took a while to get this out due to social obligations and fast-shifting events concerning Part 4! Check this out -
"As the combination of NBC's decision to replace its 10 p.m. scripted dramas with a talk-show format and a threatened actors' strike throw a chill over tinseltown, Marley-like voices from the writers' walkout that shut down Hollywood last Christmas are telling cautionary tales.
The industry has already been battered by the estimated $2.1 billion impact of the 100-day writers' strike that ended in February. Now, everyone from top showrunners (usually writer/creators who've become top producers) to the daytime scribes, say times in the television industry, long considered the writer's medium, are getting tougher.
"It is a particularly difficult time," says veteran showrunner J.J. Abrams, noting that as networks turn to shows from overseas as well as remakes of old shows to save costs, he feels "lucky" to have an original show on the fall schedule ("Fringe" on Fox).
"It's always hard, but it's getting harder," says Bryan Fuller, creator and showrunner of ABC's "Pushing Daisies." When the show returned after the strike-imposed hiatus, he says, the network made budget cuts as well as numerous requests to make the story less "weird."
Whether you are a prime-time, A-list writer such as Steven Bochco, who has migrated from broadcast networks to cable in pursuit of creative freedom, or a daytime soap opera scribe such as Karen Harris, who grinds out an 80-to-90-page "General Hospital" script every week, the challenges facing the nation's small-screen storytellers are the same: dwindling clout, an industry in historic transition and a larger economy in tatters.
Individual network heads such as Angela Bromstad, the new programming chief for NBC, often voice their respect for writers.
"I've always been very protective of showrunners' vision and passion," she says. "If it's not led by their passion, then we don't have a show."
But business trumps passion, more often than not these days, says Patric Verrone, president of the Writers' Guild of America, West (WGAW).
"In an era of motion picture and TV production controlled by seven multinational conglomerates, it's difficult for any individual to have clout or personal creative freedom," he says. "When it's in the hands of the conglomerates there is a lack of appreciation not just of writers but of the entire talent community and what they bring to the table in terms of development of content."
WOW! No wonder I watch most of my content on HULU.com, And none of it is scripted shows. In a rare show of sanity, MSNBC's Courtney Hazelett declare scripted television dead at the 10 pm mark... the rest to follow. WOW!

Pulling into the station now, so hang in there!

So we have covered:

  1. Root economic change.
  2. What is a job?
  3. The death of US manufacturing
  4. The death of traditional media (newspapers, etc.)

We need to cover:
5. Monetizing manufacturing/media's replacement (in the US at least) - Web 2.0 and higher.

How is all this supposed to make me any money!

Web 2.0 provides potent business models for making web applications which apply them successful, or least, ever popular with their users. These techniques typically have to do with connecting supply with demand cheaply and effectively (The Long Tail theory) or by providing a unique source of information that is difficult to recreate elsewhere. Unfortunately for the creators of many of these web applications, they sometimes confuse popularity with financial success, or more often, they optimistically believe the former can turn into the latter. The truth is, monetization of Web 2.0 services is a genuine issue for those that are planning to use Web 2.0 ideas for non-strategic purposes. Yet many Web 2.0 services seem to be intent on tactical financial capitalization of the attention and user base which Web 2.0 applications can build almost overnight. ZDNet's Phil Wainwright thinks this issue, namely lack of revenue, is a big piece that's missing from the Web 2.0 business model. He posits that the next iteration of Web 2.0 will solve this and other problems, which he dubs Web 3.0. Phil's analysis is pretty sharp and he has identified at least three revenue models that will form the basis of commercial succesful Web 2.0 services:
  • Advertising: Phil doesn't think much of this model, no matter how well Google is doing with it and despite the fact the Microsoft is increasingly interested in the entire online ad space.
  • Subscriptions: Divided up into fixed rate, variable rate, and fixed+plus variable models, subscriptions are very popular with leading Web 2.0 companies like 37Signals and I'm with Phil that this will continue to be popular for large footprint services, but not for mash-ups and aggregation services that provide bite-size functionality.
  • Transaction Commissions: Best exemplified by companies like eBay that charge for a given successful transaction, Phil believes this will ultimately become the biggest player.

My issue with this trinity of revenue models is that it doesn't explicitly leave room for a fourth or possibly fifth needed model. I truly believe there is an active need for one or two as-yet-uninvented revenue models to fund Web 2.0 services that face the general public. Web 2.0 monetization, for now, is heavily reliant on advertising. UsingGoogle’s AdSense contextual advertising program is one of the fastest and most popular ways of monetizing a new Internet business. For more information see Deitel’s Google AdSense and Website Monetization.

When is the last time you clicked on a banner ad/google adwords ad? I don’t really believe that there is going to be a silver bullet that can monetize all sites, but there are interesting ways to rein in the brand that most successful have built. (And no, I am not talking about “Mashable” Brand Potatoes.) Maybe the best way to make money as a content producer is to do direct sales, according to folks who’ve been there (I concur).” I believe what is missing is the adaptation of successful advertising models from outside the net to online.

Or maybe the key is not to sell the content, but sell the process. Content alone doesn’t get the job done. The dominant web 2.0 business model is the FREE business model. It comes in many different variants, but the most widely used are the freemium business model (I always thought Fred Wilson came up with that term, but he says it was Jarid Lukin) and the free with ads based business model. With freemium you get a service for free, but for the real cool features you need to upgrade and pay a subscription. Flickr, YouTube and others use that business model. The free with ads based business model lets you use a service for free, but in return you get advertisement. Facebook is the most obvious example, but many other services use that model as well. So the subscription model looks good for certain types of transaction, but it NOT a panacea, as we shall see.

I just saw an ad on TV (yeah, I still watch TV!) for the singer Rhianna - the tag line was not, so and so many albums sold or records sold... it was "100 million SONGS sold"! Now that's a subtle, but powerful and important message. Not physical units of anything, but MP3 files off of iTunes Store, or Amazon or Rhapsody. Like the software we used to buy in a box (it's all downloaded off the Net now), these things are not physical (or, as Alvin Toffler would say "symbolic") but electronic files (again, the Tofflerism is "super-symbolic"). And that is one of the most fundamental changes in our goods and services world - the physical things we are used to that represent value (symbolic) are no longer all that physical, and have become "super-symbolic". It's like the difference between a "classicist" painter/sculptor and an "impressionist" When a classicist paints a house, or a tree or the sky, that's just what he paints - but an impressionist looks at these things, then paints the IDEA of a house, a tree or the sky - do you see? When you buy music or movies (or just watch movies and TV, like on HULU) you are purchasing a super-symbolic thing. And HULU and other video media sites sell you LOOKS at the media -what would we call that? Hyper-symbolic?

So what's the point here? Simply, that the massive changes in socio-economics, what work is, what is manufacturing, what is media and how do we get it, how all this is monetized (you always have buyers and sellers, but now that term much more universal, and a just plain different PROCESS) are all happening simultaneously. Because of this, we as a culture are undergoing a similar confusion that out great-great grandparents underwent during the Industrial Revolution.

Look for me to pull all this rubbish together by Wednesday ---->>>>

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