52 Bicycles

Quick drive-by: Daveid Beisel has a pretty good essay on business models for video content that triggered a few thoughts:

1. These business models are generic to software as well as content, so are worth re-reviewing.
2. This similarity may be why I see so many software startups (often packaged as “web services”) that are looking to business models that mirror entertainment media (e.g. advertising)
3. Advertising requires either high CPM or many, many M’s. Startups don’t start with the latter, and AdWords is very low with the former. Online, there is no reason that advertising can’t be measured, and should be. And the rise of direct-response is going to make it much much harder to have a “generic” advertising strategy (a la inserting someone else’s machine-selected ads on your site) that will make money. As such, direct response advertising strategy and management will be a competency for success among those who choose this business model, and I suspect that’s a rare one.
4. Advertising may be the long-term winner for the lions share of media dollars, but that doesn’t mean it’s an especially good way to make money today - or even in the near future.. The inevitable does not always make a good business.
5. iTunes is making a pile with selling video at $1.99 a pop. DVD sales are through the roof. These are models that run against the idea that everything should be “free” (i.e. without OOP costs to the consumer/user)

Food for thought.

This entry was posted on Tuesday, February 7th, 2006 at 4:07 pm and is filed under Technology Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. Reddit This