Finally, more ads in online programming


Finally, a full slate of commercials in online shows.  This is where we’re headed.  People will moan and groan.  Purists will damn the defiling of their online sanctuary.  But, c’mon, why should we get to watch commercial-free (or -light) programming online?  The delivery mechanism doesn’t change the basic content, so why should the price (paid with my attention to advertising) go down by a quarter, or half, or all the way to free?

Think about this way:  The folks at Pfizer spend billions failing to cure illnesses, and billions more getting it right.  I want the medicine, I pay for it.  I don’t get a 75% discount to take the medicine from a spoon instead of a pill.

The delivery mechanism isn’t the issue.   It’s about all the money spent to develop something that works.

The folks at CBS wasted tons of dough making a bunch of lousy programs, but they also produced Two and a Half Men.  I want the content, I pay for it.

Again, the delivery mechanism isn’t the issue.  It’s about all the money spent to develop something that works.

If we could get medicine for free there wouldn’t be any medicine because nobody could afford to invent, produce and distribute it.

Same thing for content.  “We spend billions of dollars buying and making these programs. And if we give this stuff to consumers for free with limited ads, it’ll go away,” says Andy Heller, vice chairman of Time Warner’s Turner Broadcasting, in this WSJ article.

Over time, I believe we’ll pay for content in ways that differ from just watching 30-second spots.  We’ll get more involved with the advertising, because on the internet we can get more involved.  Maybe we’ll get more involved with fewer, more meaningful (relevant to our own needs and interests) brands.  But one way or the other, we’re going to pay for good content.  As well we should.


Don’t confuse audience with customer when talking “free”


Hmmm.  I want to agree wholeheartedly with this post from Mark Cuban on his blog yesterday but can’t go all the way there.  I do agree that “free” is an unsustainable business model.   Who wouldn’t?  And I, too, believe free-flowing investments have created a certain addiction to hope:  get eyeballs first and then hope to make money.  But dooming Google to failure because they’re based on “free” contradicts an important fact:  $21.8 billion in revenue and $4.2 billion in net income for the full year 2008.  97% of Google’s ’08 revenue came from advertisers.

In other words, people PAID Google $21 billion for the privilege of posting ads next to search results and other content.  Google didn’t give away those placements for free.  Rather, they converted a free offering (search) into a profitable revenue stream (advertising).  This is not a new idea.  TV networks converted a free offering (TV shows) into profitable revenue streams (advertising), too.

What we’re really talking about here is an indirect payment cycle.  A bunker shot, if you will.   Instead of paying the content provider (including Google) directly for what they provide (search, programming, etc.), you and I pay advertisers for their stuff (having been exposed to their ads).  The advertisers, in turn, pay the content provider for the chance to advertise to us so we’ll buy more of their stuff.  And so on and so on.

Google isn’t working for free.  They make a valuable product and exchange the people who consume it (you and me) for cash from advertisers.  Were they unable to get the cash from advertisers (or elsewhere, like directly from people who search the internet), then, yes, I’d lump them in with the many companies whose start-up money runs out before real money appears.

It’s the difference between audience and customer.  Audiences may or may not pay.  Customers always do.  Google has customers.  Lots of them.  And those customers don’t get you and me for free.

Facebook has an audience.  We’ll see if it gets customers.

(Here’s a link to the full post on Mr. Cuban’s blog:

You get what you pay for, unless it’s online…


I believe the current internet is a great deal for people but pretty lousy  for advertisers.  We get SO MUCH great stuff online and we don’t have to pay much for it at all.  Yet.  “Long Tail” author Chris Anderson has published a book on this subject:  “Free:  The Future of a Radical Price.”  Personally, I don’t believe in free.  So I was glad to see Malcolm Gladwell’s review of the book in The New Yorker.  I think it’s safe to say he’s not all aboard the free train, either.  You can read his review here:

The fascinating, and ironic, thing to me is that you can actually click on this link and read a thoughtful, articulate, well-researched and wonderfully-written piece without having to buy the magazine or even a subscription to The New Yorker online.  I bet you Malcolm didn’t write the piece “for free.”  So, why do we get to read this without paying for it?  Where’s the justice in that?  The invisible hand of economics?  This  sounds like a free lunch, and my Stanford Econ 101 professor assured me there is no such thing as a free lunch.

I believe him.  I think we are in the midst of a reckoning here.  This is a subject I will use this blog to explore.  I welcome your input.