Digital Media – Charles Darwin like evolution
Life used to be easy:
But the ecosystem evolved is much more complex today:
Originally characterized by a strict separation of roles, the current complex ecosystem is evolving with blurred lines between players across the value chain. There is no doubt that Digital Services are disrupting the marketplace – changing consumer usage patterns, driving new distribution models, and breaking down value chain boundaries as players migrate their positions to provide new consumer-driven experiences. Digital Services are the intersection of devices, content, and networks which provide services previously delivered in physical form. Digital Services are changing the way we monetize traditional media products. A variety of business models are being deployed – all attempting to ‘crack the code’ on digital monetization. Some Examples of ‘Free-to-Consumer’ economic models are:
- Freemium - Free basic services with charge for premium features or content
- Ad Supported - Free content and services supported by paid advertising
- Cross Subsidies - Free content subsidized by other products or services
- Infomediary - Sale of customer information to third parties
But for many players in this industry, blended economics provide multiple potential revenue streams, allowing tradeoff between revenue generating components, revenue timing, etc.:
- Bundle: Content or Service Subscription + Device
Example: content or service contract + free / subsidized device
e.g., Digital Content + Device + Service = Verizon VCast
- Ad-Supported + Merchandising
Example: streaming content + sale of physical content & merchandise
e.g. digital content + advertising = Yahoo!, Google
- On-Demand + IP Licensing
Example: direct content rental/sale + licensing of brand rights for related content / merchandise
e.g. Digital Content + Device = Apple
- On-Demand + Affiliate
Example: direct content rental / sale + ‘white-label’ solution for 3rd parties
- Infomediary + Free Content or Service
Example: aggregate and sell consumer data + proceeds fund free content or services
e.g.Digital Content (Supply Chain/Device Integration) = Amazon Unbox
The trend toward increasing user-generated content consumption is clear (at least in some demographics). But viability of operating a business based solely on hosting and distribution of user generated content is still unproven – primarily due to inconsistent content quality and significant cost of distributing rich media. Though, the traffic generated by providing tools for editing, storage, sharing, and syndication of UGC, coupled with user data capture, can provide a valuable asset for indirect monetization:
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