Paid Content Is Coming

Are you watching what happened over the holiday between Rupert Murdoch and his News Corp in their battle with Time Warner Cable for rights fees?

Murdoch wanted Time Warner to pay fees for Fox Broadcasting Network to keep the bowl games going and American Idol flowing.

Time Warner huffed and puffed and then gave in to what they later described as a fair deal.

Fair deal?

No problem.

The very next day, Time Warner Cable subscribers got hit with the first of what I think will be many rate increases to absorb the costs of the new deal with News Corp.

This sets a precedent for other television networks and it goes beyond the deals that niche cable networks have with cable companies. ESPN subscribers have long been subsiding the sports channels. Murdoch just got his share of it.

Rupert Murdoch should not be easily dismissed for the mission he is on.

Murdoch is vowing to shut down the free content flow that is financially killing The Wall Street Journal, his newspaper empire and other sources of content. He's threatening to do a deal with one Google-type business to act as a gateway for all such content in which he will be paid.

I'm really in to this issue and I've added it to my upcoming Media Solutions Lab agenda because I think all that free content that Internet and mobile users have been getting for is about to become paid content. The party is over.

But here's a slice of reality.

Young people who constitute the next generation expect their content to be free. They steal music, get around paid firewalls with the greatest of ease and are cheap enough to throw nickels around like manhole covers.

They want what they want when they want it. Period.

But I sense a change.

Publishers are on the ropes.

The record industry has tried for ten years to cram a CD into a computer. They've fought for the sanctity of the album as a creative work even though any consumer could tell you such albums come few and far between. Spotify and other streaming music services that look to charge monthly fees for instant "cloud" delivery to mobile devices have not set the world on fire.

Radio groups have given away their content only to find that about 3% of their Internet listeners to terrestrial streams listen online -- a lousy business at best. They don't get it.

TV networks are trying to embrace Hulu and other schemes that give them a cut of the ad revenue but even if they succeed, the pot of dough is not enough to pay off.

A few years back I invited a Warner Music executive speak to one of my music industry classes at USC. She frothed from the mouth in describing how the labels would love to have ISPs (Internet Service Providers) act as a toll collector for their customers to pay for every piece of recorded music every offered.

The students were non-plussed. She said the $5 per month charge would mean a record industry bigger than it had ever been selling albums.

They, on the other hand, didn't want everything that was ever recorded for one low, low monthly fee -- they just wanted what they wanted when they wanted it. Hey, we raised them and the branch didn't fall far from the tree.

Now, I want you to watch this trend develop.

I'm watching it as a publisher.

Would you pay $99 a year to read this blog?


Would 10% of you pay $99 a year for Inside Music Media because if the answer is yes, it constitutes a big business for me. At only 10% of the free circulation.

And for those who do not, consider the issue of micropayments that will become part of our lexicon as the years go on. In other words, you don't pay for this publication for one reason or the other, but you break down every once in a while to access a story you absolutely cannot resist ("John Hogan's Plan to Sell 300 Top Radio Stations" or "Lew Dickey's Private E-Mail Revealed" -- you get the idea). That's $9.99 for the month.

But what about you?

If you are an ex-radio content provider or marketer and you start a publication, site, blog, podcast and get to charge a reasonable amount to people who become addicted to your product or service. In the past there was no real reliable way to collect such payments.

But days before my January 28th Media Solutions Lab Steve Jobs will announce the much anticipated Apple tablet, the reinvented iTunes infrastructure platform and new, cool mobile entertainment devices to make your future brighter. Learn more here.

There are estimates that Apple could sell between 1-10 million tablets in the first year alone. Suddenly, if you are a collector of antiques, you can get the content you want from an expert site acting as an app for a small price.

Actually there is nothing new to this model, that's how it's always been in the past. Want to read Sports Illustrated -- get your money out.

And there is evidence that consumers -- even and especially the next generation -- will spend for applications if they are priced right. That is juxtaposed to their stealing music and enjoying free content for which providers have been previously afraid to charge.

Chris Anderson, author of "Free", doesn't see it my way or Murdoch's way. Anderson thinks content will have to be given away free and then providers can charge for enhanced services or other things. That model hasn't set the world on fire so far.

Murdoch is old and stubborn but I think he's reading the tea leaves right.

The Wall Street Journal cannot exist on declining print revenue or even increasing online ad sales. The Journal is probably the only major publication that has had a paid model from the very beginning and because of the nature of the genre, they get millions of dollars in subscription payments.

Of course, providers are going to have to make their content bullet-proof -- not the stuff a lot of local newspapers pass off as news.

And local radio stations could be in this business while adding video and audio.

And, you -- can be in this business, too even if Lew Dickey, John Hogan or Farid Suleman decided to let you go.

Apple's new platform means democracy.

So keep an eye on this and I'll keep you ahead of the curve and for those of you who are attending my Media Solutions Lab in late January, I'll be very specific about the challenges and opportunities that will become available to you.

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