[Mb-civic] How Much is That Ring Tone, in the WIndow?

[Jim Burns]

This is fascinating stuff...

     
 
MEDIA FRENZY
It's Like Selling Meals by the Bite. And It May Work.  
By RICHARD SIKLOS
The New York Times, November 13, 2005


HOW much is this sentence - the very one you are reading right now -
worth? Is it potentially more valuable than this entire column, this
section, or the entire newspaper itself? This is not a play for a raise
or a plug for the genius of my prose, but a riff on the latest mania in
media-land: finding new ways to be paid for old material. Nearly every
day, it seems, a new business strategy emerges that on its face may
sound not only counterintuitive but also absurd. Then consumers start to
buy it, and you can only say, "Who knew?"

The ultimate example of this is the ring tone - the grating, pulsing
rendition of the Macarena or an old Whitesnake song that has replaced
the annoying blaring ring on the cellphone of the person sitting next to
you on the bus. When media companies of every stripe are facing
increased competition and rising costs for programming and marketing,
here is a product that consumers love - and that simply reuses a
fragment of existing recordings. 

According to the NPD Group, a research firm, 18 percent of wireless
telephone subscribers in the United States - many of them tech-wise
teenagers - download ring tones, at an average cost of $2.32 a pop.
Informa, a British research and analysis firm, forecasts that ring tones
will grow to a $6.8 billion global business in 2010 from nearly $5
billion in 2005, with the North American business growing to $1.5
billion from $510 million. Who knew?

Now, it seems, every media business is in search of its variation on the
ring-tone premise. Last week, we learned that both Google and Amazon.com
were working on services that would allow readers to buy electronic
versions of books, either by the page or by the chapter.
In one respect, this sounds like very much a back-to-the-future concept,
harking back to the days when Dickens's work first appeared in serial
form. But, really, it's probably less about reading the latest "Harry
Potter" installment a bit at a time than it is about parceling out
passages and chapters of books for how-to or research purposes. Just as
a music lover may want to buy a great single but not the whole album, a
student may want a relevant chapter for her research but not the entire
book.

Another recent twist on this theme is Apple's ingenious idea to sell
rock videos to download on its latest iPod; Apple proudly declared that
it sold its first million video downloads, at $1.99 apiece, in less than
three weeks. Among the top sellers it cited were music videos from
Michael Jackson and Kanye West, short films from Pixar and episodes of
ABC network television hits, including "Lost" and "Desperate
Housewives."

While Apple did not break down the downloads by type, the fact that any
music videos have a retail monetary value is fairly remarkable. After
all, music companies largely produce them as promotional vehicles in the
hope that they will gain attention from MTV or its imitators. And there
are already countless Web sites for viewing them free. Who knew?

The latest entrant in these sweepstakes was the exciting but complicated
news from CBS and NBC Universal that they had separately entered into
video-on-demand deals to sell fresh reruns of some of their most popular
programs at 99 cents each. CBS made its deal with Comcast, the big cable
company, while NBC Universal's was with DirecTV, the satellite TV giant
controlled by Rupert Murdoch's News Corporation. 

In the case of CBS it has agreed - in markets where it owns its own TV
stations, as opposed to where it supplies programs to independently
owned affiliates - to let Comcast digital cable subscribers buy episodes
of four top shows, including "CSI: Crime Scene Investigation," from
within hours of their initial broadcast until the next episode is
broadcast a week later. NBC Universal is offering a total of six shows,
including "Law & Order: SVU," in a similar fashion on DirecTV. Unlike
the CBS shows on Comcast, NBC's shows on DirecTV will initially be free
of advertisements; but to buy them on demand, a DirecTV subscriber will
need a new version of a digital video recorder that is about to hit
stores.

Everyone involved cautioned that these were just baby steps. But the
bigger point is that it is now possible to envision a world not too far
in the future where all imaginable types of programs, including the
latest movies and top-rated network TV shows, are available through some
kind of download or video-on-demand system. 

Then again, both the CBS and NBC ventures instantly conjured a good deal
of skepticism. An obvious question is this: Who on earth will pay for a
rerun of a show that he or she can watch free in the first place? More
and more people have digital video recorders like TiVo that simply
record free programs onto a hard drive, letting viewers enjoy them
anytime and fast-forward through the commercials. (In NBC's deal, it's a
doubly relevant point, because you actually need that new DVR in order
to buy these shows on demand after they've been broadcast.)

The answer from all involved is that they still expect most viewers to
watch their favorite shows when the networks have scheduled them - and,
of course, the networks want their advertisers and affiliates to be
reassured that they really, really believe this. This new
video-on-demand window, they say, is simply a way to capture easy money
from people who either don't have DVR's or forgot to record a show. Even
better, the networks say, the water-cooler buzz about a great episode
the previous night may spur some people to buy a show they wouldn't have
watched in the first place, get hooked and then tune in for the next
episode.

The funny thing is, it may work. After all, TV producers have found
unexpected riches in selling DVD compilations of popular new shows,
proving that consumers are not averse to paying for something that they
might find on reruns or in syndication, if they just bothered to look.

TWO lessons are apparent in all these attempts to revamp media business
models. One is that the limits of what people will pay for
personalization - getting what they want, when they want it - have yet
to be tested. The other is that consumers are not nearly as pragmatic as
they may imagine themselves. 

A case in point: remember all those late fees that Blockbuster used to
charge on video rentals? Pragmatic folks would have returned the videos
on time. Another example: just this morning I brewed a pot of coffee at
home, drank a cup and poured the rest down the sink. The pragmatic me
would fill up before I left the house, or maybe get an old-school
Thermos. The real me bought another cup from the vendor on the corner
outside the office just as I arrived for work.

As media companies slice and dice their products into new businesses,
the central issue is not so much whether they will work as how well they
will work. Just as the ring tone has not saved the music industry - it
has only mitigated its troubles - will gains from chapters-on-demand or
video-on-demand offset the digital challenges of the publishing and
video industries?

Who knows? 


© Copyright 2005 The New York Times Company