Reshaping the Content Model

An intriguing article by Hollywood Reporter’s Diane Mermigas on the heels of the NATPE conference in Las Vegas last week.

“There is a growing realization by content producers, distributors and buyers that they will able to generate more revenue across a spectrum of wireless digital broadband devices and platforms than has ever been possible in an advertising-dependent model.”

This notion hinges on the reality of “on-demand sales” being incremental rather than cannibalistic to the traditional ad-supported model, and the threshold consumers will have spending on new forms of media and entertainment.

Interesting numbers when compared. “Desperate Housewives” generates about $12 million in gross ad revenue per episode. However, if only 20% of TV viewers opted to download an episode through Apple i-Tunes , the popular series could generate an estimated $15 million in revenue.

The math per user is calculated at $1.99 per download in comparison to the estimated $.57 in ad revenue per user generated under the current model.

Obviously there are variables per each piece of content and revenue is only the tip of the business iceberg. Much depends on the cost side of the equation and how disbursements flow among content owners, distributors and the gatekeepers like Apple, Google, Yahoo, AOL and Comcast.

Nonetheless, the economic potential is very real. The acceptance of broadband has tipped the scales back to the content producers and packagers. It’s what Rupert Murdoch is calling “The Golden Age of Content”. What makes it most exciting is the world is watching right now.

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