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Who Pays for All This?

20 августа 2009

We seem to live in an era of broken business models. The stress test of an economic crisis will expose weaknesses that go unnoticed in better times, which might lead one to expect a surge in the rate of bad assumptions and false premises detected in times like these. That may be true, but it doesn't answer how we pay for the things we thought we had covered.

You can imagine an executive standing in the middle of a newsroom and asking who pays for all of this. The old ad-dependent model for supporting newspapers just doesn't work anymore. There aren't enough ad dollars to pay the printing and distribution costs. And somehow those advertising revenue sources shrunk in the process of migrating to electronic media.

It's not just news-gathering organizations that are caught wondering how the costs of creating and delivering content are recouped. As the means for accessing all kinds of content proliferate—wired or wireless, big screen or small—the willingness to pay for it appears to dwindle.

We hear that user-generated content can fill the gap if commercial-grade material becomes too expensive to produce for the revenue it can generate. This sounds like a dismal prospect. The term "amateurish" is taken as a pejorative for a reason.

Now network operators have taken up the refrain of who will pay. The growing popularity of smart phones and netbooks promises a steady increase in data traffic over wireless networks. At the same time, market drivers are pushing operators toward flat-rate data plans that challenge network capacity as more customers take advantage of them.

Networks require massive investments to serve mass markets. A network upgrade—to 4G wireless technology or to ultra-broadband capability—means placing a large bet that the revenues to cover it will follow.

They say you get what you pay for. For the producer, that formulation works well when there is a large enough market to support development of the basic model, creating the opportunity to up sell the few willing to pay for one with all the extras. Satisfying the customer willing to pay more presupposes some larger number of customers for the basic model.

The simple answer to the "who pays" question is the customer. Whether you are a newsroom manager or a network planner, the not-so-simple questions that follow include "who is my customer?" "how many customers do I have?" and most importantly "how much will they pay?"

Dr. Barry Sullivan, Content Director, IEC


Источник: IEC

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