Tuesday, January 29, 2008

Show me the money!!

Cynicism aside, I love it when Chris Anderson returns with some meat to fuel the tail. It's incredibly refreshing, and helps me keep focused on the future.

So this time around, I'll deviate from conversation on 'the tail', and focus on a slide that one of my comrades had cooked up a few years ago.
The title of the slide, of course, was: "SHOW ME THE MONEY!" (and I'm not sure if we should be thanking Jerry Maguire here, so to be safe....thanks, Jerry Maguire!).

These days, I'm officially scared of using the phrase 'business model'(we'll go into that another time), but Chris uses it, and he's entitled to, so I'll ride his tide on this one:
"What does the media business model mean?"

[Revenue models for INTERNET TV PUBLISHERS]
(with mild value-added categorization...)

* CPM ads
* CPC ads
* CPT ads
* Sponsorships
* Streaming Video Advertising

* Subscription revenues
* User generated (value)content
* Live events
* Licensing of brand
* Licensing of content
* "Souvenirs"/"Merchandise"
* E-commerce

* Affiliate revenues
* Upgraded service/content
* Alternate output
* Custom services/feeds
* Listings
* API Fees

Have been reading a lot lately on Hollywood griping about how there's not enough money to be made on the Internet(which, frankly, is rubbish) and Bollywood running around looking for eyeballs, pretending like that's the real scarcity(which, more obviously, is also rubbish).

So I figured the above(with much thanks to Michael Cader, Fred Wilson and Chris Anderson) could go some way in laying out some ideas for how to make money(ahem...monetize).

Disclaimer: we're still talking monetization. The profitability equation involves a longer, deeper strategic analysis, and it took us seven maids with seven mops sweeping for a few years to build the profitability road map.
Which we are happy to share with our patrons.

Tuesday, January 22, 2008

A word to the Page boys @ 1-800-DO-NO-EVIL

Okay you freakshows...I don't care how much good you're doing in the world and how much evil you're avoiding, but I'll tell you this....you totally got on my nerves with this e-mail.

My account is exactly how I want it to be, and you're being utterly sneaky about getting me to open this e-mail by using the word 're-instate'. Did you know that I didn't use my other blogger account for over 5 months, and never got an e-mail from you that it needed reinstatement? Or that my Gmail account sometimes goes unused for over a month(because I'm an e-mail freak and have 20 other e-mail addresses...different strokes for different folks...whatever...)?

So if you're offering to help, send me an email with a subject line: "Do you need help with your Adwords account?"...not "Reinstating your Google Adwords Account".

I know you'd love to have me spending ad dollars on your Adwords program, but as a matter of fact, I'm busy doing my own research on why my last few ad campaigns brought me a shit load of clicks, cost me hundreds of dollars, and gave me 100% spam e-mail ratio. (All the sign ups that came from your ad clicks were spam).

So, pretty please, with sugar on top, get your s**t together, and quit scaring us.

Monday, January 21, 2008

Citizen, 2.0

It occured to me while "drinkin' my coffee and eatin' my muffin'" this morning....
We have successfully created a persona for Citizen 2.0: a hyper-connected, fully-networked, socio-participant of the digital age.

This is great news, in so many ways. And writing about all of them could take up a lifetime(or a few hours, if the question was posed to the blogosphere..)

So, let's talk about Citizen Journalism 2.0, seeing as it relates quite well to the new media democracy.

In my feeble, humble, modest, opinionated opinion, CJ 2.0(shorter, cooler...) is not about empowerment. In fact, it's about informing. It's goal isn't to enable the masses to produce, but to help the masses stay better informed.

The traditional argument here is that conventional(mass) media brings with it its own set of biases, perspectives, and commentary, which could(dangerously) be used to sway audience perceptions of ground reality.

One of our news channels ran a feature last night, on the aftermath of the Benazir Bhutto assassination. An integral part of the feature was an opinion poll, the results of which clearly showed that 48% of Pakistan felt that Musharraf and his cronies had *something* to do with Mrs. Bhuttos assassination. Now...who knows, right? It could've been Mush, it could've been Al Qaeda, it could've been Nawaz Sharif. But what left me scratching my head afterwards was: "what possible good could come out of an opinion poll on who had something to do with the assassination"??! I mean, this was neither here, nor there. Opinions of people are rarely based on reason, and in a country where emotions are astray after the assassination, I completely fail to see the point in asking for peoples opinions. And not to let the something slide.....what's THAT all about? We're not just speculating about complicity, but we're also speculating about the vaguest degrees of complicity.

But news channels have been producing crap like that for as long back as we can remember. It's a big rush....not just to find news, but also to make news. It's their bread and butter, and it's a business...like any other. Journalism is being fronted by a corporate institution that is forced to keep its economic interests in mind.

How could journalism possibly stay pristine and un-adulterated? The only answer is the Internet. And the only way to understand how it all works on the Internet, is to actually use it. There is little risk, a lot of reward, and no whip lashes if you fail. And if you are being honest + consistent about your messages, there is no failure.

So now that I've downed my muffin and my coffee, I'm thinking about the right approach to citizen journalism, in 'my' world of Internet video.

Someone mentioned fearless.weareindia.tv.
And some folks I talked to about the idea got really excited. And that these excited people are real world journalists, got me spurred.

It's not like we can stay back and let this take its due course. We need to be on the ball, jumping up and down until we make this happen. So we will.

Stay tuned.

Tuesday, January 15, 2008

And I think to myself, what a wonderful world...!

Steve Jobs unveiling the world's thinnest notebook at Macworld, San Francisco.

Words fail me.

Monday, January 14, 2008

Oh, would you please just let this guy be?

Duncan Riley, I love you man...but ya really have to remember that Zuckerberg is 23. He has some very big responsibilities to live up to now, and giving brilliant interviews may not be what he's out there to do. And how do you turn down an interview from 60 minutes, anyway?! Did he go ask for it, or did they come get him to parade him as the cute, pimply, arrogant, bratty founder of Facebook.com?

Yes, his answers totally got on my nerves too, but then I don't think Lesley Stahl should've been asking him dumb shit questions like: "Have you changed your lifestyle? Are you buying the things you should be....". C'mon, Microsoft just valued him(well, FB) at fifteen billion good United States dollars, and if the man wanted to go out there and buy a new pair of shoes, it's really nobody's business but his.

And you know what...I don't think the statement about the Brin-twins(or the Page-boys, depending on how you look at it) was a question either.
Lesley said: "You seem to be replacing Larry and Sergey as the people out here who everyone's talking about"- it clearly was NOT a question and more of a comment(based on god-knows-what, because I've heard speak of Zuckerberg, and I've heard speak of the Google-Twins, but I've never heard speak of one replacing the other. Except in certain circles where the booze flows like water and .....enough said).

I think he was bang on in asking if it was a question because to the casual observer, it seemed, at its holiest, a very casual and personal observation.

All in all, I thought the interview, barring a few odds and ends, was a really stupid one, and 60 minutes ought to re-think its Q&A strategy...these meaningless questions leave us completely uninformed, and talking about all the wrong things.

Speaking of wrong things, I think that "Beacon" perspective of yours was a real cheap shot. You quoted him out of context and Red Bull is no excuse, mate.
What he said was: "I actually think that this makes it less commercial. I mean, what would you rather see? A banner ad from Bloomingdale’s or that one of your friends bought a scarf?" implying that Beacon's less commercial(and a lot more personal) than a banner ad.
Sure...maybe having it show up on news feeds isn't such a brilliant idea, but I think it's an interesting step to monetization. Sure....maybe it ought to be an opt-in service, instead of an opt-out one, but in even its opt-out state it beats all the other opt-in services I am sometimes faced with, including the page on which your post resides, showing me a shit load of ads right where I would hope to find navigation links to different parts of TechCrunch. How come I can't opt out of that? I think it's 115% useless to me and would rather the space be used to guide me around your website better.

Now, I'm just going to not click(obviously) on any of those dumb ads, and leave Techcrunch, whereas if I just found out that my buddy just got himself a pair of sneakers, at a steal, and it showed up on your site as a very personal ad, I'd be clicking on that ad, brother. I may not have bought sneakers, but you bet your patookus that I'd be on Nike.com browsing their "Facebook deals" section.....and no way the "Rackspace Managed Hosting" ad on your page claim that sort of reach. And FB-Beacon can.
So let's not speculate about the privacy implications(and you -are- speculating about the implications) without giving the technology the necessary leeway to grow.

Plus, I really think we need to re-think the reasons we yell about privacy- if a youth could be outed and harassed as a result of having seen Brokeback Mountain, then I think it's a matter of the youth having to be secretive about his sexual preferences, and that's the real issue we need to solve.

And I don't know about the rest of you, but if I know I'm getting a gift, or get a hint that I'm about to be gifted something, I just stay quiet and wait it out until I actually get a/the gift, or not.
If Shannon Lane found out about the ring(despite Sean's valiant cover up attempts...and now I'm suddenly curious...!), then her natural reaction ought to have been to feign ignorance(while feeling that warm Christmas glow inside). Why would she be instant messaging Sean about it instantly?

Unless, of course, Sean screwed up and the ring WAS for someone else. And sensing the instant heat, he pulled a "wasn't me"...and Shannon's bullet went 'n hit Zuckerbuerg on the shoulder. How's that for speculation?

So I think all of ya'll(and that includes you, dear FSJ) in the blogosphere need to totally chill out and let this guy be for a bit. Granted, he makes mistakes, and granted he's too young to be a CEO, but at least he's thinking about trying something new. Will FB be the next Friendster? I don't know. And you don't know. And when we don't know, we ought to observe, and maybe comment on.....not assume, and definitely never misrepresent.

Because we have some real problems of our own. Like how I had to "right click" and Add "blogosphere" to the dictionary, and if you haven't figured yet, I'm on blogger.com....the center of the blogosphere if there was one.

Parting words of wisdom for Mark Zuckerberg: get a pretty PR lady involved and make that 401 mouths to feed. Will save you a lot of heat, and you can get right back to your "operashunal shtuff". ;)

Thursday, January 10, 2008

Whacky touts and broken records

I was at the CES(Consumer Electronics Show...for those of you who're smart enough to be uninterested), in Las Vegas, a few years ago.

Trust me- this(the photo) is ALL that the show is about: A lot of s**t you've already seen or heard of, packaged together in a medley of absolute uselessness.

There is not an iota of innovation and excitement at the CES, but that which is generated through the extraordinarily expensive hype created by the loads of companies out there busying themselves making s**tty consumer electronics.

The underlying theme every year, of course, is that these products will "just work together", "keep us connected", that there will be "explosions" and "flying off shelves"- things that somehow never really happen. At least things that I have never seen happen. Have you?

I could go on, but I won't. I think others are doing a fine job of being more candid with their feelings about CES.
What I will do is point you to the "emerging technologies" at CES 2008 . Draw your own conclusions. (Warning: it's a PDF......)

Basically, I'm not sure if I should scream at Consumers, or Electronics. Because the Show obviously is doing its job of attracting a 100,000 people and making a boat-load of money.

Maybe the new generation of 'leaders' are the ones to blame for making stupid, irrelevant statements like "Our goal at Yahoo! is to make your life easier."(Jerry Yang, CEO, Yahoo!).

Gee, Jerry.......the Google guys had me sold on 'good' vs. 'evil'.
You're now telling me there's also 'good' versus 'STOOOPID'?!!

Monday, January 7, 2008

The 'Who'

We've been talking to content owners for the last few months, and would like to share our feelings about them. While we're raring to just list them out and praise 'em/rip 'em apart individually, we'll be dignified about it and simply categorize them for you.

So we have three categories of content owners in India today:

a. The ones with crap, but seem to have an addressable crap-market for it today: these are the guys who probably know that their content won't survive to see the light of tomorrow, and are scurrying to find ways to make their money today.
These are the guys who'll ask you about how much traffic volume you're anticipating and tell you how their content is their key differentiator. They'll also sometimes tell you that you'll have to license their content from them, because...you know....everyone around the block is just waiting to buy it off them.
You know what...no one's buying their content, and you know what else....they'd rather let it rot than be honest about the fact that it's crap. It's their way of "stimulating demand".

b. The ones with super content, and haven't made a dime off it: these are the good guys....they pay attention to what they create and because they have finite brain capacities(like you and me), they haven't the time to worry about oddities like distribution and monetization. They just hope that someone, somewhere, someday, will find them and glory will be theirs. Poignant...I know. A little silly, of course, but whatever...they produce good stuff, so we won't prod them too much.

c. The ones with decent/good content, and a huge market for it: these are the producers in the mainstream. God bless their souls because they have money, addressable markets, and are understandably dragging their heels in adopting the path of new media distribution. After all, slow 'n steady does win the race. Which race? I don't know. Ask the tortoise.

I bring all this up to answer some questions about who, exactly, we want on WeareIndia.TV, as content publishers.

Obviously, it's not the first category: we don't see them as fitting anywhere along the tail. In fact, given my perception of the nature of their content, they are best suited *under* the tail and those areas don't warrant much discussion.

We'd probably be honored to have the mainstream folks on here, simply because they'll drive up our traffic and make us look very good. But, I don't think we're quite ready for them(or their 'traffic') quite yet. It might take the focus away from the real reason we started WeareIndia.TV:

YES! The artsy, helpless independent and amateur film makers who produce just the content that the Internet needs, and yet don't have a place to really make money off it. And before you start yelling "YOUTUBE!!" to me, note that I didn't say they don't have a place to SHOW their films...I said they don't have a place to MAKE MONEY off their films.

So, to reiterate our taxonomic niche focus, we're *only* looking for independent, amateur, non-mainstream film-makers who're SOMEHOW associated with the Indian diaspora, and who swear by phrases like "Art for art's sake..".
It makes really good business sense, because now, we're only dealing with content that is true to the nature of its form.

This is content that attracts attention, if presented right. This is content that has led the Internet video revolution. This is content that's made of stuff that provokes participation. This content drives value creation. This content is everything that has never been.

*This* content is king.

Sunday, January 6, 2008


It's now 6 days into 2008.

I've been doing my homework, and I'm very excited because this could be it.
This could be the year that we all just come together, find common ground to capitalize on, and re-work our focus towards building up our areas of expertise.

Or, we could just drag our butts for another year, maybe three, and pretend that an empowered democracy needs the blessings of a few big corporations to survive. Until the corporations start fading out....and then we'll (have to) get it: and it is not what you thought.

I don't know...could go either way.

I'll tell you what I do know.

0) At the center of Sloan's EPIC(Evolving Personalized Information Construct) is the premise that the fourth estates fortunes will wane. And I think that's a very real scenario we're faced with, and you know why? It's because they("the estate" in question) are bringing out their meanest, leanest, biggest guns to stave off the possibility that very soon, there may not be a 'conglomerate', and that phrases like 'Big 5' will become passe in the era of democratized media.

You don't need me to tell you that it's a very scary thought for many. How does one survive? If you're no longer one of the Big 5, then who are you? WHAT are you? And the scariest question of them all: ARE you?

To me, there's only one question to really ask: WHY are you?

1) Understanding one's reason for being....one's DNA(as seems to be an oft-used terms these days), is the critical pivot around which media corporations need to re-build themselves. I'm not saying that they're broken....I'm saying that they're not broken YET. The earlier they come to terms with this reality and fix things, the easier it will be for them to co-exist in this brave new world.

2) I think the second question(after the DNA Q&A session with members of the board) to ask would be: how much are we willing to give up? I know...two tough questions in a row, but it's time. So, how much are you willing to give up, in order to re-gain market share(ahem: "....in order to address the evolving needs of this growing democracy"..)?
It's not just a question of money. In fact, money is probably best left out of this question altogether because the amount of actual liquid financial displacement could be huge.
We're better served asking ourselves...are we willing to tweak our business models over the next five years to set ourselves up for a world where the masses are ENABLED with tools to consume media freely, of their choice, on their device of choice, at a time of their choice, and as many times as they choose to?
Can we build our business around mass consumption, mass production, and mass distribution?

And how can we start paying more attention to the masses?
Because it appears that they're going to be driving the ENTIRE value chain.

3) Then, you talk about economics. Where're we driving our funds now, and where should we be driving it over the next five years? Where are the revenues coming from now, and where will they be coming from over the next five years? What's the commodity? What's the innovation? What's the value? Who's being neglected and how's that going to affect us ten years down the line? Who's NOT getting their rightful piece of the action? And the toughest one: who's getting way too much of the action?

And I'll tell you why dishonesty here won't do anyone much good. We're now on the Internet. You know what sells, for how much, and how many times. And you know that in real time.
You also know who created, who developed, who marketed, who distributed, and who consumed. And you'll know that with near 100% accuracy for each time the cycle of creation > consumption occurs. In real time.

So if you're not able to clarify your position in the value chain, and fulfill it honestly, you're toast. In real time.

4) Get creative. Like seriously creative. Why? Because one-size-will-NOT-fit-all. In fact, one size will probably satiate a millionth of your target market, and I'm feeling generous today in making that claim.
Realize that behind each user who has 'access', there is a device, a personality, a history, a geography, a list of contacts, a set of subscriptions, a budget, a set of preferences, a cluster of affiliations, and that's just the tip of the iceberg. You can branch out into each of those and realize that it's a pretty complex democracy we have out there.
But that's the catch. It's not complex. It's just diversity. It's a democracy.

So, figure out things like personalization, recommendation, customization, extensibility, accessibility, portability, device independence, mobility, and ubiquity. Tools to solve these problems have been around for oh-so-long and you've been dead-lucky to have gotten away without touching them.
Now's adoption time, fellas. Now's a real good time.

5) Stop with the social networks already. We get it. If you build a community, and get lots of users involved in it, and let them turn into vampires biting each other on cyberspace during their lunch break, then you can make money.
Wow. I'm very excited. But now I know what you're all about, so maybe I'll start my own thing and let people be fly swatters instead, swatting each other like flies in cyberspace during their afternoon tea.
And maybe I'll make money too.

C'mon guys- we're trying to empower the digital democracy here, not build a doofus economy. Focus on some actual value creation, and don't just think about ways to throw a lot of seriously bad parties and make money off the cheap tequila. It may have worked in college, but so did a lot of other things. The Internet isn't a big stupid party and isn't usually friendly to acts of daftness for too long. Remember Webvan.com from 2001? Here's how dead they are today(thanks Wikipedia).

And trust me on this: vampires are already dead. It's kinda-sorta implicit and all.


So yes, I feel good about this year. I didn't say anything that people don't already know. It's just that when you can't win by reason, you ought to go for volume, so let's speak up, eh?!


Robin Sloan's EPIC video is still a goosebumps tale for me.

Aimed to provoke(thought) and incite(participation), it remains one of the few works that first heralded the idea that media, in the 21st century, will not remain the same.
Modern media has already gone through a family of evolutions to arrive in its present day state, from the local town-crier(and I'm being generous with my use of 'modern'..), to WSJ.com and CNN.com.

EPIC was a not-so-gentle reminder that what we see today isn't the future. The future is around the corner, and it's a beautiful evolution in sight that will surely transform our lives, positively, and in proportions we couldn't have imagined a few years ago.

So why is there such a huge resistance to this particular evolution? Why the initial hue and cry over Google News? Why the utterly archaic positioning of the music recording industry? Why is there only a YOU-Tube, and not a Holly/Bolly/Lolly-Tube? Why is Scott Karp telling journalists to change or die?

The answer, dear friends, is blowing in the winds. It's decentralization, and it's happening to each and every one of us.

For years, we(corporations) have sought to build our fortunes in feudal style, building castles, then expanding territorially, and finding ways to reap the benefits of occupation everywhere we went.
Of course, competition sprung up every now and then, but they were, for the most part regarded as battles won or lost. The few wars that come to mind(PC-Mac, Open source- Closed source, the browser wars, the format wars) all were drawn out for way too long for any serious impact to bottom-line.
And our focus always remained on the 'core'. It was always about the 'core' value proposition, our 'core' business interests, our 'core' market strategy, the 'core' of our being.....until Chris Anderson came along and told us that the core, as we know it, has shifted. It's now borderline stupid to have a 'head' office, because the consumers are going for the tail....which is a lot closer and accessible to them than the head.

And if we'd listened, we'd have heard the basic complaint that the 'head' was full of it.
Edward R. Murrow: "Just because your voice reaches halfway around the world doesn't mean you are wiser than when it reached only to the end of the classroom."

I think we screwed up pretty bad.

Because very simply...everything has changed. Literally...everything. And it totally sucks that we're not ready for it because we ought to have been, and our indolence is costing us precious years of potential incubation.

I don't watch TV, but I watch video on the Internet. I don't look at ABC news or the Times of India directly....instead, I'm reading my personalized Google News. I don't write newspaper columns...I blog. I don't cut out interesting clippings and save them on my wall- I add them to del.icio.us(I can never get the dots right...), share them via e-mail, and create my own RSS feeds.

I flag media that I find to be out of place/context. I add tags that make things more relevant for the next person. I willingly submit my usage information so I can receive better recommendations in real time.
And I know privacy is a huge subject in some circles, but you know what...I couldn't give a s**t, because as long as efficiency is delivered to me, no human being is prying into my personal life, and I have the option to opt IN to personalized services, I have absolutely no beef with personalization.

In fact, for all the hue and cry we make about'We want democracy', we can get pretty sour about the democracy *needing* us.

Anyway, so I don't buy CDs online any more, and instead download from iTunes. I can't remember the last time I walked into a Blockbuster to rent a movie since Netflix came along, and I do a bunch of other things that tell you one thing....EVERYTHING has changed.

With these changes, naturally, should change the economics that will help us monetize these changes. It is, after all, a marketplace we're talking about, and yes, it's evolving, but at the end of the day, we're still talking about goods, services, money, and trade.

But, we need to talk about it all a little differently now. And talk differently we will.. in '08.

Tuesday, January 1, 2008

From Rights Management to Rights Manipulation

In a perfect example of old-school economics gone South, the AMPTP( Alliance of Motion Picture and Television Producers enters its 9th week with its writers(represented by the WGA...Writers' Guild of America).

Two key issues at hand:

1) The writers were promised a percentage(0.36%) of gross sales per home video unit sold in 1988. Those days, home video came to us on Betamax tapes, and retailed between $40-$100 per tape.
Now that movies go out on DVDs and VHS tapes(retailing between oh....say...$8 and $20 per unit), the writers feel a little screwed that they're still getting 0.36%.

WGA claim: double that amount. From 4 cents per unit sold, to 8 cents per unit sold.
AMPTP claims: production and distribution costs are rising.

2) The 'new media' issue is looming over as the larger one, of course.

WGA claim:

  • For paid content, whether streamed or downloaded 1.2% of each sale
  • For content that is free to the viewer, but is ad supported:
      • 2% for post 1984 content
      • 2.5% for pre-1984 content
AMPTP claim:
  • For paid content: 0.3% of sale(just like home video..)
  • For content that is free to the viewer, but is ad supported: $0.00

OK. Those are the facts.

I can't say much about the 4 cent to 8 cent increase request for DVD sales(because it'd involve digging up some numbers that are going to be useless in a few years from now), except that we're talking about an impact of less than 1% in earnings per share for media companies, according to Bear Stearns.
And if that small a margin makes 12,000 workers that drive a key American industry get back to work, then Hollywood should be embarrassed about not stepping up and pushing the AMPTP to back off on that front.

But I don't think this is about DVD. In fact, I saw a list of about 25 proposals from the WGA and I think the only one that's obviously under everyone's radar is the 'new media' proposal.

For the next 3-5 years, it's very hard to imagine content sales driving Internet video revenues.
Broadband needs to enter more households, pricing models need to be worked out to address the fact that it's cheaper(in the long run) to offer content on the Internet than it is to distribute via DVDs, and most importantly, I just don't see a lot of people paying $3.99 to watch 500 Kbps video streams(hint..they're shit) on their 17 inch LCD monitors, when they could be paying exactly the same for a high quality DVD (which they've downloaded off some file sharing network, borrowed from a friend, or rented at Blockbuster).
And before the "convenience of the Internet" argument comes up, remember that there are people like me who wait a good 6-9 months for a movie to come out on HBO and even pay $4.99(a whole dollar more) for the convenience of my Home Box Office.

Ahem...I also hear that "Jackass-The movie" goes for $9.99 on iTunes and it's a 983 MB download-to-own. Which sucks because I might pay $3.99 to rent it but will never pay $9.99 to buy it(not unless I've seen it already and really love it...especially unlikely in this case because I can't stand Whatshisname Knoxville)

Anyway...two words. Ad sales. Ads sell. Let's not forget that this is premium, top of the line content we're talking about. This is the stuff that runs Hollywood- the most profitable movie industry in the world. So my bet would be that if advertisers are paying $60 per 1000 views on VideoEgg for relatively crappier content, then they'd pay a lot more for this stuff.
And we know 'this stuff' sells, so it'd be fair to say that we'd see a fair bit of downloads/streaming if it was made free.

I bet you anything that the AMPTP has this all figured out. And it's really not about setting a precedent for collecting bargaining....no, sir. I think Bear Stearns has the 1% estimation wrong. Ad revenues will form a major chunk of Hollywoods overall revenue pie in the years to come. Marketing drove mass markets....ads will drive the micro-markets.

My recommendation to the WGA: take the 0.3%(not 1.2%) of gross sales from content, and ask for a 1.5% of net revenue from streaming/downloads AFTER costs of content delivery(hosting/streaming) has been accounted for.

Why? Two reasons:
  • This isn't a market of diminishing returns...it's a market of cumulative returns, and you will realize your effective revenues over time.
  • Don't repeat the home video mistake. Costs of production, especially in the digital world, decline very rapidly. So ask for a smaller percentage, but also ask for visibility in edge delivery costs.
Basically, don't count on the valuation of content. It might tend to zero. It just might.

Focus on the real $$$$$ value that everyone talks about(and pays very good money for) in the Internet world: eyeballs.

Good luck.