Economics of Video on Demand

You may use this content, but please cite my ideas as (c) 2005, Dr. Bruce Klopfenstein.

Sometimes I wish my students would tape record my lectures so I could demonstrate what I'm about to say which is something I've been preaching to my students especially since the advent of the Web. You know if you've been following my blog that the U.S. model of delivering content to audiences is advertiser subsidy. I remember when, for example, USA Today came on the web as a subscription service (you can look it up!). As a consumer myself, I had given up on the CNN and ESPN web sites for the most part because I was put off by their "premium" content available only by subscription.

When following a link from a student project today, I noticed that CNN's video is tagged "now free." Congratulations! This is the way of the world for media in the U.S. Without researching this decision by CNN, I can guess that they didn't get enough subscribers to make it worthwhile, they realized they were losing out as a brand to to other video news services such as Reuters that offer free content, and that they stand to reach a much larger audience on the web now. Oh, and surprise, surprise, you get to see an advertisement before you see the CNN video news source.

There's another good reason for CNN to be doing this (actually, there are many, in my opinion): CNN can recycle valuable content. I used to work in radio news and we, of course, would present the same "major" stories each half hour or hour. A common practice was to get an interview that lasted several minutes or more and then refresh the story each newscast with a different sound bite from that interview. CNN already lured me in with a story on the ineffectiveness of antibiotics on bronchitis. I'll leave the growth of health news to another day. (Hint: as we baby boomers age and start to get sick more often, we will want information on ailments immediately. Consider the case of a person just diagnosed with a form of cancer. Suddenly that content's value rises exponentially to that person.)

So, call this another staw on the camel's back as far as the slippery "pay as you go" model of VOD in the United States. (I confess to being a bit provincial here in limiting my comments to the U.S. market.)


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