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TABLE 4.1 Average Annual Media Consumption per Person in the United States
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Total TV Radio Broadcast TV Internet Newspapers
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1998 1573 1050 884 74
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1999 1579 1037 840 97
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2000 1591 1024 805 122 152
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2001 159 1014 773 146 151
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2002 1605 1003 751 168 150
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2003 1610 992 729 192 149
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Hours per annum.
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This chapter will focus on potential ways to make money with streaming media. The return on investment report for enterprise streaming conducted by streamingmedia.com showed that businesses that had used streaming in a variety of contexts, including building revenue streams, increasing brand value, and generating more custom to retain audiences and to facilitate communications, had seen returns on their investments of between 38 and 72%. Enterprises who try streaming are, on the whole, happy, satisfied customers. The majority surveyed said they would continue with their streaming media efforts, given the success of their streaming media pilots. Business models such as pay every day, pay per play, pay to own, prepay, pay what you think it s worth, pay if you liked it, or pay some other way are possible, but how you make that payment is a significant issue. The multitude of incompatible payment systems creates inconvenience. Who wants or needs 70 different e-money currencies in a virtual wallet (or, for that matter, 70 different e-wallets, as is the usual case) Credit cards are not viable for making small payments because of the transaction charges involved, so they do not support many of the business models possible. What use is media commerce without a convenient way to
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AM FL Y
156 154
4
pay Microsoft s .NET claims to have an answer. Their My Services offering (also known as HailStorm) provides for convenient and transparent micropayments. Time will tell whether or not My Services proves to be a revolution in online commerce, or just another incompatible online payment scheme. From the point of view of media commerce, the key questions to be solved are:
How do consumers find media (Napster proved to be a reasonably effective answer, but MPEG-7 enables many improved search techniques.) How do content owners protect their rights How do consumers protect their rights How do consumers make a payment for media, once it has been found How do consumers obtain licenses to play media without trauma
Was Free to Air Ever Really Free
Despite appearances to the contrary, television never was free, nor was radio. One way or another, the consumer paid. Either the broadcast network was a business selling advertising space (advertising costs are merely added to the costs of all goods and services advertised) or else it was state funded, supported by taxes or compulsory subscriptions called television licenses. What broadcast networks have going for them is that once the infrastructure and operating costs are covered, the incremental cost of adding another viewer is negligible, yet that viewer s attention translates into greater revenue for the broadcaster, who often sells advertising based on number of impressions. The cost of production and distribution is also amortized over a larger viewer base, so there are significant incentives for broadcasters to get as many people as they possibly can watching and listening. The limited choice of channels seems to hold viewers captive, but also acts to reduce the overall potential audience, since viewers disinterested in the limited number of program channels available ultimately switch off. Limited programming choice allows a broadcaster to hold a larger piece of a smaller pie. This push to maximize the number of viewers influences all program commissioning and scheduling decisions, with the goal of maximum audience share outweighing most other considerations.
The Business
Streaming media can adopt the broadcast model and try to compete on the same grounds as radio and television, but streaming currently has cost and quality disadvantages. However, Streaming Media can compete for niche audience satisfaction. While there has been talk of the resistance of consumers to paying for media access, the truth is that consumers have always paid for access to their media; it s just that the costs were often cleverly hidden. Also, many consumers were cross-subsidized by their wealthier audience peers. Commercial television and radio are, in fact, a form of disguised socialism, since the poor do not bear the same share of the cost of media access as do the wealthy. Affluent people, as a group, tend to buy more of what is advertised and also the more expensive items, which bear proportionately more of the manufacturer s advertising expenses.
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