AOL Just Doesn't Get It
Here's why AOL Time Warner doesn't get it: because they -- and nearly every MegaMediaCorp in the entertainment industry -- fail to grasp what we, the customers, want.
We don't want to keep you in business. We don't want to keep you employed. We don't want to keep you from being crucified by your stockholders or pilloried by your sui generis billionaire ex-employees. We want products and services that meet two things: collectibility and convenience. That's all it takes.
What do people consistently pay for? One, they pay for collections -- people spend insane amounts of money to have a personal library of MST3K tapes, Who albums, Evil Dead DVDs. When people pay for collections, they pay for the means to that collection -- be it access to collectible items (this is how fan clubs make bank) or methods to store and expand collections. Jesus, there's an entire scrapbooking industry out there where people are evidently collecting the things necessary to... collect things.
Two, people pay for convenience. We all believe our time is worth money, and we'll pay so we don't have to be at the mercy of a time-intensive task or a schedule that's out of our control. This is why we have 24-hour Wal-Marts, Shout Wipes, Netflix and Swiffer -- because we'd rather pay money than spend time.
Any sort of recording technology that meets both the first and second criteria is embraced precisely because it lets people put a whole season of 24 on the TiVo and watch it at their leisure. You can collect your shows, and watch them when you want: it beats being chained to FX during "24 Hours of 24."
And instead of looking at business models that would have the fanboy/fangirl audience in fits of frenzied spending and efficiency freaks singing the hosannas of this new tool, the companies are trying to cling to some bizarre model of "You'll buy what we want you to buy when we want you to buy it, and you'll like it!"
It's not going to work. There are too many entertainment options available for any one industry to stamp its little foot and demand that we all do things their way, and there are too many obvious business models out there for us to buy into MegaMediaCorp's insistence that the business has to work a certain way.
What are these business models? Consider the collector. Given that fan conventions draw people by promising blooper reels and DVD manufacturers beguile people into purchasing a disc by promising deleted scenes, it makes sense to bring that behind-the-scenes footage to a digital distributor, charge for the download, and boom! Revenue stream. Alternately, go to a commercial-free rerun-on-demand model: for $10, a PVR user can order and view a 48-minute episode of E.R. (although, at this point, God knows why they'd want it), and for $20, they can keep the recording longer than 48 hours, and possibly transfer it to video tape. You could tweak this model depending on the show's longevity -- for shows in season 1 or season 2, you pay a little more per rerun and the option to record on-demand episodes to your own hard disk or tape isn't made available; for longer shows, the earlier season reruns are fair game.
Alternately, you could tweak the fanboy/fangirl audience even more by offering new episodes on demand -- say, Buffy on Monday at 9 p.m., only for $50, without the ability to record to your PVR's hard disk or to fast-forward through commercials. That way, the audience for the network broadcast isn't significantly diminished by what they're not getting earlier and the just-can't-wait audience gets the thrill of a sneak broadcast without the attendant TiVo-type perks.
This sort of rerun-on-demand thing works well for building viewership in lower-rated shows too -- offer a promotion like "Download CSI and we'll throw in two episodes of Robbery Homicide Division free." The practice of fandom is pretty much the same from genre to genre -- a fantastically detailed and emotional attachment to a particular show -- and most fans follow more than one show. How else can you explain the godawful CSI: Miami's top-20 ratings? Or Angel's continued existence? Why not cultivate fanbases as audiences for similarly-themed or related-by-production-company shows? Those fans will spend over the long run.
As for the time-management crowd, provide the ability to program their PVR on the run, be it from their cellphone or via a web-based interface -- but provide that ability for a fee. Alternately, consider bulking out TiVo's search capabilities so users can set up searches and wishlists with Google-style search queries. By and large, people hate reading straight television listings (the attraction for things like Entertainment Weekly's listings or Laurel Krahn's is the infusion of personal, editorial judgement and commentary), so charge 'em for the privilege of not having to click through endless menus to see if anything good is on HBO Plus.
Whatever you do, don't consider a subscription model.
Yeah, it works for cable -- to a point. But that point is defined by what's broadcast, and we're not talking about that anymore. Forget broadcast cable subscriptions -- for most people, cable premieres are nice if you're interested in something, but the real beauty in cable is its endless capacity for rebroadcasts. You missed Six Feet Under on Sunday because, for some inexplicable reason, you got into Sue Thomas: F.B.Eye? Then you can pick up on Monday, Tuesday, Friday or Saturday. That's one of the reasons we really like cable -- because we know that some time, somewhere, someone will be rerunning Miami Vice and if we miss the episode where Julia Roberts plays a drug moll, well, it'll be on again soon. Schedule is only marginally relevant on cable; what we pay for is access to a pool of content we can enter at any time we choose. That's what makes the money.
So bag the subscription model -- it didn't work for music, because, as others have pointed out, there are plenty of ways to get MP3s for free and nobody's offering the All-U-Can-Download service that lazy people really want. It's not going to work for PVRs because people will either skip the service in favor of what they can get for free, or work around it.
Forget trying to convince television watchers that TiVo is the great Satan who's trying to take Friends from you -- if it's on for much longer, Jennifer Aniston and Courteney Cox will have dieted themselves into oblivion and who's going to pay Lisa Kudrow and the boys a grillion dollars an episode for Three Guys and Phoebe? People who watch television aren't buying the idea that one technology is going to topple an industry. Besides, it's way too easy to draw parallels between the current breast-beating over PVRs and Jack Valenti's contention that VCRs would be the death of the movie industry.
Finally, let go of the completely facetious argument that supporting an industry's revenue model is eminently moral and fair. Your typical customer couldn't give two shits about corporate "rights," and probably thinks most corporations already have the deck stacked in their favor. Telling them to do the right thing isn't a selling point. If these MegaMediaCorp-type companies could just let go of the fiction that they're just honest operators trying to make a buck, and start appealing to people's greedy, lazy natures, then they'd have a lot more success.
The most appalling thing about AOL Time Warner -- other than their continued employment of anti-PVR blowhards -- is that they honestly think they're doing something smart with Mystro. They've managed to completely miss what the viewer wants in the interest of placating advertisers and propping up a business model that's already four years out of date.
This isn't the kind of business I want controlling my options for watching television. I want a business that gets it -- and as of now, AOL Time Warner isn't it.
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