Archive for June, 2010

Sustainable business models in a digital environment

Posted in Digital business, Digital media, Digital news, innovation, Web 2.0 on June 9, 2010 by Geir Stene

People have been telling stories at least for the last 28.000 years, it’s not likely that the demand for great stories will vanish at any time soon. Professionals are more likely to be great to tell stories that  people would prefere to listen to. Journalism is in no way in danger – BUT, the mindset of newspaper people seems to still burden online media activities.

Even in this article  the word “circulation” pops up. When did an internet professional use that word? When speaking of how to generate revenue, the term subscriber, and advertisement is the only two ideas that is mentioned. This is sad, and leaves very little hope for the media houses as participants into the future if the mind set isn’t turned upside down in a hurry.
There are a lot of alternative ways to provide content in a digital world, but to be dependent of traditional media houses. There are lots of experiences of business models that work in a digital environment. The The Copenhagen Institute for Futures Studies’ 1 report and 2 report have published two interesting papers on business models. One comment is needed. CIF is supposed to study the future, these papers have the ‘problem’ that the future have met the present! The development is so rapid that the future is already here. One important statement from CIF is “Everything that can be digitalized will be digitalized – and the value goes toward 0$. Kevin Kerry, the editor of Wired magazine have stated “The value is beyond free” in order to explain how to make money in a digital environment, where the cost of content production is close to 0$, due to the free reproduction costs.

In order to defind value (a necessity if you want to build sustainable business models) it’s kind of clever to look for what is reconed to be a scarce resource, or in other words, what cannot be reproduced. An example is the music industry. The revenues in the world of distributing music have increased, not decreased. Surprised? The “stealing” sharingand waste downloading on the net have increased the sale of music – it’s true, whatever the record companies try to tell us. The only one loosing on this have been:  – The record companies. Content creators, have increased their share of the profit. In addition they have earned more money on something that cannot be reproduced by any other then themselves; Live concerts. A live concert is a scarce recourse, and cannot be reproduced. What can we learn from this?
1) The value is NOT the news/ content itself (ok, some times it might be, but often not). Rather try to look at the user/participant as your real value
2) Providing your user/ participant with real time/ location/ technology, content and advertisement with relevance is a must. In addition to that, content have to be contextual to the user/ partisipant. (segment/time/ location/ channel/device)
3) Generate revenues from the knowledge you have about your users / participants

How to start changing the mind set to enable innovation and transformation concerning establishing sustainable business models and revenues? It’s maybe worthwhile contemplating over this: (Copenhagen Institute for Futures Studies) People would like to pay for :

• Accessibility
• Navigation
• Security and consistency
• “Good enough” – to High quality
• Exclusivity (added by me)