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New Media Profits

Written by Brian Hicks
Posted January 27, 2006

This week we saw one of the most unremarkable media mergers ever. After losing their respective parent companies a billion dollars over ten years, television networks The WB and UPN decided to merge under the name CW.

Given each feeder network's dismal ratings over its lifespan, with not a single show cracking the top 100 in viewership, entering into an experimental marriage couldn't do that much damage. In fact, I think The CW could ride the cutting edge to success.

Programmers and marketing directors at The CW will take a page from The WB and UPN's playbooks and continue to cater to a younger demographic than the traditional networks. This means not only creating shows that appeal to younger audiences, but putting them in formats fit for the age of iPods.

Portability and the very invention of the iPod Video model have changed concepts of television viewing and how revenue can be drawn from it.

Now that digital TV recorders are widespread, allowing viewers to zip through commercials and thus obviating the only source of ratings-based revenue for networks, the sale of episodes of hit shows through Apple's iTunes and other sites will require the TV business's most sweeping adaptation since cable was born.

Where opportunity is lost in advertising revenue, another chance is gained in that networks have never before been able to charge viewers to watch shows just after their first airing. No more waiting for boxed sets of your favorite shows -- now you can go straight to your PC and watch it again on the train to work.

The Sound of Money

The music industry is also being forced to adapt. In 1999, I was banned from the file-sharing program Napster for having downloaded a song by the band Metallica. Two years ago, while working on Capitol Hill, I attended a digital media conference sponsored by Napster and others who were trying to make a turn for legitimate profit.

Today, iTunes is the new model for industry profitability, selling individual songs and entire albums to consumers who would just take a CD and dump it to their MP3 players anyway.

Even the ringtone market has soared past expectations by 20% in 2005, bringing in $600 million. The top ringtone was downloaded 1.9 million times, making that little snippet of a song more downloaded than the most popular full song offered on iTunes.

What this all points to is more of the inevitable wave of Functional Integration I keep mentioning in Wealth Daily.

An iPod can hold TV shows, songs, games, photos, schedules, and in the meantime has become the new century's most pervasive and increasingly essential status symbol.

A new era of media profitability is dawning. Though some worry about consolidation, we have never had more means at our disposal to get the information we seek, and companies like Google are making their fortune in facilitating our access to content.

Get ready for the next generation of information society moneymakers.

- Sam Hopkins
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