1. Online Content and Media
Chapter 10

2. Learning Objectives
Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, and digital rights management
Discuss the concept of media convergence and the challenges and opportunities it creates
Understand the key factors affecting the online publishing and online entertainment industries

3. Online Content
No other sector of the American economy has been so challenged by the Internet and the Web than the content industries
The online content industries are organized into two major categories:
Print (newspapers, magazines, and books)
Entertainment (television, movies, music, radio, and games)
Together, the online content industries generated revenues of about $22 billion in 2015
What is the common characteristic across each of these industries?

4. Annual media consumption (Figure 10.1)

5. Media revenues by channel (figure 10.2)

6. Online content consumption (figure 10.3)

7. Three Revenue Models for Digital Content Delivery
There are three revenue models for delivering content on the Internet:
Subscriptions (“all you can eat”)
A la carte (“pay for what you use”)
Free (with advertising) and freemium
A newer alternative model is completely free user-generated content
Contrary to early projections that free content would drive “paid” out of business, it turns out that both models are viable now and in the near future

8. Free or Fee: Attitudes About Paying for Content and the Tolerance for Advertising
In the early years of online content, most Internet users expected to pay nothing for online content
Users were also willing to accept advertising as a way to pay for free content
By 2015, consumer behavior and attitudes had greatly changed
In a demonstration of just how much quality online content is worth paying for, by 2015, Apple had sold 35 billion songs, 700 million TV shows, and more than 200 million movies
As it turns out, free content is not worth much and should be free, but premium content is worth a great deal and should be priced accordingly

9. Digital Rights Management and Walled Gardens
Content producers generate revenue and profits from their creations, and they may protect these revenue streams through copyrights
Digital rights management (DRM) refers to a combination of technical and legal means of protecting digital content from unlimited reproduction and distribution without permission
Content producers and distributors are still trying to find the right balance between usability and protection
One solution is a “walled garden” that ties content to the hardware and operating system
For example, Kindle books cannot be converted to other e-book or document formats

10. Media Industry Structure
The media content industry prior to 1990 was composed of many smaller independent corporations specializing in content creation and distribution in separate industries of film, television, book and magazine publishing, and newspaper publishing
During the 1990s and into this century, after an extensive period of consolidation, huge entertainment and publishing media conglomerates emerged
Some of this is due to a phenomena called media convergence

11. Media Convergence Technological convergence Content convergence
Development of hybrid devices that can combine the functionality of two or more existing media platforms into a single device
Content convergence
Convergence in the design, production, and distribution of content
Industry convergence
Merger of media enterprises into synergistic combinations that create and cross- market content on different platforms

12. Online Content Revenue Models
Marketing
Free content drives offline revenues
Advertising
Free content is paid for by online advertising
Pay-per-view/pay-for-download
Subscription
Monthly charges for service
Mixed
Combination of the above models

13. The Online Content Industries
The Online Publishing Industry
Newspapers
Magazines
Books
The Online Entertainment Industry
Television
Movies
Music
Games