seth shapiro @ media future week
DESCRIPTION
Seth Shapiro's presentation on the Future of Media Business Models during the Media Future Week (MFW12) in Almere.TRANSCRIPT
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Los Angeles | New York | Amsterdam
Media Future Week:The Future of Media Business Models
9 May 2012
[email protected] | @sethrshapiro
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... a business model is the method of doing business by which a company can sustain itself... The business model spells out how a company makes money.
– http://digitalenterprise.org
Business Models
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Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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2010 New Amsterdam Media LLC
Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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PublishingContent: News, magazines, books, trade pubDistribution: Presses, delivery
FilmContent: Motion Picture ProductionDistribution: Exhibition, regional/platform windows
MusicContent: ProgrammingDistribution: Broadcast, cable, satellite
TelevisionContent: Recordings and performancesDistribution: Replication, delivery
2010 New Amsterdam Media LLC
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Publishing
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“Many of his writings were originally published serially, in monthly installments or parts, a format of publication which Dickens himself helped popularise at that time.
Unlike other authors who completed entire novels before serialisation, Dickens often created the episodes as they were being serialised. The practice lent his stories a particular rhythm, punctuated by cliffhangers, to keep the public looking forward to the next installment.” – Wikipedia
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+ = ?
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The Secret Business Model of Early 20th Century Media
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The Secret Business Model of Early 20th Century Media
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“Dickens fought with his various publishers and, at different points in his career cut a deal with a printer, pushing the printer towards a publishing role and cutting out his publisher altogether; self-published his work by paying for copies of his books to be printed; and self-published his work by setting up and part-owning periodicals whose main attraction was that they carried his work.
He even, towards the end of his life, read his books aloud to paying audiences – an entirely new business model.”– http://nosycrow.com
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Film
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“In 1893, Thomas Edison patented the first efficient motion picture viewer, the
kinetoscope. A customer could drop a penny into the
kinetoscope... and enjoy a short movie loop. In the 1890s and 1900s, kinetoscope parlors
spread like crazy across the country... ”
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Edison misjudges the market
“As he had with the phonograph, Edison misjudged how the market was to develop. He thought the money was in the kinetograph and the kinetoscope; he didn’t think people would want to sit in audiences...– Edward Samuels
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Edison misjudges the market
“As he had with the phonograph, Edison misjudged how the market was to develop. He thought the money was in the kinetograph and the kinetoscope; he didn’t think people would want to sit in audiences...– Edward Samuels
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The biggest misconception of the transition to sound [is] that it was rapid and completely disrupted the movie making process. Nothing could be further from the truth. The transition took years to take effect and was a much slower process than many film historians have suggested.”
– Francesca Miller
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Music
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“These talking machines are going to ruin the artistic development of music in this country.
Today you hear these infernal machines going night and day.
We will not have a vocal cord left. The vocal cord will be eliminated by a process of evolution, as was the tail of man when he came from the ape.”
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“These talking machines are going to ruin the artistic development of music in this country.
Today you hear these infernal machines going night and day.
We will not have a vocal cord left. The vocal cord will be eliminated by a process of evolution, as was the tail of man when he came from the ape.”
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Over time...
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PublishingBooks
• A la carte sale of “permanent” printed work
Newspapers and Magazines• A la carte (news stands)• Subscription• Advertising (Brand, Help Wanted, Real Estate et al)
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Books• A la carte
Newspapers and Magazines• A la carte• Subscription• Advertising
Publishing Business Models
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Ticket sales
Ala carte sales
Intellectual Property
(No subscription or advertising)
Film Business Models
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Music Business Models
• A la carte (major focus)
• Ticket sales
• Intellectual Property
• No Subscription • No Advertising
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Walt Disney Company Disney Pictures Buena Vista Pictures Touchstone ESPN ABC WDInternet Group Disney Parks
Time Warner HBO Warner Bros Turner Networks Warner Music New Line (formerly) AOL
Viacom CBS Paramount MTV Networks Showtime Nickelodeon BET CMT Comedy Central
News Corporation FOX Companies FX Networks FOX News Foxtel Wall Street Journal NY Post London Times
Comcast/NBC Universal Comcast Cable, NBC, MSNBC, CNBC, Universal Parks Telemundo, USA Networks, Bravo
Sony Columbia Tri Star Sony Pictures Sony Music Sony Computer Sony Electronics
The Big Six
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Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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Media Business Models 1 Advertising 2 A la carte purchase 3 Subscription 4 Intellectual Property 5 Enterprise Value 6 Ticket Sales
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Media Business Models 1 Advertising (TV Spots, ads, auction) 2 A la carte purchase (DVD, Download to Own) 3 Subscription (magazines/news, cable, Over The Top) 4 Intellectual Property (Licensing Star Wars toys) 5 Enterprise Value (being acquired or going public) 6 Ticket Sales (Movies, concerts)
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2010 New Amsterdam Media LLC
Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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What is television?
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Terrestrial Cable Satellite
3 Networks 4 Networks 6 Networks
Household Appliance
Telco
100s of Networks
What is television? [1950-1995]
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What is television? [1995-2005]
Big screen in your living room
A community experience
Delivered by a big provider (cable etc.)
Professionally produced entertainment
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What is Television?
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What is Television?
An ecosystem
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What is Television?
An ecosystemthat allows for evolving business models
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c. 1927: Philo Farnsworth invents his prototype
c. 1941: FCC adopts NTSC
c. 1948: CBS and NBC begin regularly scheduled broadcasts
c. 70s: Satellite (B2B) – Birth of Basic Cable Network Industry
c. 70-80s: Niche High-End satellite (MDS/MMDS/SMATV/TVRO)
c. 94: DBS – Birth of MSO Competition
c. 99: Internet as a platform
c. 00s: Increased bandwidth, iTunes video, IPTV, Torrents
Brief History of Television
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• Very limited choice• Very broad audience• Free to User• Primary Business Model: Advertising
TV 1.0: Broadcast Television
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Broadcast Business Model
• Massive volume• Ratings driven• Advertisers pay per spot• Ratings point = 1% of HH (1,159,000 HH for 2010–11)
• Share = % of TVs in use that are tuned in
How is success measured?
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The Grey Flannel Golden Age
Ratings point = 1% of HH (1,159,000 HH for 2010–11)Share = % of TVs in use that are tuned in
1952-53 I Love Lucy 67.3r1980-81 Dallas: 34.5r2005-06 American Idol : 11r
Arguably, the Broadcast TV Era peaks w ‘83 M*A*S*H Finale: 60r/77s (28 year record)
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TV 2.0: The Cable Era
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Cable• Greatly expanded choice (100s)• Smaller audiences: Power of Niche• Expensive to user• Primary rev: Subscription fees• Secondary $: Advertising
Broadcast• Very limited choice (4)• Very broad audience• Free to User• Primary rev: Advertising• Secondary $: Device sales
TV 2.0: The Cable Era
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• Subscription• Advertising• A la carte• Enterprise Value• Intellectual Property
Cable Creative Models• Broadcasting ---> Narrowcasting• Monthly fees = funding for LOTS of programs• Allows for mass and niche audiences
Cable Business Models
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Text
2002 2009
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TV Economics
$.13 sub/mx 12x 99,700,000 HH
$155,532,000
Conservatively, a low-price cable network yields over $155 million in subscription revenue per year
15 cable networks x avg $.20 per month = $3.6 billion.Top price network ($5) = $6 billion.
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MEDIA ECONOMICS
By far, the most valuable assets in media are cable networks.
US MSO Subscriber Revenues = app. $135 billion per year.
(GOOG 2010 = $28B)
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Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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The Future of Media: The Content Brand Conversation
Case Study 1: Harnessing Business Models for Art
Case Study 2: How Old Media Morphs Online
Case Study 3: New Platforms Change the World
Case Study 4: New Art Creates New Models
2010 New Amsterdam Media LLC
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American Movie ClassicsAMC is a cable television channel that primarily airs movies, along with a limited amount of original programming. The letters originally stood for American Movie Classics; however since 2002, the full name has been deemphasized as a result of a major shift in programming. AMC is owned by Rainbow Media Holdings ... AMC was originally a premium cable channel that aired classic movies...It was not uncommon for the channel to host a Marx Brothers marathon, or show such classics such as the original Phantom of the Opera.
-‐-‐ Wikipedia
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Source: Kagan
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$.23 sub/mx 12x 88,000,000 HH
app. $155 million
AMC is in app 88 million US households
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1. Pro Producer X has $30 million show idea.
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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1. Pro Producer X has $30 million show idea.
2. He goes to HBO, SHO, NBC, CBS... all the big guys
3. “I need $30 to make a great show” [US$2.3M x13 episodes = $30M]
4. Network: “Who are the stars?Is there sex? Does it appeal to 18-24?”
5. Producer: “Not really - it’s a period drama.”
6. Network: “Get out of my office.”
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I will build you:- Higher Subscription Fees- Higher Advertising Fees- Intellectual Property...
Broadcast model re narrowcast model
"Small rating.... but will build you a brand!"
Goes to AMC: "You get .23 cents a house...""... what if we can double that?"
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US $2.3 millionx 13 episodesUS$30,000,000 (est.)
1.9 rating = No Way
"period drama"
Broadcast model re narrowcast model
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US $2.3 millionx 13 episodesUS$30,000,000 (est.)
Build brand to increase license fee = "OK"
"period drama"
Broadcast model re narrowcast model
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US $2.3 millionx 13 episodesUS$30,000,000
1.9 rating = “No Way”
Build You a Content Brand = “OK”
Playing Old Game vs. harnessing New
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Rainbow's Sapan: Streaming Cable Shows 'Devalues' Product
... "We don't think it's wise for the industry to Napster-ize itself," said Rainbow CEO Josh Sapan, referring to the site that famously became a popular hub of free music.
Sapan said Rainbow is angling for AMC to receive 50 cents a subscriber per month from distributors in its next round of negotiations.
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Rainbow's Sapan: Streaming Cable Shows 'Devalues' Product
... "We don't think it's wise for the industry to Napster-ize itself," said Rainbow CEO Josh Sapan, referring to the site that famously became a popular hub of free music.
Sapan said Rainbow is angling for AMC to receive 50 cents a subscriber per month from distributors in its next round of negotiations.
On $3M business model change:
$.23 to $.50$155M to $310M
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Matthew Weiner is the creator, executive producer, head writer, and show runner of the AMC television series Mad Men. Weiner has received eight Emmy Awards and three Golden Globe Awards for Mad Men. Mad Men has won the Emmy Award for Outstanding Drama Series three consecutive years (2008, 2009, 2010). Weiner was named one of the 2011 Time 100 Most Influential People In The World. -- Wikipedia
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Mad Men
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The Future of Media: The Content Brand Conversation
Case Study 1: Harnessing Business Models for Art
Case Study 2: How Old Media Morphs Online
Case Study 3: New Platforms Change the World
Case Study 4: New Art Creates New Models
2010 New Amsterdam Media LLC
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Subscription 3.0
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Website and subscription service offering ad-supported on-demand streaming video of TV shows, movies, etc.
Competitors:
Advertising Subscription
Owned By:
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The Future of Advertising = Data
• Are you buying diapers in the morning, or your third BMW?• Advertising moves from Broadcast to Narrowcast • Advertising metric changes from audience size to a measure of customer value
• Know your customer like never before• Target your customer like never before
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Hulu
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• Advertising • Subscription • Intellectual Property • Enterprise Value• Precise Customer Data• Intellectual Property (originals)• Economics of Community
Media Business Models 1 Advertising 2 A la carte purchase 3 Subscription 4 Intellectual Property 5 Enterprise Value 6 Ticket Sales
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The Future of Media: The Content Brand Conversation
2010 New Amsterdam Media LLC
Case Study 1: Harnessing Business Models for Art
Case Study 2: How Old Media Morphs Online
Case Study 3: New Platforms Change the World
Case Study 4: New Art Creates New Models
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… viewership on [tablets, mobile and CTV] doubled from Q3 '11 to Q4 '11.
Tablets led with 22% growth in quarter-over-quarter growth in time watched per play.
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CONNECTED TV AND CONSUMERS – HILVERSUM, NETHERLANDS – FEBRUARY 7, 2012
Seventy percent of tablet owners and 68 percent of smartphone owners said they use their devices while watching
television.
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The Future of Data:
• Since last year:• Sharing via mobile was up 500%• Overall sharing up 143%• Shares to and from TwiAer up 116%
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The Future of Data: Audiences Talks Back
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The Future of Data: Audiences Talks Back
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“Turner is looking to establish itself as a leader in adopEng smart TV technology” – Ad Age
“We are trying to understand the consumer marketplace “People react to adver8sing differently on different screens, and we’re trying to figure out, ‘What is the next evolu8on of TV?’ David Levy, TBS President Sales, DistribuEon and Sports
Turner Embraces Social TV, Interactive Ads via 'Conan' AppBy Mike Shields on February 8, 2012
... As part of a major push by Turner’s entertainment networks to embrace second-screen viewing...... users of the new Conan app (which is being sponsored byAT&T) will be periodically greeted with pop-ups within the app featuring information relevant to the show, such as facts about a guest’s movie career. And soon enough, viewers will be able to buy tickets to those guests’ movies via the app.
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CONAN
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102
The Second Screen...
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103
The Second Screenpoints to the future of media business
• Hypertargeted advertising• New subscription products• More items for purchase• Intellectual Property• Enterprise Value• Customer Data and Preferences
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The Future of Media: The Content Brand Conversation
Case Study 1: Harnessing Business Models for Art
Case Study 2: How Old Media Morphs Online
Case Study 3: New Platforms Change the World
Case Study 4: New Art Creates New Models
2010 New Amsterdam Media LLC
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Jenna Marbles
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Jenna Marbles
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Epic Meal Time is a YouTube cooking show known for creating extremely high-calorie meals from meat (with emphasis on bacon) and alcohol (especially Jack Daniel's). It is... represented by Brillstein-Grey Entertainment, and... Internet television network Revision3.
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Jenna Marbles
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2010 New Amsterdam Media LLC
Agenda
2010 New Amsterdam Media LLC
Brief History of 20th Century Media
Media Business Models Made Simple
TV and the Beginning of Future Media
The Future of Media: The Content Brand Conversation
Conclusion
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Conclusions: Future of Media Business
• Community is the new network• Customer data is the new currency• “If you’re not paying, you are the product being sold.”• Media moves from a monologue to a dialogue
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Current Future
1 Ticket Sales 2 Advertising 2 Customer Preference Data 3 A la carte purchase 3 Always On: Power of the Cloud 4 Subscription 4 Digital Delivery, cross device 5 Intellectual Property 5 Economics of Community 6 Enterprise Value 6 Self-sustainable small businesses
Media Business Models
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Current Future
1 Ticket Sales 1 “Live” Digital Events 2 Advertising 2 Hypertargeted 3 A la carte purchase 3 The Cloud = Always On 4 Subscription 4 Digital Delivery, cross device 5 Intellectual Property 5 Economics of Community 6 Enterprise Value 6 Self-sustainable small businesses
Media Business Models
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“Nobody knows anything.”
- William Goldman
2010 New Amsterdam Media LLC
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"Anything new, anything worth doing, can't be recognized."
- Picasso
2010 New Amsterdam Media LLC