How Can Content Businesses Succeed Online? By Clive Rich

How Can Content Businesses Succeed Online? Clive RichIntellectual property online; Economic Models and Legal Aspects Russian and Global Experience April 17, 2012

Background  Professional Negotiator, Mediator and Arbitrator  Ran Legal departments for Warner and BMG  Ran Digital Divisions for BMG and Sony BMG  Runs digital law firmHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 2

Can Content Businesses Succeed Online? • Content can succeed online • Legal regime is only part of the picture • Content needs to deliver value • Content needs to be readily available legitimately • Content needs to be trackedHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 3

How can content create value online? • Bargain price • Individualised experience • High Luxury price • Saves time • Authority • Makes life easier • Expertise • Try before you buy • Brand recognition • Ubiquity • New product excitement • Bundled/Ease of purchase • Clear product offering • Niche sector • Social recommendation • Scarcity/Variety of offering • Social conformity • Associate with another desirable product • Community • Micro Charging • Expert recommendationHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 4

Successful Case Studies for Online Content BusinessesHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 5

Bargain Price/High Luxury PriceRadioheadIn Rainbows Experiment• 1.2 million downloads – price set by user• Average „voluntary‟ price £4• Pre-release sales more profitable than total sales of previous album “Hail to the Thief”• Disc box (selling at £40) sold 100,000 copiesHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 6

Expertise/AuthorityFT.com• 4 million registered users• 250,000 digital subscribers• 585,000 paying users• 3 subscription options (paid weekly):- $6.69: Newspaper only- $8.59: FT.com only- $11.49 Newspaper & FT.com• 4 week FREE trial available for each optionHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 7

Brand RecognitionAmerican Idol• Made an estimated $6.4 billion fromthe first 8 seasons• American Idol artists have amassed (in the US):- Over 57 million album sales- 104 million singles and digital trackdownloads• Digital download figures alone total 99.96 millionHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 8

New Product Excitement/Clear Product Offering Spotify• Streaming service with easy interface: - Easy sharing - Use on mobile online or offline - Facebook connectivity• 3 clear price tiers:- Free (with advertising)- £4.99 (Unlimited streaming /no advertising)- £9.99 (as £4.99 + mobile use & offline playlists)• By June 2011, 10 million users in Europe – 15% paid• By April 2012, 3 million US users - 20% paid• Revenues of US$99 million by 2010• Anticipated Revenues of US$900 million in 2012How can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 9

Social RecommendationAngry Birds• Released December 2009• 700 million downloads• 25% paid downloads• iPhone/iPad version $0.99, Android version free with advertising• Merch, TV shows and Movie to comeHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 10

Social ConformityFarmville• Zynga‟s games (including Farmville and Cityville) have 240 million active users• Valued at US$10 billion in May 2011• Revenue of US$311 million for quarter ending Dec 2011• Game accessed for free• Once users are „drawn in‟, they are temped to pay real-world cash in exchange for virtual items and in-game advancementsHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 11

CommunityClub Penguin• Avatar-based virtual games world for 6-14 year olds• 30 million users• Bought by Disney for US$350 million• Subscription options: - US$3.95 for 1 month - US$19.95 for 6 months - US$37.95 for 12 monthsHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 12

Expert RecommendationPandora• Streaming internet radio with stations based on Music Genome project• Revenues of US$274 million in March 2012• 1 billion listener hours in March 2012• 51 million active users in March 2012How can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 13

Individualised ExperienceLast FM• Music Recommendation service which builds a detailed profile of user‟s musical taste by recording details of the songs the user listens to (via Internet radio stations, users computer or portable music devices).• 30 million users (March 2009)• Acquired for £140 million in May 2007 by CBS Interactive• Free for users in the UK, US, and Germany (with advertising).• Users in other countries require a subscription of €3.00 per month after a 50 track free trial.How can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 14

Try Before You Buy & Saves TimeShazam• Free-to-try programme (5 „tags‟ per month)• Pay to play programme (Shazam Encore) is US$5.99 per month• 3 million tracks „tagged‟ a day• Facilitates over 250,000 purchases a day (conversion rate of 8-10%)• As of June 2011: £16 million in revenues from 80 million users• Estimated that Shazam earns almost US$6 million a year from track referrals How can content businesses succeed online? Intellectual Property Online – Russian and Global Experience, April 17, 2012 15

Ubiquity Hulu• Profitable within 2 quarters of launch based on advertising around free usage• Second only to YouTube in video streams – well over 1 billion monthly• 1.5 million paying subscribers• Revenues of US$420 million in 2011 Netflix• 24.4 million subscribers (Jan 2012)• By 2011, total digital revenue reached $1.5 billion• Two subscription plans in US: Streaming and DVD rental (both charged at $7.99 per month)• Launched as a streaming-only service in the UK and Ireland in January 2012 (£5.99 & €6.99 per month) How can content businesses succeed online? Intellectual Property Online – Russian and Global Experience, April 17, 2012 16

Bundled/Ease-of-Purchase Deezer• 20 million registered users with 1.4 million paying subscribers• August 2010 – partners with Orange to bring their unlimited music service to a broader audience in France.• December 2011 – launches in the UK. No free ad-funded model. 2 subscription options: - Premium £4.99/month – unlimited streaming on PC/mac - Premium+ £9.99/month – as above but also for mobile devices (online and offline)• Deezer partners with Orange for UK launch: Premium+ offering is bundled into the price of Orange‟s Panther pay-monthly tariff.How can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 17

Niche SectorBookboon• Publishes textbooks focused on specific areas (e.g. accounting and economics, IT and management)• Business model - provide free eBooks but embed advertising every three to five pages in each book.• Over ten million downloads over the course of 2011 - 500% growth of the eBook publisher‟s download numbers.• By the end of 2012, Bookboon is expected to own a 10 % market share of the eBook publishing industry in the US, with 50 million eBook downloads. How can content businesses succeed online? Intellectual Property Online – Russian and Global Experience, April 17, 2012 18

Scarcity/Variety of OfferingTrent Reznor (Nine Inch Nails)• “As the climate grows more and more desperate for record labels, their answer to their mostly self inflicted wounds seems to be to screw the consumer even more”• March 2008: „Ghosts I–IV‟ (first release on Null Corporation label), became available via the bands official website in a number of different formats, including: - Free download of the first volume - $300 Ultra-Deluxe limited edition package – all 2,500 sold• May 2008: Nine Inch Nails released „The Slip‟ via their website without any advertisement or promotion. The album was made available for download free of charge with a message from Reznor "this ones on me."• Individual downloads of „The Slip surpass 1.4 million. It has since been released on CD as a limited edition set of 250,000.How can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 19

Associate with Another Desirable ProductIamPlayr• Social game that gives users thechance to play the life of aprofessional footballer• Players must make the choicesthat real footballers make• “Coin” based economy• 2.4 million installs• 800,000 monthly active users• 400,000 Nike boots sold• 2 million Red Bull cans soldHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 20

Micro-chargingGetty Images• Supplier of stock images for business and consumers• Archive of 80 million still images and illustrations and more than 50,000 hours of stock film footage• Net worth $2.4 billion in 2008• Micro charges of a few pounds to a few hundred pounds• Price dependent on usage – company corporate/web/advertising/marketing/film/tvHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 21

Can Content Businesses Succeed Online? • Content can succeed online • Legal regime is only part of the picture • Content needs to deliver value • Content needs to be readily available legitimately • Content needs to be trackedHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 22

Content needs to be readily available legitimatelyMusixmatch• “Lyrics” is the most searched for word on the Internet – even more than “sex”• Lyrics licensing API• Users: More than 2,6 Million users• Tracks: More than 1Million matched lyrics per dayHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 23

Automating availability and tracking of contentCriteria Media Exchange• World‟s first digital media exchange• Automating availability and tracking of content• Retailers can plug and play• Content delivered directly to consumer by the exchange• This ensures perfect reporting recordHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 24

Conclusions  There are plenty of successful value propositions for value added services for content already operating online  Copyright legislation should support collaborative availability of content, rather than just focusing on the “balance of power” between rights holders and distributors in relation to restricting copying  Equally, legal support for collaborative systems of tracking usage is more important than legal regimes just based on restriction/infringement and takedown  Hargreaves Review of UK Copyright legislation is a good example of this  A combination of enabling access and tracking usage is good for users, good for distributors and good for rights holders  This is a modern approach to the definition of copyright  This enables more of those copyright businesses which provide value to users to thriveHow can content businesses succeed online?Intellectual Property Online – Russian and Global Experience, April 17, 2012 25

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How Can Content Businesses Succeed Online? By Clive Rich

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