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Summary:

The entertainment industry has its eyes set on Facebook, hoping that the site will help to sell VOD rentals for Hollywood blockbusters like The Dark Knight and indie flicks alike. However, history teaches us that social networks can’t help you sell stuff that no one wants.

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Facebook is becoming more and more like MySpace, and that’s not a good thing for the media business.

But don’t worry — I’m not gonna predict that millions and millions of people are ready to abandon Facebook for the next hot thing. In fact, this isn’t even about anything that Facebook, or its users are doing. Instead, it’s about the perception that Facebook can help to sell media products that no one wants to buy.

You see, when MySpace was still on top of its game, there was a moment when people thought it could help save the entertainment industry. Countless bands were on MySpace, and many of them found it to be an invaluable tool for communicating with their fans. That’s when folks in the music industry got the idea to use MySpace not only for promotion, but actual distribution as well.

First up was Snocap, the music startup founded by Napster’s Shawn Fanning. Snocap wanted to sell MP3s directly on musician’s MySpace profiles, complete with a widget and a rather complicated backend. Snocap’s pitch was that indie bands would be able to avoid the middle man and directly sell to consumers, and reputable online music platforms like CD Baby joined to give their 200,000 musicians a chance at raking in the dough.

Only, the money never came. CD Baby founder Derek Sivers wrote an eye-opening account of his dealings with Snocap in 2007, detailing how he hired six people to exclusively work on the cooperation — only to receive a measly $12,000 check for eight months of music sales on MySpace. Snocap eventually closed shop when its assets were acquired by Imeem in early 2008.

Imeem itself got acquired by Myspace in late 2009, only to be folded into MySpace Music, a service the social network launched in cooperation and co-ownership with the four major record labels. The primary goal of MySpace Music wasn’t to sell tracks like Snocap, but to make money through advertising. And guess what: That didn’t work either. MySpace Music burned through “a lot of money,” observed Greg Sandoval from CNet last summer, reporting that MySpace was thinking about switching to a subscription model.

What does Facebook have to do with all of this? Both sites are obviously quite different, but the similarities are striking if you look at the way folks in the media business are projecting all of their hopes on them. Case in point: I got a pitch for a startup last week that wants to sell VOD rentals from independent filmmakers on Facebook, much in the same way that Snocap wanted to sell music downloads.

The startup in question, Berkeley-based FlickLaunch, actually has a pretty neat feature: Film makers can decide to give any number of views of their movie away for free, only asking users to press the Like button if they want access to the title. That way, 1,000 free views become 1,000 promotional messages in people’s Facebook news feeds, which could potentially reach a huge crowd for free. FlickLaunch also has the benefit of launching at a time when major studios are looking to Facebook as well to boost their online VOD sales. Warner Bros. has been experimenting with renting The Dark Knight and Harry Potter on Facebook, allowing users to pay for the movies with Facebook credits.

However, none of that matters if the product isn’t right. Internet users have for the most part rejected one-off VOD rentals, and opted for Netflix-like subscription plans instead. Netflix has captured 61 percent of the digital movie market, according to recent data from the NPD Group. Apple’s iTunes store, which is the biggest online platform for VOD rentals and sales, only has four percent of the market.

Of course, you can convince yourself that all you need is a better social media strategy to make online VOD take off and put all your bets on Facebook. Or you can face the facts: Facebook may be a great platform that has much to offer for the media business. But it won’t help you sell things no one wants to buy, much like MySpace didn’t help the record labels to preserve a failing business model.

Image courtesy of Flickr user Denis Dervisevic.

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  1. Rupert Hurley Wednesday, May 18, 2011

    Subscription is definitely the way forward…however there are myriad challenges content owners and distributors which threaten to undermine the whole model. My company digitalle has been working to solve these problems since last April, and will be formally launching our service in e very near future.

    Anyone interested parties are warmly welcome to get in touch with us to learn more….and there are some pretty fundamental issues at stake here.

    Rupert Hurley, CEO, digitalle Limited, a UK based start up specialising in multi channel publishing solutions, digital content management and content security.

  2. One thing that is a problem is one-off rentals, if they are not under $2.00 and transferable between devices, then you won’t get many sales. You have to be perceive as a “great value”…but buying Facebook Credits to purchase one movie, that I can go to my Cable OnDemand, Netflix or Redbox to see,
    in the words of a Mobster…”Fagetaboutit!”, there is no trend.

    Until Facebook is throughly integrated into the connected device market or it can host a video library…it won’t work.

  3. beenyweenies Friday, May 20, 2011

    I’m no expert in this space, but I would imagine the primary barrier for one-off rentals is that people are lazy. If they already have a pile of Facebook credits in their account (most of us don’t), they’re more likely to use a service like this. For most people, however, digging into their wallet and going through the name/address/credit card info routine just for a single $2.00 purchase triggers the laziness in all of us.

    Netflix offers a wide selection and is available on dozens of on/offline devices, but I would guess their main selling point is that people can sign up once, pay their bill once a month, and not have to worry about a lengthy microtransactions process just to watch a movie.

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