This is the last in a series of posts that highlighted key people, companies and trends to watch in 2012 in the sectors we cover most, from publishing to legal, and from mobile to advertising.
Not too long ago, TV Everywhere was a bold concept being evangelized by Time Warner (NYSE: TWX) CEO Jeff Bewkes: subscribers would pay once for programming on cable or satellite, then have access to that content across platforms and devices. It provided a potential solution for multichannel operators frustrated by programmers sharing their content for free digitally with consumers directly and for programmers looking for leverage with digital rights and access, and could be a valuable anti-cord cutting tool.
Bewkes offered Time Warner’s own premium HBO, available only as pay TV through cable, satellite or telecom, as an example of how it would work. Subscribers who paid for HBO on, say, Comcast (NSDQ: CMCSA), would have access to HBO Go via authentication. It worked beautifully, offering instant online subscription video on demand (SVOD) of current shows, The Sopranos, The Wire and more while expanding the potential value for subscribers by untethering it from the TV. The catch?
Subscribers have no control over access. It only worked as long as Time Warner and Comcast or other pay TV distributors could agree on terms. It took two years for HBO to be available to the bulk of its pay TV subs via authentication on computer or portable devices; major holdouts Time Warner Cable (NYSE: TWC) and Cablevision (NYSE: CVC) only signed on as 2011 came to a close. That came after TWC and Cablevision added a twist — asserting that the channels they traditionally provided through TV could be available on any screen through an in-house network.
Pay TV isn’t alone. On the video side, Netflix (NSDQ: NFLX), Hulu, Apple (NSDQ: AAPL) iTunes and others expanded from computer access to over-the-top boxes, gaming consoles like Xbox, tablets and smartphones — and through some of those or connected TVs, to TV sets. At Conde Nast, Time Inc. and some other magazine publishers, print and digital only-only subs get full access for one subscription. The New York Times offers options at different costs for different kinds of digital access but home delivery customers get it all included; other newspapers have their own variations.
It’s not exactly the content nirvana offered up by Qwest in its prescient ads about being able to offer every movie, book or musical performance ever produced to a customer at an off-the-beaten-path cafe or a middle-of-nowhere motel (as long as the business had an efficient broadband provider). But it is the beginning of a new age of ubiquity for people willing to pay for content — and scarcity for people who don’t pay directly.
Yes, it sounds a little off base to describe anything digital in terms of scarcity. The usual argument against charging for access is the consumer can get news, info and entertainment from a lot of sources and will turn to those rather than pay a fee. It’s a fair argument and one that rings true in a lot of cases, enabled for years by a traditional media strategy that untethered the print-video dual revenue stream of subscription/licensing and advertising for online distribution and by new digital-only ad-supported outlets. The expectation created was this kind of content would or should be free online. Most of today’s pay efforts are based on balancing that consumer expectation with the reality that online advertising alone can’t replace the disappearing dollars on the traditional side.
We are looking at a different kind of ubiquity and scarcity in digital content today, one that operates almost like pay TV and broadcast. Pay and you get access. Want it for free? Access may be delayed and some content won’t be available at all. Through last season, if you wanted to watch Glee after it aired on Fox (NSDQ: NWS) — a broadcast network — the new episode was online in 24 hours at Hulu or Fox and usually the five most recently aired episodes were available. Starting with the 2011-12 season, unless you subscribe to Hulu Plus or a multichannel provider that has a deal with Fox, you have to wait 8 days. By the way, the only way to get Hulu anywhere but a computer is to subscribe to Hulu Plus for $7.99 a month; basic Hulu is online only.
It also creates some of the same barriers as premium and pay TV. Some were in on Sex and the City or The Sopranos from the beginning; others didn’t meet Carrie or Tony til syndication. For the past few years, some of those barriers have been lowered as networks experimented with digital access. Now they’re going back up. Expect more networks to follow the Fox approach.
The app explosion opened new options. Papers like The Guardian that espoused free online access were willing to charge for app downloads and now, for app subscriptions. Apps became a new revenue stream — potential for some, very real for others — and added a new quandary. Should subscribers have access across every new platform and device for one fee or pay separately?
That’s particularly important when you consider that the cost of developing and deploying new apps can run into serious money for some publishers. Distribution has costs, too. Publishers who want to take advantage of the built-in sales base for iTunes and others have to pay for it with a share of the fee, usually 30 percent. They also give up some or all control over the customer relationship unless the subscription comes through the publisher outside of the app.
News Corp.’s tablet tabloid The Daily went for browser scarcity, charging for full access via iPad app. The same company’s New York Post blocks browser access on the iPad, requiring a paid app, but is open online for now. The Post is trying to keep apps as a separate pay space; its 52-week $273 “digital bundle” includes only the print subscription and the replica e-edition. (App subs get the first 30 days for $1.99, then it’s $9.99 a month or $99 a year.) The New York Times now includes full online access with subscriptions to its Kindle and Nook editions but its digital subscription access doesn’t include the Kindle newsstand, which is operated by Amazon. Freemium Spotify is only free online; the premium part covers mobile access.
The Boston Globe solved a lot of this in one fell swoop by designing its new subscription-only bostonglobe.com with HTML5, rendering it easy to read in any browser on any device. Boston.com is still free but gaining access to the full print and online content from the Globe takes a subscription to the new site.
There’s not an easy answer, especially when “everything everywhere” is a mantra.
As a subscription addict, I’m all for ubiquitous access. More than that, I expect it — and as a traveler who uses a mix of ways to read and watch, I need it. I’ve been separated from my home video subscriptions for 10 weeks now (broken Slingbox connection doesn’t help) and paying for a lot that I literally can’t see is frustrating. I know I’m an extreme case, though, both in my willingness to pay for multiple subscriptions and in my access requirements. I look to family and friends who are far less extreme though and I see a growing expectation that access to content, especially the kind you pay for, will be ubiquitous.
That doesn’t discount new platforms and devices as revenue streams. Each opens new opportunities for subscribtions or for one-off sales/rentals.streams/downloads. That does’t make it cost effective for every publisher to develop something new and device-centric, which either means doing without or accepting that some access will come at the expense of creativity. In the old days we called that shovelware; today’s more sophisticated development environment offers some better options.
In an iPad tablet world, it was easier to put off some of these decisions. But despite iPad’s continued dominance, choice is increasing as is Android’s market share. Millions of Kindle Fires are in use now plus Nook tablets, Samsung Galaxy, and more. Each OS has its issues but content publishers and creators have one that overrides them all: the need not to be left behind when a consumer switches devices.
That’s where “pay once, get it anywhere” should pay off.
Read the rest of the posts in our Coming in 2012 archives.