Unlike most businesses, the content business is a unique challenge to those who manage a version of it every single day. In no other business is revenue largely dependent upon an uncontrollable audience — advertisers and consumers. With the introduction of digital media, it continues to change aggressively and introduces new players, new models and new solutions that impact every company — new and old. These changes are difficult to keep track of, hard to make money from and even more challenging to navigate. Today, the large studios still earn billions of dollars, where as digital media entities are in the low millions of dollars. And, those are just the successful ones. With hundreds of millions of blogs, everyone is looking to create the next big media empire. Today, it’s possible more than ever.

State of Movies – 2010

Despite popular belief, box office numbers have continued to increase over the past 5 years, with the exception of 2005 and 2008. The chart below represents gross totals. 2010 numbers represent revenue ended in July. Using a monthly average, the box office numbers for 2010 will be $11,509.54 (in millions).

Source: http://boxofficemojo.com

This is a staggering number and one of the reasons traditional movie studios and distributors receive a lot of criticism from digital media pioneers. Today, no digital media company comes close to this revenue. For the past few years the major studios have focused on 2 things — creating really good movies (Avatar, The Dark Knight, Inception, etc.) and focusing on low-budget movies with a potential (Paranormal Activity). And this mix seems to be working for them. Just like not every investment is successful, some movies provide better returns than others. At this point, the box office will continue to grow because the cost of promoting movies has gone down significantly with tools like Facebook and Twitter.

Facebook Movie Promotion

If you’ve been in a movie theater recently or have viewed a handful of trailers, you’ll realize that many companies are asking viewers to become a fan on Facebook. And, this is a brilliant move for a few reasons:

• It reduces the cost of building a highly interactive and flashy website.
• It serves as a reminder to view the movie in theaters.
• It reaches an audience of more than 1/2 a billion people for a very limited cost.

From a technical standpoint, cost of production is also likely to reduce in the new few years. No longer do you need camera kits that cost $500,000. You can create a stellar kit for nearly 20% of that cost. While this does not mean a reduction of talent cost, technical enhancements will continue to reduce production budgets.

At this point, the movie business is strong and should continue to see 2% to 10% gains annually.

State of Television – 2010

Unlike movies, the state of television is a little challenging. Shows that used to drive over 15 million viewers are barely getting over 10 million viewers. While that is still an acceptable number, TV might be in more trouble than movies.

Lost Ratings. Source: Wikipedia

There are a couple issues that stand ahead for TV series:

• Today, TV shows are available on at least half-a-dozen platforms — live, cable company DVR, TiVo DVR, iTunes, Hulu and the network’s own site. These are too many options and more than 80% of these options don’t contribute towards ratings.
• The quality of various shows has varied quite a bit. One one hand, a show like Lost is highly addictive and has a huge audience. On the other hand, many first-season shows fail to tell a compelling story and don’t have a fan base.
• Shows like Lost and 24 had a huge audience and a fairly large budget. Today, neither of those are possible.

While there are a number of concerns for television, this medium has the largest growth potential in the short-term. Possibilities include:

• Selling a cross-platform media experience to advertisers: Enabling advertisers to purchase a complete media package around TV, web and mobile.
• Generating direct revenue: TV has always relied on subscription and advertising revenue. With digital and mobile platforms, companies can directly sell content to the end user.
• Increasing interaction and loyalty: NBC recently launched their rewards program which allows users to earn rewards for interacting with the brand. This is a brilliant move and something that should get a lot of traction.

How I Met Your Mother on Facebook

State of Newspapers – 2010

Out of all the media properties, newspapers may have the longest and toughest road ahead. Despite so many devices that support digital content, very few people are willing to pay for newspapers or “news content.” The reason for that is simple — information that newspapers provide is now a commodity. You can get the same information from a number of different sources for the same price — free. If one portal decides to charge for their content, there are at-least a dozen other sites that provide the same content for free.

www.nytimes.com

news.yahoo.com

Newspapers have also approached  the digital age in the wrong way. Many of them went towards the pay model first, made it free and are re-considering paid versions again. While experimentation is good, research and prior experience should be a key indicator. Offer something that people can’t get for free and make them pay for it. The Kindle is a great example of this. To read The New York Times on your Kindle, users have to pay a monthly fee. There’ no other way to access that content and this, people pay for it. Exclusivity will always demand a premium.

State of Digital Media (text) – 2010

Text based digital media has been around for a long time. Today, it is extremely easy to start a media company for free. All a user has to do is signup for the many free blogging services and start publishing. However, publishing is less than 10% of the battle. The other 90% revolves around making a business out of content. And, that’s not easy. Out of the hundreds of millions of blogs, only a small percentage of them are successful. Some companies approach a niche audience, others approach a mainstream audience.

Recently, 2 trends have popped up in regards to text-based digital media – hyper-local and aggregated content.

• Hyper-local: The concept behind hyper-local is straightforward — provide targeted content (news, videos, information, etc.) to a geographically targeted audience. With the thousands of towns in the United States, it appears to be a lucrative market. However, the economics are extremely challenging. If a town has 50,000 residents and all of them are aware of the town’s hyper-local website, it’d be a great situation. But, assuming even the highest CPM rate of $100, that revenue is extremely small and doesn’t even cover the cost of a full-time employee, let alone the infrastructure. AOL has dived deep with their Patch venture, but it is still unproven.

Ridgewood Patch

• Content Aggregators: Professional content creators have a love/hate type relationship with content aggregators. In short, content aggregators collect content from other sources and makes it available as an index. Some of these are highly complex aggregators and are presented in a very usable and functional user interface. Others simple present content in a list form. While success is limited in this field, the number of aggregators are increasing.

Text based digital media has proven successful for independent content creators with low overheads.

State of Digital Media (audio/video) – 2010

YouTube started 5 years ago with a simple concept — sharing videos on the web. From there, it has changed the online media landscape. Today, everyone with a camera is a content producer — and that’s a good thing. Creating and distributing content is no longer restricted to those with financial resources. It is possible for all creative people to create, distribute and make money from online media.

However, the path for online media is still unpaved.

• User adoption for independently produced content has been fairly slow. Very few shows have a fan base large enough to generate revenue.
• Advertisers still want to see millions of impressions. With online video, that is a challenging proposition, especially if shows on TV get less than 5 million views.
• The medium is still unproven for those that hold the checkbooks.

While it’s only a matter of time before all these issues are resolved, online video has an exciting road ahead and one that could be highly profitable for everyone involved.

Hulu Plus

Another interesting trend in the online video space is the emergence of paid content models. Hulu launched its premium service this year and will be growing that over the next few months. Similarly, Netflix has taken the online media space aggressively with Watch Instantly and iPad application. Over the next few years, users should not be surprised if content distributors start experimenting with paid content distribution models.

A few minutes ago, this site published its 200th post. It took us 15 months to get to the first 100 and just 20 weeks for the next 100. I’ve often been asked what this site is about. The answer has varied as the industry has changed. Bu, one thing has remained the same — content. This is a revolutionary time in media. Today anything is possible. Tomorrow will bring new technology. But, good content will always keep billions entertained.

To content creators, technologists, readers and subscribers — thank you.

Without you, this site would not be what it is today.

On a very frequent basis, I’m asked for technology advice — whether it’s professional or personal. While I’m hesitant in recommending most solutions, there are a few that I would recommend instantly.

Over the next 5 days, I’ll be posting technology products that I’ve used and those that have been sorted from dozens of press-releases, conferences and PR pitches. They’re easy to use and have the potential of making a big difference.

Full disclosure: I have not been paid, nor will I receive any financial compensation for these recommendations. However, PR companies have provided me with editorial units and NFR (not-for-resale) software for review.

Over the past week, I’ve spoken a lot about Facebook advertising and how you can use it for your business. The best thing about Facebook ads is that they’re highly targeted and are extremely cost-effective.

Today, I’m pleased to announce the first whitepaper for Digital Media Business — Facebook Advertising. You may purchase the whitepaper from the store or for a limited time, sign-up for our newsletter and receive it for free.

I’m pleased to announce the first episode of the Digital Media Podcast, a weekly audio series that will discuss the business and technology of digital content.

For the first episode, I had the pleasure of speaking with Tim Gilmour from Dualform Studio.

If you’re a digital content creator, it’s an interesting episode as it touches upon the Flash Video vs. HTML5 debate from a content creator and web developer perspective.

Subscribe | Download MP3 | Podcast Page

New article on the Huffington Post:

Apple is a company that has tightly controlled its ecosystem — hardware and software. While building that ecosystem, Apple has also created a significant content and application economy. Today, the iTunes Store is one of the largest content portals in the world. Less than 2 months ago, Apple announced that it had sold more than 10 billion songs, making it one of the largest music retailers in the world.

I had the opportunity to appear as a guest on ‘Digital Life with Shelly Palmer’ today. The show will air at 10:00pm on NBC Nonstop. Feedback welcome!

A special thanks to Amanda and Shelly!

To say the least, 2009 has been an interesting year.

It has been a disappointing one. It has been an innovative one. It has been a revealing one. Above all, it has been a learning process, with signs pointing to an optimistic future.

When I started this blog in January, I didn’t expect much. However, what I received has been tremendously beneficial. This blog covers news, contains analysis, and sometimes opinionated technology reviews. But, more importantly, it is a platform to discuss digital content.

Digital content is still in it’s infancy. What lies ahead is the open road — with no barriers.

Since I will be traveling for the next few weeks, I also wanted to take this time to wish you all Happy Holidays. Please continue to innovate and generate content. The potential is endless.

Best regards,

Aanarav Sareen

Last week was a big week for consumer electronic companies, as they announced a whole slew of products at Macworld and CES. In this post, we take a look at some of the announcements, events, and statistics from various technology and media companies.

Apple: At Macworld, Apple announced that songs from the  iTunes store will be DRM-free. Since Apple occasionally mentions the number of songs sold via the iTunes store, it will be interesting to track this announcement’s impact on sales. Furthermore, Apple also announced that it will be allowing users to purchase and download songs via the iPhone over the 3G network.

ABC – Ann Sweeney: Ann Sweeney, the President of the Disney-ABC Television Group presented on January 8, 2009 at CES. During the speech, new media was defined as a platform that connects consumers with popular content. Specifically, Sweeney mentioned that Apple’s devices, including the iPhone and iPod touch are helping new distribution methods, given their ease of use. Other points of interest from her speech include:

• Collaboration: Technology manufacturers, advertisers, and content creators must come together to produce not only great content, but also create technologies that distribute this content such that it benefits the viewers and advertisers.
• Interactive content: Good Morning America and Lost are two strong brands that can drive interactivity in various ways, which allows users to more intimately connect to the content.
• Statistics: ABC.com’s video player has delivered over 1/2 billion streams and 1 billion ads.

Revision3: Online content network, Revision3 was at live-broadcasting multiple shows at CES, including TekZilla, HackCollege, and Hak5. This represents a shift in digital media coverage over the past few months. Users are often used to live-blogs and real time status updates. However, well-produced live video over the internet is rare.

NBC: While NBC didn’t have any major announcement at either show, NBC Universal was posting content on their site NBCUATCES.com.

Palm Pre: Surprising and impressing it’s investors, Palm announced the Palm Pre, a mobile phone that vastly differs from it’s predecessors. While it’s a cell phone, it’s important to note that it’s form factor makes it easier for consumers to view video or watch multimedia content on the device. As the device is released, it’ll be interesting to see if Palm is able to regain market share from other competitors in the highly populated smart-phone space.  CNN: Of surprising note was CNN’s coverage of CES. As of January 11, 2009, a vast majority of CNN’s tech videos were dominated by CES 2009 coverage. CNN has been long known as a traditional news source. However, it is also one of the most advanced news networks, with a vast presence on Twitter, Facebook, online video, and it’s iReport platform.