Here is an article that I came across some time ago.

The Problem of Media Economics: Value Equations Have Radically Changed

Some of that stems from a failure to understand legacy media economics.

People ask why no one wants to pay for news anymore, referencing the decline in newspaper circulation, when in fact that misrepresents the value equation. People were paying for newsPAPERS, which contained a lot more than news, and they were also paying for newspaper delivery, which is a service.

….It’s not that no one wants to pay for music or movies, it’s that increasingly we want to pay for content when, where, and however we want. We’re willing to pay for the convenience of video on demand, but the service isn’t always being offered. Digital technology has put content producers in the services business, but they don’t yet fully understand that value exchange.

New business models for media require entirely new exchanges of value — it’s not about finding new ways to balance the old equation.”

It’s interesting to read the author’s take on this issue, because people have focused largely on the death of traditional media, when perhaps they should be focusing on the dearth of companies that should be working to deliver content on demand in the most cost effective and efficient way.

The Craigslist example where the author had been looking for someone to rent their room out to, and was “able to achieve for free on Craigslist what they couldn’t achieve by spending money in the newspaper” is also rather telling. The question is, Is the Freemium model, or even, Free, model sustainable in the long run? Then again, content has always been used as bait for eyeballs in advertising.

The internet has changed a lot of the ways that processes and services can be monetized. For benefits that accrue to end users, think about postage. Telegrams, airmail, shipping costs all used to come into play before the arrival of the web and suddenly, email made communication (almost) free, easy, and much faster to boot. Of course, the illegal side of free (aka piracy) has the the people in the software and music industry tossing in their sleep, but that is another issue altogether.

On that note, I blogged about the Pirate’s Dilemma book last year, and you should check it out if you haven’t. Youth culture, trends, innovation and “piracy as a business model”, that’s what this book promises. The author also informs you why the book is relevant to people from all walks of life(and not just the suits from Hollywood and the music labels). Other stuff also ties in nicely with the economic thread running through this post- the author weaves his own background and training in the said field and you can read snippets about his thoughts on the book here.

Enjoy!