The message couldn’t have been more clear at TechCrunch’s Disrupt Beijing last fall: Sure you’ve got several $1 billion-plus public companies, China. And, yes, you have more people online than any other country. But the Chinese Web scene will have really come of age when you stop copying and start leading on features and products.
We’re mostly still waiting on that to happen. But in the mean time, US companies are copying what the Chinese have done well: Business model and monetization innovation. We’ve already seen this with the flood of Valley companies building online games paid for by mobile micro-payments and virtual goods– all multi-billion industries in Asia well before Zynga was born. China’s largest Web company, Tencent, became one of the largest companies on the planet charging users ten cents at a time via mobile phones as early as 2000.
That trend is starting to play out in online video too. Today, Hulu is announcing its first original show along with speculation that it may raise a barrel of money to produce more. YouTube recently made a push towards professionally produced original content too.
It’s not a shock that the two are looking for new ways to be relevant. Both sites have been run-away user successes, but have struggled to meet greater business ambitions. YouTube has never become the big money-maker some Google analysts expected it would back in 2006, meanwhile Hulu has called off a planned IPO and struggled to find a buyer at the right price.
Interestingly, this original content strategy is what Chinese online video players YouKu and Tudou have been working on for years. Although these companies are typically called the “YouTubes of China,” neither has ever been very bullish on user generated content– all the rage in the early days of online video’s resurgence.
Part of the reason are cultural differences: Victor Koo of YouKu said in previous interviews that the Chinese culturally don’t like to turn the cameras on themselves. Another reason is simply market demand: There’s not as much good TV in China. In the old battle between content and distribution, the distributors are now trying to own both…again.
I’ve long wondered if a market like China might be the one to break the mold on old media business models. That idea may seem crazy given the censorship and copycat issues, but the latter is exactly the reason why Chinese companies might be the ones to figure it out.
Industries are developing in parallel in China and many other emerging markets. In other words, the local film and music industries are coming of age at the same time as the Web, not decades before. They’re born into a world where piracy is a reality, so their business models will never be dependent on some silly bygone era, nor will they waste billions trying to recapture it.
The ultimate example I’ve seen of this is Nollywood– Nigeria’s film industry. It is the second largest movie ecosystem in the world by volume and third largest by revenues. But its distribution hub is located in the exact same market as its pirates. You literally have to walk past pirates to buy Nigerian movies legally. To make money in such a hostile world, Nollywood directors aren’t dithering much about cinematic releases– the smart ones are making far more reaching the Nigerian diaspora online via a company called Iroko Partners.
I’m not necessarily holding Nollywood up as the model. As I wrote last spring, the intense lawlessness of Alaba can lead to machetes. But I’m still betting the answer to the modern media business model comes out of these markets and the US follows. Or at least new media companies will follow. The old stake holders will likely continue to do what they always do: Waste billions trying to stack the deck in their favor, bitch-and-moan about competition and eventually die a long, slow, noisy death.
Piracy has always been a reality, it is just much more observable - and able to operate at scale - in the era of networked computing. I totally agree that big media firms need to accept the existence of piracy and adapt. The best way to do that is to sell goods at a price point at which users are willing to pay for the convenience - until they do, piracy acts as a market pressure in the direction of lower prices. Here is a recent post I wrote on the issue actually, http://alexanderfurnas.com/post/15884432482/why-piracy-is-good
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Like[...] A Better Way to Combat Piracy: Accept That It’s Here to Stay and Adapt—Sarah Lacy (PandoDaily) SOPA: the public debate—T.C. Sottek (The Verge) Follow @TheAirspace !function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs");Follow @AirspaceReview !function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); [...]
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LikeI hadn't heard that Hulu was hoping to start producing original content. Intriguing idea.
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LikeFirst, Sarah Lucy, I hope you put up a page on Google Plus- that will make it easier to follow what you are doing! More to the point of what you are saying here, there are other and better approaches being created right here in the US. My company, Safe-Xchange, is revolutionizing digital distribution of music and video by using the file-sharing peer to peer networks as a way to distribute ad-supported free content. Multiple studies have shown that file-sharers, far from being evil pirates, are knowledgeable customers willing to spend more than other internet users. We offer a direct approach that allows our clients to make money from file-sharing. We distribute apps on the P2P sites that allow users to find and connect with the artists they like, discover new artists, buy physical and digital product and engage the artists they are fans of on a social networking level. We include third party advertisements including video pre-roll and overlay and share the revenues with the artists. Rather than trying to shut down the internet with laws like SOPA and PIPA, we use the file sharing networks to bring revenues to the industries that are being affected.
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LikeHas there been any research done into how releasing a movie for sale online at the same time as it is released in the cinema would affect revenue? A lot of the people who download movies download low quality versions because they don't want to go and watch the movie in the cinema but they still want to see it. I wonder what would happen if you could download a high-quality version of the movie (even just for rent - 30 days -) the same day the movie was released in the cinema. I reckon most people go to the cinema, not to see the latest movie, but to see it on a huge screen and enjoy the social experience so they would continue to go to the theater, and many of the pirates would start buying/renting the film.
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LikeI was thinking this exact thing and just was about to say. I am quite people would pay not to see a crappy bootleg.
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LikeA simultaneous online release would harm poor and over-rated movies, because the word would get out quicker. Cinemas can stop you posting your comments on Facebook, by banning cellphones etc., but there's no way to do that if you're watching at home. Of course the same effect would help good movies, but there are fewer of these. http://abcnews.go.com/Technology/texting-movies-woman-curses-austin-texas-theater-anti/story?id=13786189#.TxU97_k-3mE
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LikeExactly... But this is nothing new, people like 50 Cent talked about this years ago... "I don't think the music business is dying. I think we're just experiencing technology and we just have to pass new laws, eventually, to change how music is being distributed,” 50 Cent
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Likesorry, this comment is horrid and totally idiotic; my copy/paste skills got in the way... ill just crawl to the hole and not comment for a while :) gl to the pando btw, TC sucks!
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LikeNo matter the system or any bill put in place, there will always be some sort of piracy and theft going on. Just like Walmart, Best Buy, and the Gap know they will always have a certain percentage of loss. Those stores know that there are ways to cut it to almost zero, but it would also make shopping so uncomfortable that it will kill sales. Same goes for the online world, if you make it so hard to obtain media eventually the customers say screw it. Then you are just left with a few pirates and no where to make money. It is short sited and simplistic of the RIAA and MPAA thinking this will do anything to help their cause.
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Likejust wondering... there's no attribution on the Pirates picture so I don't know if it was pirated... will SOPA/PIPA mean it's illegal to come here :) Love the new site and looking forward to a new daily destination...
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LikePossibly it came from the first link below, so Pando didn't pirate it. The picture was published under a CC license, which I assume the original author had the right to do. "Except where otherwise specified, the text on Wikia sites is licensed under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA) ... Non-text media on Wikia should not be assumed to be available under the same license as the text" http://disneyvillains.wikia.com/wiki/Hook%27s_Pirate_Army http://www.wikia.com/Licensing
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LikeSarah, did you have a queue of well-written articles just to post them all on opening day? :P
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LikeJust wanted to wish you well
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Like