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April 11, 2005

The Forces Shaping Mobile Media (3 of 3)

Postcards From The Edge

The basic competing economic forces I outlined previously will lead to a redefinition of Media. While the traditional media incumbents are taking the proper precautionary steps to ensure their content doesn’t get Napsterized, what if Media in the mobile space simply got redefined? Yes, I want to watch video on my phone because that’s cool, but did I say what kind of video I want to watch? Today’s condensed mobisode form of television will evolve into a new type of media: producers will simply create two-minute mobisodes specifically for the mobile environment. Why repackage and pay a license fee when I can create native content with no cost basis? Makes sense. Now the important part: Who makes the content? Does it have to be Hollywood studios? Not when the production studio is in your pocket.

With my LG VX8000 PMD I can create my own two-minute mobisode-based reality show and I’ll bet you I can get an audience. How big would my audience be? It doesn’t matter, because the incremental cost of distributing my mobisode to the next consumer does not decrease with an increase in the size of the audience. Every new viewer will pay for the bits to transfer it to their phone as they do today. So for a network operator making money on the transfer of content it doesn’t matter if that content is my mobiseries or a repackaged episode of "24." They incur the same network cost basis and can charge the same markup to the end user. The difference is that they don’t have to pay me a license fee to distribute my mobiseries. The math is simple: One mobisode can be watched by a million people or a million mobisodes can be watched by one person each and the economics don’t change for the owner of the network. (Except that they may improve their margins because they are not paying any licensing fees.) In the time it takes the MPEG LA and the GSMA to decide on a DRM standard (see the First Law) The Network owner will monetize their infrastructure by realizing they can make money without having to pay any attention at all to DRM.

All the tools are in place right now, too. The subscribers have the content production and consumption devices, they are happily paying for data and there is no shortage of demand for self-expression. Because there is no derivative work being created, there is no licensing minefield to navigate. The network operator simply states in their EULA that the end user releases all claims to the work and that it can be used however they see fit. Then the end user has no need for DRM, and frankly the content being produced would have such a short shelf life that it wouldn’t even make sense to protect it’s future value. Finally, the end user would not be asking the network operator for a cut of the revenue on every new user they add to their audience. In fact, today we create media that generates additional revenue for the network operator and we pay them for the privilege. Every time I send an SMS, I pay for it. And every SMS I send results in someone else opening it, and they pay for it. The more I send, the more people open them, and the more money I am making for the network operator. These little electronic postcards are not created at the center of the network by a Hollywood studio – they are created and distributed at the edge of the network by ordinary individuals like you and me.

Now amplify this concept so that whenever I produce a mobisode, I pay for it. And whenever I post it to my channel, my list of subscribers views it, and they pay for it, too. Simple. This is the future of mobile media. As devices and networks open, the ability to secure traditional media will become more and more difficult. Personalizing media and distributing it from a trusted source is a way to ensure viewership, and creates a different kind of “closed system,” one that is essentially open to everyone, but relevant to a smaller number of participants. This scalable model has already started with blogging and will continue into multimedia.

User-generated content is one of the biggest issues shaping mobile media because the mobile space overall is enabling a migration in media production to the farthest edge of the network - into the pockets of every wireless subscriber. I have said before that the biggest threat to incumbent media companies is a teenager with a mobile connected camcorder. But this is the biggest opportunity to the LMNO media titans of the future who have the vision to enable these prosumers to redefine media, and the mobile space is where it is going to happen.

Posted by Shawn Conahan at April 11, 2005 07:04 AM