He predicted the demise of MySpace after it was acquired by Rupert Murdoch. Now Jeff Cole has some more bad news: the writing is on the wall for subscription models. Digital is unbundling everything, pay-per-view is the future, and content is "king-er than it has ever been".
Cole is director of the Center for the Digital Future at the University of
Southern California's USC Annenberg School for Communications and
Journalism. His research includes an ongoing tracking project of a group of internet users which started in 2000 and now extends to over 40 countries.
Speaking at yesterday's Mi9 Imagine event, Cole said the most profound insights from his research came “by accident” from observing just-graduated college students in the process of getting their first apartments. “That's when they had to decide which things they grew up with that they're now willing to pay for, and which things they don't want to pay for,” he said.
“Thirteen years ago, that was where we saw they weren't getting landline phones, and it was obvious what was going to happen to landline phones. They weren't subscribing to newspapers, and it was obvious what was going to happen to newspapers. Two years ago we saw they weren't getting cable or satellite TV, or in some cases TV sets themselves.”
While Nielsen reported in 2011 that for the first time in history the number of households in the US with TV sets went down, it was “not that that 1.25% are not interested in TV – they're not interested in TV delivered through traditional means”, Cole said. “Things are changing in a very profound way.
“People's interest in content is greater than it has ever been, but they're looking at the TV business and the bundling business and applying the same standards that we apply to the music business – it used to say to us, you want these two songs, you have to buy all 12 songs and spend $17. Now we're buying or stealing the two songs we want.”
Foxtel is already looking at this “very seriously” and has already made its initial foray into IPTV with Foxtel Play, and production houses are increasingly striking deals with video providers to deliver programs over the top directly to consumers, such as the landmark deal struck two weeks ago between Sony and cable TV giant Viacom, which Variety labelled the “assassination of Archduke Franz Ferdinand” of the pay TV wars.
“We're looking at not just the unbundling of channels from packages, but programs from channels,” Cole said. “I grew up with Hollywood always saying content is king, but I would argue in a digital era where there has never been so much good content, but also so much bad content – and thanks to digital we only have to watch the good stuff – content is king-er than it has ever been.”
Emphasising his point, Cole pointed to the situation US network NBC found itself in last year, when it was the number one network due to the NFL and The Voice. But when it lost its two hit shows, it dropped “not from number one to number three, but to number five, behind Univision, the Spanish-language network”.
So if Cole is correct – and he has form – it raises questions about the broader industry push towards subscription models, both across TV and print. Could the future of newspaper paywalls lie in pay-per-view micro-payments?
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