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Thursday
Mar272008

A Bridge Too Far?

I recently participated in a private conference called BRIDGE, the purpose of which was to bring together artists (actors, directors, writers and animators,) media entities (studio heads, network presidents, producers and heads of media companies) and technology progenitors (venture capitalists, visionaries, innovators and heads of technology companies) in order to help set a course for a plausible future in which these three components of the emerging entertainment value chain could find a way to work together.

The discussion lasted a whole day in a single room, moderated by Donny Deutsch, and proved to be an exhilarating (and sometimes heated) exchange of ideas and concepts.

The artists were represented by the likes of John Cusack, Matthew McConaughey, Michael Mann, John Singleton, LL Cool J, Matt Stone, Anthony Zuiker, and Scarlett Johannson. Media reps included Kevin Reilly, Dawn Ostroff, Doug Herzog, Dana Walden, Jeff Berman, Brad Grey, and Matt Cohler. Technology progenitors included folks like Mark Kvamme, Marc Andreessen, David Sze, and Mike Volpi.

One of the biggest questions at the gathering was, “Are we all in this together?” Having had some time now to reflect on this, I think that question needs to be qualified to some extent.

The CPM model (cost per thousand) works for aggregators of content because the sheer volume of individual items they have.

Let’s look at an example, for the more creatively inclined: Let’s say one of the content aggregrator sites, let’s call it MyTube, has 20 million visitors a month. Lets say that on average, each viewer looks at 10 individual pages within MyTube during the course of that month. Now, let’s say that each “page” has 3 ads on it.

That means, in any given month, MyTube has (20MM X 10 X 3) ads that it will serve up in total. Which is an amazing 600 million ads. At the standard of $20 per 1000 ad views, our aggregrator MyTube stands to generate $12 million per month in ad sales.

That same logic doesn’t apply to individual content creators because the transactional value of sharing in the ad revenue for their specific, individual pieces is only a very, very small portion of that $12MM per month. Even if a content creator, over time, were to generate over a 100 pieces that sat on this aggregrator, the sheer volume of other things people can look at on the site doesn’t guarantee a very large amount of traffic to the content creator’s stuff.

THOUGHT: The ONLY way (outside of a systemwide subscription model), in my humble opinion, for a content creator (in this case, I’m referring to the type of content creators that came to Bridge — those who are used to getting paid millions for their work) to generate true transactional value from a content aggregator site is to form some sort of a “digital content coalition”. In this case, the content creators would own a piece of this coalition, and in exchange for this equity, would create content for the coalition to distribute digitally.

Let’s say this new consortium is called “Content Creators Coalition” — the CCC. In this case, anyone who joined the CCC (other than the founding members, who would have founder’s equity) would own a piece of the company. The company, in turn, would raise production funds from a VC firm or private equity firm in exchange for stock. Then, the content creators make proposals for specific content to the CCC, asking for budgets that would allow them to create their pieces. The CCC, in turn, would then digitally distribute the created content to various aggregrators, and given the volume of talent and content coming from the CCC, they would be able to get far more favorable deals with companies like “MyTube” than the content creators would be able to by themselves.

Over time, as the library of content owned by the CCC grows, and as more talent joins the coalition, the “asset value” of the CCC grows, as does the transactional base of revenue coming from the various forms of distributed content. The key is for the coalition to agree that the money that comes into the CCC from transactional revenues must be used in almost a ‘socialist” mechanism — for the overall good of the coalition, shared by all, and not split unevenly within the CCC.

Anyway, just an initial thought.  

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