Some pretty interesting research today out of Forrester, via News.com.com, that claims that growth in online video sales will begin to stall and then sputter out in the next few years; the success iTunes has had will be but a blip and a footnote in history.
The reason? Media companies are racing to make so much of their content “free” that its conditioning the market to evolve to a point where they just won’t pay for online video content.
My knee jerk reaction (and I have been known to have them) was “that’s garbage!” What about online music sales? After all, with the success of iTunes, they’ve pulled out a steep decline, and people still have a way to get a free copy any time they like.
But you know what?
The business for video is much different than the business of music.
For one, with the exception of things that go to DVD, there has been a long tradition of getting your videos for free as they were supported by ads. This is called television. In fact, up until very recently, when TV shows were starting to be sold *on* DVD, there was simply no way to purchase television shows. The legacy of television is that it, I think, really inculcated us to believe that television is an ad-supported medium. Even for those of us that pay steep cable bills every month.
This isn’t so in music. While its true that music has always been freely available through radio, there has always been the impetus to buy the album to acquire the music. Until Napster, anyway.
Furthermore, another point of difference is that media conglomerates are already racing to the bottom to give their television shows away for free — an are doing so for all kinds of reasons. One of them, I’m sure, is the recognition that their content is getting uploaded and distributed irrespective of how they try and lock it down (if they ever could), coupled with the dominance of Google/YouTube in distributing said content — irrespective of its legal challenges via Viacom and its friends.
The music industry has never done any such thing, and the closest its ever going to get is by slowly evolving into a DRM-free format. But you’d still have to buy the music in the first place (or, someone’s got to).
While I think there will always be a segment that’s willing to pay for online video (perhaps high definition content, rare content, unique content that is streamed live), I think that there is some merit to the idea that the vast majority will not. There’s probably always enough to make a business out of it, and for some, a healthy business, but then again, the assertion is not that the sector will disappear — only that the growth will flatten out.
And I think that’s believable, if for no other reason that companies today are in such a rush to gain a foothold in the hearts and minds of online video users that they’re giving away viewership to those assets.
You might wonder about the porn industry — surely they’re growing and earning billions of dollars per year, and they depend on online memberships, subscriptions and so on (or so I’ve been told). The difference, though, is that no company has otherwise ad-supported and free shows on network television and in *addition* is also giving some of their product away.
Its an interesting future for online video — particularly television. I don’t know if there’s “no future”, but the way that media conglomerates are going at it right now — and I don’t know if there’s a right answer to it — they’re conditioning their customers to *never* pay for online video, torrent hijinks or no.
