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Week 4 – Multimedia Business Models

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Chris Anderson’s article “Free” has a very modern spin on the economy of multimedia and I found the article thoroughly engaging.

The model relies on several variances of providing a free service and making money via other streams  e.g. free web site selling advertising rights.  The background of ‘free’ economy was enlightening and you realise the old saying “nothing is free’ is very real as long as you look hard enough at what you are getting.miivii

I found myself agreeing with his points wholeheartedly regarding how new technology is driving the costs of media and information distribution down lower and lower.

I think the technology in turn is also providing the ability to manipulate how consumers consume that media and information, which also pushes costs down due to unwillingness to purchase the ‘goods’.

The ethics and legal consequences of movie downloads have been debated worldwide, but the fact still remains it is still widely available and this has caused companies involved in online media distribution to keep costs to consumers at a minimum.

The below video covers a presentation regarding “ad supported music downloads” as an example of a ‘free’ business model for consumers.


Source: Captured 08/08/09 http://www.youtube.com/watch?v=_Yz_wJJn-SY

The following links are responses to Anderson’s article and provide strong debate to the ‘free’ model.  They are well worth a read for a balanced view of the free business models.

http://abovethecrowd.com/2009/07/15/bill-gurley-on-the-free-business-model/

http://www.newyorker.com/arts/critics/books/2009/07/06/090706crbo_books_gladwell?currentPage=all

The most interesting points in my opinion being:

  • The products can be free (or close to it) for consumers due to minimum costs for distribution on the surface, but delve deeper and costs for running the business grow as demand increases and more resources are needed to manage all areas of the business.  Examples included the outrageous costs to youtube to purchase rights to program licences, and bandwidth costing them $3.6m.
  • ‘Free’ is a risky venture; there will also be someone else creating something better than yours.  Examples included Facebook over Myspace, where its  similar product tweaked and presented better.

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