Market forces at work on the Internet

Last week, Bloomberg reported on a historic occurence.  For the first time, the per-viewer cost of ads for popular shows on Hulu.com exceeds the cost of the same ad on a traditional TV broadcast.  The article explains why this has happened, so I won’t rehash it.  What I will do is say that this goes to show how intelligent the folks at NBC, News Corp., and Providence Equity Partners are.  For years, the industry fought against the proliferation of TV shows on sites like You Tube.  With Hulu and similar sites, finally the demands of the consumer are being listened to.  Hulu has found that some people will continue to “pirate” whatever shows they desire, but a significant number will happily trade a small amount of ads in exchange for the convenience of being able to watch a show on their own schedule.

Some of the same people who argue that the free market is the solution to everything argue the strongest for the heavy-handed punishment of piracy.  Yet, here we see that the free market is pushing for making content more readily available online.  Apple’s iTunes store marked a shift from getting music from places like Napster and Audiogalaxy, to paying for music downloads.  Now iTunes revenue is in excess of a billion dollars per year.

Also last week, there was a story on Ars Technica had a story about how gaming giant EA no longer minds piracy.  Video game piracy (not to mention OS) piracy is a long-standing tradtion in gaming.  Now that the role of the Internet in the playing of games (see the popularity of World of Warcraft, Second Life, etc) has become key, the game itself is just a portal.  It makes sense for EA to ignore piracy so they can get more people paying for the online experience.  In a few years, I think we’ll see more games given away for nearly free in order to maximize the subscriptions.

It is encouraging to see the entertainment industry beginning to understand that in order to survive, they need to meet the changing demands of the consumers.  By adapting their business model to the technology available, they can continue to make money.  And who doesn’t want to make money?

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  1. Pingback: Market forces at work on the Internet | WoW Guide Reviews

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