Wednesday, April 6, 2016

Politics for fun & profit: The Donald Trump Story

This blog has nothing to do with politics, yet I wanted to share a 1-2-3 sequence here that I've been thinking about for some time with readers.

So here we go.

1. Ross Perot's 1992 campaign was remarkable for the way he spent his own money running for office in the United States

2. Ron Paul's 2008 campaign was remarkable for the ways he raised money running for office in the United States

3. Donald Trump's 2016 campaign is remarkable for the ways a presidential bid makes him money


Ross Perot: 1992 infomercial. Yes, he bought television time slots to show us his bar charts

Ron Paul: The 2007 & 2008 money bombs go off

Donald Trump 2015-2016: Billions in free coverage

Yes, Mr. Trump, who inherited a money bomb of his own in the 70s (and on that pile of artillery is said to have achieved a non-noteworthy return more or less equal to that of the S&P), makes money through brand awareness. And more creates more. He sells his name to things like flashy real estate developments and in return usually receives a flat fee plus a percentage of annual revenues.

With a personal brand that he estimates at being worth in the billions, and a campaign that is said to have received close to $2 billion in free media coverage (so far), I think it's safe to say that Mr. Trump is the first presidential candidate to actually increase his net worth by running for office.

Monday, April 4, 2016

Free-conomics...Or the winding down of the digital free-for-all

If you build it, they will come. One of many Hollywood flights of fancy that may be appealing to audiences on the big screen, but rarely pans out that way in reality. Or maybe way back when in the 20th century things did work that way. In the 21st century world of digital services, however, the defining feature of attracting audiences has been creating a fiesta of free. Legal free, illegal free, it doesn’t matter. Just make things (appear to be) free and millions, if not billions, will come.

Of course nothing is ever free, only ‘free’, meaning there are always strings attached. As we moved from a monetize first model in media and entertainment – pay for the album, pay for the movie, pay for the newspaper – to a monetize last model, we shifted currencies as well. Whereas the currency was once dollars, it is now data; data culled about you from what you post, who is in your network, the websites you may visit pre and post the platform you’re on, etc. All of these provide an increasingly fully fleshed out portrait of you as a consumer. As the Silicon Valley saying goes: “If you’re not paying for the product, you’re the product.”

That’s the deal, and that’s the cost of free.

While the model of free has worked exceedingly well for platform-based businesses able to scale rapidly and monetize millions of users on the back end of the transaction, it has worked less well for content creators, who, whether working within the structures of industries such as music or publishing, have seen revenues from their creations decline sharply.

The previous post on this blog looked at the potential for blockchain, the technology that powers decentralized currencies such as Bitcoin, to provide a new, open-source payment path between musicians and fans, that doesn’t involve either music labels or for-profit payment companies. Imogen Heap was the first artist to release her music using blockchain and explains why here.

Imogen Heap represents but one example toward a monetization model, and in the last few weeks in particular a few more have emerged, suggesting to me that the pendulum may be swinging back to a pay model, if at not least swinging back and forth.

For your consideration, Exhibits A, B, C, and D:

Exhibit A: 

Blogging slash social journalism platform Medium, launched by Twitter co-founder Ev Williams in 2012, has been free since its inception but is now looking at putting up a paywall as well as adding premium content streams.

April 5th, 2016 Breaking News:

Click here for full story from AdAge

Exhibit B: 

SoundCloud, the nine year old audio-uploading platform with a few hundred million users is plagued by losses, and therefore just added a subscription service.

Exhibit C: 

YouTube, which needs no introduction, is now 10 years old and its revenues more or less match its costs of operation – approximately $4-5 billion in per year and $4-5 billion out per year.  They just launched YouTube Red, a subscription service with premium content and an ad-free viewing experience.

Exhibit D:

Blendle, a Dutch company that has stepped up to take on the challenge of monetizing the consumption of news online, across a wide variety of sites and platforms. This means micropayments, which means that the revenue generated from the micropayment has to exceed the cost of processing it; not an easy business to make work on that front, and also not an easy business to make work as so many have become accustomed to everything being free. 

The way it works is that (for now, at least) you get $2.50 in your account when you sign up for the service and you pay rates starting at $0.09 (set by the respective publishers) to read individual articles. You can even get a refund if you’re not happy with the transaction. After attracting close to 700,000 paying users in Europe, Blendle just launched in North America. Can it work? Will it work? Old habits die hard, especially when the baseline behaviour is not paying. Once again, time will tell. Meanwhile, this blog watches with a keen eye.