The most common of the economies built around free is the three-party system. Here a third party pays to participate in a market created by a free exchange between the first two parties. Sound complicated? You’re probably experiencing it right now. It’s the basis of virtually all media.
In the traditional media model, a publisher provides a product free (or nearly free) to consumers, and advertisers pay to ride along. Radio is “free to air,” and so is much of television. Likewise, newspaper and magazine publishers don’t charge readers anything close to the actual cost of creating, printing, and distributing their products. They’re not selling papers and magazines to readers, they’re selling readers to advertisers. It’s a three-way market.
In a sense, what the Web represents is the extension of the media business model to industries of all sorts. This is not simply the notion that advertising will pay for everything. There are dozens of ways that media companies make money around free content, from selling information about consumers to brand licensing, “value-added” subscriptions, and direct ecommerce (see wired.com/extras for a complete list). Now an entire ecosystem of Web companies is growing up around the same set of models.
Great feature piece in Wired’s latest issue by Chris Anderson on why everything is becoming free. What Anderson says here about the media business model being applied to more and more industries ties in a lot with what Tom Foremski has been saying about Silicon Valley becoming Media Valley.
And walking the walk, Wired is giving away the print version of the issue (to the first 10,000). US addresses only, or otherwise I would have signed up. Though I got a year’s subscription to Wired free once with my $20 subscription to Salon, so I’ve already benefited. =)
The UK’s tax authority has confirmed that it has paid an informant for data regarding British citizens who have accounts in tax haven Liechtenstein.
First Germany, now the UK. So much for Liechtenstein’s claims about client confidentiality. Laws are nothing when you have much larger, richer countries willing to pay leakers millions of dollars for secret client lists.
TGV accounts for only one-third of SNCF revenues, but its fat margins lifted the railway to a profit of €695m in 2006, after fees paid to RFF, the track owner, are taken into account. How do the TGVs make so much money when so many railways struggle? Mr Pepy points out that a double-decker TGV can make two round trips between Paris and the south or west of France every day, carrying about a thousand passengers on each leg. The combination of size and speed brings economies of scale, boosted further by the route through Strasbourg to Germany opened last summer, and the new high-speed Eurostar link to London.
French railways stand out in Europe not only because they manage to turn a profit, but because they remain solidly in the public sector while doing so. Instead of conflict between politicians and managers, there is a clear division of responsibility. French towns and regions now pay SNCF to run less glamorous local services or even extend TGV services on slower lines into the depths of Brittany. Since the regions pay, they, rather than the railway, decide where and when the local trains run. This keeps the politicians off the backs of Mr Pepy and Anne-Marie Idrac, his chairman. It also keeps politics out of the railway, since no party would dream of privatising SNCF—sparing France the agonies that Britain and Germany have faced over privatisation.
I wonder if SNCF’s TGV group’s profitability includes tracks funded by the French government. Assuming that RFF doesn’t rent the tracks to them at a loss, I guess so. If this is true, this makes me more optimistic for the California high speed rail project. I love the idea but have been worried that there was no pay the costs for the infrastructure (part of me figures that it’s fine for the state to eat the cost regardless). However, if the TGV group can make over a $1 billion a year, then there’s hope for t.
And, if you’re interested, here are some takes on the California high speed rail proposal. First, a government funded video, complete with soothing female voice:
Check out those garish blue and yellow paint schemes! I think Tyler Brûlé needs to turn his attention to the trains’ design. I like one of the YouTube comments for the video:
The only problem, why would you want to go to Sacramento?
After introducing a new online film rental service for American consumers last week, Steve Jobs, the chief executive of Apple, said he was “dying” to expand the program to international markets, adding that this would happen later this year.
Such an extreme sacrifice will probably not be necessary; but in trying to establish European versions of the iTunes movie rental service, which allows users to rent films over the Internet and stream them to their computers or televisions, Jobs at times might feel as though he were banging his head against a brick wall.
Apple will have to confront legal and regulatory hurdles, copyright challenges, scheduling conflicts and technological issues that demonstrate that the European media landscape remains a patchwork of several dozen individual countries - not the single “internal market” that the European Commission envisions.
It might be a funny question to ask, but will Apple (and Commission push-back) be the one responsible for creating a true single market in media in the EU?
With rising concerns about carbon dioxide emissions, the first container ship assisted by a giant kite just set sail. However, the real news is that shipping companies are slowing down their boats:
“We’ve saved so much fuel that we added a ship to the route and still saved costs,” said Klaus Heims, press spokesman [for Hapag-Lloyd]. “Why didn’t we do this before?”
Hapag-Lloyd cut their speeds from 23.5 knots to 20 knots and are planning to go down to 16 knots on the Atlantic soon.
I wonder if this will have a subtle and long terms effect on how the global economy works, since ‘just-in-time’ shipping from overseas is so essential to manufacturing these days.
Note: This is based on the European January 19-25 edition.
p.14 I was surprised to read:
“It [America] has much to learn from Europe. Best of all, set a carbon tax, which is less susceptible to capture by business lobbies than a cap-and-trade system.”
Perhaps I’m mistaken, but I thought The Economist preferred a cap-and-trade system. But, as they point out, the European system has been largely ineffective and is easier to game than a simple tax. Unfortunately for both them and the US, it’ll probably be a cold day in hell before an aggressive carbon tax gets real headway in Congress. Given that cap-in-trade was invented in the US, it has another thing in its favor.
p.23 I like the line, “ If Napoleon’s armies marched on their stomachs, American ones march on bandwidth.”
p.24 Wow:
“A single Global Hawk unmanned surveillance aircraft flying over Afghanistan can eat up several times more satellite bandwidth than was used for the whole of the 1991 war against Iraq.”
The whole war!
p.41 Did I miss something? Apparently Obama’s admitted to doing cocaine. Bill Clinton, W, and now Obama (and I’m sure most of his fellow Presidential candidates): everyone’s ‘experimented’. It just goes to show that my friend smoking a joint while in Amsterdam and didn’t want their photo taken because of potential problems in the future has nothing to fear.
p. 71 According to research by Steven Levitt and Sudhir Venkatesh, “Prostitutes [in Chicago] are more likely to have sex with a police officer than to be arrested by one.”
p.78 A mystery indeed:
“Who knew that … the rarely seen $2 bill still accounts for 1% of all American notes printed? (Where do they all go?)”
What if we thought of stag tourism as actually a subtle form of currency arbitrage? It’s not like any of the things purchased are significantly different – they’re just cheaper, and specifically in a less-valued currency.