entrepreneurship at the intersection of sports media and the social graph

Mark Cuban is such a brilliant thinker on Technomedia--or the intersection of content, business models, and technology. His recent interview with The Daily Beast really got me thinking. 

I'm now seeing a world of 'networked content bundling' by leading media brands. So what Comcast and newspapers do today--bundle their content instead of selling it a la carte--can be done through the cloud. In this world, the content creators like ESPN, CBS, and Miramax are kings, not the technomedia distributors like Amazon, Apple, and Google. That 30% Apple tax? Probably not market sustainable...Follow with me: 

Today, if I'm consuming News Corporation content for example, I watch their TV shows on Hulu, read articles on The Daily (iPad app) or in print, and watch movies on Netflix or on DVD.

Tomorrow, if my logic is correct, I can watch it all on one device--with one/two clicks of a button--and News Corp can use the same bundling strategy for its movies that Comcast uses with its most valuable programming--ESPN (live sports and the trojan horse SportsCenter).

How is this possible? The cloud of course. Once content is hosted in one content management system (think WordPress), it can be cross-delivered and cross-promoted at the marginal costs of zero--once it's through Hollywood's well-defined 'windowing' process (where the real money is at in the movie-making business). So as Cuban states, News Corp could offer a free digital book to buyers of Avatar 3 (after it's through the theatre 'window'), or even give paid-subscribers of The Daily a free pass to watch Avatar 3. Many scenarios in a 'networked content bundle in the cloud' world exist. 

Who can do this? Apple Inc. (company), Amazon, Google, Netflix, and other technomedia companies that have built their own acquisition/payment (and hardware) stack. They're simutaneously building the content management system (Google One Pass, iTunes, Amazon Unbox) to deliver this type of unified user-experience while striking the big-time content deals with movie studios and premium content publishers that operationally enables a world like this. 

Question is, what is the appropiate "tax" from these technomedia companies: 30%, 10%, or something else? I truly don't think anybody knows but do appreciate the writings from MG Siegler and Jason Kincaid on the topic. 

This networked world of content streaming to your device and a user being able to access it all with a couple of clicks--while the content creator rightfully generates profits from it through creative bundling strategies--isn't possible until all of it is hosted behind the walls of these technomedia companies so it can seamlessly be distributed to the end user. 

Right now, some of the content is at Netflix, some on iTunes, some atHulu, some still with the movie studios, some on sites like andTechCrunch / AOL, some on Comcast / Xfinity, and probably even some on next-gen premium content sites like Quora. 

The ability to monetize all your media brands' assets by bundling your important yet non-cash cow content (articles) with your super-premium content (movies, live sports) has to be very attractive to the Disney's, News Corps, and movie studios of the world. 

Extending that thought even further, I wonder if we'll see movie studios specifically reaching across the aisle to other content brands like AOL for bundling relationships. So Miramax hypothetically would pay AOL a per subscriber fee to give its movie buyers access to premium/exclusive AOL content. 

In this world of 'networked bundles of content streaming from the cloud', the content owners are the kings and their various content assets are the soldiers strategically deployed to win over various 'regions' of advertisers and paying audience members / viewers. Technomedia companies are the delivery agents, and that 30% charged by Apple may not be what the media marketplace wants / can profitably sustain.  

So in summary, what Comcast and newspapers do today--bundle--can be done through the cloud, by individual content brands like ESPN, News Corp., etc. All powered by technomedia companies like Apple, Amazon, Google, etc. 

Makes sense to me. We'll see.

If you've made it this far, then you'll definitely want to read Cuban's thoughts yourself: 

full article: http://www.thedailybeast.com/blo...

On your blog, you've been outspoken about how a la carte media businesses will have a hard time surviving because they are easily disrupted by technological innovation. What are your thoughts on The New York Times' pay-wall plans and News Corp.'s iPad-only newspaper, The Daily?

As long as everything behind the pay wall is free to paper subscribers, it absolutely will work. They are assigning a value to their Internet content and offering it for free to the people who pay them the most money, their subscribers. None of those subscribers are going to feel upset they are getting something others cannot get. The pay wall will make the subscription decision easier. Compare it to the bundled services that cable and telcos offer. A bundle of cable TV and telco services worked well. Add to it wireless cell service and it worked even better. Bundles of valued services work.

Pay walls change the message to the subscriber. They are now in a partnership with their subscribers and can start creating value that goes beyond the cost of the daily paper. Why couldn't News Corp. use its movie assets and stream a free classic movie every week for free to its subscribers? The marginal cost is next to nothing. Why wouldn't it? Or a free digital book from its publishing group? It can completely change the value proposition for newspaper and magazine subscribers.

It also allows multiple media companies to consider forming a "Netflix" for news content. Netflix at its heart is an arbitrage on the value of content versus the cost to acquire subscribers. How many subscribers can it create from the cache of content it has paid for?

Why couldn't all the media companies that have a pay wall work together to offer joint access to all of their content for an additional $5 or more per month and share it? They could conceivably get millions of subscribers and share that revenue based on actual usage.

Each of these is a far better business model than throwing up content on the media website and then praying you get enough traffic and a high enough CPM to pay your bills, all the while giving your paper subscribers, who are paying you $30 per month or more the "well, it's free on the Net" reason to consider dropping the subscription altogether.

Apple, Google, Netflix, and others are all moving aggressively into streaming movie and TV content and are in active licensing negotiations with providers of that content. Do you think that one of these companies will decide to just buy a movie studio or production company outright to both give them control over their own library of content as well as the capability to produce new content instead of just striking licensing deals, particularly if the terms offered by the incumbent content creators is undesirable?

Buying a library of content will open the door and allow them to test some things, but they very quickly fall into the trap of every content originator, paying the money to produce new content. That's a new business that is very, very difficult and expensive. There is a ton of competition, and competition increases costs. YouTube is having a challenge making money, and everyone gives it content for free!

What are your thoughts on what's in store for the economy and the stock market in 2011? Are we headed for a double-dip recession? Jobless recovery?

I have no idea. Neither does anyone else. So my advice is to be careful. Whoever tells you they know what is coming is lying to your face. Always remember that in the stock market, no matter what you are buying or selling, there is someone else on the other side of the trade. They aren't making the trade with you because they want to lose money or leave money on the table just for you. They think you are a moron for doing the trade.