Digital Chiefs Envision “Freemium” Future Online

HRTS luncheon panel sees free-paid hybrid model for digital content

The ongoing debate over how to monetize digital media was the focus of the panel at the Hollywood Radio & Television Society’s Digital Chiefs Newsmaker Luncheon Sept. 8.

The Walt Disney Co. President and CEO Robert Iger moderated the panel of digital chiefs at The Hyatt Regency Century Plaza Hotel, where the consensus was that free and paid content can co-exist in the digital world.

“There are some who will pay and there are some who won’t – we’re going to see a hybrid world,” Chris Anderson, Editor-in-Chief of Wired magazine said.

Anderson said not everyone will opt for a free version of a digital product, and that many prefer having a better quality version at a cost. He pointed to the success of Apple’s iTunes as an example of this trend.

“ITunes is selling convenience,” he said. “You get your time back; you’re paying a convenience fee.”

Hulu CEO Jason Kilar used pay-cabler HBO as another example. “You’re not going to find HBO programming free online,” he said. “[If consumers want it online], it’s going to have to be a subscription product.”

The panel agreed that ad-supported digital products have become mainstream and that consumers are used to pre-roll ads. Iger asked the group if there would ever be an equivalent to the 30-second spot in traditional television advertising.

YouTube CEO and co-founder Chad Hurley said the focus is not on the format but rather on proper targeting. “If an ad is in front of the right audience, there will be a great outcome.”

Hurley said YouTube will continue to focus on ad-supported products but that depending on the content, there will be different models for revenue. The company is looking into several different options including rentals and subscriptions.

Kilar argued that a 30-second spot online can actually garner better results.

“We make a conscious choice to watch a show on a computer, so we’re more engaged to start,” he said.

Kilar cited a study that revealed there was 15% more correct plot recall from watching a show on Hulu than on television.

With the world of digital media growing larger everyday, Iger asked how companies can continue evolving and not stagnate after making a big splash in the digital world. 

Jonathan F. Miller, Chief Digital Officer and Chairman and CEO for the Digital Media Group for the News Corporation, admitted News Corp.-owned MySpace fell victim to this problem.

“It took off and I think it forgot the rules,” he said. “There is a constant need for reinvention but also not losing who you are.”

Miller stressed the importance of always doing product improvements and staying ahead of the curve. “You can’t play catch up.”

“Paranoia drives innovation,” Hurley echoed. “There’s always someone out there to trying to make something better.”