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The Madness of March – Consumers paying for content?!

by Nitesh Patel | 3月 18, 2010

Today is the start of March Madness – the US tournament that will crown the college basketball champion. March Madness was also the underlying theme of my most recent report, March Gladness – which looks at how print media can leverage lessons from sports to succeed in the world of mobile media.

But there is also an important lesson for multimedia content owners; despite what you think consumers will in fact pay for content.

As of this morning the iPhone application, CBS Sports NCAA Madness on Demand, selling for $9.99 was number nine on the top ten paid apps list (and expected to rise) and the current highest grossing application. The popularity of the app demonstrates the willingness of sports fans to pay for ubiquitous access to events – even if it is otherwise available for free via broadcast or online. And we are simply at the tip of the proverbial iceberg – World Cup, the Masters – each of these events have already or are planning to drive users to pay for content on their mobile devices – a phenomenon not easily replicated online.

And it is a smart decision for a number of reasons:

1. Conditioning. By educating users that everything online would be ad-supported, content owners found it difficult if not impossible to then charge for content that had so long been provided gratis. While some sports such as Major League Baseball have successfully avoided this, others such as the NCAA have not.

2. Avoiding cannibalization. By not relying on advertising dollars, content owners can better protect existing revenue be it broadcast or online without risking advertisers simply shifting money from one medium to another without growing the total pie.

3. Value. By offering lite versions of applications, content owners are still putting information into the hands of consumers but are maintaining that live content has additional value and thus should be paid for.

Now, NCAA online once had a paid online service when it launched in 2003 which eventually evolved into the free service available today. So, could a similar trend be seen for mobile? It’s unlikely on a large scale. Charging for mobile content is becoming accepted (despite grumbles from users who expect everything to be free) and companies will learn the lessons of the internet by avoiding devaluing their content by giving it away. Paid content may not be for everyone but there are millions of users who will pay for a la carte content that appeals to them and when taken in aggregate could result in hundreds of millions of dollars in consumer spend within the next few years.

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