Growin’ Up: New Business Models for Self-Employment

A teenage Morgan Stanley intern is ringing bells on London’s version of Wall Street. The teen, Matthew Robson wrote a market study about what his peers like. The word “free” was a prominent note in his piece.

Teens don’t like regular TV or advertising. Nor do they prefer print. They don’t favor Twitter. Forget radio! Forget phones! No!

Their time and money is spent on cinema, concerts, and video game consoles. The latter are used in lieu of computers or phones for texting friends.

“Wait a minute, Nancy. Where do you get the word “free” in all this?”

If you read David Mathison’s new book, Be the Media you’ll see. The theme of David’s book is the battle between traditional media forces and the new Internet media way of doing things. The latter is what Matthew Robson was telling the financial moguls in London about.

In traditional media, the idea is to “hook” consumers with “free” or low-cost “come-ons” to become subscribers. You subscribe because there seems to be little alternative among the big corporations offering you media services. Then you watch in horror as your bill goes up and up and up each month.

Burned by offline giants like Comcast, AT&T and Verizon, you tread carefully on online giants such as Google, MSN, Facebook and other “free” sites, perhaps recalling the furor on MySpace after Rupert Murdoch, owner of Fox News and other mainstream media bought it and began changing its TOS (terms of service).

When it comes to traditional and online mogul media, “free” comes with strings attached. You are going to have to pay in one way or another: more money for less services as your subscription costs rise; less privacy; charges for things you used to get for free; or having your time wasted by advertising, some of which (my last paid email provider as one example) is downright disgusting and/or nauseating

In the new media model, also called the “10,000 fans” or “the long tail,” free stuff, such as music downloads, is given away in order to promote personal services, like concerts or music instruction or other experiences, for which you do pay. The deal is out in the open. You sign on as a fan instead of a subscriber. When you do sign on, you get more when you pay more, not less.

The new media model is described in detail in Mathison’s book, Be The Media, along with all of the new media tools, Internet sites, service providers and community organizations that support it. This is why I have an affiliate link to it. I feel everyone, and especially authors, musicians filmmakers, graphic artists, digital tv and radio shows, and independent news writers, needs to know what’s in this book.

In my view, what Matthew Robson’s peers are doing is going for the free-est versions of media they can find. They like commercial-free radio, films and concerts (where the performers they like do earn a living by charging for tickets or selling branded merchandise), and video consoles where they can chat—on devices their parents no doubt supply them for their birthdays and pay the Internet charges for.

The downside of this is the fact that most teens aren’t going to have a lot of disposable income in the current economic climate. The upside is that they’re managing the money they do have exceedingly well. For “creatives” and small businesspersons who are in the creative and digital production and distribution service fields, this new business model is a boon to earning a living.

But have no fear about this being an easy road.

First, there are the traditional media who are trying desperately to hang onto their best-seller profits through use of what Robert Kiyosaki, author of the Rich Dad, Poor Dad series, calls “business systems.” These systems are government and legally-enforced monopoly rights to ownership through contractual vehicles such as copyrights, royalties, patents, and franchises.

Be The Media is filled with horror stories of how these “rights” have often been used to leave creatives with next-to-nothing while ever-consolidating giant producers and publishers walk off with trillions. These companies will not give up without a fight.

Second, with the collapse of traditional speculative markets, there are risk-loving investors entering the “intellectual property” field. Under the new investment fad of “securitization,” the big money-players are looking to buy up song rights and branded merchandise and other “intellectual property” from mainstream artists and others from whom they plan to profit.

Securitization of intellectual property is different than the act of flipping intellectual property.  “Flipping” traditionally involves a house that is bought at a low price, fixed up and sold at a higher price. But on the Web it means a blog or social network is bought, improved in content, function, and appearance, and then sold for more money.

In this case there is a measurable improvement in the media property being bought and sold. That’s the number of subscribers. Not so in bankers’ and brokers’ securitization markets. Those are the markets that brought us the asset bubbles (e.g., the largely now-defunct SIVs or “structured investment vehicles”) popped by the last economic downturn.

Securitization of intellectual property is a big-money gambling game where there are expectations of huge rewards from “arbitrage,” or price differences, based on everyone’s lack of information about some unknown kind of inherent value underlying the royalty cash flows from media property. In other words, no work is involved: there’s just a “hunch” that prices will go up. Sound familiar?

Personally I think we ought to listen to Matthew Robson and David Mathison’s Be The Media. It looks to me like today’s teens aren’t about to support giant media or big money arbitragers’ hopes for the future.

Copyright © 2009 Nancy K. Humphreys