So, Channel Four is to monetize its content on YouTube and Bebo by running pre-roll ads on their programme clips. This is interesting stuff. In a month when UK broadcasters have had to stomach some big doses of bad news, here is some light at the end of the tunnel. There’s a mutual raison d’etre here. Social media giants like YouTube have to find ways of monetising their content before investors start to lose patience and broadcasters like Channel Four need to find ways of monetizing their content before they fall even deeper into financial trouble.
The digital age is an age of partnerships where one time enemies can, and sometimes must, become friends. To succeed companies need to see old competitors as new companions. Rather than scrapping over content ownership and rights (another social media story today), it looks like Channel Four and YouTube are trying to make it work in the brave new world. Of course, this move won’t solve all Channel Four’s strategic and financial problems but it is the kind of creative thinking that’s going to be required to get broadcasters and social media platforms through these troubled times
On a separate but not unrelated point, it’s interesting to note that today ITV has announced it is parting company with its head of online revenue. Sometimes what these guys do behind the scenes is as interesting as the programmes they transmit.
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Should twitter charge?
Twitter is talk of the town in UK marketing circles this week. But the discussion isn’t about the fun of using twitter or the reasons why people do or don’t use it, or when they use it, or how often or who with. No, it’s about whether or not twitter should charge brands for using its services.
You can’t blame twitter for trying, they have bills to pay just like the rest of us - and like the rest of social media. Despite their incredible growth, social media brands are caught in digital Catch-22;  they can get right into the highly prized personal space of individual consumers. But unfortunately, these high levels of personal involvement come at a price; when consumers are facebook-ing, twitter-ing, myspace-ing or bebo-ing, they are so highly involved in generating their own content that they are not very interested in advertise-ing. The display model is virtually impossible to crack in these environments - especially on a click/sales performance basis.
So if the social media channels can’t make display pay what other areas of potential revenue can they look at? There are two obvious alternatives. Data and subscriptions.
Some big and successful businesses have been built selling customer data and using data to generate customer sales leads. Social media sites can gather all sorts of data but there’s a hitch here. Â Both formal privacy regulations and “online morals” (e.g. Facebook’s Beacon rebellion) make monetizing social media member data a difficult area.
The other route is subscription revenue, but asking for a subscription fee risks losing members and slowing growth. That’s a risk social media can’t take. I’d bet that every venture capital presentation they make starts with a great looking exponential growth chart because, for the time being at least, growth is keeping the financiers happy.
So without revenue from traditional display, data sales or subscription revenues, how can social media companies make a living? Brands I’m afraid are an obvious target for two reasons. First, they’ve got money and second, charging brands does not affect the growth of the user base.
All the pioneers of social media have got to do now is find a way of creating a trade between their social assets (us) and brands’ desire for close engagement. Social media stakeholders are going to be very focussed on answering this question because if they can’t, some aspects of social media will quickly move from being the talk of the town to being a thing of the past.