A recent article titled “The Unlikely Mogul – Can Jason Kilar and his hit site Hulu save traditional TV from itself while remaking it for the future?” from American entrepreneur and tech magazine “Fast Company” has brought me to think about something that came to my mind years ago already. This time it is just about another, though related, industry: Television.

The Music Industry, Still up to date?

I remember that years ago when I read about the first lawsuits initiated by record companies against the people who created illegal copies of pieces of music I thought that since the evolution of P2P software and the continuous build-up of sharing networks it would be soon an unstoppable movement. In deed the outcome was something like this. Although right now the movement is back to hosted solutions like Rapidhare or Netload the idea of the (P2P) networks lives on. People want to share information – in this case – music for free. Apparently, nobody wants to pay for music, films, etc. anymore. On the one hand many people will claim that the work an artist put into the creation process needs to be rewarded. In addition to that there are of course production and logistical costs. Fair enough. On the other hand, to me it seems rather to be a matter of perspective. What if the main good is not the actual CD but more the artist itself? What if the CD actually does not matter but the presence and/or actions of the artist is the actual new money-maker? Many things can easily be copied – such a CD – and are therefore very hard to protect. The artist itself is almost impossible to replace under the condition that people like him/her and his/her music. Thus, the prime objective for the artist should become to reach as many people as possible.

Many companies use so-called “White papers” in order to spark the interest of their (potential) customers. A good white paper usually outlines how the company works, gives detailed insights in the technology or processes that they use, and gives relevant, to-the-point, applicable advice or solutions for different scenarios. To a certain extent the company is giving away valuable information that can be used immediately. It can be copied and distributed but one thing it cannot. It does not replace the actual service or product that the company can deliver. If the business is set up intelligently and a fair competitive advantage exists the company becomes irreplaceable. It is unique and could be compared to an artist. So what if the music is actually a white paper? In this sense I think the music industry missed out on changing their business model in a timely fashion and many of the involved firms have to pay the steep price for it now.

The Business Model Idea

This discussion obviously triggers the question of what the new business model is. To be frank I do not have a one-fits-all solution. If I did I might not put it on here but rather be meeting up with record company executives. One thing is for sure though. Concerts of all kinds, live-venues, interviews, meet-and-greets, private sessions are increasingly more important. I am certain that many artists could make similar amounts of money through innovative ways of delivering and distributing their music and performances. Radiohead is probably one of the most recent examples of how a step ahead can bring is huge success. The band not only got lots of free marketing through their spectacular move but also made it a financial success.

To come back on the “Fast Company” article I see some strong parallels with the Television industry.

When I lived in Texas for half a year I was able to enjoy the services of Hulu.com. Hulu streams TV series legally to US consumers via its website. It does not require but offers registrations for personalized service. All major US TV shows are on there and can be watched at any convenient point in time. The service is like YouTube but with feature shows that run on all major networks. So far, the service is unparalleled in the world. In Europe some internet providers have taken on the challenge to integrate TV into their internet delivery. The idea is to give the customer a box that can do it all. Since this is rather new and customer acceptance is rather slow, not many people have signed up for it so far. No doubt that the market is growing though. In the US a previous invention that sort of revolutionized the market was TiVo – a box that would record the requested show when it was on and that made it available later on even with the option to skip commercials.

The hurdles to make a project like Hulu  go global are perhaps preexisting contractual obligations. So far it is not possible for people outside the US to access the Hulu offerings. Since the main revenue generated by Hulu comes from advertisements it is not really a technical issue to let it go global. Assuming Hulu was available globally, there would be  a lot of money to be made for everyone; the platform, the networks, etc. Offering a new business model next to the other one does not necessarily mean that the old one would die immediately. On the contrary.  If there were other things like paid subscriptions things would be different.

I trust that in Europe many companies would be willing to pay top-dollar, because Hulu has something to offer that no TV station can give you: a perfect profile of nearly every individual viewer. It must be every marketing manager’s dream to be able to custom tailor his message to the individual audiences with maximum effectiveness and efficiency. Hulu offers this for anyone involved with television. Also the chance of getting immediate customer feedback should erase any doubt that might be left. Since the technologies for real-time customer interaction are already there companies have to learn to use them properly, too. One other example of how a global implementation of a video streaming service was successfully carried out is the offerings of South Park (www.southparkstudios.com). Not only are they offering localized mini-sites for many countries but views from non-English speaking countries are also able to view the program in English. This is a very important feature to most young people who like to watch the show in its originality. Translated jokes are mostly not very funny. The show, however, is still running on TV and is probably not going away for some time.

In this three-minute interview with Hulu CEO Jason Kilar he explains that Hulu also is a long-term business

And now?

A remaining question of course is what other, non-related businesses can take away from this example. To me the message is quite clear. To change the business model or to explore new ways to distribute a service or product should be one of the top priorities of business owners and entrepreneurs. Constantly working on the business concept is an absolute must since the dynamics of the market should not be underestimated. Especially in a connected world as the one we are living in, a market-changing innovation or innovative approach will most certainly be highly rewarded. Examples for this can be found in every industry, for every product, and in any organization.

Making sure that every possible way to reach your target audience is explored is essential. Maybe this might not be the cheapest way since failures can happen but not daring to try it might be the last mistake of your organization. In my opinion if there is any decent or crazy idea to create new sales it should be tried. Giving away customers (and money) – maybe even to your main competitor – will never be acceptable. Even more shocking is that most of the tools that enable a business to explore new ways are freely available at no extra cost. Many businesses are not using them so far. Facebook and Twitter are just two out of hundreds of examples.

Is it possible to sell a pizza, accountancy services or a haircut through Facebook? I claim that if you can sell taxi rides through twitter it must certainly be.