More models on the move...
Posted by James King at 1:00 07/10/09
We continue to look at models that aren't working... Models, that if you fix them, will make you rich / a hero.
Lets kick things off with newspapers...
Newspapers
Whilst the previous article may not suggest it, I am actually a big supporter of content creators. I do think writers, actors, performers and professional critics / reporters / commentators deserve to be paid.
BUT, I think it should be a meritocracy and celebs should be reasonable in their financial expectations. If you are a sports commentator that just tells me what’s going on in the game I am watching I don’t care if you don’t get paid. If you offer me insight, are knowledgeable and inform me in an engaging manner, I will happily watch the adverts that support your pay packet.
Whilst magazines and newspapers try to secure the monetisation of their content creation no one organisation has nailed it yet.
Here is a list of some of the models publishers are exploring;
http://danblank.com/blog/2009/05/29/the-missing-piece-revenue/
And here is a little more information from idio. Real Clear Markets delve into even more detail. (The article covers media in general)
With a heavy focus on internet delivery I am waiting to see real life innovation. Where are the newspapers who are offering “as you like it” print? I like having a paper to read, I would subscribe to a newspaper if they delivered to my door in the morning at work and at my house at the weekend, but they need only deliver me the sections of the paper I want (i.e. the main paper, business, rugby and tennis news)… I’ve been lead to understand that this would cost to much using current printing methods… but is there no one willing to try to make it work? Surely cost saving of not printing the travel section or the football review should offer an opportunity on a large scale? And knowing your real life audience as well as your online audience can only be a bonus. Just look at Tesco, their understanding of their customers has resulted in them doing so well that Wal-Mart, five times Tesco’s size, is asking the government for protection!
We move on to the financial services sector…
Forwards, Derivatives & Futures
Exchanges push for the use of these financial instruments when trading commodities, currencies etc. claiming that they offer a long-term price signal which should offer stability and a bit more certainty for buyers… but, the exchanges make their money from commission on the trades that are placed, thus it is in their best interests to have markets that are volatile, non-constant and produce unpredictable prices to increase the number of trades placed as in a static market the number of trades would decrease.
Of course the traders would argue that these securities offer the investors enough risk mitigation to encourage increased volume of buyers that more than compensates for the “hopeful” low volume of trades.
A win would be a business model that allows for the exchanges, traders, financial advisors etc. to monetise successful long-term static investments.
Investment banking & IPO Research
An investment bank will sell the shares it is researching for IPO, this encourages inflation of the value of the company during the research. But if the investment bank doesn’t do the research, who will pay for suitable research and due diligence?
Mentioning due diligence leads me (finally) to…
Auditing
This really is a catch 22 of vital importance. Auditors are scared to flag their customers accounts as being falsified or materially incorrect. If they do that they will loose their clients and their revenue. Sadly, in a lot of instances, auditors see stripping of qualifications and licenses as the lesser of two evils as they choose to turn a blind eye in return for a pay cheque.
In this instance government may have to intervene, as carrying on as we do will result in disasters like the Enron collapse and more recently the Madoff Ponzi scheme where jobs are lost, pensions are lost and charities are brought to their needs.
The problem is this; Company X needs to have their accounts checked for fraud (be it hiding money from the tax man, laundering money for criminals, falsely representing the financial position of the company to investors etc.).
So accountants Y check company X’s accounts… but company X are the ones that pay accountants Y.
This bugs me no end… the government can’t afford to pay for it, financially encouraging whistle blowing may result in a witch hunt, government enforced fixed fee levels may lead to sloppy work and doesn’t allow for difference in quality. Maybe the government should bill the businesses? But then corruption and price inflation or tax money waste can occur... I don't have the answer sadly, but maybe you do.
Anyway, hope you found this article and the previous article interesting and maybe someone reading will create a business model that solves one (or more!) of the problems discussed.
To leave you on an optimistic note, here is an article about a successful business that solved a broken business model and helped millions of students. http://industry.bnet.com/media/10003790/flat-world-knowledge-a-disruptive-business-model/
Food for thought!
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