Wishful Thinking: Hollywood Believes Next Generation Of Kids Will Pay For Content

from the don't-stop-believing dept

Well, it looks like Hollywood is going to keep betting against basic economics. A new report has come out suggesting that the latest generation of kids are perfectly happy to pay for digital content. The report suggests that it’s just the slightly older generation — “the Napster generation” — that isn’t interested in paying for content. Perhaps I’m missing something, but there appears to be no indication of how this conclusion was arrived at, other than some random research firm says so. There is no indication of an actual study or methodology — though, if someone can actually figure it out, please let us know in the comments. Frankly, this sounds like wishful thinking. It’s premised on the idea that the reason many people don’t pay for content today is because they “don’t know any better.” But that’s hogwash. People understand the legalities of it all. It’s just that many don’t buy into it. Furthermore, having the legacy players bet on this fiction that the next generation of kids will magically start paying for what their older siblings got for free means that these legacy players will hold back on making the major changes they need to make to their business models. This kind of report is the sort of thing that is written to make big company execs feel good about their unwillingness to adapt — rather than give them any sort of useful advice.

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Comments on “Wishful Thinking: Hollywood Believes Next Generation Of Kids Will Pay For Content”

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Lisae Boucher (profile) says:

I think they're right.

I think the younger generation will be willing to pay. They’re just not interested into paying the industry itself, preferring to see their money to go straight to the artists who deserve it, not the bossy middle-men who just sit on their arses collecting lots of royalties while the artists continue to struggle financially.
The new generation is willing to pay, indeed. But they prefer to pay the artist directly.

senshikaze (profile) says:

I’m willing to pay, but not willing to pay super high prices for goods that cost nearly $0 to provide and distribute. E-books are a good example of this: I refuse to spend 10$ on an e-book that costs the publisher next to nothing to create (meaning the copies, not the work itself). I will happily and merrily buy the paperback for 7$(or less) instead. That way I get a book to read, and I can gift it to either someone else or my local library, or even make a few cents off it. Personally I see the e-book (ebook?) craze as completely and utterly retarded.
What I won’t do is pay an artificially high price for a good that is worth less than a penny physically. (Again, ignoring costs to the creators, just cost per copy)

Anonymous Coward says:

Re: Re:

I’m willing to pay, but my estimation of value has little-to-nothing to do with how much it cost to produce. if it takes $1 million or $1.85, the end product will have the same value to me (assuming we’re talking about identical products, of course). They key for the seller is to be to minimize their costs so that more of what I’m willing to pay can be profit for them — and that’s why many of these “infinite goods” fall towards $0. Because if it can be produced for less then a competitor can undercut you and take your customers. The smart seller uses free products to drive demand for other products and services.

Dark Helmet (profile) says:

Re: Re:

“I will happily and merrily buy the paperback for 7$(or less) instead.”

That seems to be about the price lots of people are throwing around. Here’s the problem for the independent author who wants to sell his/her books directly to the reader: most of the sites out there for authors won’t even LET you sell it at that price point. I have a book on Lulu, for example, and I set the price of my paperback at $19.99, which I hate, but I did it because the minimum price they would have allowed was something like $17 and change and I’m OCD about getting at or near round numbers.

That, of course, is where selling the added values comes in, something I’ll be doing shortly. But for those that just want the book, it’s really difficult for the author. Even cheapy book printers probably wouldn’t allow you to sell a full length novel @ $7 and make a dime.

Not that I’m complaining. Challenges are what make life fun….

Anonymous Coward says:

Re: Re: Re:

I’ve never bought a paperback for more than $8, and the brick-and-mortar book stores are filled with books — complete novels — for $6 or $7. I know it’s not “really” your call, but why would I pay for your book when I can get a competitor’s for 1/3 the price? Especially if we’re talking about buying sight-unseen (as is almost always the case with novels)?

Senshikaze makes a good point, you can probably get a few bucks for selling an ebook directly (less if you sell through a middleman), but even giving away free ebooks might convince me that it’s work $20 to buy your book. (I’m a bibliophile, and while ebooks are nice for previewing an author, nothing beats the deadtree version.)

big money says:

Re: Re:

Ebooks will prove to be much more then a fad. They will take over as the prominent books sales channel. Real books will always exist and never go away. Just like real books stores will not go away. What will go away are the small books stores and the number of actual books that big stores carry. Ebooks are better for the environment, easy to get and most importantly for many young people, they are just as easy to steal (like music). If you could have any and every book you wanted with you in an ebook reader and never pay a cent for a book again, you might be okay with buying an ebook reader. Just like you did with an MP3 player or iPod. Ebooks are hear for good and will take over even more so in the next 2 years. 3D Tv’s are the fad, not ebooks……..

BigKeithO (profile) says:

Re: Re: Re:

3D TV’s are not a fad either. People have spent $55 million on 3D TV equipment in the first 3 months equipment has been available. There are like 4 Blu-ray movies available in 3D, The Master and the World Cup was in 3D and now the PS3 has a couple of games in 3D. Yet people are still buying 3D gear for the home.



3D is here to stay, get used to it.

Hephaestus (profile) says:

“A new report has come out suggesting that the latest generation of kids are perfectly happy to pay for digital content.”


The kids get $50 dollar iTunes gift cards and use them. One simple question, where do the other 9,550 songs on their iPods coming from?

The data shows that the kids and teens are the ones actually doing most of the downloading and sharing among friends. That is spreading up through the age groups.

“This kind of report is the sort of thing that is written to make big company execs feel good about their unwillingness to adapt — rather than give them any sort of useful advice.”

I was going to make the same point. The execs only want to hear the good news and deny the bad so they surround themselves with people that say exactly what they want to hear. It kind of reminds me of the band playing while the titanic sunk.

Anonymous Coward says:

Yeah, right!

Three or four weeks ago I was going around to garage sales, and found one with a guy selling stacks of DVDs, Blurays, computer CDs from his garage. He had rows of them lined up, with labels and the black plastic cases. Something hes been doing for weeks to help feed his family and safe his home because it was being forclosed on. It was like a feeding frenzy of piranna fish with the people buying. Whats that tell you about what his kids are seeing?

Anonymous Coward says:

The problem for the industries is that the consumer, both young and old, has become educated enough to realize that the cost of distribution is no longer as high as it was years ago. It seems ridiculous to many consumers now to see the thousands of copies of DVDs in all the stores. I would guess that many of the people who actually still buy physical copies are the older generations who buy them as gifts, or are still hanging on to their DVD players. What is clear is that the generation growing up is becoming less reliable on DVD’s.

Knowing that the distribution cost of a digital file is very low, it is counterproductive for the industry to try to convince any generation that the profit margin for them should be higher, and that the restrictions on the product should be greater. The “Younger” generation has already figured out that the industries are trying to pull the wool over their eyes.

Sure, there are plenty of people willing to pay for these products, but the internet savvy generations have realized that cost value is an important factor in what they spend their money on. If you try to charge someone $15 for a severely restricted digital movie, then it’s just insulting to the buyer, especially after paying $10 to see it at the theater.

It’s ironic that these reports are trying to say that the younger generation is willing to pay, but they never seemed to ask exactly WHAT they were willing to pay.

Michael (profile) says:

Re: Re:

“The problem for the industries is that the consumer, both young and old, has become educated”

If ever I have heard a death toll for an industry…

I would argue against you on this one though. It is not a problem for the industry – it is a problem for the legacy record companies. The recording industry as a whole has no problem with well educated consumers.

Anonymous Coward says:

“Say you’re an Italian-American who speaks Italian and you want to watch old Italian-language movies,” Russo said. “Where are you going to find that? Not at Blockbuster, but you could potentially the Internet.”

How does anyone justify this guy having to pay for these movies. And there’s no one in Hollywood who’s going to offer a product that will do that sort of thing. Just negotiating the legal end makes it more expensive than the money they could ever raise.

I support intellectual property taxes.

Felix Pleșoianu (user link) says:

“People understand the legalities of it all.”

Actually, in my limited experience, no they don’t. And why should they? For most people, all law is a big meaningless jumble. And at least things like “don’t kill” and “don’t steal” make sense. Copyright doesn’t. But yes, once you explain it to them, they *really* don’t buy into it. How should they buy into something that flies in the face of common sense and natural laws?

As for the issue at hand, I agree with Lisae Boucher above.

eMike (profile) says:

I suppose I’m part of the Napster generation, in that I used it during high school and subsequent technologies beyond (once it was deconstructed by lawsuits).

I think the reason I used it so much back then is because I couldn’t afford it. These days I rarely buy CDs, but do buy vinyl every once in a while, but only if I’m reasonably sure it’s going to be a good record. I almost never buy movies.

That’s not to say I don’t consume content. But I don’t download it either. I use Rhapsody to consume music. I use Netflix to consume video. If it’s not available when I want it, then I find it pretty easy to ignore.

It has nothing to do with a “Napster” generation, and everything to do with an “On-demand” generation. I need to access whatever, whenever… and there’s no good reason why I can’t.

Dark Helmet (profile) says:

Re: Re:

“It has nothing to do with a “Napster” generation, and everything to do with an “On-demand” generation. I need to access whatever, whenever… and there’s no good reason why I can’t.”

Bingo. You couldn’t have said it any better. It has nothing to do with not knowing any better, it’s a matter of the age of convenience. There are so many services that offer what users want any time they want it, those that consume that way are at a loss as to why everyone else isn’t doing it the same way.

I get into this with my parents all the time. An odd example recently occurred when my father told me he was growing cucumbers in his garden and wished he knew how to make pickles, but he didn’t want to go out and try to find a good book for it, spend all that time, and then maybe not be all that good at it. I literally facepalmed myself in front of him and said, “Dad, just Google ‘pickling cucumbers’, pick a link or two, and get to pickling yo!”.

Well, after he slapped me for talking like a moron, he did just that and was amazed at how much information was available to him when he wanted it.

Then he turned to me and said, “it looks like I need a specific kind of mason jar to do it right. I don’t know where to find those.”

And then I facepalmed myself again before screaming, “GOOGLE IT, OLD MAN!”

JC says:

Re: Re:

The “on-demand” generation is almost a perfect description … but I would say “on-demand” culture

I’m 30 years old and am probably considered part of the “Napster” generation, but I would say I’ve fully embraced the on-demand culture. I use Netflix streaming. I buy video games on-line or not at all.

Two weeks ago my air conditioning wasn’t working well, I went to the basement and realized that the air filter needed to be replaced. I grabbed my keys, jumped in the car and started heading to Home Depot – it was 12:45am. I ended up going to Walmart (only thing that was open) but I was frustrated that I couldn’t go to Home Depot. I need something – I have money – I want it now.

I don’t think theres any going back from that mentality.

Anonymous Coward says:

Re: Re: Re:

I’m worried for ya.

Couple of things you could have done better, first bought spairs in advance and second if you didn’t do so yet calculate the lifespan of your air-conditioner and start saving money to buy a new one every month as it will eventually fail catastrophically.

The same rule is valid for every other thing you own except for IP infested goods, since you don’t own them apparently.

Paul (profile) says:

Things COULD Change...

…If the media companies decided to make content available via an affordable, comprehensive, easy to use, and consumer friendly service.

Right now I pay ~3000 per year for Internet, cable services, Internet subscriptions, books, and CDs and DVDs — Not including theater or concerts or hardware to view digital content! This is just for recorded and/or published media. And my estimate could be low.

Certainly, I have a wife that accounts for a chuck of this expense. But regardless, I am paying out this kind of money and the content industry wants even more. I say that because I watch only very rarely a Hollywood film at home, because I only have AT&T U-verse video on demand, and their offerings suck, and are hugely over priced. I don’t want to bother with renting DVDs, or buying DVDs (or any other format).

I don’t want to pay extra for HD content. I don’t want to pay extra for 3D. I don’t want to pay “convenience fees” to buy tickets online.

The only significant industry in the world that expects to raise prices and hike up profits as they add features to their product and lower their production costs is the media industry!

Where would computers be if we paid premiums, and continued to pay premiums for every improvement made to computer systems?

At some point progress in digital technology MUST make access to content cheaper to the consumer. Every year that goes by making it more expensive to access content and information will force people to find ways to access that content and information in a way they can afford.

Either the next generation will be wealthier by a huge margin than all that have gone before, to the point they don’t care if Media is ever more expensive, annoying, and difficult to access, or the media industry is absolutely delusional.

I go with delusional.

Skippy T. Mut says:

Who's really paying though...

The other part of this is that they are considering kids who download and pay for content on their phones…which they don’t pay for themselves. A kid can go download a music video for $475 and just click yes to the “are you sure you want to spend this ridiculous amount of money on something so worthless” prompt. Their parents are the ones that end up getting stuck with a bill for it and it is technically content that was paid for. But if you ask the kid to come up with the money they’d probably just stop caring.

Research firms are paid specifically to spin data in whatever way is necessary to prove whatever point the company paying them is trying to make.

Michael (profile) says:

Re: They would be willing to pay...

“I think the youngsters would be willing to pay if the cost of content wasn’t exorbitantly high”

I don’t think most people (young and old) distinguish between the content and the services around them. Youngsters today pay for convenience and access a lot, but probably call it paying for content.

That is what on-demand is about, rhapsody on your cell phone, Netflix and RedBox, etc. They pay for on-demand to watch House episodes whenever they want and call it paying for content – of course, they could wait for the episodes to air, or search for them on the internet, but on-demand is easier – and they get the content with the service.

Michael (profile) says:

Re: Re: Re: They would be willing to pay...

Which is great for content creators, I think.

Even though the content is free elsewhere, the consumers are paying money for the combination of the abundant content – for which economics sets the price really low – and the scarce product that comes bundled with it. And at the end of this process, they think they just bought music or a movie or something. They have unintentionally assigned the money they have just spent to the content – which is free of cost, but full of value rather than the scarcity bundled with it that is essentially valueless without the content.

That is one of the huge benefits of the economics of RTB with infinite goods. The consumer attaches the price to the item with the greater value even if it is something infinite that has it’s price driven to zero. On top of that, they feel good about doing so. The best business models are the ones in which you not only take money from your customer, but they thank you for it.

CDC says:

Well they may be willing to pay.......

I think a lot of people are willing to pay for content but it is about the value proposition rather than the cost. I believe that most people have a figure in their head that they see as the value for an item of content, be it 0.09 pence for an mp3 track or 0.99 pence for a movie but they willnot buy while the content producers/distributors continue to ‘rip’ them off. Sensible pricing based on the value to the consumer, to me, seems the only way that charged for content can ever work if it is to work at all.

Joel (profile) says:

Re: Well they may be willing to pay.......

“Sensible pricing based on the value to the consumer, to me, seems the only way that charged for content can ever work if it is to work at all.”

This is exactly what I’m thinking. Most people think they are being ripped off but the problem is that everyone wants to make money from one persons work (i.e. music industry out of artist)this is why cost is so high, if the artist was not tied down to a big corporation or understood that people would buy more of their work if it were reasonably priced then they would fight for us but they don’t think that way they just see how much money they are getting and don’t think of increasing revenue/profits.

Dan (profile) says:

To me it's all about overvalued product

To me, it’s all about the fact they all just want to much for their product. $20 dollars for a DVD? Too much. $15 if it’s good. $3 or more for a streaming rental? Don’t make me laugh. And it goes on and on. I don’t think kids want it free, they just recognize value that isn’t worth the price.

There are some things that have given me a lot of content for my money. Interestingly enough, it’s usually video games. Mass Effect, Fallout 3, Dragon Age……

Media companies have overvalued their products tremendously. The only one that gets it close is Netflix @ $10/month

BigKeithO (profile) says:

Re: To me it's all about overvalued product

The Netflix streaming model is pure win. That model is the easiest for content companies to make money with. It is really the best of both worlds. Content creators get to DRM the crap out of content and they make sure consumers don’t own it and consumers don’t really care because they have 24/7 access to tons of content.

Why bittorrent a movie when I can just fire up the xbox and stream that same movie to my TV? The only problem with the current model is waiting on the DVD window. Bittorrent still looks pretty darn appealing when I can get a DVD quality rip right now or I have to wait 3 more weeks for the legal Netflix version.

Anonymous Coward says:

I love this part:
gave away digital copies of Tom Petty and the Heartbreakers’ recently debuted “Mojo” to purchasers of concert tickets

They’re doing the whole “give out an infinite product and charge for the scarcity”, but they’re actually doing it backwards!! I mean, giving you a (free) RtB after you already bought is just absurd. Also, they were forced into that sort of thinking, and they’re still getting it wrong. I wouldn’t read too much in this article. Obvious troll is obvious.

rbry (profile) says:


When I can pay $13 to go to a movie and get not only a refund but and extra% for the two hours of my life that I wasted when the movie sucks THEN I will be concerned with getting content for free. When I have to pay $14 for a CD that only has 4 songs on it or only one is any good I will NEVER feel bad about getting anything for free. As long as bands like The Who not only still perform but charge $250 for a ticket and when you get their not only can the deaf dude not play any more but compared to how bad the lead singer is and all this was not told to people up front I will have no issue getting whatever can be gotten for as little as it can be gotten. DOWN WITH THE MAN!!!!!

Robin doran says:

Youngsters have always bought premium content

The ringtone and mobile app, specifically games, industry highlights how digital content can be sold to those with higher disposable income and a different appreciation of better-than-free and that’s not taking into account strong sales in iTunes. It looks like this generation of kids are already paying for content and the entertaimment wants to exploit it further.

crade (profile) says:

Re: Youngsters have always bought premium content

I don’t think this stuff is about a different appreciation of anything. This isn’t a generation difference, the theory that people who infringe don’t ever buy content is just plain misinformed.

People will buy when they think it is worth it. Making your own xbox or ps3 games is a pain in the butt. Itunes is convient. Creating and using your own ringtones isn’t so easy. Nothing groundbreaking, just path of least resistence I think.

trilobug says:

The American Nightmare

The younger generation only pays for stuff because they use their parents money half the time. The second they have to live off their own dime full time, they will change their tune. “I need to eat. Do I buy off itunes and skip a meal or borrow the CD from a friend or torrent and enjoy the music on a full belly.”

If anything they will be less willing, it’s getting more and more expensive just to live, and if you are fortunate, work in this country – never mind movies and music.

I’m of the opinion that the next generation is comprised of extremely savvy consumers that have outlets to communicate with one another like never before. Oh yeah and HATE the MPAA and RIAA.

Good luck cause these kids aren’t stupid.

Lauriel (profile) says:

My daughter is 15. I don’t know where they’ve done this research, but her and her friends have two main sources for accessing and sharing music. Obviously, downloading and sharing tracks through phone/mp3 players. But mainly they use their phone to watch music through youtube. This combines video, music, and social interaction. In all honesty, her and her friends can’t understand the appeal of a CD – it’s too boring and limiting. If music can’t provide this mix, they simply aren’t interested in it. Will they pay for it? Maybe, if it’s reasonable. But from my experience it is the merchandise that they are willing to pay for. If something they’ve shared and enjoyed excites them, they want tangible goods to increase the experience. To them, a CD doesn’t count, because it’s less than what they already get through youtube. But rock up to your friends with a new keyring/tshirt/bag/whatever branded with the latest cool thing and they are ecstatic. That’s what they’ll pay for.

Trish says:

If I remember correctly, there was an article a few months ago about a class of children saying they didn’t see any moral problem with downloading content for free, and I really doubt that tomorrow’s kids will be more willing to pay for content. I think it’s quite the opposite, where paying for anything online that isn’t a physical good will be seen as ridiculous. More and more people know that everything is available for free on torrent sites and such, why would then more and more people pay? Isn’t it the older generation, my parents in their forties, the pre-napster generation, who have some moral problem paying for content, since they were used to paying for it before? The system can only last as long as those who have ever had to pay for content still are alive or relevant to the market, and by the time the baby-boomers pass on, say in 20 years or so, I think the content industries will have adapted or died off. Noone will be putting their hard-earned cash into virtual goods.

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