Subscription Business Model for Media

There are currently 3 different models for digital media distribution: Subscriptions, Pay Per View, and Super-Renting.  Despite what the media companies tell you, there is no option to "Own" a piece of media via digital distribution.

Definitions:

1) Media creators/producer - These are the people that actually create the content.  For music, this is the musician.  For TV shows, these are the production companies that you probably never heard of.  For the TV Show, the Big Bang Theory, this would be Chuck Lorre Productions and Warner Bros. Television.
2) Media distributor - These companies buy the rights to the content produced by the media creators.  These rights are usually exclusive for the country they are in.  For the Big Bang Theory, this is the company most people associate with the show: CBS
3) Media providers - These companies buy the rights to re-distribute the content.  These companies tend to not be exclusive.  Examples of this category are Comcat, Time Warner Cable, Verizon FiOS, Netflix, and Hulu.

Subscriptions

This model is by far the most popular.  It gives customers the most amount of content with the most while charging the least amount of money.  Customers are charged a monthly fee, but get access to a vast collection of media, that they can access as often as they like (with some exceptions).  The media is usually streamed to the customer on a per-use basis.  This means the media provider must set aside a large part of the operating budget for bandwidth costs.

Media distributors don't like this model.  They want to charge more for content that is more popular.  Media distributors and internet providers negotiate licensing costs for entire collections prior to anyone actually viewing the content.  This means media distributors don't get rewarded for making more popular content.  Because of this, media distributors will ask for higher licensing costs for the entire collection.  For internet-based media providers, the distributors seem like they collude with each other and essentially ask for the entire profit margin of the provider.  This means the internet-based providers are almost always in the red or the black.  This is why the news always reports how Netflix , Pandora and Hulu are doomed to fail.  They can never actually make a good profit, because the profits go to the media distributors, not them.

Since license costs are based on a per country basis, you cannot travel and use your subscription.  The famous example of this is Neflix being available only in select countries.  One thing to (somewhat) consider is that if you choose to stop paying for the service, you lost access to the entire collection.  You do not keep anything.  I underlined choose because in all 3 models, you have the danger of losing all your content of the company goes under.

Pay Per View

This is normally called "Renting" by various providers, like Google Play or Amazon Prime.  I tend to refer to it as Pay Per View, since you can usually only rent for a limited amount of time.  That limited amount of time only really lets you use the media once.  If you rent a TV show, how often would you actually watch it in a 24 hour period?  It may be watched by multiple members of the same household.

The rental price is lower, so you can watch more variety; if you plan on only watching once.  Since you already know you will lose access to the video, there is no risk of losing access when the company goes out of business.

Super-Renting

This is normally called "Buying" but I have serious issues with that term.  What you are actually buying is the right to watch a video as many times as you want for an undetermined amount of time.  That right can be revoked at any time for any reason by either your provider or the distributor.  The DRM connects to your content provider every single time you try to watch the video.  If your provider ever shuts down, then you lose access to your entire collection, even though you "own" every single video.  Imagine what would happen if BestBuy closed and all of a sudden all your DVD's stopped working.

Although each piece of media can be priced differently based on supply and demand; they usually are all the same price.  Videos are generally location-locked, and sometimes, device-locked.  This means you can't travel overseas with the video and you are sometimes locked to the device that you actually purchased the video on.



Overall, none of the current business models are great.  They all suffer from location problems and lack of ownership problems.  As consumers, we lost a lot of our digital rights due to digital distribution.  For my family, the best choice is the subscription model.  I pay for Neflix, Pandora and Hulu Plus (all services that work on the MK802).  We tend to watch a smaller amount of material over and over again.  Sometimes, my wife will put on a series of what she calls "Bad Netflix Movies" throughout the entire day.  If I could find a service that provides actual ownership, then I would consider buying movies and TV shows.  Till then, I will pay the monthly fees.