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One has to endure lots of commercials to watch "free" TV

April 17 2008 at 4:23 PM
Ken Akerman  (Login KenAkerman)

Response to Business Model

Ken is right; there is most definitely no money in those puny TV and radio networks who give away all that programming to the public for free...

"Free" TV & radio is definitely not "free" - one has to watch or listen to many commercials during the course of programming. For example, a typical 30-minute situation comedy on network television only has about 22 minutes of actual running time, so there are 8 minutes of commercials every 30 minutes. Thus, over a quarter of the time allocated to programming is allocated to advertising.

Most TV channels are on cable or satellite these days, so you have to pay a fee to access them, and you still have to view the commercials. The most popular cable channels (i.e. ESPN, FOX News, CNN, MTV, etc.) are part of the basic cable package; for the "premium" channels (i.e. HBO, Showtime, etc.), you have to pay even more.

Perhaps the best solution for to offer, in my opinion, is to offer a free basic package, supported by advertising, and several different levels of premium packages that customers would pay increasing prices for, depending on the level of service that they desire and the amount that they are willing to pay. Therefore, the company would be able to achieve the maximum amount of revenue and would be able to satisfy the needs and wants of the greatest number of customers.

Some customers just occassionally want to view a few small-scale maps with limited detail, so for them the free package would work well and they would have no need to pay more. Other customers would require more frequent access to a wider variety of maps, at greater levels of detail, so many such customers would be willing to pay a competitive market price for access to such maps.

It's interesting to learn about such topics from the perspective of marketing and economics. There is a company based in Houston, called PROS (Pricing and Revenue Optimization Software) which "is a world leader in pricing and revenue optimization science and software for manufacturing, distribution, services, hotel/cruise, and airlines". This company provides software and services to companies to help them determine the optimum prices to charge to maximize revenues and profits.

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