Following our look at the general issues facing the media and the difficulties of trying to transplant existing business models into the digital realm (part 1) - via Digital Rights Management (part 2), what are we left with (we note the failure of Weedshare, the p2p project that aimed to distribute DRM media files).  Well, there are a couple of well established methods, as well as a few new ones that have arrived on the scene.  Today we look at those staples of media; advertising and sponsorship.

Using the audience gathered by a media event and offering space to other companies to either tell the audience about their products (advertising) or associating the media event with the company (sponsorship) are ubiquitous methods of financing media.  Indeed, the very term 'soap opera' comes from the original sponsors of content aimed at selling housewives washing powder.  You might have noticed that recently this was taken up a level when dance outfit, Groove Armada 'signed' to drinks company Bacardi.  Bacardi already promote their products via music events, so this fits well and unlike the music-selling model of media, when the band put out an MP3, the more sharing the better, from the point-of-view of their sponsors.  Some might ask, so what about creative freedom?  It is now unlikely that Groove Armada willbe playing a gig for the Boycott Bacardi campaign any time soon, but then would they have anyway?  Tours have had commercial sponsors for some time, it is just that now the band are cutting out the middle-man.

How might this work for film?  Films already have product placement, the James Bond franchise being a good example - the same idea taken further would mean that for the sponsors of the film the more sharing of the film, the better - the studio can still charge for the cinema tickets (after all, going to see a film is about the event as much as what is on the screen - we pay for the experience and not so much for the film itself).  They might not make the money from the DVD sales, the increased sharing means they can charge the sponsors more.  (There is a core question about commercialism and artistic freedom here, but selling CDs and DVDs is not the answer!)

This method is not unlike a viral approach - short, catchy films that push a message.  One example of this is the exploding mints & cola film that reputedly netted its creators over $35,000.  Not only that, but this sort of 'guerilla' marketing is what lots of companies are keen to do to reach younger audiences who are using increasingly less and less old media.

On the subject, advertising is the business model of that media behemoth Google, and it is so successful because the internet allows it to sell targeted advertising space to people interested in the products.  The old-media advertising model is struggling with this as more and more advertising moves to new media for this very reason; on TV or a newspaper I can take out an ad and know that a certain percentage of people would be interested in my product, but it is a bit of a scatter-gun approach.  With Google, my ads only appear next to the search of people interested in my product - a far more efficient method!  This is the revenue method used by YouTube - but also sites such as blip.tv and Revver, who offer their creators a share of the money.

To underline this shift in ad-patterns;

"Everyone talks about advertising dollars shifting online, but when you're fighting all day in the trenches it's easy to miss the big picture.  Here's the big picture:  US advertising revenue at 4 big online media companies--Google (GOOG), Yahoo (YHOO), AOL (TWX), and MSN (MSFT)--grew by $860 million in Q2, or 26%.  US advertising revenue at 15 big television, newspaper, magazine, radio, and outdoor companies (Time Warner, Viacom, CBS, etc.) shrank by $280 million in Q2, or 3%."

But not content with being the biggest online advertiser - Google has moved in on the TV and radio markets too!