Floyd Mayweather And Our Pay-Per-View World

NEW YORK (MainStreet) — In a world where time is limited but content is endless, the financial pyramid is increasingly pointy.

Movie studios know this. That's why they push superheroes all summer long. TV and cable networks know this, which is why they endlessly promote their big hits and cancel nearly everything else.

How high can this go? Is there room to demand that audiences pay big bucks in an Internet age?

Floyd Mayweather has much to teach us there.

Mayweather, a boxer, is the country's best-paid athlete, according to CNN. The network estimated in May he will make $90 million this year, and judging by a check posted online last week, that estimate may be low.

In the past, fighters often lost their fortunes to promoters or managers. Mayweather runs his own production company, and you'll note that the check is written by Golden Boy Promotions, which is run by ex-fighter Oscar de la Hoya, whose own net worth is estimated at $200 million.

Once you get big in the content business, controlling your work is the way to fortune. In a path pioneered by Burt Lancaster in the 1950s – his first Oscar came from producing the movie Marty – the first thing every TV and movie star does now when hitting it big is launch a production company.

Jon Stewart is worth $80 million, according to Celebrity Networth, not just because he stars in "The Daily Show," but because his Busboy Productions produces other shows for Viacom's Comedy Central, including The Colbert Report. (Colbert is worth barely half what Stewart is and his salary is a relative pittance by comparison, but this is subject to change upon negotiation.)

Stewart showed he gets the Mayweather hint last year, when he did an Internet pay-per-view debate with Bill O'Reilly.of Fox Other comedians, starting with Louis CK, have made big money selling individual downloads directly to consumers.

TV networks have shown they get the Mayweather hint by putting their excess programming on sites like Disney's ESPN3 and Comcast's NBC Sports' Live Extra. There, they can push ISPs to bump up their access prices to handle the rights. Teams and leagues do the same thing when they get their own cable channels. They can even sell whole seasons to obsessive fans for a pay-per-view price.

As you extract cash from your best customers, of course, your total audience may contract. It's just like putting a paywall in front of a news site.

Mayweather was thrilled to get 2.3 million paying customers in the U.S. for his latest fight, at $70 each. With the fight free on Mexican TV, 80% of sets tuned-in.

That's the balance. Celebrities, networks, leagues and Web sites must match the dollars they get from pay-per-view against the valuable time audiences deliver when we get something free or for a fixed price. Despite the wealth of Mayweather and de La Hoya, boxing is increasingly a marginal sport.

But Mayweather does show the way forward for content of all sorts. It is possible to extract a lot of money from paying customers in the Internet era. You can go for reach by bundling through a network, or services like Hulu, Amazon.Com and Netflix. Or you can take the risk of going pay-per-view, getting as much you want from a smaller audience.

Time is money, and money is time. It's true when we work, true when we need information, true when we entertain ourselves. While content is abundant, time is a commodity worth spending money on. Fewer and fewer succeed in a pay-per-view world, but the paydays when they do get bigger-and-bigger.

--Written by Dana Blankenhorn for MainStreet

 

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