How do you make money when you give away something for Free?
How do you make money when you give away something for Free?
How do you make money when you give away something for Free?
With all the hubbub about Facebook and Twitter making money by providing a free platform for people, I ran across this gem that also shows another way to make money by providing free content. I am always fascinated with the rest of the story behind how people become who they are. As an example, I saw the trailer for the new movie Chappaquiddick which is distributed by Entertainment Studios. Other than the subject, I was drawn to the back story when I saw a headline. Bobby Tony
‘Chappaquiddick’: ‘Powerful People’ Pressured Studio Not to Release Film, CEO Says
Picture from His Twitter FeedThe fact that someone was pressured not to release a documentary on the Kennedy family did not surprise me. What did surprise me was that CEO was Byron Allen. My interest was immediately piqued to find out how this moderately successful comedian become so rich and powerful. Here is a primer on his business model.
The first question many might ask is Who is Byron Allen? If you are under forty years old you will probably don't remember the TV Show 'Real People which aired from 1979-1984 on NBC. Byron was a regular on the show and also a stand-up comedian. He quickly discovered the money was behind the cameras instead of in front of them and founded Entertainment Studios in 1993. The rest as the say is history. He produces content for TV as well as distribution of movies and other media.
Why Byron Allen Is the Biggest TV Producer Working Today... Period
Here is a summary of his business model from an Indiewire article linked below and here.
Most network and cable shows are purchased from the producer for a fixed amount. They then sell the advertising for the show and keep all the ad revenue. If the show is a hit then, they make money on the production. If it is a dud they cancel the show and take a loss. The big networks and cable companies have the resources to take a chance on a show.
Local television shows don't have that large reservoir of capital to take a chance. Here is where Byron Allen makes money.
However, in the case of Allen, since he’s dealing exclusively with syndicated television, he has a better deal. He barters his shows.
In other words, he offers all his shows to stations and networks for free. You don’t have to pay him for the right to broadcast his shows and he pays for all production and distribution.
The deal however that in exchange for getting the show for free. He gets to sell a minimum of 50% of the ad time for the show himself. The ad revenue goes straight to him, and the money
that he gets is always much more than what he would get if he sold the show to the station.
That kind of gives new meaning to the old admonition that "A Half a pie is better than no Pie!"
For those who did not click on the link above I offer this tidbit for Entertanment Studios.
Total assets $1 billion
Comments
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Wow; all that; it takes all that.
Like I said before: I need a manager. |
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I was initially referring to Dave Ramsey's 7 Baby Steps to Financial Peace, but could not resist the Bill Murray take off on the technique. I guess most things in life come from incremental success or failure.
It is like the Paratroop instructor told the young recruit. "Don't worry after the first step it is all downhill." Baby Step 1: $1,000 cash in a beginner emergency fund Baby Step 2: Use the debt snowball to pay off all your debt but the house Baby Step 3: A fully funded emergency fund of 3 to 6 months of expenses Baby Step 4: Invest 15% of your household income into retirement Baby Step 5: Start saving for college Baby Step 6: Pay off your home early Baby Step 7: Build wealth and give generously www.daveramsey.com |
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I'm too old for "baby steps". But, I try to stay healthy and keep some modicum of a sense of humor.
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I thought you would get a kick out of the story. His mom was a Publicist/Tour Guide at NBC and he hung around the sets as a kid. He was the youngest comedian (1
 to ever perform on the Johnny Carson Show. He recently bought the Weather Channel for $300M.To paraphrase Bill Murray's character in 'What about Bob'. "Baby Steps". beaufortcountynow.com |
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Sounds a lot like me, but way much we're way smaller. I need a manager.
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"Spend less than you make, invest the rest"
I admit I did not follow that advice until I was in my 30s, but once I did, life became so much more enjoyable and less stressful. Now that I am in my 70s I freely give that advice to my children who are now in their mid 30s and I think it is beginning to take hold.