Imagine if TV companies charged consumers by the minute to watch a football match. Or if your office rent increased when you had a particularly busy month at work. Sounds preposterous, doesn't it? Yet, this is exactly how many media management systems providers are currently pricing their services, and no-one is batting an eye, indeed, it is a model that is being extolled by many. But examination highlights that consumption-based models for management systems are only beneficial to smaller operators.
The media and entertainment industry was slow to embrace the Software as a Service approach introduced by companies like Salesforce over two decades ago. The last few years has, though, seen a massive uptick in the adoption of cloud services and many media operators are now enjoying the benefits of easy access, instant scalability and the financial flexibility that make SaaS applications so appealing to many other business sectors. However, with this new way of working comes a whole new approach to cost and, for the media industry in particular, this aspect of cloud adoption has not been without its headaches.
Specifically, anecdotes of bill-shock' abound as content producers struggle with the apparently contrived complexity of costs associated with downloading or exporting their content from the cloud and many articles have been written (including some of our own) on the infamous egress fees. But, perhaps the media industry's preoccupation with egregious egress costs has distracted us from other issues with some cloud-based pricing models which may not be as beneficial as they first appear.
Fees for transcode services and content egress are based on a consumption pricing model which Amazon Web Services (AWS) are credited with pioneering. It's not really a new concept of course, we've been paying for consumables such as gas and electricity in this way for decades. In that context, the consumption model for media services is very clear, and inherently fair.
What is more difficult to reconcile, is the application of the consumption model to management systems that simply orchestrate 3rd party services. For example, some cloud media management providers charge a standing fee for access to their platform and, on top of this, add a variable charge based on the volume of content under management or the 3rd party services utilised. These management costs are in addition to the cost of the actual consumable service and are categorised as throughput overhead. Some providers bundle' a storage or a throughput allowance and charge an overage' rate if it's exceeded, a shameful oxymoron in context of cloud.
This model works for smaller operators - in fact it's seen as the perfect pricing structure for SMEs because it affords access to enterprise class management software, on a pay per use basis, with a very low cost of entry. Yes, the base costs are a little elevated over the underlying services and each transaction is a little more expensive, but this orchestration tax is worth paying for the operational benefit and convenience.
But, for anything but the smallest operators with only a few TB of content, this orchestration tax becomes noticeable, if not burdensome. Providers are quick to justify the model by pegging cost to success - the more content a producer has under management, the more work they are doing, the more successful they must be and, ergo, the more revenue there is to spend on services. This creates a very linear relationship between busyness and cost which is just about justifiable for video processing services were work is proportional, but that is not the case with management systems.
Like online accounting software tools, media operators expect to pay for management systems based on features, or even user seats' but will balk if pricing is per transaction. Moving production operations to the cloud affords limitless scale but that should not limit the economy of scale and media operators should see the cost per transaction flatten out and fall at higher throughput volumes.
In recent years there have been many published comparisons between taking a CAPEX (hardware and perpetual licences) and an OPEX (cloud service) approach to production technology procurement. In most cases authors tend to present a clear winner one way or the other but the reality is more nuanced and comes down to the business's operating model. The significant variations between the different types of SaaS model on offer, and specifically how these suit different business requirements, play an important role here and deserve more scrutiny.
We are great proponents of cloud and SaaS and, in our own procurement of business systems and infrastructure, the model has allowed our business to grow rapidly without taking on burdensome debt or suffering the distraction of equity investment. But our success has been based on careful assessment of the different SaaS pricing models on offer and how these align with our specific business requirements. Our advice is that medium and larger scale businesses, in particular, should engage directly with underlying service providers and factor in future growth to identify which model is right for your business.
The acid test here is that operational costs should fall with, not track, your business growth and if the model on offer looks complicated, look out for the devil in that detail.
This artcile first appeared in the IABM Journal (119 Page 4) https://theiabm.org/journal-119/
By Blue Lucy - December 6, 2021
Share this Twitter Consumption based pricing models sound attractive but are they cost effective?
&source=BlueLucyMedia rel=noopener noreferrer target=_blank class=social-share-btn btn-linkedin mr-15 mb-15>Linkedin
Most recent headlines
05/01/2027
Worlds first 802.15.4ab-UWB chip verified by Calterah and Rohde & Schwarz to be ...
06/09/2026
June 9 2026, 23:00 (PDT) Dolby and MagentaTV Bring Fans Closer to the FIFA Worl...
04/08/2026
Dalet, a leading technology and service provider for media-rich organizations, t...
04/07/2026
April 7 2026, 19:00 (PDT) Detective Conan: Fallen Angel of the Highway Opens in...
15/06/2026
Detach from Direct-Attached: How Remote Editing with EVO Keeps Creative Teams Mo...
14/06/2026
Library captures 1960s R&B/pop drum sound
Following on from their recent wave of plug-in effects, Iconic Instruments have just launched an all-new virtual d...
14/06/2026
HBO Comedy Rooster Shot with URSA Cine 17K 65
Brie Clayton June 14, 2026
0 Comments
Large format brings viewers intimately close to characters.
Black...
13/06/2026
Latest expansion pack includes 252 presets
Devious Machines have recently introduced another expansion for their powerful multi-effects plug-in, Infiltrator...
13/06/2026
Create custom DAW/plug-in controllers using prompts
MetaGrid have recently introduced an all-new AI Builder function to their touchscreen-based control surf...
13/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
13/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
YES Network and The Gotham Sports App will air seven Athletes Unlimited Softball...
12/06/2026
The United Football League will host its FAST Innovation Suite at the 2026 United Bowl presented by Credit One Bank on Saturday, June 13 at 3:00 p.m. ET at Audi...
12/06/2026
PTZOptics and LayerJot will present live demonstrations at InfoComm 2026 showing how natural-language AI prompting, robotic camera control, and on-device comput...
12/06/2026
MultiDyne Video and Fiber Optic Systems will exhibit at InfoComm 2026, featuring...
12/06/2026
Ateme has announced that Eurovision Services is using Ateme's software-based frame-rate conversion technology for international live event workflows. The de...
12/06/2026
Bitmovin and Simplestream have announced a partnership with Xperi to simplify the launch of OTT streaming services on TiVo OS smart TVs and devices. The collabo...
12/06/2026
Net Insight has announced that a multinational technology company is deploying a...
12/06/2026
MLB Players Inc., the business arm of the MLB Players Association, has announced a partnership with Athletes First to develop and sell brand partnerships across...
12/06/2026
Guntermann and Drunck (G&D) and VuWall have announced the CommandKeyboard-Advanc...
12/06/2026
Comcast Smart Solutions announces a new smart technology deployment with Major L...
12/06/2026
Elevation Worship completed the initial leg of its Elevation Nights 2026 tour ...
12/06/2026
AJA Video Systems has announced KONA IP25 support for Colorfront Transkoder and ...
12/06/2026
Audinate Group Limited (ASX: AD8) will exhibit at InfoComm 2026 (Booth C7321, Ce...
12/06/2026
Pac-12 Commissioner Teresa Gould has announced the appointment of Scott Adametz as Chief Technology Officer. The Pac-12 describes the hire as the first CTO appo...
12/06/2026
Grass Valley has announced AMPP Edge Live, a production system combining Grass Valley hardware, NVIDIA Blackwell GPU acceleration, and AMPP OS in a single platf...
12/06/2026
At one time a trailblazer with the launch of the Longhorn Network, the Universit...
12/06/2026
Ratings Roundup is a rundown of recent rating news and is derived from press rel...
12/06/2026
Chyron has announced PAINT 10.4, an update to its illustrated replay and sports ...
12/06/2026
SVP, Production, Mark Gross: With the new schedule, with not having every Sunday night, it has given us an opportunity to take a step back and reimagine what o...
12/06/2026
For Televisa Technical Engineering Manager Roberto N nez Ibarra and the small team of 12 technicians and two production personnel at the IBC things are already ...
12/06/2026
Simple Steps to Better Acoustics - Taming The Small Room
Most of us mix in spare rooms and small spaces, where the acoustics fight us at every turn. At Gear...
12/06/2026
Latest addition expands vintage-inspired effects palette
Meris' Ottobit pedal range draws its inspiration from vintage gaming consoles, and the latest a...
12/06/2026
Soundbox-based chamber strings series expanded
Sonora Cinematic have just announced the launch of the second instalment in their Soundbox-based chamber stri...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
AJA Announces KONA IP25 Integration with Colorfront Software
Brie Clayton June 12, 2026
0 Comments
Collaboration enables uncompressed SMPTE ST 2110 I/O ...
12/06/2026
URSA Cine 12K LF Used to Create Visuals for STUTS' K-Arena Concert
Brie Clayton June 12, 2026
0 Comments
Organic visuals projected on a giant scre...
12/06/2026
MTI FILM Acquires Mango New Edit, Expanding its Global Post-Production Services ...
12/06/2026
AI Point Tracking Speeds Up Complex VFX Tracks in Mocha Pro
Jessie Electa Petrov June 12, 2026
0 Comments
The 2026.5 release adds automatic point trac...
12/06/2026
Bitmovin, a provider of video streaming solutions, has partnered with Simplestream, a provider of OTT and broadcast solutions, and technology provider Xperi, to...
12/06/2026
Leostream Corporation, creator of the world-leading Leostream Remote Desktop Access Platform, today announced Jigsaw24, a leading B2B IT solutions provider wit...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
12/06/2026
How Aussie indie games and screen are levelling up with IP 11 June 2026
Ari Harrison, Pro Jank Footy
Head of Games Joey Egger and Ari Harrison of Umbrella sha...
12/06/2026
AgentPerf from Artificial Analysis, the industry's first agentic AI benchmark, gives developers, enterprises and infrastructure providers a clear way to com...
Imagine if TV companies charged consumers by the minute to watch a football match. Or if your office rent increased when you had a particularly busy month at work. Sounds preposterous, doesn't it? Yet, this is exactly how many media management systems providers are currently pricing their services, and no-one is batting an eye, indeed, it is a model that is being extolled by many. But examination highlights that consumption-based models for management systems are only beneficial to smaller operators.
