It’s that John Lennon time of year again – when we cast our minds back over the last 12 months and reflect on our achievements. Personally, I find it hard to think back further than last weekend. But after an online refresher, the most obvious thing that strikes me about 2009 is the way the economics of content creation and distribution has been transformed by digital media.

By content, I don’t just mean television. I mean the whole spectrum from business information to video games. The question for everyone from Rupert Murdoch right down to me is this: What are consumers willing to pay for?

How do we get a return on investment if they aren’t willing to put their hands in their pockets?

Before addressing those, we should start out by showing a bit of consumer love. Sure there are a few spongers out there, but the fact is that most audiences in advanced markets are not pirates or freeloaders (even though we often like to berate them for skipping adverts or illegally downloading free content from the Internet).

For the most part, they have pay-TV, broadband and mobile subscriptions, on top of which they pay for premium content and services. They buy DVDs, licensed products and tickets to events, not to mention regularly upgrading hardware. If occasionally they take something for free, is that any worse than the outrageous booking fees ticketers charge for using credit cards? Or the overpriced popcorn we’re forced to buy at concession stands? Or bogus call TV competitions which rake in cash from viewers who stand no chance of winning?

My point is this: consumers are the good guys; if they are unwilling to pay for a piece of content then it is either: a) not a compelling enough offering, or b) not yet fully proven. And if that’s the case, it’s up to us to find alternative ways to monetize it.

So let’s explore what consumers were willing to pay for during 2009.

Pay-TV channels: There is plenty of data from the likes of Comcast and BSkyB to show that consumers were willing to keep subscribing to pay-TV despite the recession. However, there’s little evidence to suggest that standalone on-demand services can command a fee (with the exception of new movie releases). Instead, on-demand, like HD, looks like an added extra that channels and platforms provide as a benefit to consumers, with the cost absorbed into the overall package. For most consumers, it’s easier to swallow a small increase to the subscription than set up a separate payment plan.

Merchandising: There’s no question that the free-to-air terrestrial channel model is under severe financial pressure following the collapse of the spot advertising market. But even in the digital age it is still capable of creating breakout primetime hits (Idol, Got Talent, etc.). This in turn continues to drive revenues across a range of licensing categories, notably music and gifts.

Transactional: I never thought I’d talk up QVC, but the company’s success in both TV and online shopping is quite astonishing – US$1.09 billion in U.S. sales in Q3 2009. For me, QVC reinforces the pre-eminence of pay-TV platforms while also highlighting that the Internet is better at driving transactional than entertainment revenues.

Online’s transactional muscle is also a reason why ad revenue is moving out of TV. While TV still has a role to play in branding and rapid awareness-build, online’s 24/7 mix of targeted messages, search, easily accessible information and straightforward transactional capability makes it a very compelling channel for brands.

Freemium games: Horrible name, great model in which Internet users can play a few levels of a game for free before deciding whether to subscribe to a premium service. Examples include Disney’s Club Penguin, though there are many more. This has possible applicability to specialist sports, where fans can get some TV content for free but have to subscribe for the special stuff.

Virtual goods: Until recently, advertising was seen as the main form of revenue relating to social networks and community-based sites. But the fact that Facebook is reckoned to be making around US$75 million a year from the sale of virtual goods is a real eye-opener. Numerous community-based gaming sites are also benefiting.

Apps: Mobile hasn’t really proven itself to be a very interesting market for TV (except in Korea and Japan…). This is because it is fundamentally a communication device, hence the incredible resilience of text messaging. (An estimated 76% of 16 and 17-year-old teens in the U.S. text.) What does seem exciting is the emergence of Apps, since these really seem to fit the nature of the medium – i.e. pocket-sized bursts of fun that fill downtime or can be shared with friends. No wonder Juniper Research sees this sector as being worth US$25 billion by 2014, with the freemium model prevalent.

Content retail models: There’s little demand for non-exclusive or not-quite-good-enough TV content. I mean really, why bother? I can already zap through 400 channels to find something to watch. And that’s not including YouTube and a plethora of other sites which offer me non-pay options.

Murdoch will encounter this problem when he tries to make us pay for online newspaper content. I read his online papers, but I can’t think of anything in them I would pay for. This is one reason he hates U.K. pubcaster the BBC – because his attempt to charge will be derailed by such organizations.

But what about quality content?

The DVD boxed-set model suggests there is some propensity to pay for good shows, though this is now clearly at threat from the ability to store content on PVR hard drives. Perhaps the answer lies in a technological time-limit which stops shows being stored on boxes indefinitely. Ironically, this would require support from the likes of Murdoch’s News Corp., though whether he would self-limit his Sky+ box to help producers generate revenues is a moot point.

There’s also been a lot of talk of charging for popular clips (e.g. Susan Boyle singing on Britain’s Got Talent) or pre-transmission previews. But these don’t really look like robust models. The former is mainly a promotional tool to feed the main platform, while the problem with the latter seems to be twofold. Firstly, you’re paying for something unseen. Secondly, part of the appeal is the water-cooler effect, the sharing of the experience. That is destroyed if you fragment the audience with new pay tiers. ITV believes it can charge £1 to £2 per episode for these previews, but that looks extremely ambitious.

Of course, the fact that consumers won’t pay for large swathes of content doesn’t mean it is worthless. It can be used to attract ads or act as a shop window for ancillary or transactional services. Content as the gateway rather than the destination is the critical characteristic of the new world. Returning to the freemium concept, content creators need to see the free phase as a new kind of test phase, a way of gaining traction that bypasses the traditional gatekeepers and wins an audience directly.

So where do these financial dynamics lead us? Well here are a few possibilities to be thinking about:

TV, broadband and telephony subscriptions will collapse into one bill, with consumers sourcing services from one supplier… a virtual entertainment supermarket – i.e. the Rogers approach.

TV producers will increasingly turn to games and community sites for inspiration. A key goal will be to bolt freemium, virtual goods and social networking models onto the back of hit entertainment properties.

The number of free-to-air networks capable of originating drama will reduce dramatically, with the bulk of investment from pay-TV. Staggered international distribution windows will be replaced by simultaneous transmission to head off the threat of content piracy.

Free channels will focus ever more investment on primetime entertainment franchises. They will also start demanding a great share of back-end revenue for the hits they have helped create. Branded content and product placement will prop up non-primetime free TV. Retail and branded products will play an increasingly prominent role as part of the entertainment mix.

There will be even greater focus on cross-platform brand exploitation, with a commensurate decrease in demand for new content. At some point, there has to be a collapse in the number of professional content creators and linear channel operators that the market can bear. The slack will be taken up by the kind of unpaid hobbyists who have made blogging and crowdsourcing such pivotal parts of the modern media landscape.