Like many of you, I've been spending a lot of time lately thinking about how media is transforming -- and trying to understand what this means for the future of the media industry. The Internet, the digitization of media and the explosion of electronic distribution channels are changing the economics of the media industry right before our eyes. At its simplest, media is changing from an industry driven by scarce distribution to one driven by scarce attention. Now that the consumer has so many choices, controlling distribution no longer means that you control audiences. The consumer (or viewer) is the present and future center of the media world.
This is why media companies are suffering from such extraordinary audience fragmentation, having to work so hard to capture audiences and even harder to keep up their ad rates. Certainly, the maintenance of ad rates is also under extraordinary pressure from the current financial crisis. But what I think is clear to most, is that if media companies don't solve their "audience problem" (or "business model" problem) by the time this crisis is over, their businesses will probably be over anyway. Thus, it is critical today for media companies not only to structure their businesses to survive the crisis over the next two or so years, but to structure them to be competitive in what will certainly be significantly altered media landscape that values audience attention, not media distribution. Here's some of what I think folks should expect from this new media reality:
Smaller mass media. Audience fragmentation will not only continue, but accelerate. It will be harder and more expensive to truly capture and keep audiences' attention.
Heavy, inflexible fixed cost structures mean death. Not only that -- but the inability to move nimbly and develop, test, measure and adjust new media products to audiences in a constant and dynamic way will also mean death.
Exposure-driven ad model dies. In a world where media distribution is scarce, so are audience exposures. In a world where media distribution is plentiful, audience exposures become plentiful as well and very, very cheap. This is why MySpace, Facebook and Twitter are killing the CPM-driven model of the current display ad model in the online world. It is only going to get worse. In a world where attention is scarce, value shifts away from the exposure and toward either unique sponsorship (athlete or sports team) or performance (Google AdSense). Anyone stuck in between will die.
Subscription relationships become even more precious. Where attention is scarce, those companies that already have access to both the attention and wallets of audiences have a perishable opportunity to hold or expand those relationships, but they will need to move quickly and aggressively. Whether these efforts look like Jeff Bewkes' "TV Everywhere" strategy or sports teams giving season ticket holders free hot dogs and preferred parking, it is incumbent on media companies to find ways to hold existing subscriber relationships, at all costs. The advantage that such relationships give companies over their competitors is enormous, particularly when times are tough. Just look at the ascendancy of cable programmers and their dual revenue streams, relative to broadcast networks and their ad-only models. Audience re-aggregation becomes critical. As audiences fragment, it become even more important for media owners to participate in scaled offerings to advertisers. Whether this means more consolidation and more ad networks across different media, scale becomes more essential and in the future it will likely only be achieved through "re-aggregation" plays that combine access to audiences from multiple properties for sale to advertisers and marketers. As you can tell, I think that our media future is going to be all about audience attention rather than media distribution. What do you think?
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I guess you can put me in the "undecided" column, because while opinions abound, I don't think a suitable business model has evolved yet.
I recently started a new blog to track the future of media as well as attempt to create my own solution. Check it out and let me know if I'm on the right track: http://makemyownmedia.blogspot.com/
Gerd's presentations suggest that our evolving social and sharing media systems should/will incorporate mechanisms to charge for premium content . . . so my question is, in that world of ubiquitous UGC, why would anyone work or invest that hard to create premium C in the first place?
Passion for Sale http://mediablog.com/media_renaissance/2009/04/passion-for-sale.html
You talk about consumers being more fragmented than ever and I look at it semantically differently. Media is fragmenting. Consumers on the other hand, have never been easier to unite.
Media plays one role in the ad economy: aggregating consumers. And that role has netted all of the ad dollars spent buying consumers' time and attention, and most of the consumer loyalty that advertisers were paying for. (are consumers more loyal to Lost or the advertisers' that make Lost possible?) It's 2009 and consumers can aggregate themselves, replacing media as the alpha dog of the ad economy.
I've been blogging about this at www.OurSeatAtTheTable.com. My view of the future has consumers being paid for the time, attention, consideration, loyalty, viral marketing, and personal information that has been bought and sold for decades without us. By redistributing the flow of ad dollars directly to consumers, the real winners will be advertisers who may get as much love from consumers as they currently get from ad reps.
And the same will be true of news and information - that is, more true than it is already with Cable and Satellite On Demand, RSS, and all the "my-anything and everything" sites.
So - why will we need advertising? And if we don't need advertising (or the agencies and campaigns) how will we pay for free, or quasi-free, anything (network TV, radio). How can this become anything other than life by subscription? And isn't this the opposite of Chris Anderson's vision?
I might have a modest advantage here - I come from the music industry where, complain as we will, we have already experienced this evaporating phenomenon. And though vestiges remain, the entire Industrial Age model is only refusing to attend its own funeral - (as if fortifying the fortress walls makes any difference when the castle is built on the isle of Atlantis).
100 years from now - if we haven't committed societal "S" by some other means (and considering that Madoff grew much of his biz while many average citizens were worried about getting their bath oil through airport security, it appears we are pretty adept at coming up with the options) - then I'm guessing there will still be new products and services. But I would not be surprised to find that the operating principles of introducing and promoting brands in those days were developed by Tobacco marketers today - the people who are not allowed to say anything about their product, show its package, communicate its logo, etc.
You're exact right, particularly about the 'altered media landscape that values audience attention' and as I mentioned to you previously our online voice consumer conferencing solution (TalkShoe) melded with social media sites is changing this landscape and essentially replacing forums and chat with real simultaneous, bi-directional communications. Engagement levels, which are a higher form than pure attention levels, have doubled since last year! Keep up the great articles!