• by Joe Marchese , June 8, 2010

I, as a human being, want to be told great stories and to witness great art. I want to be delighted and enlightened, entertained and informed. Major media companies have evolved around these ideas to bring people ever-greater-quality content. However, despite serving a very real demand in the market, those media companies producing the highest quality content are facing a major challenge. Shifts in how people consume music, entertainment and news are undermining traditional media business models that currently support the cost of making great content. The irony is that by embracing and taking advantage of the new media landscape that threatens their survival, media companies can not only survive, but actually thrive.

Great content has always been social. People want to discuss and share great content. Media companies that produce great content therefore have the most to gain by creating environments and tools that make content discovery, consumption and sharing a more social activity. Improving user experience will also mean making people's experience with content more personal. Through partnerships with leading social companies like Facebook, media companies can offer a more personalized experience based on people's publicly stated preferences. All of this will add up to a new definition of what a media company will look like in the future, but rest assured there will be media companies who figure it out. The new media company will be both centralized in production while widely distributed in consumption. The new media company will facilitate social and community interaction while offering a highly personalized music, entertainment and/or news experience.

Okay, you might say, but this begs the multibillion-dollar question: How will media companies support the cost to produce great content in the new media reality? The answer is that media companies need to build revenue models that take advantage of digital media's unique interactive qualities.

The old impression-based models are the enemies of big media companies in the new digital media environment, for three reasons. First, a banner loading on a near-valueless page loaded with "search bait" (content that simply attracts search engine traffic), is an ad impression the same as the one that loads next to your expensive-to-produce content. Make all the arguments you want about "premium" impressions, but the market is simply flooded with impressions.

This leads to the second problem: Big media companies can't make the argument that they are the only ones that can provide scale, at least not when it comes to impressions, when any ad network can offer billions of impressions.

Then there is my favorite reason: Banner advertising, as we know it today, simply doesn't work for marketers. Large numbers of impressions, where advertisements show up next to content, just doesn't offer the value marketers are looking for (as if people will just absorb marketing messages by osmosis). What media companies that produce quality content need is new advertising formats that actually demonstrate differentiated value to marketers. Luckily...

Digital media enables new advertising formats and revenue streams that ONLY media companies who control quality content can take advantage of. By offering consumers content that they value, media companies have the ability to ask for "something" in return. The key for media companies offering quality content should be to make sure that the "something" they are asking for, is something that takes full advantage of the medium and something that their "competitors" -- who can produce a lot of impressions -- can't ask of people.

The two things that quality content producers have the ability to ask for are payment and consumer attention for marketers.

For payments, it is important to create a credits system that fits with the way people consume media in a digital world. I don't read the entire New York Times online, so I don't want to pay for a subscription to the entire newspaper, but I do value the articles I read, and might be willing to pay for those.

Also, when asking for consumer attention, media companies need to be sure to create ad units that fully transfer people's attention, and actually take full advantage of the interactive and social nature of digital, which will mean that when they deliver consumer attention to marketers' messaging, there will be a lot more for marketers than just an impression.

Sound complicated? If big media companies want to take a look into a crystal ball at their future of monetization, they simply need to look to social game maker Zynga. Zynga creates entertaining and social gaming experiences that anyone can interact with. If you are really enjoying the experience, you can buy credits to increase your usage. If you don't want to buy credits, you can interact with advertising to earn credits (in effect, advertising is subsidizing people's entertainment -- sound familiar?). The model is nothing less than a truly revolutionary way to reestablish the age-old contract between content producers and consumers.

In the end, shift happens; it's what the media companies do next that matters.

This post in 140 characters or less: With media "Shift happens" says @joemarchese, but there is a lot big media co's can do to survive and thrive http://bit.ly/5PPZbV