The (industrial) (r)Evolution of Media

Tablet PC's, fences, and information ownership as seen through the generational divide

The PR buzz created around today's launch of a tablet PC device is astonishing and a testament to a marketing machine that is currently setting the standard. I've read no fewer than a dozen posts on it in the past few days and avoided three times as many on reputable sites.

It makes me think back to the larger trend thread in the media universe that began (for me) with Google's You Tube v. Viacom...a billion dollar lawsuit because Viacom is not capable of protecting their own content in this new age of technology. So much has happened since this suit began 3 1/2 years ago. It seems like it will die from old age and irrelevance before any real attempt is made to acknowledge that the issue is not framed correctly.

Of the content I did read about Apple's new tablet PC is how it may save old media by creating a new channel for content. Another new channel !?  It may be wrapped up prettier and more convenient than others but it will fail later (if not sooner) if it leverages itself on the incremental revenue from this new channel for content. Why?

Distribution Channels Continue to Multiply But Are They The Ultimate Answer?

The defining characteristic of the past decade in the media business has been expanding Choices of distribution channels for content. 

In today's NYT an article stating how Microsoft's Xbox will offer streaming content through its existing system and how it intends to compete with other providers, namely, cable.  Disney is mentioned as part of the discussion. (It's a quick read)

In the past I have saved articles like these for the trend thread as if they could be significant developing alternative channels of distribution (even if not immediately). In the coming months and years efforts like this have great potential to serve the Era of Choice since pay TV is increasingly shifting the burden of slowing ad sales to consumers....while still running long commercial stop sets anyway. I see no mention of this dynamic anywhere in the consumer realm.

The NYT wants and needs a pay model but ads continue as an important a part of their culture now as ever.

Cable companies want more and more money for the most basic TV but commercial breaks are as long as they've ever been on prime time shows.

The Era of Choice is being ignored whenever convenient to do so.  Is it possible that the lessons of the record labels are pertinent as to why this is dangerous? This position is less my opinion and more an observation that reflects the single minded determination to do business one way; the old way.

Silent customers do not mean happy customers. An Xbox distribution platform is a long shot outlier right now but, if and when present dynamics change in the market for content, it may move up to "definitely worth the effort". Indeed, if it serves Choice it is already is worth the effort.

Is it unrealistic that many content distributors hopes remain pinned on a national recovery in disposable income that won't come for years**...and that will then only spur the changes demanded by Choice deeper into our behaviors as consumers?  Xbox is demographically skewed and therefore remains a limited threat.  It is not a far stretch to imagine downloading a movie to your smart phone on the way home at a good promotional price just for that night and pointing it at your home system to watch. How far away can that be?

The Era of Choice is media's dominant trend in the US and other places too. Cable's business model is rigid and inflexible in an economy where the supply and demand (for content) has shifted forever. So it is easy to see how distribution channels will continue evolving and in the short to medium term (2-5 years) and will be a dominant theme.

What are the other facets of the era of Choice?  Choice is a broad idea that reflects our shared values and will expand beyond new distribution models. Ultimately, the new two way street in the media universe is telling us that solutions can no longer be two-dimensional. The real obstacle preventing media's new business model is its existing business structure and the relative inflexibility that public ownership presents. I suppose if we are perpetually stuck looking back over our shoulder, then you can just heap blame for this on the gang from Wall Street for transforming media companies into stock owned entities(back in the late 90's)....yet again....hey, they are used to it by now.

I submit that it is all part of a larger social correction where we examine our allocations of our available social capital (and other kinds of capital) in many directions at the same time.  US media companies have become risk averse at a time when experimentation is demanded. Beyond this fact is a key question: Just how much of our national economy is leveraged toward selling content for profit and how beneficial is this allocation to our future? Yes, that's a deep question. Maybe a better question is this: In an era when barriers to entry no longer exist as they did in the past, can we rightfully expect content to be valued the same when there is five or six times as much available? And if your answer finds you quibbling about quality issues, isn't it up to the consumer to distinguish what is reasonable? 

The Era of Choice will not be denied; any part of it. It will, however, reveal other changing shared values that will go beyond who, what, where, and when. Two or three years after the tipping point in "social media", the drum beat from the market keeps throwing ever more ways to get content of all kinds from every conceivable source.

The key question is; what's missing? Is it really all about price?...the latest cool gadget? Limiting Choice (or availability) is the antithesis of the Choice trend. It seems like a very good time to revisit the 4P's.

**  15.6 million unemployed in December &  26.5 million underemployed in December...with these kinds of numbers how long will even a slowly recovering economy take to put the fundamentals back in good shape? Link here (the link suggests at least five years, if it doesn't get worse before it gets better)

The (industrial) (r)Evolution of Media in 2010

It was June 2007 when I first noted the trend I use as the name of this blog. That post over at my other blog began a category of posts and those led to this blog in August of 2008 and by that time I decided it would be a good idea for a book, never having tried to write a book before. The past year has been something of an internal wrestling match for control of this idea. What matters more? A description of a likely set of destinations for the business of media or a thorough discussion of the whys behind that reasoning. And while it is easy to suggest both are necessary, the amount of work and reading that would require from both of us may not be the best way for me to launch this project in book format. 

Since beginning this discussion I have offered a breadcrumb trail of important behavioral threads that make up the big picture of this subject -- Where are we (collectively) taking our media tools as a nation?

In the spirit of the New Year here is a list of the posts I think matter most from this past year along with the promise that I am on track to launch the first part of this project as a book later this spring. The initial effort will focus specifically on the business model for media enterprises and how it must change in detail. Each of these posts will be represented in the book and sewn into the big picture appropriately. Up to this point I have left it all somewhat disjointed because of the wild west (frontier-like) feel to the world of content these days. What is proper attribution for ideas to one person is completely missing in another. We live in unique times and on the edge of a huge wave of social change (that has not happened yet). From this perspective, this wild west dynamic is an inconvenience to be managed. The human capacity to share is muted by the human capacity to take. Both live in abundance on the web and are an important part of the social energy that will get us to where we are going with media.   

Where are we taking media and how will that change the business of media?  Here are the posts worth reviewing from 2009 and a promise that the first edition of the (industrial) (r)Evolution of Media will discuss why and how the business model will change in the years directly ahead of us. The business of content is both a good and important business and it can be made profitable if we are willing to change like the blacksmiths ultimately became mechanics and engineers (among other specialties). 

(listed in reverse chronological order) 

The Cable Bubble through the lens of media's dominant trend

The Search Business Offers an Important Lesson For American Media Companies

What Single Social Trend Matters Most to Media Enterprises (& Marketers) Today?

Getting Media Companies to adopt Better Metrics requires honest discussion (part 3)

What the Viacom-Google-You Tube suits are telling us (entering year three)

What characterizes the qualities of "partnership" during a social correction?

What does it mean when business models of venerable industries break down?

Happy New Year!

Rupert Murdoch's Op-Ed in his WSJ today was opportunistic and not terribly surprising based on his recent comments. He seems to be making a realistic case for his own set of challenges which are shared by many in the industry worldwide.

I have only one question for people to think about: Why do people everywhere insist the advertising business model for content is dead? It's not. It is as good an idea today as it was decades ago. The only thing that has changed is how efficient a business must be in order to be profitable.

The hidden challenge in the media business is that the empires that exist today suffer from the same social illness as the rest of America. Leverage.

The ad based business model is not going anywhere and among the many examples of why, Google may be the best. In fact, if you look closely at Ad Words, you can see a lot of reasons why it works so well.  Likewise, if you look at Coca Cola's success over the decades, it was not harmed when the bottlers became a business by itself. The US drinks as much soda as it does because the bottling industry is as good at what they do as Coca Cola is at making their products.

This AM's merger agreement for Comcast to take control of NBC Universal can be looked at from a few directions based on the news surrounding it. The FT, a great newspaper, has a story titled "Comcast's NBCU move is no joke". It's worth a quick read.

If you look back at my last post here and consider that broad view, my takeaway from the merger and what I read in the FT is fairly straight forward.(What follows are my own observations and did not come from the FT article in any way, though it was good reporting)

#1. Comcast just bought a bunch of programming we used to get first and for free on broadcast.....no doubt there...so, potentially, there will be even less on regular TV now. Some of the syndicated programming on cable will be migrated more to NBC and the first run new shows will likely migrate to cable as they justify the expenditures by limiting the free Choices. I see this as a potentially Big strategic mistake in a world with a digital universe and fewer barriers to entry.(Am I wrong about this? Let me know)

#2 Forcing viewers in what this article calls new "non-linear" choices into the old model of cable and on-demand is a recipe for new competition, not market control...though I am sure a few legislators have been recruited to help them slow change down. The article suggested that owning more long form content would be good for on-demand inventory but that should already be working if the economics were in balance. 

#3 To my eyes, Comcast is buying near a current top in order to diversify into programming when they should be specializing in distribution methods that are more friendly to Choice.

#5 The industry's overconfidence in existing revenue streams will be a mistake in the 5 year time-frame as pay TV turns out to be more discretionary than anyone imagines right now. Add competitors like Hulu and you can see the long term decline already if you squint just a little. (Simply buying these new competitors will not change the demand for the new channel.) 

The titans of media are right when they say quality content can't be completely free but forcing the solutions into unrealistic tired choices so that government regulation (or even approval) can be obtained is cheap and insincere at best. Business titans and legislators who think media distribution must be regulated are not working for the citizens they serve.  Back during the first industrial revolution (in the US) every part of our economy saw distinct specialization as people went from being highly self sufficient to more dependent upon interrelated systems for their needs. The very same thing is happening to media right now and this demands smaller parts that do what they do better than ever, not bigger, monolithic, vertically organized caretakers over our content Choices.

The FTC is holding hearings this week and the FCC is also involving themselves in matters that are best handled by private enterprise. The Bailout mentality lives but it is also wearing thin. How long before cable TV is considered a tax? We are inches from health care being a tax. The big banks had to be saved though doing that produced exactly what? (there's a lot to fight about on this point)  These political sounding issues are really echoes of the same dramatic social change being brought to us in the form of the industrial revolution of media. Fixing media won't fix banking (of course) but I submit to you that the media construct in the US is more important in order to keep us connected and aware now that we have grown to be such a large and complex society. Encouraging overt vertical concentration in these businesses is as dangerous (in different ways) as having five investment banks that each pose a systemic risk by themselves. Large closed systems do not produce a diversity of ideas and that will only add to social polarization. It is time to end legislatively supported consolidation of our media resources. That is the only way we will see the true innovation needed to revive a core component (freedom) of a mature nation.    The disruptive qualities of distribution over the internet is positive for consumers and only negative for companies that cannot figure out a different way to do it. Supporting even more media consolidation while attacking the search business is like telling the voters, 'we know what is better for you than you do'. There's just too much of that these days. Think about it...A lot.

The Cable Bubble through the lens of media's dominant trend

Charlie Rose interviewed a USA cable exec last night (11 23/09) about her part over the years in taking the network to its current success. Here's a link to CR's main site. She attributed USA's current success to its two streams of revenue as well as good people and management. Right now, this structural difference in cable companies is overwhelming the business model for broadcast TV.

I remember thinking to myself "wow, do they see the bridge out ahead?", and I immediately recanted (to myself) because even if they do see the change coming they probably would not acknowledge it. The hard truth about long term trends is that very few who are wrapped up in their development are ever willing to acknowledge dramatic change is coming in advance (unless it is good) no matter how many solid (fundamental) reasons are in your face demanding attention.

The success of cable TV's business model was touted this week in both the NYT and on this respected nightly show as being a result of their two revenue streams. Cable TV is crowing about its success because of revenue from selling advertising and also from revenue from cable systems paying for the programming (and that money comes from your monthly payments).

That cable networks are counting this revenue from cable systems as a given is a likely sign of reliance on a trend that, remarkably, stands alone as unaffected by the larger changes in the media universe. If you can remember the late 70's you can remember the first cable boxes being offered into homes at very reasonable prices with free HBO. Collectively we bit and the hook for endlessly higher monthly payments was set firmly. Free TV was made to be a joke over the next couple of decades (as Choice was seemingly teased in our faces) and the utility-like nature of cable became established.  If you can remember that you also remember ATM's introduction into the mainstream with free use and no mentions of transaction fees for years.  Rather than have this sound like a bitch session about fees, it is the opposite. Both of these new technology oriented services offered great utility in our lives and we collectively adopted them and made them a part of our everyday lives.

So why am I now suggesting the opposite will soon develop for cable TV?

The Era of Choice is Media's Dominant Trend - even News Corp can't stop it

An article in the FT this AM indicates News Corp's Rupert Murdoch will sue the BBC. The story indicates he thinks it won't go so far as court,

“They know the law. They will adapt.”

Like all media companies that sell their content using a combination of advertising and consumer revenues he bemoans the difficult competition these days for revenue in a consumer market that has seen traditional distribution channels become secondary.  He acknowledges change in how audiences are aggregated but he also blames most profit oriented woes upon what he calls product theft.

When you think about it though, we've heard this tune before and if it sounds different this time it is only because Mr. Murdoch's voice and reputation stands out more than record label CEO's blaming file sharing kids for all their problems. Still, for many decades the record labels enjoyed a technological edge that forced people (young and old) to buy over and over again the same recorded material if they wanted clear sound. Now the shoe is on the other foot and the debt piled up in a decade+ of mergers is choking the entire media industry. At the same time technology enabled deflation is making many of these mergers feel pointless as profit forecasts go unmet. It's not the recession.

Technology has the power to change things and history shows us this clearly. Technology is not enough however. It takes social momentum using that technology and the difference between the two is not subtle. It takes crowds of people experimenting, trying, failing, and trying ten more times to come up with what we like to call 'best practices'. In an era when technology is enabling Choice we must expect change to be the norm. If this is the case then businesses serving people must be as adaptable.

If Mr. Murdoch relies upon the market to change because he cannot then he will become a dinosaur no matter how large or how much he paid for the Wall Street Journal last year.  

Asked how he reacted to the challenge of Google and others for newspapers such as his to remove their newspapers from search results, Mr Murdoch said that once they had in place the means to charge for news, “I think we will”.

The same FT article points out how he is thinking of removing his content from search results on Google's platform as if another company is the cause of his problems. (quote above)

Here's the crux of the issue, the meaning of what I call the era of Choice (we are in now), and the message of this blog: Think of Google as Henry Ford thought of his Model T. We are only just beginning the era of Choice and it was Google that figured out how to mass produce first even if Yahoo was first to market.  Up till now Google's main product is useful, works fairly well, and though it comes in mostly black, it is considering other colors (real time search versus query only). Eventually many competitors will emerge as innovation flourishes. It will...many times over.

It will because this is the era of Choice and what is driving the world of content right now is what the consumer wants. This is the first time this dynamic has ever existed in the marketplace for content. That may seem somehow wrong if you are in the business of selling content but up till now the market for content has been very one-sided in favor of 'if you build it they will come' because they have limited other choices. All of that changed and it is not Google's fault...nor will it change back, ever. As a matter of fact, either Mr. Murdoch's company will adapt or they will perish in the wave of new competition (new supply)that is descending upon media consumers now.   

The business model for media must change because of changes in how people use content....not because evil search engines are helping others to steal their products. From a generational perspective, the aging leaders of media companies are not likely to be who will solve these challenges. This is not a business issue nor is it a shot at older leaders. It is a social issue and it is about how we share is changing. It's not about the difference between songs, current events, movies, or books. It is about ideas and their usefulness in a social setting. 

The next generation of media entrepreneurs will allow for change in how content is used. They will not leverage their company on any one idea that is not derived from their customers. They will not leverage their company up buying assets in anticipation of government regulation that will hold us back now that the expansive digital universe is available. Think of the digital universe as a frontier we are just beginning to settle. Land is cheap. Content is currently the primary product moved across this resource.  Future media companies will base strategic decisions on a marketplace that provides real time metrics. Anything less is just not good enough because change is the new normal. Journalism will not die; don't be fooled by these alarmist claims. Journalism will change as it separates from the business of selling content. Eventually, more kinds of businesses will develop but for now the business of content is the business that must adapt.

You can't sue to stop the most dominant social trend of our time no matter how contrary it seems to your business model.  It should be celebrated and it can be if you reorder the pieces. The answer is not as exciting as a trip to Mars but it is what will get us there. It is not quite like a "warp speed" engine but so far the precursor to the answer has made distance on earth almost irrelevant. From a social standpoint, the era of endless fat media profits is over because it was socially inefficient. That is why the change is happening. Like it or not, crowds have both memory and a sense of purpose (even where individuals are indecisive) So, Mr. Murdoch, pulling your content from Google instead of trying to innovate how your content is monetized is only demonstrating frustration.  News corp is better positioned than most to benefit if only you look forward, not back.

The Guardian takes a swipe at Mr. Murdoch too

The Search Business Offers an Important Lesson For American Media Companies

This blog is about a very large & important trend involving a key part of the American infrastructure. As a nation we are presently doing to media what we did to establish the US as an industrial force more than a hundred years ago. Many naturally occurring circumstances surrounding the first industrial revolution helped the US to a quick competitive edge. This time, however, many of the key mitigating factors (think technology) are matched around the world so American's main advantage will be our very freedom, creative flexibility, and development speed attached to these defining alterations.

In the US during the 20th century broadcast media was a great business and the rules that confined and defined these markets allowed it to develop both deeply and broadly. Now, the digital era has changed so much in a very short time and the pace of this change is increasing.

My perspective (because of my age) is naturally divided between pre-digital media and AS (after Search arrived). To some extent, we are all products of our experiences. For instance if you learned how to use Yahoo and Google as an adult then these powerful tools are an adjunct to the universe of media in your head. If however, you are younger and have come of age in the past 13 years (when search entered the mainstream) then search is more than a thick phone book option for when you do not have a first choice; the process is more thoroughly integrated into a pattern of behavior. Different generations think about (organize) media differently and that is evident in how search is utilized. 

Yesterday's NYT offers a brief discussion of how the Search business is now splintering its efforts to distinguish real time search from query oriented search. When you think about it, this is the equivalent of a wizard bottling the magic power of TV or radio's immediacy into a universal potion for access to the collective consciousness without regard to geography. wow! If you are a user, it is a great development. If you are an established media company, your challenges just got more complex.

Building The Era of Choice (a smaller increment of media's most important trend- Net Neutrality)

Net Neutrality. It sounds technical if you've not taken the time to understand the issue. If you have, it is relatively simple.  So, what really matters?  Choice.

Apart and above all the doings of this smaller increment is the larger trend. The Era of Choice. This is an era when humans, guided by technology have reversed the dynamics associated with commercial channels of communication to such an extent that entire industries are seeing forced change across America (and worldwide societies)to adapt to people's new behaviors and expectations.

For analytical purposes I use the idea that societies function according to social mood and that this slow moving "root of all social trends" shapes our creative endeavors, especially business and industry.It is only one dynamic in the big picture but it is exceedingly important.

Just before launching this discussion as its own blog (more than a year ago) I looked closely at social media tools and offered my perspective on what they were telling us about where we are taking media in general. My conclusions were simple and straight forward.(look at the links in top right column of this blog) They are worth revisiting now. First, social media tools scream out for Choice and while this social trend can be seen from many angles, social media tools demonstrate most clearly that two way communication in channels for content is being directed by the social impulse toward Choice. Second, how each generation grew into adulthood with some or all of this technology in their lives shaped their experiences and attitudes and therefore, the generational divide offers a critical perspective on the psycho-graphics of media consumption, marketing endeavors, and the developing social protocol of the digital universe. In a nutshell how you engage Boomers and Millennials requires two differing standards but the long view on a number of core issues must be shaped by those immersed in technology and not those who saw it develop in their lifetime. Third, social media is a blazing indication of the specialization to come, and it has barely begun. As this dramatic process fans out throughout our creative endeavors in America, the tide of social mood will shape this process very broadly.

Each of these three social dynamics must be seen separately and together and only then can you appreciate where the social tool, guaranteed in the first amendment to the US Constitution, will be taken by a free and creative people. Media is a higher order social tool that we use to create other things everywhere. And despite how the editorials in respected papers are calling for ivory towers of journalism to be rebuilt, I submit that this tool will be managed properly by the People and for the People. In the years ahead the government bureaucracy will endeavor to build large awe inspiring structures that seek to better control outcomes. In the meantime, people will take the critical functions produced by media organizations and break them up into smaller pieces, specialize them, and produce an altogether new social infrastructure. (It is going to happen whether I say so or not.)  And if you are one of those already suspicious of the free market (aka the American people) I suggest you spend your angst elsewhere while the people get together to do the heavy lifting of building of a better media infrastructure, one that is primarily social, with the profits/payoff always out on the horizon of group endeavor, and not next quarter (as was promised by big media companies if only they were allowed to get bigger). (If you are sensing a theme in the previous era you're not alone or wrong.)   

So, net neutrality is about the market's access to information and it is critical that it reflect consumer Choice and not the channel provider's choice. This conflict of interest is telling us that further specialization in the market for  digital access providers is needed, and in time, it will happen. What really matters most is that we let the American people design the solutions and keep special interests relegated to the tools in the tool shed. If we do that, America has very bright prospects as we navigate this unusual period of social correction. If we do not do that then the market for content will struggle for freedom until we do, because it is what really matters right now. There is no better stimulus than a free people doing what needs to be done. Better media (on many levels) makes people better at what they do. That is exactly what we need most right now. Any new rules must protect the consumer's ability to get their Choice.

Net neutrality is essential. Click on keep reading and you'll see a letter a friend sent to his Congressional representative voting against it in Congress. No matter what your opinion is or how it was shaped, Speak up! Social corrections end when we create our way out of them; you do not spend your way out unless the money goes to things that are creatively productive. Limiting creativity for the sake of profitability is socially and politically foolish if you are looking beyond the next election cycle. 

What Single Social Trend Matters Most to Media Enterprises (& Marketers) Today?

In order to see where we (American society) are taking media (a tool with great social utility), we must first see three dynamics separately and then together. Doing this will allow insight on how and why the media business model, as we know it, must fracture and specialize along specific pathways. The first of these three dynamics is, by far, the most important: 

My primary email account gets a grand total of only five scheduled daily deliveries that I signed up for using that address intentionally. Maybe, there is another five that are weekly emails, too. There's also probably a handful of occasional retail entries but they are on a short leash. Otherwise it all goes to Gmail which acts as a clearing house.  That is how I choose to manage the email tool. 

The current recession has been devastating to many media companies that rely upon advertising revenue. The causality attached to this change, as I read about it most days, has to do with a cyclical decline that is viewed by many as unprecedented and includes new competition from web based competitors. Of course, there are plenty of far sighted pros who see the long term term changes continuing to unfold in that direction but to label it new competition from the internet is too simplistic. Consultants and gurus directing the world of media enterprises all preach very specific solutions that involve incorporating social tools as a means to a better end. The more sophisticated among them see clearly how social tools are no answer or end but, a means to the kind of overall cultural change that is needed.(more effective communication on multiple levels at the same time)

Back two+ years ago when this thread about media was developing and broken off from my other (broader) blog,I did so because of one basic and very broad insight. Choice. We are living in the Era of Choice where technology has enabled Choice on many more levels of our individual lives.   And since businesses are tools designed by people, for people, these perceived evolving needs necessarily lag the changes. The more you think about that last thought the more painfully obvious it seems and yet, we see some of the most "plugged in" companies struggling today with the very idea of Choice. The universe of media enterprises is where this revolution will unfold most notably. (It has yet to)