The (industrial) (r)Evolution of Media

A deeper view of iroM

The latest post on my main blog, The Root Trend defines how I came up with the idea I call the (industrial) (r)Evolution of Media over several years.  In the past two years since pointing the domain here, the search listings for this historic period reference have expanded a lot. Various people write about the same named topic from many different perspectives. I've taken the time to detail the specific analytical method that was the genesis of the idea over at my main trending blog. iroM, as I call it, is not about sound bites, yet but, it offers a big reservoir of insight to the social change affecting media businesses. I believe it is more than a great idea. It is a detailed plan for modernizing the advertising based business model for content companies based on social trends we can see unfolding right now. And while I have not detailed these models as yet, they are on the way. Timing is everything.  In the meantime:

If you are one of the few who needs to dig into the analytical method I used to develop this forecast, click through. I always look forward to talking about it in the context of social mood with anyone interested. If you do click through and read and find you are interested, I encourage you to subscribe to the journal, The Socionomist. See the link in the right column of The Root Trend.  I believe that a basic understanding of this social trending model will be a big help to many businesses in the coming years of social change.  Dave 

Measuring Choice Means Defining What Value is Today

New link added 7 31 10  The WSJ published a blurb-like article discussing how top web sites in the US feed your history to tracking businesses that are known to steal your browsing behavior using invasive software without your permission. My opinion of this issue may seem apparent but the social mood surrounding this practice will reject it strongly in time...and maybe less time than many imagine.

Few readers have taken to my description of an era of Choice. Could a description so simple be helpful in any way? I think so. I also think that just by recognizing how important the dynamic (market) force that Choice represents, we can then see one step further toward what really matters in the business of selling content these days. (It is really worth just thinking about when the fish are not biting.)

In the age of broadcast (one way media) the notions of reach and frequency worked just fine. They were assembled using different statistical formulas depending upon the particular media. Everyone was using the same measurements but then it all began to change.

In an age of interactivity and endless digital channels of distribution the two dimensional metrics that we know as reach and frequency have become much less meaningful. Even more less meaningful: rating points.

In my last post I commented how the quotes and sound bites coming from Sun Valley Idaho felt disappointing in how few leaders seemed to express any insight to the core problem in the business of media these days.

In a three dimensional world of interactivity, the old media companies think sprucing up their product with cool interactive graphs will grab the content consumers attention. They also expressed the need to be paid well enough for those products. That is a key concern of course but it does not suggest any insight about the big challenges of media companies today. I thought that was what the conference was all about. Oh, that's right, sharing those ideas on the internet means they'll just be taken. 

Media is a primary social tool that benefits every American and every company...even those in the business. Adjusting to a new era of Choice does not have to be the end of an industry but it will require courage and conviction on the part of leaders. The reward for this will be considerable but not easily achieved.

The advertising business model has been turned inside out in the age of interactivity. Fractionalization of demand will forever change the market forces that impact the business model for any advertising based enterprise. The metrics must compensate for these changes and allow value to be captured even as demand is fractionalized. Perceptions of "what is Value?" to both consumers and sponsors has changed a lot. It is time to update measurement and that is the job of media enterprises. Do you really want to wait around for a splintered advertising industry (or search companies) to do it for you and dictate terms?! 

I am reiterating the point I made in the last post because I may not have been clear enough. The flow of this blog is cumulative and if you drop in and read only one post it is like picking up War and Peace half way through the book. 

I do not think the quality of the average media product is a problem today. I find excellent content everyday. I believe the packaging is not representing the products well enough. By "packaging" I mean the measurement that gives us ratings or reflects the consumer's perceived value. Cookies that increasingly steal more detailed information are not a suitable answer.Innovation is desperately needed in the realm of ratings and interactivity without sacrificing the relationship with the consumer.

In the past two years I have watched the radio industry fight internally about a new electronic ratings platform as Nielsen brought another old recall method back to the market.  The single most important aspect of monetizing content use is knowing how and how much it is being used. Recall is just not effective in the era of Choice and will not stand up to competition from electronic measurement for helping sponsors predict where their investments in advertising are best placed. This will be reflected soon in a renewed spirit of risk aversion. Count on it.

I believe census quality data is both essential and possible but many concessions along that path will be needed to get to the destination.

There is no way to truly know how valuable any one chunk of content is without knowing how and how much it was used after production and digital shipping. The content manufacturer and sponsors must know more detail. Old fashioned reach and frequency is just not meaningful anymore.

The realization of Choice as an ideal is possible with census quality metrics. Just because that is the big goal does not mean that there are not stopovers on the way. This is the job of the media business. Thinking it is not is just putting critical decision making into the hands of those who would be competitors.  More should be expected from industry leadership. 

Why, When, and How will the business model for media companies be forced to change? (in the US)

If you make an effort to understand particular macro social changes in a market (let's say, the market for content used by all Americans) you can begin to see how a business must change in order to continue meeting the changing needs of their market.  You may not be able to pin the month on a calendar but, if you begin in the right place you can point in the right direction. Without the extensive detail let's look at the outline of these very important coming changes:

Q: What really matters?:

A: How are shared values changing amongst people in a market? Traditionally, this kind of information gathering was considered to be a function of the marketing department.(right?)

This blog is a spin-off discussion from my main site, The Root Trend, where I discuss how using a specific understanding of social changes shows us how & where businesses might adapt to broad changes in their markets by understanding a set of ideas called socionomics. It is the science of "social mood" that explains the path of social change and it has a lot to say about the business of selling content right now, if we listen closely.  

Media, in all its forms, is a core social business service that is actually mentioned in our founding agreement as a society. (This fact is very important just as founding fathers like Thomas Jefferson went out of their way emphasizing the importance of an independent press.) Media's role as a higher order tool of social communication is central to free expressions and our creative capacity as a nation. Yes, even the supermarket tabloids participate in this "expression".  As our nation's parts (and the whole) have been changing in the past two decades, our needs from media tools (the businesses offering us content and platforms to share) have changed and will continue to change dramatically because our shared values will change more. If you only consider the technology as the cause for the changes you are not seeing deep enough into the challenges posed to the business of media today.

In order to grasp the bigger ideas central to social mood is not hard but, it will feel new and take some time. Why is it worth it?

The buzz all around the US today is how big changes are happening to the business of media since the internet has changed all the traditional ways of competing for ad dollars.  Just about every part of what I read discusses the symptoms and not the causes. If you mine down into the actual causes you can see very broad answers that are directional and no one seems to be looking that way. These directional answers do not offer easy fixes. Fundamental change to the business of media is needed now as "We, The People" have changed a lot and will change even more in this next decade. Using social mood as a guide goes a long way to opening an important conversation about how to serve tomorrow's content consumer.

The Era of Choice is upheld in Court as Content Companies Face New Market Reality

Three years ago I began to see the Viacom suit against Google's You Tube division as a bellwether case.  It was this very subject that spawned the larger ideas for this blog based on using the idea of changing social mood as a directional indicator in the markets for content in the US. Since then I have developed a series of flow charts that lead to a new business plan based on where this process is taking us collectively. Radical change is ahead in one of our primary social tools as a nation and this is good! 

I've written about this suit every year since inception and reflected on the big social issues that are changing and not talked about while mundane narrow points of law were fought over. I have enjoyed using old western frontier metaphors when considering the issues.   The social backdrop to this case is driving change and will build further momentum in these (new) directions very soon.

Out on brave new digital frontier the suit suggested that the ranchers (content companies) insisted that the cattle markets have sellers come take full responsibility for picking up their product(cows), taking it to market, and making sure no one steals it on the way there....and if that actually happened all good western movies would have played very differently. 

Building fences was the eventual development for all landowners that wanted to protect their land claims from intrusion and theft. In order to own something you had to take reasonable precaution to protect it.

What the case never discusses is the broader perspective: Content companies in the US have had protected markets for many decades and only know how to function in a very limited competitive environment. This case is only one small dynamic of the implications of greater competition in the markets for content. There will be many others. 

See the recent post five key developments impacting the business of media and the social trends behind them 

That post is a very brief over view but will be a springboard for much future discussion here.

For now, Viacom will contest the ruling and another year of waiting is in the works.

Search gave us Choice. Choice is driving the era of change in media companies and it has barely begun as yet. Open competition will force much greater specialization along functional lines and the media universe as we know it will change just like the frontier disappeared. Back then, many pioneers were not to happy about settlers demands and some adjusted well to the development of the frontier into self-directed towns.In this analogy we have to recognize that since distance is not an issue, we are not waiting for railroads to come. That is important to see if you want to work this analogy.  I suspect Google will adjust but that content companies will have even more difficult adjustments to make to serve Choice effectively.   

Viacom Loses $1 billion copyright case to You Tube   FT 6 23 10 

Follow this thread of trend ideas from the beginning: Category: Google You Tube V. Viacom

The People (the market) sends a message to content companies

If we assume that an era of Choice began with the introduction of search, then what does 15 years of search tell us about broad social (trending) attitudes towards data ownership?

If pioneers on a specific frontier were allowed what seems like an unlimited license to gather and collect a specific critical resource, and suddenly, the needs of new (organized) generations of settlers demand change, what message does that convey about the needed structural changes to the market?

If trends are better measured based upon movement instead of any relationship to time elapsed, what do the trends surrounding search and social media tools offer as insight? 

If demographics offer the picture of cross currents in these results, what new measurement techniques does it suggest? Does it suggest to us anything about macro changes in market (for content) psychology?

Are there other market based businesses that are really obvious and can offer a model for change that is both practical, attainable, and reasonable? 

Does the emergence of open source content platforms suggest that even popular pioneers are subject to market discipline based on the consumer's preferred time line? (I am thinking about Apple as I write this but there are other examples)  In the absence of competing platforms, pioneers hold that advantage until incremental innovation evolves and Choice is allowed. In the case of needs seen as "basic utilities", won't markets react to these perceived basic needs faster? Are these questions particularly timely for Facebook? Is there an example here for Nielsen and all for-profit content companies? Who gets to decide these issues....if this is indeed the Era of Choice? 

Sometimes change comes slowly because participation in trends is slow to accumulate. Sometimes incremental technology innovations are needed and that takes discovery time. Sometimes both happen close together. 

Over time, how we (collectively) value ideas and things of all kinds changes. It changes not only because outside circumstances change but because our collective perceptions of value changes and that gets expressed through the various groups to which we belong. Businesses lag these changes, sometimes a lot, sometimes only a little. The (industrial) (r)Evolution of Media will be a series of fast moving changes designed for markets of content consumers. The boundaries between generations will be flash points for this change but extrapolating past values and behavior based on demographics may well be less useful than ever. If social media tools are teaching us anything it is that specialization is the driving point of these cool new tools. This tends to happen in smaller groups, not larger ones. In the digital environment it will be increasingly hard to maintain any monopoly or an oligopoly for long because the only barriers to entry left are regulation and since media (generally) is built into our founding agreement as a People, we should not allow the government Of The People to regulate a core freedom in a way that favors narrow specific interests. 

If open source is indeed the power of the market talking back to enterprises demanding transparency and competition, then what other critical market based businesses might be mirrored in order to serve the changing demands of content consumers? It's worth talking about. The message the market is sending; the message we are collectively sending is that the era of government controlled media oligopolies is closing out now and that Choice is the overriding impulse in all aspects of the content experience. Over time this will be seen as America's growth business.           

Four kinds of critical market metrics can be seen changing in the market for content in one short video. I doubt this is a fad or limited to some dead end niche. This small, young group deserves a lot of credit for listening. Is Facebook an unexpected echo of the dot com era?  Only time will tell...but then directional movement combined with increasing participation is the definition of a trend. Let's take the time to watch.

Choice as seen through The Diaspora Project

The Difference Between Pioneers and Settlers

Americans need their media businesses to begin to make needed adjustments to their business model in order to better serve the changed markets for content. In order to expedite these changes it helps to recognize the difference, historically, between pioneers and settlers.

I am a big fan of old westerns. One reason why is because many capture the real mood and circumstances of the time the film portrays. There were economic and social highs and lows over the many decades as we moved west as a society. One of the most captivating periods of social transformation is the transition from scattered pioneers to competitive communities (markets) of settlers.  Once a frontier has been established this often involves a complicated social adjustment. (For instance: Thinking we should rely on government to manage the process is a reflex reaction but a very bad idea. Why? People should define their specific needs for government and it should not be the other way around. History shows that may invite greed and corruption when so many unknowns still exist.)

Pioneering anything requires a unique perspective and insight.  It requires skill sets most people (or companies) do not cultivate. In reviewing recent and distant history it is easy to see how the process naturally allows for inefficiencies. The inefficiencies are easily recognized later by the settlers because competition did not exist earlier. Different challenges that no longer exist are ignored as the old ways are often criticized. Yes, pioneers in our old west often wasted resources and often made no attempt to manage or conserve them but that perspective is now passed on by those who came after the pioneers.

Adding social structure to a newly settled frontier is a messy process. The vision of the few gives way to the Choices of the many. Traditions surrounding compromise and right-of-way must be established. Social contracts not previously considered often require revision in light of the needs of the new local markets. To do this, updated social norms must be accounted for and allowed room to change more with the place and the times...and then change again if needed. This is not the job of government and oligopolies will not do this well.  Successful social structures endure because they are sensitive and flexible to changing shared values of the many...not the few visionaries.  As populations grow the values of pioneers are inevitably in conflict with the newer settlers because expectations are expanded.  (Many great movie settings were born this way.)

What changed  since the late 1990's is very obvious: Technology. This change has enabled consumers of content (all kinds) to change their expectations and to have Choice for the first time. Choice is as important to the business of media as the railroad or modern guns were to settling the west and changed our nation forever. Choice has already transformed  us as a nation and how we communicate. (witness: social media) Much more change through Choice is coming.

Pioneers are both essential and reliable elements of a successful free society as they confront new frontiers. So too are settlers.  The analogy I am painting needs to be discussed (LOUDLY) in the new media these days. Government and regulatory bodies need to be removed from the business of content for The People when it comes to developing new business models for production and delivery systems. The notion that journalism might somehow go away is preposterous. Many of the same interests that have been firing journalists are the same ones hiring lobbyist to voice fearful concerns asking for unreasonable protection. I ask you to think hard about these issues because media is primary social tool. It is built into our founding agreement as a people. Media tools are among the most important components of a free society.  Government does not belong in the middle of these big decisions regulating one of our core freedoms. New business models will not be smartly figured out by government agencies...government tends to protect yesterday's shared values because it reflects consensus associated with lagging interests. Protecting old interests would be terribly unproductive for our society right now. Mature businesses commonly lose relevance when significant new technology comes along. New business models are put to use in order to more efficiently use new technology to serve changing markets. This is natural selection at work in the economy. The businesses that were most powerful in content production and distribution in the 20th century will probably not be the companies leading us in the 21st century unless government is allowed to hold us back using fear because of powerful lobbyists. So, how do we look forward and not backward?

We need crowds of competitively-minded settlers right now; lots of them. Settlers think big and are willing to risk it all to suffer humble beginnings and are capable of moving mountains slowly. The best days of some digital pioneers are already coming to an end...a time when their specific interests are in conflict with the needs of the new settlers. Many 20th century media pioneers feel like they should somehow be grandfathered into this new era. The old business model needs to be updated. Significantly Changed. Pulled Apart. Specialized. The parts will not go away but the fact that some parts will be re-allocated does not ordain ownership of these parts to the old enterprises as if it is royal title being passed down. There are no meaningful pedigrees in business that a market does not support by way of profits.  The businesses of building cars and banking has taught us this lesson many times recently. Failure must have stigma attached or winning means nothing. We are all going to have to earn it in the years ahead. Failing companies cannot be bailed out or we risk creating disincentives through bailouts.

If Congress and federal agencies get out of the way, the free markets will combine myriad new possibilities to produce more efficient content companies. This result will make us all better off than we are today.  We will have journalism, many new jobs, and better forms of communication benefiting our free society.  Right now, it does not matter if you produce journalism or entertainment. The tools we use to get our content products to market have changed and need to be changed much more in order to serve quickly changing communities of content consumers. Most pioneers move away as settlers arrive. A few of them are able to change (evolve) their perspectives and help to build the new communities that rise up around them even though they are no longer part of a powerful regional or local oligopoly.  They adjust and change with the new shared values around them. When you think about this, one thing is very clear: It's time to change. Are you ready? 

The end of this post is where I might begin a meaningful comparison of Google and Apple as both pioneer and settler. I'll save that for another post. Which do you think is more likely to adjust to settler lifestyle? The answer might surprise you.

Wired Magazine highlights how the settler mindset acts

Five key developments impacting the business of media and the social trends behind each

 

1. The era of Choice must be served by all media (related) enterprises

               (big picture, yes but, this trend is specific to media). 

2. Social media tools are not a fad but do not extrapolate current trends to the moon; instead consider other vectors

3. The post-Boomer generational divide will be the catalyst for dramatic (American) social change, and will be especially evident in the media business (well beyond demographics)

4. The manner of profitability of media enterprises along with the channels used is evolving to reflect the changing utility of content in our lives.

5. Competitive bottlenecks, vertical stacking, and exclusive platforms will be viewed increasingly as anti-customer, anti-progress, and just plain greedy.

click through for some discussion...

The Perishability of Content: Re-Evaluating the social contract, slowly

update 5 09 10:

Since publishing this post the argument has been shown to me to already have much wider social application than I anticipated and is already developed in the realm of software patents and business process patents. One of the core qualities of significant social trends are how some core value is reflected upon in a variety of manifestations across a society. In this case it is about shared attitudes toward ownership of ideas as it related to IP, patents, and copyrights. Interestingly, these seemingly separate events are all part of one evolving social trend that can be monitored as such. Established interests in the business realm use an ever more complicated legal process to obfuscate the core public need: ever increasing utilization of good ideas to produce incremental innovation. The problem is how ideas have become protected like patents on machines and drugs once were. The age of digital innovation is ground zero for all these concerns and is subject the the era of Choice. The greater social good in the era of Choice is about being more connected using high quality ideas and whether or not ideas can be owned the same way a unique manufacture process has been protected by patents. So the perishability of content is about the ownership of ideas in the same way that we eventually decided that ranch owners ultimately were forced to erect fences to protect grazing for their cattle.  This is not esoteric if you produce daily news content in any modality, if you write software, and these day if you use math to produce a business process. The following video link is 28 minutes and shines a bright light on how individual interests are using our legal system to protect ideas that cost prevent from becoming more efficient in order to capture value for a single enterprise. From a very broad social standpoint, businesses are tools created by people to deliver value to markets of people. That is their role and responsibility. Over time the social fundamentals have evolved so that our laws are working harder for business interests that for the markets they serve. That is the current state of this trending process.

If space allowed (it does not) I could offer an esoteric discussion of how different portions of large social trends are seen to have phases that can be identified and how this phase of this particular trend is clearly nearing social exhaustion and typically this produces circumstances where the fundamental issues are out of balance with the greater public good. This is exactly why I am writing about this topic here. Viacom v. Google (You Tube) is a side show to this larger social trending process.

Even if you have no interest in the legal process surrounding tech issues, this video will offer insight to how this late stage trending is choking value off from the larger social need that the era of Choice is endeavoring to revive. Large and important social trends have at their core very simple social values that can be seen to swing from one polar extreme to the other.  This will take a while (as in several years more at least) but the value in identifying this now is precisely because social values sometimes change much more quickly than at other times. We are approaching one of those periods now. Expect change because it is needed and the social motivation to produce that change is based on need and noting less (like politics etc). This trending issue is a reflection of one important aspect of social need that surrounds the industrial revolution of media. 

video link: Patent Absurdity

Original publish date: 4 08 10

Viacom's lawsuit of Google's You Tube over copyright protection issues is a major social issue but so far most people see it only as one business fighting another business in court, so they dismiss it.

That's really too bad.

The implications of any decisive action will affect all Americans, and especially the youngest & brightest from focusing on what really matters most...incremental innovation. 

Even though the long term outlook is more predictable (generationally), the shorter iterations will change how content companies do business and how Americans, ultimately, make progress in these challenging times.  How we value things (our shared values related to information) is changing and more than ever the spotlight is being cast upon the behavior of newly competitive enterprises and the generational divide. This case matters to everyone because we are redrawing the official boundaries of acceptable behavior (as reflected by actual changing behavior). It is not everyday we re-write (or redefine) a social contract. It is worth a little reflection that goes beyond the demands of the quarterly earnings of over-leveraged companies.

If this introduction sounds like editorial, I encourage you to read through to the end.

Which one of the 4 P's matters most to digital media enterprises right now?

Maybe the best place to begin is to survey is the world of "old media" enterprises. Q:Why old media enterprises and not the newer, sleeker, more updated social platforms that connect us to everyone, their choices and, everyplace?

A: Because old media has a sustainable, transparent business model that evolved from consistent market feedback over time. And while it is understood to be in decline, it is still working, and this combination is much more robust than anyone seems willing to acknowledge right now. 

Current trends in the broad content universe are truly dizzying when you include user generated content platforms. There is just so much any one mortal can digest and interpret and the key seems to be a willingness to adjust volume levels up and down (on our own) of any new input. If we do not do this pro-actively, the software driven world of social networking (media) might have us believe that the Facebook empire is our collective future.  It's not.

There is no doubt that we collectively value the features and benefits of our social networking and it has forever changed us (in a very positive way) using these new digital networking tools. However, extrapolating from here to three years down the road is more likely to yield a better result by looking at strengths still in place in the world of old media enterprises and how to combine the improvements offered by "social everything".

Over many decades, the business model for old media companies in the US leaned on one critical factor. There was a substantial barrier to entry that was reliable. In that period the main form of competition was product and promotion based. <but there were ongoing competitive forces shaping and reshaping> Since most franchises are geographically focused, competition was limited but so was the target area. On average, this reduced the challenges to a manageable set of problems facing companies that evolved towards a simplified structure emphasizing what matters most to consumers. 

During the broadcast era, Choice was limited by the nature of the technology. A competitive dynamic evolved in our markets into a dualistic structure where two customers ultimately emerged: The consumer of content and the sponsor. The link between these two constituencies was measurement, otherwise known as ratings. These days, the new reality of digital engagement metrics has turned this realm of business into a gold rush mentality (using secretive and complicated algorithms) not unlike the speculative financing witnessed just a few years ago in the housing boom. It is not understood nor is it explained much more than superficially to end users. And while we know how the era of modern finance has hit a dramatic speed bump owing to complexity, this period of expanding engagement metrics feels distorted and likely misunderstood.

Better metrics of engagement are a driving force in the content universe and seem to offer great promise.  This observation is too simple, however, and needs to be seen from a few perspectives. The era of Choice effectively begun around the year 1995-6 as we first bought shares in the future of Search businesses. Yahoo and Google were the first generation. It might seem now as if social networking sites are taking us to the next era in our transformation by using greater amounts of our personal data to design better engagement experiences. Is lack of disclosure a hidden liability waiting to become a big problem?

One has to wonder the following; old media companies have struggled mightily to improve measurement techniques and consumers of content, when approached and asked have always demonstrated a degree of reluctance to comply.  One might assume that a big chunk of this reluctance has to do with convenience, their schedule, and the ease of compliance.  Just as likely though is a consumer's unwillingness to share sensitive information about themselves.  What is fascinating is how the digital universe has become exceedingly effective at compiling our personal data to hold, extrapolate, and forever use at their discretion. This new reality comes complete with endless disclosures in legalese much like the warnings offered to buyers of financial securities warning of potential loss.(hey, but Everyone is doing it, right?)

In a litigious society like ours, we now know that such warnings will not stop blocking actions later if the outcome warned about exceeds our concerns.  That is the American way and also why I am not in danger of not having a new book of lawyer jokes to send my brother every Christmas. 

In a world where feedback from engagement with content is now possible we all clearly see how it can help marketers of content be better. Human proclivities being what hey are, however, suggests that the present euphoria surrounding social networking will be tempered at some point with legal action that demands better disclosure, just like the mortgages that were signed and later contested in a chorus of outrage and discontent.  To not see this coming is to miss the obvious. The question then becomes what really matters to enterprises that monetize content (of any kind)? ...and this takes us back to the 4P's.

In the universe of old media companies, the value of the product is inextricably entwined with engagement metrics. Eventually, forces of specialization will force the interests of consumers of content and sponsors into differentiated businesses. Until then, the glue that makes enterprises profitable is firmly based on aggregated metrics that are better approximations of who is engaged with what(?). Until this time, the P that represents Product will be enmeshed with the metrics accumulated by all enterprises.

The reason this observation is valuable, and not just obvious, is because social trends that affect  how consumers of content see their place in this process is very much like the transient trends that allowed us all to become blind to the risks associated with adjustable rate/option to pay mortgages several years ago. History has shown us over and over how warning labels are rarely sufficient disclosure for events that have not already been personally experienced by the person(s) being warned, especially if death is not warned.

In the meantime, the plodding and old fashioned TV stations and radio stations have an advantage recognized by few these days. In them are all the spare parts needed for two or three enterprises of the future that will rise up to fulfill all that the era of Choice promises. Social media platforms seem to be focusing on the product "P" (in their own way) but in the process they are ignoring changing socially shared values as if nothing but scale matters.  It may not matter next week or next month but, when it does matter, it will be a game changer just like many new landlords now wish otherwise.  When this happens, a profitable footing that is clearly understood by both parties to the transaction, will be a critical advantage and the next phase of media revolution will take another vector.

Once more: Is lack of disclosure between host and customer a hidden liability waiting to become a big problem?

Is transparency a critical dynamic in the formulation of customer experience? If shared values were always to stay the same as they are right now then maybe not. It is precisely because how we value things changes with social mood (things and ideas of all kinds), that this observation is worth much more than a few hundred words of our time.

Dave

Further reading: Two older posts that are relevant:

Revolution of Evolution of our Media Tools? (looks at the much longer time horizon)

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

An immediate opportunity for Net Neutrality

Net Neutrality looks like it took a body blow this AM with the announcement that a court of appeals rules in favor of Comcast and their right to regulate flow of traffic in their own network. Previously the FCC stepped in to say that should not be allowed and that traffic flow in the network should be allowed to flow freely. The court of appeals basically said that the FCC lacked authority.

This moment offers us a crystal clear perspective on how the free market needs to be allowed to step up and provide Choice to consumers of broadband connections. And rather than the FCC fighting for new power, they should simply release bandwidth in the signal spectrum to new distributors of broadband connections. If they do that, this problem together with the free market will likely fix itself and bring incremental innovation along with it. The first reaction will be to create laws and spend time and money in Congress "studying the problem". Let the market handle the issue by freeing up our scarce resource of spectrum needed to make competition possible. Otherwise, we will wait many years for real Choice. The development of the era of Choice depends on this outcome. If Comcast can do what they want to do, well then, they should have competition to correct their perspective back toward what really matters to their market.

The above link is the Washington Post initial blurb. This link is for a more complete Bloomberg discussion this evening.

The Great Media Pay Wall, and the incremental answer not being offered; yet

update 4 03 10 : This post is turning into a thread of links on the issue of fractionalization of demand and the market's current refusal to accommodate it. Links added at end. Dave

Paying media companies to produce high quality content is an idea that feels reasonable to everyone.  As we collectively move through this period of changing technology and shared values toward them we will also have to decide the many nuances surrounding this issue. It is not all so straight forward.  On the surface, however, a larger issue is being tested right now. Kind of.

Just about anyone weighing in on the issue of effectively monetizing content knows that the market for content has changed and that is why we find ourselves and our media companies where we are today. The psychology has changed along with the structure of the market,altering the fundamentals and the larger business trends.  Yet even though dramatic change in the market for content is acknowledged, it is not being acted upon in a manner that seems to really address the changes. Like an endless one-sided conversation in the headlines where management and unions negotiate during a strike, fairness and balanced perspectives are skipped in favor of grabbing an opportunity to make a soundbite that will be repeated endlessly.

Let's try for some balanced market perspective here:

In his own "Network"-like moment Rupert Murdoch opened up the window and yelled I'm mad as hell and I'm not going to take it anymore!' (Did he really do that? No.) But by adopting a total pay wall strategy that is targeted toward an audience that largely writes off the subscription expense of the WSJ, he is trying to justify paying so much for it two years ago. Because of the WSJ's unique audience, he may succeed in saving that over-leveraged investment, for now. That option will fail with most other newspapers, and has already, spectacularly in some cases (like Cablevision's Long Island Newsday).  

It was newspaper companies that first adopted the internet strategies that led us to this moment. So it might also seem reasonable that the newspaper companies now are erecting barriers that ask to be paid for the same content provided seemingly free for years. Of course, you and I still see ads when we read content on the web but because they do not get paid as much for those ads and we are led to believe that our end (as consumers) is somehow not being held up. Make no mistake; the story is being skewed in favor of why consumers should replace lost revenues of the traditional media companies as they struggle to adapt to our changing habits using technology. The companies that exist today want you to believe that we must all pay to make them profitable or we won't get high quality content. We will. Just not from them, unless they can adapt.

This is the key point in the discussion. Who must adapt and how? The media companies serving us our content needs must adapt. It is common for dying companies (that were previously successful) lash out as if their plight was the product of some nefarious forces in the market that must be defeated. (see this post on business models from The Root Trend) 

Newspapers are not the only place we are seeing this battle right now. If you live in the US you are probably aware of how cable TV bills have been going up and how TV production companies are asking for more money from cable companies and still running as many commercials. Cable companies are distributors that have little competition so prices are not yet checked like the are in almost all other realms of monetizing content. The consumer has no appreciation for why this is happening unless they really dig to understand the deflationary forces at work. I am guessing most of the execs in charge of pricing do not fully understand the deflationary forces either. Cable just happens to be the one market unchecked by competition as yet.(see link at end of post) The record label business was the first to see deflation happen. Radio and magazines too, have been hit hard by deflationary forces. Deflation in any industry that is leveraged is a nasty combination. We just saw this in the banking industry and we all paid to bail them out. I really doubt the US electorate will tolerate a bailout of the media companies that have leverage hangovers from the 1996 Telecommunications Act (consolidation era). This time, those that survive the revolution will be smarter about how to make and sell content (or which to do).

With the launch of the iPad days away, we see a new channel for content about to come on-line and more than ever it seems like an easy answer to old profitability problems may be in sight.  No matter how successful (or not) this launch is during the first few months, no one will deny how technology has changed how everyone gets content, uses content, and what kinds of content we increasingly spend our time with every week. In just the past few years, Americans now dedicate substantial time to user generated content that does not cost anything. You cannot dismiss this important dynamic as part of the overall answer. 

I suspect the iPad will be an important disruptor even if it is destined to be a narrow market that is defined by Apple's proprietary software that deceptively limits Choices. 

The most common discussion I have with non-media people (over the years) is the perception how the industry is like a monolithic entity that hides in the dark shadows of government protection. Nothing could be further from the truth. Sure, lots of media companies try to use Congress to do their bidding but the only reason that exists is because substantial barriers to entry in the business existed for many decades and that concentrated the power of select companies. That advantage is rapidly disappearing as content producers are no longer protected from competition and competitive advantage is based on product quality (and not infrastructure or licenses) these days.  For instance, the cool market dashboards that the WSJ web site offers can be replaced, if you go looking, on other free sites (and those sites are glad to have the targeted traffic).

I call this the era of Choice because with the advent of search and ubiquitous internet connections we consumers of content are now in control of our own destiny. Tune in Sunday at 9pm is no longer relevant if we choose not to set our schedule by a company's. This may seem simplistic but the change it represents to a large and complex industry is very dramatic and brought us to this moment. Newspapers feel as if offering a web based option is allowing Choice but here's the thing: Until a new kind of content company is built and accepted, Price will be the issue that seems most important. Remember the 4 P's of marketing? Product, Price, Place (channels), and Promotion.  The way to a more profitable media industry is to specialize in specific functions, just like factories did with labor to become more efficient. Each of these specialties will have a very different mix of the 4P's.  And since the world is consuming more content and not less, this idea is for a growth business born from a mature industry. Only right now, many highly leveraged companies cannot see past next quarter and even though the digital world is moving at warp speed. These older, leveraged, media companies are struggling for every breath. These are the symptoms of deflation, and correction in a market, and not an industry that is about to die off and send us into information blackness. Why? Again, we are consuming more and more content, not less.

I am skeptical of the iPad's potential because of how I expect media companies to limit Choice through the device. For instance:

50 cents a day for the WSJ on the iPad would be a step in the right direction though I am sure that idea will be resisted, until someone else does it, of course.That is not likely to happen if Apple is allowed to build a monopoly in the distribution market similar to cable companies with no competition.  Why? Because the market is all of us and represents our collective shared values for things and ideas.This includes content, how we get it, how much we pay, and how it is packaged.

If the iPad is really to serve Choice, it will sell content more like a news stand and not like a Publisher's Clearinghouse subscription center. By only providing those Choices of long term sign up's, broad consumer appeal will be diverted elsewhere or they may even stop using it.  So the news stand $1.25 daily copy of the WSJ should be .40, .50 or .75 cents on the iPad, right? How much is an article in Time worth; one you could scan while standing in line at the checkout? Choice requires that companies selling content make these decisions. Fractionalization of demand is an important part of packaging Choice, like it or not.

Once you dive into this mindset of change you can begin to appreciate the discussions I began previously about much needed better quality metrics for media companies. For now, serving Choice means accepting fractionalization of demand and lowering operating costs by reducing leverage. That's a tough recipe to achieve but we are going there one way or another.  

also worth reading:

iPad makes cover of Time and Newsweek  WP 4 03 10  (article includes iPad cost for various pubs)

NYT's Jacks Kindle E-edition to $19.99/mo (wishful thinking) 4 02 10

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

Google: 1100 Cities want us to build huge fiber networks (think: badly needed competition for Cable Co's)

Google suggest micropayments for online media consumption (previois iroM post with link)

Will the iPad unintentionally pierce the Cable TV Bubble? iroM post

added 3 30 10:

Why the future of Good news is not Free  London Times (another Murdoch asset) (blurb below)

..."Ultimately we think that other newspapers will follow, and that the only free content online will be of inferior quality or supplied by the BBC. Even that organisation is finally beginning to realise it should stop trying to become a publisher online, and is cutting back on its massive internet spending.

We are in the midst of a publishing revolution, and if we get our finances right, you, our valued readers, will benefit from a new golden age in which we can devote more time and money to bringing you the very best journalism in the finest traditions of The Sunday Times."

What is rarely admitted by leveraged companies is how "getting our finances right" is being made the consumer's problem and used as an excuse to limit Choice. There are thousands of blogs and companies with web sites providing high quality, current, content for free now that somehow enhances the business' mission. Sure you have to go find it but that is exactly why Google, Yahoo, Bing and others are successful enterprises. Failure to admit this fact and attributing it to some form of malfeasance on the part of their customers is blatant, even if remaining unspoken...and terribly obvious. 

Viacom's suit of Google-You Tube is making media's long term challenges very clear

 For readers who do not realize, this is my second blog. The other other blog I write, The Root Trend is about big picture social trending issues that matter to marketers and business owners. Yes, that is a very broad subject area. It uses a specific model to see social trends that originates with the general idea called social mood. This blog  (iroM) is intended to be an extension of that view and a discussion about how three specific trending forces are impacting the business of media right now. Social mood, generational issues, and what I call the era of Choice are each worthy of separate discussion but can be viewed together to see where media is headed as a business (where we are taking our media tools).  Each of these three exerts a different pull on the business of selling content but together they offer a strong directional argument for how the business model for media enterprises must now change in order to better serve their markets. And while I have not shared that specific vision yet, I will in some format soon.  In the meantime there is plenty of connected issues to look at from this same perspective.

Oftentimes, I begin looking at current (social) trending dynamics over at the Root Trend blog and later it'll migrate here. That is how this blog came to be in the first place. This blog was first inspired by this lawsuit almost 4 years ago though it took 2 more years to develop into its own blog.  For instance, right now the latest post over at The Root Trend is about how shared values toward privacy issues change (over time) and how they are expressed as different trends depending upon from where you are viewing it. 

From the perspective of a media company, the issues surrounding intellectual property rights (IP) are being shouted about right now and for the past 3 1/2 years. IP rights are  being argued as if  they = expressions towards privacy in the world of enterprises. There's no better example of this pomp than Viacom's suit of Google/You Tube for $1 billion dollars. Viacom is not able to police their own products, does not want to pay to do it,  and in keeping with decades of media's protected market status, they are suing someone else to do it for them. Now, that last sentence contains a pretty strong opinion...no doubt. When you take the time to see where we (society) are taking media broadly and according to the large trending forces (read as "shared values), you cannot help see the falseness of Viacom's position while knowing they'll never admit that much. They can't. No matter how this turns out they'll lose money because the old media business model is falling further and further behind. Why? Because it is not serving the larger, changing social need these days....because shared values have changed (are changing) with the adoption of digital technology. The technology did not change us. We changed as we realized that more is possible from our media tools and there is no going back. The FCC and other large barriers to entry into the business of selling content that previously existed, have now disappeared. The flood of competition was inevitable. The sharing that exists as a result is part of the emerging social norm. In the years ahead many cases surrounding this core issue will be decided in courts incrementally but right now it has already changed the business of selling content. The unspoken truth is that no one realizes how to do it differently. The best businesses surf the unfolding social trend....and do not fight it.

In a article last night in the FT, Viacom and Google's lawyers exchange jabs in initial arguments, only now in a 3 1/2 year old suit. 'You Tube is an obvious attempt to circumvent copyright infringement laws and Google should be responsible as if they are a media company'. And, in order to prove the position, Viacom has been seen uploading protected materials to the You Tube site and then complaining about the material being there. First, get the free promotion, then a slap em with a suit "as if". It's the American way!

The fact that this last statement was alleged in the FT, a paper usually beyond reproach, I submit that millions of our own tax dollars are being wasted by a company gaming our own system instead of doing the work they should be doing...or paying another competent company to do it for them.

Google is a behemoth. It is a giant that is almost an oligopoly. Many believe they deserve to be watched closely. They certainly deserve considerable praise for delivering us Choice even if it is disruptive. The age of broadcast began dying with Google. I suspect it is hard not to blame them as if they are responsible but social trends this big are not caused by technology or a single business.....social momentum is required for trends to happen and history shows us clearly how technology has often existed for decades before being adopted and used. The industrial revolution in the US was just such a trend. It took the rift between large generations to expose this overdue need for change then, and now again....and these times are exactly when history shows us huge examples of social change!

The most obvious lessons of the new industrial revolution are simple and straight forward. They are also remarkably similar to what we learned last time: 

1. Recognize the fact that we have all changed for the better;it's not a fad.(How we values things changes as social mood changes and different time horizons matter a great deal when using this view)

2. Understand that generational rifts are where the largest changes happen to social contracts. The generational perspective is essential to understanding how to prioritize social developments but is always secondary to social mood.

3.  Specialize your function to gain competitive advantage. Competitive markets require more specialized focus, not broader. Vertical integration and exclusionary software strategies will be socially rejected as a business strategy unless it is demonstrated to add value not available elsewhere for market participants.

The FT article link above is worth reading.

NYT story 2 24 10 re Italy's bureaucratic courts on Google:  Larger Threat is Seen in Google Case (in Italy) NYT  (read the entire article because every time this story is told it is like hearing two different movies)

For further reading @ The Root Trend: What is social mood?

Social trends reflect the polarity of shared values

More on the link between social mood and consumer behavior: the most basic social expressions

Revolution or Evolution of Our Media Tools?

A question I see often is, what is the difference between the evolution of media and the industrial revolution of media? There are a few ways to answer that and each are relevant to seeing 'right now' as it is.

For instance: In 1789 the Bill of Rights was drafted and adopted in 1791. That's the document that gives us the first amendment to the Constitution and a "free press". 143-145 years later in 1934, the FCC was created to lord over the airwaves in the US and regulate the scarce public resource for the good of The People. 55 years later we witnessed the birth of the world wide web in 1989.  Several years after that the name Yahoo entered our consciousness as we bought shares in the future of Search (1996). During the first 13 years of search we witnessed many new wrinkles and conflicts in the markets for information and content.

From this broadest of perspectives, we see the evolution of media as a primary social tool in our society as it has become increasingly important in our daily lives to both individuals and as a nation. The shorter spans between critical changes suggest dramatic transformation is possible right now. The main thing holding media back, right now, is the business structure wrapped around this most important social tool(s).

Anyone who has read of evolution is familiar with how long periods of stability are often punctuated by rapid periods of transformation.The same is often true in significant social trending processes too.

The industrial revolution that occurred after the US Civil war was a dramatic social trending process. It was based on the mass social adoption of technology that had been conceived many decades earlier. The key development was the social momentum that swept our society. This all happened during a time of social expansion and that characterized and fed how the trend unfolded in the US (and other parts of the world too).

The industrial revolution of media has begun but the critical growth part of the trending process has yet to begin. When it does it will occur during a period of social correction and that is an important dynamic to consider. The social momentum that brought about the adoption of technology and processes to use these tools effectively is exactly what is happening right now to our media infrastructure. Our use of content has, and continues to change. Digital social technologies are helping to more clearly define what really matters. Enterprises will soon make major changes to better reflect the changing shared values relative to content use.

Both the similarities and critical differences between this time and last time are a great vantage point from which to view this approaching growth phase of the media trend. Differing time horizons are a critical part of seeing right now properly.  I am excited to be living in such a time even if it means creative destruction of key aspects of the existing tools need happen in order to move towards what really matters. And since all macro social trends develop slowly, outside of the daily hustle and bustle of quarterly earnings, we will not wake one morning to a new media universe. The point of our evolution of media is to make us all better at being individuals within the productive groups we associate with in our lives. Media is not some monolithic institution outside of ourselves. It is us. It is a clear reflection of who we are as Americans. And while many of the enterprises we build cross societal boundaries, the emphasis must be about Americans exercising their freedom as granted in our founding agreement to empower ourselves to a brighter future. Entertainment fits neatly into this macro discussion but the tools we use to share ideas and information are a critical part of being a productive, free people.

So, we see media evolution continuing on as it has for 234 years as a republic. And at the same time, we see a brand new revolution occurring around one of our most basic freedoms as Americans. It goes well beyond profits, even if the result will be more profitable enterprises in the not too distant future. What really matters? That is exactly what will drive the next phase of the media trending process.

As social mood changes what people pay attention to changes and that how's to figure out what really matters.

 

Will the iPad unintentionally pierce the cable TV bubble?

A few months back in November I wrote a post titled The Cable Bubble Through the lens of Media's Dominant Trend

Back then the new iPad had not been announced and the notion of Price had been, as always, a tightly controlled feature of modern TV programming unexposed to the chaotic forces of a truly free market.  The value proposition offered by cable TV in the 1970's and 80's was simple. Free TV, plus programming not available otherwise, and the best picture possible, all the time. A small fee for such a service seemed reasonable in an age when chimneys were all adorned with TV antennas in need of frequent attention. We witnessed the birth of "premium channels" and in lieu of going to the movies (as often) we began recycling movies using this secondary distribution platform that was immediately in tune with a generation willing to relive the past over and over.  Cable companies had a virtual monopoly for a long time and even with the advent of satellite TV, the critical urban markets were in little danger of fragmentation.

The notion of "ala-carte" pricing of cable TV packages has never been seriously considered because managers know well that revenue would probably decline if people got to Choose. Lacking competition, the idea has been dismissed over and over.

Enter the iPad which may as well be called the "iPay". Cable companies get $5 a month for an addressable box that offers a universe of on-demand choices. Apple somehow generated a tsunami of promotion over a $400 box that allows you to pay for content on the go. They deserve an award for two reasons: First, they are being congratulated for creating a portable cable set top box-Kindle and got incredible amounts of free promotion for the launch as if was an innovation that would change our lives. Second, they may well have pierced the cable bubble's hold on pricing of content experienced previously by the record labels, newspapers, magazines, radio stations, and broadcast TV. In lieu of this development, ala carte pricing cannot be far off for consumers of TV content in the Era of Choice and the popping of the cable bubble may not be such a long wait because the cable itself may become an antique soon in urban areas. 

I've read some thought provoking ideas on this new market dynamic recently and from this perspective, the main ingredient of what I call the industrial revolution of media is the removal of barriers to competition that all media are experiencing in this digital age. Cable company's stranglehold on consumers in terms of pricing power has been exerted despite dramatic waves of technology enabled deflation in other segments of the media industry. Up till now cable execs on both the distribution side and production side have felt confident of their control on the market and yet, in the blink of an eye, Choice is being introduced to the market for content otherwise limited to cable TV.

I've admittedly been surprised initially at how much Apple seems willing to charge for TV shows in iPad. It feels a little outrageous but the dutch auction has only just begun and will play out over multiple business cycles where the market will bear out the true costs of delivering programming (with and without advertising) to desired markets. Moreover, the app market that has grown strong with Apple's iPhone is likely to expand, eventually, into multi-platform coding that forces competition even upon Apple's iTunes. This may not be the case right now but this is the direction of competition out on the digital frontier.(open source is a giant force that will not go away)

The era of Choice is media's dominant trend in the US right now. The second key trend to monitor is how generational dynamics are rolling over and how that will dictate changing values in all areas of American life. Finally, there is the idea of social mood, (a very macro social dynamic) that expresses itself amongst us and each of these three dynamics will shape the ongoing evolution of media in the US because it is a primary social tool to all Americans.

The next shoe to drop in the revolutionary phase of this evolution is the Cable bubble. Like most bubbles, it developed so large that it became the new reality. In a few years time it will be like those scary styles of the 70's and 80's. True market bubbles unwind faster than they grow. This may be best described as a damn being removed from the river of competition to sell video content to consumers.  Viacom's suit of Google's You Tube was the tip off that this development was overdue. Besides a virtual pricing monopoly for content in the market for cable TV, there is also the trend related to IP (intellectual property). Eventually this trend will be viewed from a very different perspective too and when that happens, the real revolution will have begun. For right now, however, I place my bet on how Google (and other search competitors) will be the surprise players in the leveling of the pricing field for video content. Free markets create change through Choice and that bestows benefits to the markets (people) they serve. Barriers to entry, like government sponsored monopoly, regulatory indifference to vertical consolidation, and patentable software do the exact opposite.   

Senator Franken comes out swinging against Comcast NBC deal (another worthy read in this area)

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?