editing in progress...
The point of this discussion is to help make clear the underlying changing dynamics of supply and demand in the broad business known as media. Specifically, this perspective looks at very large social trends that are changing what we want as consumers of media, and especially how we will serve these varied markets as profitable businesses. If I can clarify the issue of strategy using a broad historic perspective and the benefit of how changing social mood will impact the demand (in general) to help see opportunity better, then my highest goal will be achieved. Since businesses are created as tools to serve demand, these basic and big picture observations can be helpful while leaving lots of room for creativity in the broad market for making and selling content. I believe this can be particularly helpful because, in the rush of short term events, we are inclined to lose sight of these bigger picture influences. Times are tough in the media vertical no matter where you are. There's no doubt about that. Those who are in tune with changing demand in their market,(really in tune), will be more able to evolve successfully in turbulent times.
The benefit of using the four metrics I will discuss next is to see how the immediate and longer term momentum in competitive markets is reflecting changing demand. These observations call for immediate shifts in the underlying business model. From this very broad perspective the business model used for many decades can be viewed as a social contract. There are a lot of details in this contract but a few major factors shaping supply and demand can be isolated, discussed, and used to see how we must better serve the various segments of the market in the future. This perspective affords significant opportunity to those who push the obvious obstacles out of their way first. As you will see, however, these are not small obstacles.
The best way to gather meaningful perspective on a market, any market, is to isolate circumstances along the following four broad sets of metrics: fundamental facts, the trend (momentum in the broad vertical metrics), a good characterization of the developing market psychology, and a thorough understanding of any changes to the market's structure (or how business is transacted)
With these four ways of characterizing "facts", an engaged executive can see both forwards and backwards enough to see better where opportunity exists in a vertical. And since this discussion is about such a broad vertical, the making and selling of content (media), then this discussion of these facts (the four metrics) will broadly outline where competitors are likely to focus their capital and creative energy in the years directly ahead.
This discussion is not meant to be even a complete outline. The space demands here allow only enough space for ideas to begin developing. Consider it a sweeping overview of a strategic process, and a few suggestions for how to "see" the market for your products differently. If you like, I can personally apply this insight to any particular business challenge whether it be in this vertical or not. Each one of these metrics deserves a chapter in a book. Dave
Fundamentals: (The state of supply and the state of demand in a business)
In the aggregate (real, not nominal) revenue is shrinking in many old media businesses and has been for years. Those having already adapted to the digital environment are at least growing again. More media than ever is being consumed by Americans on a daily, weekly, and monthly basis. So, despite substantial growth in demand, supply has expanded more quickly. When split along demographic lines, the increases are dramatic on the younger side. A digital youth culture will mean very different consumption patters for a long time and that dynamic will shape demand and fulfillment of demand for a long time to come. Shrinking profitability in old media businesses are a symptom of ill health and not of renewed competitive spirit.
The Trend (momentum in the trend metrics)
information ubiquity has exploded on the web and especially because of the blogosphere, providing and adding to choice so that this larger dynamic is driving demand. The implications of social media are profound beyond Choice as well. We are colonizing (settling) the digital frontier and in the process we adding social expectations. It is being driven by younger people and those norms will eventually merge with regular social life (obviously we can spot where this is already happening). So rather then a social business platform, social media trends and momentum are telling us to expect this new community dynamic to be integrated into our everyday life.....now, right now. This will be (is) the old/young divider and eventually it will be essential to social functioning whereas it is still a choice whether to participate. Eventually the impact of social mood in this social correction will define smaller groups as desirable and this will refocus all media enterprises on the value of smaller but, better defined reach metrics and the business models will emerge that monetize this new social reality of smaller like-minded groups being desirable.
The Psychology (of consumers in a market)
is a metric that should be defined as particular to specific audiences. In this way, what I just stated in the Trend goes here too.....but in a broader, aggregated view, people want content, when they want it, how (modal choice) want it. This is the psychology of "The Era of Choice" as I call it. Embrace it and you will succeed.
The Market's Structure (how markets are designed to transact and what changes are evident)
is the dynamic you may recognize first but this deserves consideration from a few angles. The market's structure, in this case, implies how competitors and consumers organize. This is my main premise in the media vertical that similar (big picture) social forces have been unleashed (by us unconsciously) where will will more naturally repeat much of what happened in the industrial revolution with a very important twist. I suspect smaller, more effective units of consumption and group production instead of the grand social structures built during the industrial revolution. This important twist is a result of the present social correction but more importantly to us today, it is reflected by the amazing growth of social media tools. If you are familiar with social mood, my mention of its effect upon how we are organizing may resonate and if not, then rest assured I will discuss it more in the next installment.
The digital universe has dramatically changed supply and demand in the business of media (for profit). That this is obvious is not enough. By looking at how media companies need to compete more effectively, the coming division of production and distribution tasks seems like a obvious requirement in order to be more efficient companies. These are really two businesses worthy of specialization in this new age. Downward price pressure is the result of much greater supply on the content side of the vertical and this new dynamic must be respected, not fought by seeking more government control over the market. By specializing on content production and content distribution separately the promise of the previous industrial revolution (yes, that one, 150 years ago) will be bestowed on a suffering US industry over the next decade or two. I believe it will take a long time but the social forces propelling these trends are anything but subtle and, the market is ready now for more agile competitors.
In my thinking, the business dynamics of a trusting relationship with consumers of content is fundamentally the most important aspect of these changes no matter how soft a factor that may seem to represent. I suggest you read the three part post series about social media on the right of the web site (20 pages-fyi). Add that to cooperation dynamics, and the new, leaner, and more effective media company can, and will, show the world how to compete in information production and distribution. This broad prescription leaves a lot of room for creative design, application, and of course, further discussion and reasoning. It is a dance between consumers and enterprise where the relationship between content distributors and consumers will have to evolve dramatically. Cooperation and trust will be the underlying factors in successful new media companies. The younger generation who've grown up digitally will take us there later, if we don't see the light and go sooner. These relationships, in a sound bite, will allow for better use metrics on how highly targeted people can be made more valuable to marketers. It may also happen that ROI demands of a nasty recession will help this process along to a new age of the highly qualified reach metrics for buys of media space/time.
This is a very wide ranging set of prospects I am laying out but they fit neatly into one conceptual framework are more about how we do things in groups, and using history to see how it'll rhyme going forward. So to anyone struggling today, I say...
Ready, Set, Go!
This discussion can and will be expanded.....please feel free to email me with questions. Part 3 of this set of thoughts will focus more upon the effects social mood will exert upon this process of change in terms of some specific short term and medium term issues like metric collection. Dave
Comments