This site is not a typical blog...I've used it to develop a topic and share the larger elements along the way. As the blog name indicates there is a large correlation with historic patterning as well as a working model behind what is here to break the subject down into useful chunks and to use this insight for media enterprises in the coming decade of the 10's.
And while there are always obstacles I have to push out of the way (slowing this down), the intention of all these posts is to sew them together, add depth and appropriate weighting, and then offer a useful (positive) way to see the incredible change in the next decade for the media business model.
So that's the big picture I will bring into focus when many topics discussed here are compiled and organized as a short book sometime this year.
Right now, however, the daily and monthly war that (old) media's enterprises are fighting down in the trenches is proving daunting as any ad-recession experienced in decades."This too shall pass" is not a mantra anyone should be counting on right now. Add in the longer view of how owners cashed out equity beginning in 1996 and left an industry leveraged to the hilt with expectations that were not realistic beyond the cyclical time frame, and you have a really big mess today in the business of media. And while everyone knows change is in the air, and that means innovation is a must, down in those trenches it is difficult to see the long term influences upon the competitive environment. So far, the view from most old media executive suites has only succeeded in managing existing gross margins by tightening cost structures. Sure, lots of grand experiments in "new media" have been attempted or bought but, none has yet figured out how to efficiently monetize the Internet user of content.
First things first.
As the title of this post suggests, there is a very direct way to get from here to there, only, so far there has not been enough cooperation among competitive enterprises or between companies and their customers. Why is it like that? There are a lot of reasons. Some are better discussed very broadly and some are more narrowly defined by vertical. Some recent posts here have discussed a few of the broader social dynamics. Broadcasting, seen as a social tool, deserves a lot of attention too and is where the next best step is defined for media. Digital companies have already been addressing better metrics but the nature of the problem is highlighted particularly well in old media businesses.
Decades of managed market excesses are very difficult to shake off overnight. No where is this fundamental truth more clear than in the business of broadcasting.
The FCC created a managed market for the limited spectrum of radio signals in 1934 with the admirable goal of managing a "limited" public resource. By the time Yahoo and Google entered the public consciousness 60+ years later the limited nature of the resource was completely removed no matter how much distinction some players still assign to how content is distributed. The digital environment is a new universe and is as unlimited as our imaginations will allow. It follows that any business model designed for a managed "limited" market will not be competitive in the new media universe.
The unprecedented nature of this change will not be contained. The Era of Choice as I've called it in previous posts is already well underway and managing it will not be possible with new regulation, though I expect the older generations to try earnestly (initially). So where does this leave us and why are better metrics the answer to the challenges all media enterprises face today?
First, let me be clear: Better metrics will only be a first step on which a new competitive environment is established for all media. Since it is already possible, it is being done. The ubiquitous Google or Yahoo "click" set the new standard of electronic reporting of media engagement by consumers of content but it was outdated almost as soon as it was embraced. As content consumption speeds up the only way to measure the qualities of engagement will be electronic measurement. The move from (self) reported engagement to electronically measured consumption must be part of a new social contract, otherwise high quality content will not be produced for the marketplace. And since content consumption is increasing every year, not decreasing, the (societal) negotiation is already underway. Existing businesses can stick their heads in the sand or worse, drag their feet screaming and kicking until they are made obsolete or they can adapt. No matter what the holdouts do, progress will be set by the competitors in the digital environment and not in what used to be called the FCC's managed market environment. The worst mistake any content competitor can make is to think they can buy time. They can't. The dynamics of the new marketplace for media will not be slowed.
Right now there are highly levered radio companies struggling to breathe (financially) as they adapt to the first generation of electronic measurement during a tough ad recession. And while the initial changeover to electronic ratings will erase subsidies imposed upon markets in the previous era of self reporting, the results will pave the way for the proper measurement of market value for that content. Valuing content companies by way of politics is not authentic nor is it smart in an era that will see changes ten times as fast as the Boomer generation experienced during the peak in old media business.
The only way to move forward is to accept that the business of media, which is making and selling content that people want, is just that.....a highly competitive consumer business. In the managed market created by the FCC the advertiser was often seen as the customer just as much as the person using the media. Rather than spend space discussing the nuances of this point, better metrics is all content producing companies should be thinking about right now because the ad recession is signaling a structural change, and not a cyclical event, as consumers of content figure out how their media time is best spent now that options are multiplying every month. Only the nimble will adapt quickly enough.
The distinction in the last paragraph between consumer of content and advertiser will be settled agreeably in the stage immediately following the establishment of better metrics. However, if this step is skipped by existing broadcasting companies, a new form of competition will arise from a new class of competitors, and those better metrics will be imposed upon the old broadcasters just like the "click" was a surprise several years ago. The pace of change has increased exponentially and what this means is that the Era of Choice must be balanced by establishing a greater sense of partnership with their primary customers.
The market for content is changed and will keep changing just like railroads changed the west forever. Towns came with the railroad's expansion and cities followed towns very quickly. The opportunity for better metrics will be shorter because what follows better metrics is needed just as much...more efficient monetization of content. Each of these two processes will be the result of process specialization that was never necessary in the manged market created by the FCC. Specialization was just one of the lasting social developments of the industrial revolution that we all benefit from directly. The same kind of changes are happening again right now to everyone, only with a different twist this time.
Better metrics is the next step in the evolution of media. Layers of innovation is what to expect in any social process where a task is specialized and improved incrementally. Old media companies have a head start in so many respects. Whether it is used to great benefit depends on the pace of change to match the new markets they increasingly compete with everyday. That is the magic of this recession.
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