The (industrial) (r)Evolution of Media

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 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 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?

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

What truly matters as the business of selling content moves forward to better serve its customers during and after the current recession (whatever it is that comes next) ?  As I've suggested in two previous posts, Better Metrics are essential first steps even if the changes that follow these will be more substantial to the media business model.

Interestingly, this loud discussion about how to measure consumer engagement with old media has made the headlines often (lately) as radio businesses attempt to shift to electronic measurement and away from diary based recall methods. The process has been turned into a political football game borrowing from the social acrimony so ever-present these days. And since most statistical methodology is esoteric (at best) the negative nabobs opposed to change are winning the shouting contest by saying 'it's not fair'.  The result of their efforts is that the industry has been distracted from what truly matters at a crucial time.

Just recently, I read where two competitive industry views considered the results delivered by radio's new electronic measurement system (PPM).  They came to opposite conclusions about electronic measurement while looking at the same data.

It's hard to know what honesty is in this discussion with all the selective whining going on. Let's explore a little because it really matters to all media enterprises - and not only to radio businesses: