The (industrial) (r)Evolution of Media

Content Distribution Platforms: Only one part of an increasingly specialized marketplaace

The buzz now is about "content distributors". I wrote about this aspect of specialization here almost two years ago.  Each of the basic functions of old media's business model is being naturally specialized so that content can be (eventually) more effectively distributed in a macro marketplace that is slowly responding to Choice.

Is this an end in an of itself? Is it a new normal for the business of selling content?

The answer, to me, is an obvious "no".  High quality producers of content are losing the battle for profitability and middle and low end producers are gaming the click system to try and make it up in volume.

This method is unlikely to produce concentrations of talent in a media universe that still demand high quality production. This does not mean better efficiencies must not be sought and surpassed.  It does mean, however, that a better way exists.  It must if only because the demand exists. Paywalls will work for a few, for now but, they are not a long term strategy beyond a limited core of operators.

The raw frustration at how things cannot be forced back into the old paradigm is just too much for most who've watched it devolve into something strangely resembling a Mad Max market economy for content.

Content distribution platforms are here to stay but they will continue evolving...and crucial new elements in the overall competitive mix must be established and frequently improved upon. These tasks belong to the entire industry as new roles are established.

What are these elements? I see a three part content universe (roughly) and right now it is the other two parts that must be established formally and set toward efficiency. The very nature of the content distribution platform will change based on how these develop and evolve.

The most important trend in communications is less about tablets & smart phones and is not as positive as all the hype right now

There is a lot of white noise about tablets in the media this week because the marketing machine is revved up.  Thirteen+ months ago we saw the iPad released into our lives and the spin has surpassed the reality. I know the numbers of these cool gadgets are swelling but the trend that matters more is being drowned out by the white noise. This post is IMO about what really matters most.

Connectivity.  The gadgets get the headlines as if they are what connects us but the pipelines are what really matter most and movement there is badly in need of being freed from greed.  The digital pipeline is critical infrastructure and how we know that is because those who govern the pipelines have too much pricing power still. These oligopolies are shaping new markets into distorted markets that are too familiar to Boomers.

The content consumption market reality of the digital generation can be defined by Choice.  Choice is defined by consumers and not pipeline providers  (ala Can you hear me now?) 

Choice will be delivered upon by enterprises specializing their focused offerings to us as part of the whole and doing it both better and more efficiently than before.  The urge to horizontally aggregate services in order to build pricing power (long before this critical infrastructure is built out) is disingenuous and unfair to both consumers and our country as a whole.  Yes, it's tough to take the reality of deflation in an existing business but we are up to it and will all benefit from it in the longrun.  In this next era of growth we may just find outselves asking tough questions like this: Has our economy invested too much of itself in entertainment? These kinds of big, central questions will characterize the next phase of time and we are arriving there now.

Further, Choice (in all areas related to content consumption) is defined by better measurement but it has to conform to Choice. What does that mean? Eventually it will mean strict adherence to privacy standards for all zealous marketers in the digital realm who think participation means opting out of ownership of personal information and other rights.  It doesn't and Choice should remind all of us that Choice will win all arguments in this phase we've entered.  It is the dominant trend in content consumption along with social mood which will guide us all more and more in these trending directions.

So, cheap smart phones are not what really matters though so many want you to think the mobile market will explode just because they are available and the fact that they carry yet another monthly revenue streamis a positive not a negative in predicting extended exponential growth.  How attractive an idea! Pipeline greed is all too common in the US.  Pipeline greed must be controlled by introducing competition broadly.   Simply merging the #3 & #4 wireless providers in order to create a third (maybe eventually) good national wireless network is short sighted and limited thinking. Oh sure, it can be spun to sound amazing like anything.  It may serve us well for upwards of a decade but our digital infrastructure can already be described as behind some other smaller digitally sophisticated nations.  Additionally, the trends in digital communications will grow and morph like lightning compared to earlier similar industrial expansions governed by oligopolies.  Concentrating power in a couple or a few digital pipelines is foolish, manipulative, disingenuous, and outrageously selfish.  How many times do we need history to teach us that politics drives these decisions and free cash flow is cloaking limited competition that saps the American economy of its productive potential in this new economy. These highly profitable dominating networks act as taxing mechanisms instead of assisting creative construction to its potential in the larger economy. Every week we see political bitching about job creation as if Washingotn must somehow do it for us. How about really freeing up the digital pipeline and see how many small business jobs get created when $90 a month smartcell bills and $100+ month combined cable/high speed bills are brought into reality with our larger digital economy potential.  It'll be like a substantial tax credit that is returned by thousands of small businesses operating in a new efficient pipeline. Really think about this because the barage of commercials makes it sound like were are all on the cutting edge when the real cutting edge has been abandoned for donations and political influence.

Some (many?) sophisticates will look on and say the market will handle these kinds of things in time but the political process is really handling them for us so let's call it what it is and let the free market really have at it right now. We need broad based digital pipeline access that is competitive and not some slickly marketed version of competition with a very pretty girl in a dress. We need to release our national resource of spectrum and allow the market economy to freely build out those resources for the future of the American economy. Just dong this will limit horizontal price fixing and much of the hubub about net neutrality over time. Capacitybuildout is essential right now.  To think that the existing pipelines will somehow suffice is long term foolish and politically selfish owing to short election cycles and deep pockets. The digital access market is controlled by oligopolies and politicians right now. The spectrum belongs to the people. It is a national resource and we all need it now to create a multi-lane digital economy that is fast, efficient, cheap, and reliable. It is the best stimulus we can give our nation.

Can you hear me now? !

? Is dynamic pricing a possibility?

Latest post on my trend blog is Social Mood versus Social Media; how to anticipate granular change

Last June I wrote the post The Difference Between Pioneers and Settlers.

It was an intentionally light take on the chaos we see everyday out on the parts of the digital frontier that are now populated and growing rapidly.  As digital towns and markets get built around new tools the same kinds of struggles happen over and over. It really doesn't matter whether you are talking about water rights, grazing issues, fences, or who owns what rights(?). The latest VHS vs. Betamax battle is underway pitting the open source model against the original pioneers that reliably fight the trend until they are exhausted.  This Wall Street Journal link to Web Video Rivalry Sparks US Probe

The key point in this fight is about Google, the settler, buying and releasing code that is being used as open source in order to encourage a web video standard  free of royalties to oppose the MPEG (for profit) model.  Currently it is the standard and it produces profit for the company MPEG LA. The problem is that two of the Pioneers on the other side of this fight are Apple and Microsoft.

Competition is essential to Choice and pioneers hate competition. 

The role of anonymized data in better content delivery may change

The question and answer posed near the end of the last post was one about delivering Choice.

Q: In an era of Choice (related to content consumption) and changing social mood, how do you increase the value proposition for your customers?

A: The critical path to this end will involve both single servings and better use-metrics that must conform to Choice. These two together will achieve competitive advantage.

Better use metrics that conform to Choice.  It is possible.  In fact, if it is done well, I believe census quality use data of content may be part of our future.

Media, as a business, is having a hard time with the Choice trend because markets for content consumption were allowed to develop with significantly different supply potential and that distorted the nature of supply and demand for a long time.  This happened over many decades and the obvious fact of this distortion was lost to most competitors. No wrong was committed.  But as soon as digital technology began developing, this old distortion was naturally highlighted and is being corrected.

If you tend to hold the view that deflationary forces are shaping media you are right.  The main problem with that view is how it tends to hold your perspective hostage to the market structure of old. I say, break out.

Almost as soon as I began getting outside of this perspective was when I first saw how market forces are shoving media businesses in one general direction.  The best way to see right now, is to see market forces in relation to the answer to the question above.

To most consumers using the internet, privacy concerns are only minor or maybe moderate (controllable) concerns now even if the noise around this issue has increased notably in the past year. These concerns seem to have grown because others told them to be concerned.  The main reason why this is being noticed is connected to behavioral tracking technology that happens without anyone noticing.  Suddenly, your computer knows you and anticipates your every interest and need.  The number of companies competing in this area is almost shocking but it really should not be to anyone. It is a valuable service that could potentially be used in negative ways.  The industry exists for the same reason the digital universe came about...because we can. 

 Since most consumer data is automatically anonymized, these practices are a benefit to everyone using them, especially the media businesses selling advertising in the digital environment. 

It comes down to this piece of hierarchical truth. Choice is the dominant trend in media businesses. It must be faced because it is not going away.  On top of Choice is another, higher order, trend: Social Mood.  I blog about this subject on my other site, and it is what got me to begin this blog two years and 100 posts ago.   Social mood is the primary social trend. It shapes and influences social trending issues over time.  Social mood will impact the Choice trend by encouraging consumers of content to take even more control over their experiences. When this begins in earnest, the winners will not fight the Choice trend.

When you Google "anonymized data" you can get into some pretty sophisticated discussions. The issues around this subject need to be made conversational . The idea of anonymization needs to work for consumers and not be allowed to pose a threat. Now, before the industry comes charging this way defending themselves, my point here is how perceptions change over time as part of a pattern and how self regulation one day is often replaced by overt regulation in another period. This does not have to happen even though it feels inevitable, now, as a trend watcher.  The industry can choose to step up now and conform to Choice. What does that mean?

It means this, and only this: If behavioral tracking is such a benefit to consumers in the digital environment, then build a company that serves consumers, and consumers directly and spare me the arguments about how it does right now.  If this is done earnestly, the ultimate product that results may just be the best source of behavioral data ever and sanctioned by consumers at the same time. It may also rescue part of the media business that are struggling now.

Social trends often take us where we need to go directly if we let true market forces dominate. The Choice trend will throw off many good ideas and services to consumers along the way if we only stop fighting it and make it part of today. The real partnership needs to be made with the very people you are measuring. It needs to be transparent as well as having information flow in both directions.

 

 

 

The single serving mindset

good link posted at bottom of post 12 16 11

Social Media Tools Will Continue Evolving With Our Shared Outlooks

Sub title for this post: Social mood has a significant influence on the business of social media.

It is my belief that the three big-picture social trending forces shaping changes in the media sphere are:  1) Choice 2) Generational Trending 3) Social Mood

Many posts here have mentioned Choice. (use the blog search feature for" Choice" in right column).  It is the largest and most specific social trending dynamic related to media and why I discuss it first.

Generational trending issues pervade the strategies of most companies competing in the business of monetizing content. The predisposition toward seeing basic demographics as defining different opportunities is traditional.  Every generation of Americans is affected by social mood.  It is the third and most macro of the social trending dynamics affecting media's development as a business.

This blog, as a discussion, is an offshoot of another blog I write where only social mood is discussed.  Social mood may be succinctly described as The Primary Social Trend.

Social media is a trend as much as it is a series of technical developments that ad up to something significant as the bow and arrow, the wheel, or the steam engine.  Social media is a fundamental outgrowth of the digital age and is a tool that will develop and take many shapes over coming decades.  If your business is social media, it is a fine business with great prospects but, if history shows us anything about new inventions with complex social utility, do not get too comfortable with any one manner of use. In the case of software driven tools this cannot be overstated.  Social media tools and norms will change a lot over coming years.  They will change right along with our shared outlook toward the always uncertain future. Moreover, thinking any one company has a long term lock on something so changeable as social norms is a risky assumption.

Enforcing the Era of Choice

One more post about Choice that looks forward from today (because it really matters):

The very idea that Choice is the overriding consumer dynamic in markets for content is fairly easy to appreciate.

What is decidedly less apparent is how existing businesses serving markets hungry for content are struggling off-balance to manage consumer relationships in an era where the entire feeling of control has flip flopped.   It is one thing to give this dynamic a casual nod.  It is another to discuss how it is cutting right to the core of many existing business models in use today.  

I intentionally produce a feeling of opposition here that exists commonly beneath the surface. The Us versus Them thing. Of course, no one wants to admit ever having that kind of relationship with their customers. No way. "We love our customers!" It would be heresy to say or think anything else, right? In a world where behaviors are evolving so very quickly this cannot go unacknowledged.

This post is intentionally edgy about a truth that is already here in varying degrees depending where you look in the realm of content. Over time, perceptions will change broadly and eventually effect large scale change.

The very idea of Choice is an awareness. It began with our social charter in 1791 and grew very slowly until recently and is now growing faster.  If you are in any part of the business of monetizing content your blinders tend to point you toward businesslike applications of these ideas but the Choice is independent of business channels and for-profit mindsets. This is the essence of what is coming from your market for content of all kinds. Choice is like water and has been seeping into all supply channels it passes. Choice has driven all demand for information at some level. The demand that must still conform to old appointment media is patient for now though it will seek any opportunity made available.  Just as it is human nature to share; first we need to know. This more basic need drives Choice everywhere. 

Eventually, Choice will have several new business models that people will want to try on for fit and comfort. The key to these changing experiences will be competitive action.  This is the most discomforting part to those in the business of monetizing content today. In time, the various functions that comprise existing services will be specialized enough so that competition is more narrowly defined in ways that do not limit the customer's Choice. In time, specialization will help to produce more content than ever in ways that benefit specific markets and will not step on consumers  appetite for such content by making it, somehow, inaccessible.

False scarcity created through erroneous pricing schemes will eventually be seen as the emperor's new suit of clothes. False scarcity in an era of Choice is temporary at best, and detrimental to brands that need ongoing support in an increasingly competitive marketplace. False scarcity is a mistake.

Any business that has a great product to distribute and is willing to follow Choice, will eventually find that their market delivers answers that both enforce Choice and reward it. These answers will call for increasing levels of specialization but the rewards for meeting those demands will offer profit opportunities for enterprises that are both flexible and responsive. 

Choice, in the business of monetizing content, will be enforced increasingly in years to come because it was already proven to work.  Some businesses that appear very healthy and growing today will be forced to change because Choice will control the conversation increasingly.   It is important to remember that Choice offers an easement, not ownership. Most of all; Choice is not a threat, it is a grand promise of the good to come in a nation of free people. Choice will take us to new competitive advantages. I point this out on a day when the internet is being shut down and messaging limited in places that have very weak (societal) charter agreements.  Choice is a gift we gave to ourselves 220 years ago and we are using it.  If today teaches us anything, we should fear the uncertainty of not having Choice. The rest is just a business challenge.

The New, New Media Company

Yesterday a company called Demand Media went public. They are a new media company. They are also easily seen in a niche in so far as how they serve Choice today. That got me to thinking on this familiar topic. Choice should be a category on this blog and I encourage you to use the blog search function for Choice until I make that happen.

The idea of Choice being the dominant trend driving the business of content consumption is how it is easiest for me to see what is driving changes and challenges in those markets. It's simple and yet all encompassing. It is what the  two-way nature of the web has done for us all and what we are collectively doing to markets for content.  I like things simple and that is as simple as it gets. 

So, let visualize Choice.

Choice does not have to be a picture of Paris Hilton luring in viewers who must know what the caption says after two more clicks load additional cookies.  It's fair to say that is the shallow end of the Choice pond.

To me, Choice is the following:

Choice reaches out to you only at times that are convenient. It just knows.

Choice offers what you want, when, where, and how you want it.

Choice cares about why more than anything but not because it wants to sell that knowledge. Choice already knows that doing that would not be Choice.

Choice is the dominant dynamic in a market that seems upside down and inside out now that broad competition has been unleashed in markets for content.

Choice is looking at your customers from over there and sees them very well indeed.

Choice knows that price matters but not how most old media companies think it does.

Choice will be resented until it is thoroughly embraced.

Choice, done well, will be pulled through the market and need little push.

Choice really is very, very simple.

18  19 of 316 words here is Choice.  fyi

 

Channelling Choice in 2011

The current medium term trend is seeing many content owners produce new channels designed to deliver Choice to consumers of content based on old tested models.  The implications of this trend toward many channels of distribution suggests marketing efforts will be critical and probably expensive too.  The process is a to-be-expected phase of what is best called specialization in the business of selling content.  The fact that these efforts remain focused on these goals is, for now,  understandable given the undesirable splintering of an already smaller set of valuations. The implications are much the same as during the entire age of broadcast; the primary need is to aggregate customers by bringing them to your platform (only the potential selections are many times deeper now) and getting content consumers to pay in ways that are easiest (for the seller).

From a greater distance I see an industry that still perceives competitive advantage as the ownership of IP in the form of specific content in a static format.  I also see a cable tv industry overly reliant on its seeming exclusivity.  This could and should be a longer discussion that uses history as a guide but for now let's consider only two different ways of seeing markets of people consuming ideas through content:

#1  The social media model has been adopted by content marketers as one great way to sell market their wares. The benefits of social sharing are obvious.  The problem with this is how digital views are not yet able to be quantified in a such a way as to make them equal or even reasonably comparable to their old fashioned counterpart.  As total social media use (time spent) is both growing and evolving, this challenge must be met by being understood better.  There's no doubt about it; social networking is responsible for increasing incremental views for all kinds (and sources) of content. This practice seems to make sense now because success will benefit the social network enterprise and the content producers to a lesser extent. The problem is in how it's really little different than network TV stations trying to gather tune-in. The only difference is how time-shifting is possible now for digital products.  So, it is, an advance of sorts.

#2  The individual model.  This model is about going to the consumer individually.  Some onlookers might stand up and say this is what Apple is doing with their platform. In the end, however, Choice is about freedom and freed content consumers increasingly want to design their own experience and not be guided by one limited source no matter how cool the company may seem right now. 

Hope is a wonderful emotion but not for content sellers seeking profitability through a single source channel.  Hoping to sell more content to consumers directly is a limiting challenge. Of course, selling the content directly to the end user sidesteps the challenge associated with counting viewers and the overall quality of measurement. I submit, again, at the beginning of this new year how the primary challenge is to devise ways to better quantify engagement with content. That this was not done yet is testament to how difficult it is proving through the broadcast paradigm in a digital world. It is not impossible.  It is not being done because it is perceived to be too expensive.

I submit the problem has to be re-framed. Building potentially infinite channels to deliver Choice is not the answer in the long run.  Content producers need to focus on being better at producing content in ways that meets developing needs.  The earnest distributor of this new era must try channeling Choice, no matter how silly this seems.  That this challenge can be reduced to a bad pun is testament to how confused the market for content was made by limiting factors in the late 20th century.  Markets for digital ideas (including entertainment) are only beginning to develop now. They can and will grow by many factors if Choice is allowed to be claimed by markets of consumers. The solutions we are seeing, for now, are limited by the old ways of imagining the business of selling content. That will eventually change but probably not in 2011.  New, better engagement metrics are the necessary goal of the entire industry.  Choice is the overriding social trend in this context. In some parallel universe, Choice and better engagement metrics already exist side by side.  The way there does not involve oversight with many new rules and committee meetings.  The way there is through permission.

 

Of Social Contracts and Business Models

Update: 1 17 11 Wash. Post Banks Allow Ads in onLine Checking Accounts

The point made in the post link below about personal information being a click away from all that is public is highlighted in the example offered in this discussion.  The ad notices a specific personal  expense and offers a discount next time at a competitor simply by clicking on a link that will tell their computer your debit card info. Wow. Is that convenient or what! It is also problematic as heck! Ad inflation will create trade offs for consumers that also contain potential pitfalls not being discussed. The social trends surrounding Choice will take change changing this one, eventually. Dave

 

The link below is a post from my other blog in November about how social trending dynamics will eventually affect a correction to a social contract we all know but rarely consider.  

For many decades of the 20th century (in the US) the channel for delivery of high quality content was somehow limited in how much outside competition was available in any one market.  (Think;  FCC licensing & capital intensive production)  These factors have been discussed here.  What has not been discussed often is the effect of developing changes to the social contract that makes room for the advertising based business model to exist. This discussion focuses on consumer based content channels but has behavioral implications that will reach farther into our day to day lives. 

The idea of a social contract being an unofficial agreement between markets of consumers and enterprises serving them is plain enough but, the fast paced and confusing changes wrought by the digitization of everything has produced confusion in markets and expectations by content sellers in many cases that are not realistic. The result?  Ad inflation everywhere you look.

I have also argued here over the past two years how better metrics are an essential development in order to better capture the new essence of value in a world with digital content.   Reach and frequency is increasingly becoming irrelevant as the number of different content platforms multiplies every year and measurement loses a sense of our changing behavior.  What is the relationship of shrinking attention spans to exposure and how can value be assigned in a meaningful way?

Again, this link was posted at The Root Trend in November.  If you are interested in how perspective of social trends ultimately manifest in changes to specific markets over time, then this post is designed to make you think more about where we will be taking this social contract in the next decade. 

Is A Correction Coming to an Altered Social Contract?

There is certainly room for pay models and ad based models and even hybrids. Is it as much as many now seem to believe? There are limits to reason-ability when serving different markets and they will be tested by changing economics, emotional proclivities, and a demonstrable impact on ROI. This last point may well stand out the most in coming years but the others must be considered to understand how best to see it. The one point always worth remembering about this blog is how the (industrial) (r)Evolution of Media is a consumer centric set of changes we are collectively making in order to make us all better at using content in our lives. If your market determines value is insufficient and greed is driving product changes instead of the trend toward Choice, then new competition will find a way.  Increasingly, I suspect anti-trust issues will be raised in this process as we sort out the real difference between TV versus digital video products.  (hint: vertical consolidation is the exact opposite of what should be happening right now)