Analog (old) media is all about managing scarcity by controlling distribution, the net effect of which is to enable publishers to price access to their “toll roads” as they see fit.
Digital (new) media, by contrast, is premised on the assumption that the tools for content creation, selling, distributing and marketing enable meta-professionals and prosumers to create a surplus of “good enough” content.
This content, in tandem with un-tethered distribution and pretty good search/retrieval functions, operates in complete disregard for the old media-based pricing models that preceded it.
As such, when the forces of analog media collide with digital media, as they have in music, newspapers, yellow pages, books and magazines (and are beginning to collide in television and movies), a brutally efficient “creative destruction” process occurs.
Simply put, if the digital forces can assemble a “good enough” version of the un-tethered content, then in most cases, the analog media provider is in deep trouble (read: devastating business model disruption).
Understanding Media Disruption
My once-beloved San Francisco Chronicle has been “hollowed out,” reduced to a thin pamphlet, thereby accelerating their subscriber attrition.
Why PAY for content that is less deep, less differentiated than I can get online elsewhere for FREE? It’s a vicious cycle.
My once-favorite local news station, KRON, no longer has sports on the weekends; it runs more syndicated content and requires that its reporters operate their own cameras to minimize cost. It’s definitely struggling. KNBR, which is the sports radio station that I listen to, tells a similar story.
Do you even know anyone who actually uses the Yellow Pages anymore? That would have been unfathomable when I was growing up.
Now, Google is the Yellow Pages.
On some level, it really is as simple as saying that Craigslist killed the classified ads business, which in turn, killed the newspaper business.
The music business was once supremely cool. Records were cool. The whole chain between record producers, tour promoters and record stores was pretty cool.
Remember record stores? Whither Tower Records. Heck, even Blockbuster is standing on some wobbly legs.
Strangely, it’s not that the music suddenly is less good. In fact, I probably listen to as much music as I ever have.
It’s just that the “disruption” cow has left the barn (and is living in my iPod), and there is no turning back.
In this case, there are just too many incentives for the performers to maximize their online availability and shift their monetization to other sources, like touring and merchandising.
As a result, the music producer/promoter has been pushed to the backseat (for now).
(Un)Differentiated Media
It seems that the only safe havens are highly differentiated media creators that can’t readily be replicated elsewhere, such as the type of original programming one sees on HBO (e.g., check out: True Blood); the vertical/demographically targeted cable channels (where old media distribution rules still promulgate); and big budget movies, where production values (and production costs) are out of the reach of meta-professionals.
That is what makes the furor playing out with AP, all the more interesting.
AP is a syndicated content and news distribution service that makes its money offering infill content to (traditionally) analog media sources.
In the online world, however, the digital form of AP’s fee-based media is fodder for enabling digital publishers to link to, reference and excerpt from these same stories, typically without paying a nickel to AP.
Now, AP wants to turn back the hands of time by limiting/restricting access to and usage of that content.
Meanwhile, digital media advocates are citing fair use, and you just know that this can’t end well for AP, as their product is fundamentally undifferentiated.
That is not to suggest that they have no case, at least karmically speaking, but it’s akin to arguing about oxygen. This is the atmosphere that they operate within.
The media industry would have to exercise a collective re-set to turn the tide on this one. Maybe they will, but I am skeptical.
Re-thinking The Audience and Your Product
Extending the conversation further, Fred Wilson’s post, ‘Monetize The Audience, Not The Content’ (read the comments section) presents a conundrum.
On the one hand, I totally agree with the objective of building your business around your audience.
But, I also think that a true solution needs to reconcile how the product or service evolves to achieve differentiation in such a universe; and that is a bigger challenge.
Here, my specific assertion is that while not all content is created equal, a whole heck of a lot of it is fundamentally undifferentiated.
In the case of The New York Times (a high profile pub that Fred regularly writes about), there are a few star writers, but none of which are such must-reads as to drive users to pay for access to them (hence, the failure of NYT’s Times Select).
I love reading Frank Rich; Maureen Dowd is pretty entertaining; and Thomas Friedman is thought-provoking. Plus, there are 6-7 other times throughout the month that I find myself reading a Times article.
But, I’ve seriously never considered paying for access to them, and when the Select thing was in effect, and folks like Friedman were behind lock and key, I mostly forgot about them.
Case in point, whatever happened to Howard Stern after he left broadcast radio? Is the King of All Media even relevant anymore?
Don’t tell me how much he is worth now. Tell me this. What happened to his audience?
It’s a hard truth, but while there are 10+ good “enough” quality news/opinions sources for every news story of the day (and they are easy to find and well-indexed vis-a-via Techmeme and Google News), there is no “good enough” cheap/free alternative to the Ridley Scott directed, Christian Bale starring action movie.
As such, the NYT’s of the world face a real paradox. Their brand is their content, and without continuing to cultivate their content and innovate the way it’s presented, which costs money, they have no durable audience.
Thus, I think a better path is to:
- Come up with well-defined linkages between online and offline workflows. For example, print subscribers get access to deeper analysis, better tools for saving, excerpting, sharing and finding related content;
- Create new types of media/engagement units that reward loyalty, communit-ize it, perhaps game-ify it;
- Re-think segmentation (and pricing) across high-end, low-end, hyper-local, and vertical-specific distinctions, and re-work the product accordingly.
Apple, Record Labels serve up ‘Cocktail’
So it seems fortuitous, that as I am updating this post, word filters into the blogosphere that Apple’s long-rumored Tablet computing device is due in September (the Friday rumors said Q1, 2010), and that Apple is working with the record labels to re-invent the packaged music experience for the digital realm. Smart!
Here’s an excerpt from the article:
Apple wants to make bigger purchases more compelling by creating a new type of interactive album material, including photos, lyric sheets and liner notes that allow users to click through to items that they find most interesting.
Consumers would be able to play songs directly from the interactive book without clicking back into Apple’s iTunes software, executives said.
“It’s not just a bunch of PDFs,” said one executive. “There’s real engagement with the ancillary stuff.”
New York Story
Ending where we began, creative destruction has had a field day with the media business (and by virtue of its association, advertising as well).
To get to the other side intact, the NYT’s of the world have to figure out what they are that a focused, less expensive blogger, prosumer or meta-creator can’t emulate.
With brutal efficiency, this truth will separate those that can meaningfully, unquestionably differentiate from those that can’t.
Prognosis: more hurting ahead; then the industry finds its footing, begins a renaissance, and gets back on offense.
Related Posts:
- Digital Media Rules: The Open Sourcing of Information
- Apple, the ‘Boomer’ Tablet and the Matrix
- How Social Media Works: It’s About Breadcrumbs and Conversations
- The Programmable Fan Site: A New Media/Ad Unit Model
- Flip Video News Network: Crowd-Sourcing meets CNN