Category Archives: digital media

October 3, 2016 · 11:12 am

The Coming Vast Wasteland

Back in 1961, a man by the name of Newton Minnow was appointed to run the FCC. He gave a speech soon thereafter called “Television and the Public Interest” in which he coined a phrase with which he described commercial television, calling it a “vast wasteland.” He urged us to tune in our favorite station for a day and watch from sign on until sign off:

You will see a procession of game shows, formula comedies about totally unbelievable families, blood and thunder, mayhem, violence, sadism, murder, western bad men, western good men, private eyes, gangsters, more violence, and cartoons. And endlessly commercials — many screaming, cajoling, and offending. And most of all, boredom. True, you’ll see a few things you will enjoy. But they will be very, very few.

Fast forward 55 years. One can see something similar happening in our new media landscape. The public networks – Facebook, Twitter, Google+, Linkedin and others – are becoming vast wastelands. You might not be aware of it, but in the last year, more content is being posted on private networks such as Snapchat, Messenger, and WhatsApp than on the public networks. That private content tends to be what’s meaningful to people. What’s left is increasingly clickbait, corporate shouting, or, worst of all, content generated by bots. In short, a vast wasteland.

All of this is happening at a time when many companies are pushing hard to create and distribute content yet something like 80% of the content we publish is never seen by the intended audience. We are increasingly reliant as the shift moves to untrackable (by anyone other than the platform owners themselves) places on the folks who run the platforms for data. We can’t listen and respond to things that we can’t hear, and unless the consumer reaches out (vs. complaining to everyone they know in private), we’re deaf and blind with respect to being proactive and customer friendly.

The challenge for all of us is to foster engagement and to be proactively supportive. The expanse of the coming vast wasteland in the public networks is going to make that much harder, and subject to the will (and business models) of the walled garden gatekeepers. How do we address thins? Thoughts?

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September 29, 2016 · 9:52 am

57 Channels

Anyone with whom I speak these days has a lot to say about competition. Every business seems to have many more players going head to head for customers, and I suspect that nowhere is that more true than in the media business. The Boss wrote about “57 Channels And Nothing On” a couple of decades ago. He characterized it as having been “Shot back in the quaint days of only 57 channels and no flat screen TVs”, and 25 years later the average home can receive nearly 206 channels, according to Nielsen. What is instructive to anyone is business, however, is that they watch fewer than 20, or under 10% (19.8 channels, to be precise).

Obviously, consumers are spending just as much, if not more, time with video content. It’s not a matter of the video business being imperiled. What is a problem, however, is the manner in which the traditional business model operates. Video providers have bundled together dozens (hundreds!) of channels and sold them to consumers who really had very limited choices in breaking the bundle of channels apart. You’re beginning to see “skinny bundles” which focus on a few popular channels. Although I’m not aware of any “roll your own” packages in which a consumer can choose any channels and create their own bundles, they aren’t far off. Rest assured that if the cable and satellite guys don’t offer them, someone will.

Consumers aren’t rejecting TV – they’re rejecting a business model which forces them to pay for TV they don’t watch. That’s something that isn’t unique to cable and satellite. Fast food does it. You might end up paying more for something if you don’t want the fries or soda and, therefore, buy ala carte. Software companies do it. The music business did it (an album was always cheaper than buying the best songs on that album as singles). 5 years ago, researchers found that consumers might actually value a bundle less than they would value the individual component products. There was a “negative synergy” associated with the bundle. The key to successful bundling it seems is to provide an option to buy the individual components or the bundle. When that option isn’t there, sales actually declined significantly.

We can’t sit on existing business models anymore no matter what business we’re in. We certainly can’t force consumers to pay for things they don’t really want to get those things they do want. I’m watching the changes in the video business with great curiosity (and some degree of thanks that I’m no longer in it!). You?

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September 21, 2016 · 11:37 am

Winners Rethink

At one time in my life, I had aspirations to do music as a career. Even though I no longer have either the band or the hair required to be a rock star I still listen to music and follow industry developments. Because of that, an article on the music industry caught my eye this morning. It comes from MediaPost and its headline reads “Streaming Music Enjoys Revenue Uptick to $3B.” It goes on to report that:

Revenues from streaming services continued to grow strongly both in dollars and share of total revenues. During the first half of the year, streaming music revenues totaled $1.6 billion — up 57% year-over-year. This accounted for 47% of industry revenues, which compares positively with 32% in the first half of 2015.

Impressive growth and reflection on how the business has changed. Spotify, Pandora, Apple Music, and others have changed how people consume this product. What hasn’t changed, however, is how the music business works. In fact, a business model that was written into some laws a century ago still governs how the business operates for the most part. As a result, as Fortune reported a couple of months ago:

Based on almost every metric that matters, Spotify is the most successful streaming music service in the world, with almost 90 million subscribers and close to $2 billion in annual revenues. Yet its recently-released financial results show that despite its massive success, it is still incapable of making a profit—and because of the way the music business works, it may never make one.

You won’t have to search very hard to find many articles detailing how little money artists make from digital music either. So where are these record (pun intended) revenues going? You can probably guess. The people at the record companies wrote the business model, and there are still payments to those companies for things such as “breakage”, physical discs (fragile vinyl when the clause was written into standard agreements) that didn’t make the trip to retail intact. Recently, “New Technology Clauses” were added which charges the artist to ready an album for digital distribution and which are completely unnecessary.

The point today isn’t to rage against the record machine. It’s to point out that this industry and almost every other business has been totally disrupted over the last 20 years. Middlemen serve very little purpose other than to act as legally-protected gatekeepers. Rather than rethinking the business model with an eye toward how to provide value to the customers (the artists and consumers) they serve, the record companies dig in further. They haven’t quite figured out that if they starve the artists and bankrupt the new distribution systems, they too will die.

So ask yourself if the business model in which you operate has been rethought in the last few years. You can watch it happening (finally) in the TV business and countless others if you need inspiration. Winners are rethinking everything. Losers dig in. You?

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