The changing media business model

Posted on 2006/05/25

0


Forrester’s Charlene Li wraps up a panel she led on The changing media business model. I’m probably overreacting here a bit, as the idea of panels like that usually is to scare the s**t out of the incumbents to generate some fresh consulting business (hehe). And with most of the things she’s mentioning in here post, I would agree 100%. But then I read this paragraph, which I find a bit misleading.
Media companies in the past derived their value from either: 1) their distribution channel; or 2) the content they created. I believe that in the future media companies will generate the bulk of their value from serving their ability to aggregate and serve audiences better than the competition.

Well, some media companies already do that. As an example: It’s the core asset of any tv network. Owning a distribution channel is important; the channel we’re running reaches about 1.2 million German households; nice to start with, but the real battle is definitely somewhere else. In digital tv, network capacity is already almost a commodity And with IPTV, it definitely is.
So it just might be, that some top tier production houses will join the ranks of aggregators. If your brand, derived from relentless on air promotion (AKA scheduled programming on a major network), is strong enough, you’ll now have the chance become your own audience aggregator.

Unfortunately, the big question ist still lumbering: even if you aggregate a sizeable audience, how are you going to convert eyeballs into revenue? Look at YouTube. Billions are watching. But where’s the scalable business model? AdSense as the poor man’s answer for media sales can’t be taken serious as a solution. And cutting some special deals with some media houses makes good PR, takes a lot of time and probably barely covers the legal cost of reviewing the contracts.

Thing is: your business model depends on your place in the media value chain. In b2c it’s either product sales or ad sales. In b2b it’s either product sales or selling services.

Where would you place, for example, digg? Again, AdSense is nice, but. Now let’s look for an equivalent in traditional media.
How about this (I’m not sure whether Kevin likes this comparison): a TV Guide for the techno-cognoscenti audience, based on a recommendation engine, which tracks certain explicit behaviours?

Now, let’s look at the TV Guide model: b2c product sales (the printed guide), ad sales (the printed guide, the web, tv), b2b services (tv guide on screen), b2b product sales (EPG data) and so on and so on.
A great company, an undisputed global market leader in it’s field. But still: just an aggregator of meta data to tv content. The real business lies somewhere else.

So let’s be careful: most of the stuff we’re talking here about is meta content. Important, yes. And, combined with the (technical) cost of production and distribution being in free fall, good for quite some tectonic movements.

But let’s be reasonable: Give me a camcorder and iMovie and a broadband connection, and I will compete with “Americas Funniest Home Videos”. But I take any bet that nobody reading this comment will be a able to produce a full season of “Desperate Housewifes” in his past time.

So back to Charlene Li: The goal of the panel: to give “traditional media” attendees an idea of how new technologies are changing the way consumers interact with media. Yup. Makes more sense. The panel on the changing media business model is postponed.
Via RSS Blogger

About these ads