There’s a good exchange going on between John Hagel and Umair Haque and a couple of other guys. By putting Lost and Desperate Housewives, is ABC/Disney close to finding the holy grail of digital distribution (as Fred Wilson seems to believe) – or is making exactly the wrong move.
So what’s happening here? With putting some successful shows online, Disney as a copyright holder is most likely generating some additional pocket money. That’s just fine.
Same for ABC as the traditional distributor (AKA tv network): some incremental income from some top shows. Makes sense, too.
Of course, Disney/ABC won’t get any multiples in valuation out of that. Producing content isn’t a scalable business model. Bundling, or – as Umair likes to call it: rebundling is. Rebundling is where value capture will happen – at communities, reconstructors, markets, networks – that direct people’s attention to individualized ‘casts. This is where branding will be reborn – and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)
Yes, right. Google’s a good example. It’s an ad sales giant with an attached search engine. Which is either a good example that directing people’s attention to individualized ‘casts is either a phantastic business. Or a nice way of telling you that the value creation spot at this end of the value chain is already taken. (It’s getting scary if you look at MySpace. More users than a medium sized country, more pageviews than sand on mars. And Appalachian thrift store-CPMs. Is there a cure for this? That’s going to be an interesting question for News Corp.)
Hagel’s approach is a bit more sober. Now, there is nothing wrong with remaining a product business in the media industry. If you come up with compelling and engaging products (content), you will still own a profitable business. You may even attract a loyal audience. But the challenge will be to build a scalable and sustainable business. In a world of intensifying competition and proliferating options, that is going to get harder and harder. In most cases, audience “loyalty” is only as good as the most recent product issued.
In contrast, audience relationship businesses take these proliferating content options as an opportunity, rather than a challenge. The more options there are, the more value that can be created by organizing, packaging, presenting and adding to these options for specific audiences. Itâ€™s a completely different mindset, skill set, culture and economics.
Straight consultant thinking. But in any product business, loyalty is tied to your most recent product. It’s more a question of product life cycles. Designing and producing a car is a 25 years effort (including the after sales market). Media is about 5 minutes of fame. That’s why brands like Oldsmobile can experience quarter of a century long near death experiences. Media products die much quicker (anybody remembers The Sweet?).
Audience relationship is definitely a right angle. And from a consistency of performance perspective, the quantity of options to be matched with a as big as possible consumer base makes perfect sense. But the real power
of media and media production is the chance of hitting upon the perpetuum mobile of inherent brand building.
No media buying involved. You ARE the media (at least, if you keep all those necessary rights, handle distribution well …) In those cases, audience relationship building isn’t about matching and hedging. It’s about product-defined relationships, delivering emotional frameworks for people to live with.