[As a follow-up to the previous post about forecasts of media transformation – thi spost first published in January 2006]
In Thermo[SAT]’s first post my blogging colleague Michel Dumais set out one of the primary targets of media companies (the consumer’s living room) as it becomes more and more clear that what we understood as broadcast media is being “blown to bits” (in the vernacular) – fragmenting, unbundling and from what we can see from “early signals” reconstituting itself around an interactive two-way pull-and-push infrastructure driven increasingly by the consumers … who are also rapidly becoming *producers*
As people are becoming producers (and if not producing at least re-mixing what is broadcast to them using tools like TiVo, podcasting, blogging, aggregation of RSS feeds) it is becoming evident that there are significant implications in the areas of business logic and business models, intellectual and copyright law and governmental regulatory policy and implementation. While the basic thrust of the Internet’s impact on traditional media is understood by those who have been following the issues since the early days of the Internet, this awareness is now becoming more and more widespread as new capabilities and service offers keep coming on stream, such as Bittorrent, Rocketboom, Youtube or Brightcove. David Schatzky, a Jupiter Research media analyst, provides a short and succinct perspective on the ongoing fragmentation of the media we know: Regarding the US media industry (and by extrapolation the rest of the Western world, to some extent), he poses the question …
“this is a time of dramatic disruption and transformation that will remake the industry landscape and see formerly dominant companies whither into irrelevance and test the resilience of an industry that has led the world through all of the last century. Will it lead the world in the current century?”
He then offers a high-level elaboration to his point of view:
The driver of this disruption is the dynamic of fragmentation, which is playing out along three dimensions simultaneously. Audience fragmentation. As an expanding array of media and entertainment choices make claims on consumers’ time, the amount of time they spend with traditional media, from television to magazines, is declining. Mass audiences are shrinking. Personal fragmentation. Consumers are spreading their media time and dollars around, spending less time with TV, magazines and other traditional media in favor of newer media like the Internet and video games. Media fragmentation. Media itself is beginning to fragment in dramatic ways. Individual songs and episodes of TV series are available for sale via download. Digital “feeds” of newspaper and magazine content allow consumers to read parts of a publication out of context without ever seeing the rest. Cable companies may soon offer individual channels a la carte.
Consumers increasingly expect to be able to consume media when and where they want, on any platform or device, in any context. The technology and media industries are beginning to oblige them. Fragmentation is both a cause and effect, creating a cycle in which fragmented audiences lead to fragmented content, which allows audiences to fragment further, and so on. These changes will threaten established practices and entrenched interests in the media and advertising sectors, but consumers will benefit and ultimately, companies that can ride this wave will benefit as well. They have no choice.
His prescription ?
As fragmentation transforms the media landscape, media companies will need to adapt to remain relevant. They will have to:
– Support multiple platforms for their content, from public venues such as theaters to digital media hubs in the home, to portable devices on the go. Content not available across the spectrum of platforms used by consumers will become irrelevant to them.
– Enable disaggregated, a la carte models that offer singles, episodes, feeds, fragments, samples, and so on to consumers who increasingly expect to select and consume their media granularly.
– Integrate more closely with advertisers, looking beyond the thirty-second TV spots, for example, to a multitude of new formats, from much shorter 5- to 10-second units to branding experiences that are integral to the media they sponsor, such as product placement.
– Collaborate more with consumers who, in online discussions, blogs, and podcasts are increasingly creating their own media.”
Terry Heaton, another prominent media analyst, provides an ongoing watch on his PoMo blog over the re-structuring of the television industry, and offers a clear and substantial perspective on the major changes being experienced by the television industry in a recent short article.
So what happens to broadcasters? TV Networks and program producers can make more money off downloads of their programming than they can through advertising. That is the remarkable conclusion of a couple of noted researchers and reported today by Diane Mermigas in The Hollywood Reporter. The math is pretty amazing, and it validates what a few of us have been saying for years about the role of the local broadcaster — that the Internet destroys middlemen in the existing value chain of media.
The mass-market acceptance of broadband in the U.S. has tipped the scales back to content producers and packagers, with the proliferation of distributors diluting the de facto gatekeeper strength of television stations, cable and satellite systems, cellular and video telephones, personal digital assistants, personal media players and Internet service providers. That should theoretically boost the economic fortunes of content players, though much will depend on the details of new business models and prevailing of old business models. So while the "economic fortunes of content players" are getting boosted, what about the old distribution system?
Heaton elaborates on how making money in the traditional media world is being “blown to bits” in another article titled “The Economy of Unbundled Advertising”, in which he explores possibilities that seem to be just around the corner.
Advertisers are projected to spend $292 billion in 2006, and like the content players they support, the industry is dealing with real threats due to the unbundling of media. The same energy that’s pulling apart the packaging of media also demands that merchants who sell goods and services do the same in their communication with the public. Who wants to sit through the pitch of a sales person at any kind of dealership? Just give me the price, man. This essay proposes a form of advertising that doesn’t currently exist but certainly could. Like the personal media revolution, the concept levels the playing field for anybody wishing to sell goods and services, so I don’t think it’s much of a stretch to predict that something like this will come about.
The trends are evident, and the fragmenting and unbundling of media (and the attendant online advertising) continues apace. These changes are important … so important that the changes will not unfold smoothly, or without pushback from the established power in television, cable, satellite and the telecommunicatio
ns infrastructure that is (to date) enabling the disruption.
Doc Searls is a senior editor of the Linux Journal, and a widely-respected expert on the impacts of the Internet and interactivity on media business logic and business models. He is the author, with David Weinberger, of a manifesto titled “World of Ends” in which he sets forth some fundamental reasons why such a massive power shift … away from top-down broadcast models and towards fragmented, do-it-yourself content production … is occurring.
In a more recent article titled “Saving The Net: How To Keep The Carriers From Flushing The Net Down The Tubes", Searls outlines the pushback that has begun from the carriers of bits, who today are assertively stating that it is their pipes that are being used to carry out this revolution. They want regulatory policies to be changed in favour of their control over access and distribution of content. Many commenters who follow these issues, arguments and developments have noted that the eventual outcomes will define whether or not we get more traditional television-and-radio broadcast models applied to the Internet environment, or whether the regulators and telecommunications companies will have to be a party to what has been called “the democratization of information”.
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