Linking Local - The wikiDOMO Blog

Digital Media and the Status Quo!

Digital media has failed to deliver on its promise. We have worked so hard to create a “new media” industry, but we failed to realize that we simply digitized an old media model. For the most part the digital media industry has not been very innovative, not at its core. Yes, some of the peripheral aspects have been creative, but those innovations sit on top of a model that is a pure rip-off of a century old model - a model that won’t stand the test of time.

This reality struck me especially hard over the last week. I met up with a few more than usual number of friends and colleagues in the media industry, and it’s been a while since I have felt part of the industry (this comes from a decision that I made a couple of years ago). Now, as I meet up with them, it’s as if I’m seeing the industry with a new set of eyes.

All the insiders are doing what they have been doing all along, dealing with the ups and downs of the industry. Some are happy to see investment in their organization, others are dreading the amount of destruction that has happened and wondering how much more is yet to come. Others, are simply dealing with another cycle, another down slope in the rollercoaster that is media. It’s as if they’re stuck on an endless ride that loops and will never lead anywhere. That is except for the brutal ejections that happen so frequently that they have become part of what is acceptable.

Those of you who are not in media might have a tough time understanding what the media industry is. It’s probably not what you think it is. For the most part it has little to do with content. It’s about advertising. Well, the selling of adverting.  Then you have all the support organizations that help make that happen, the audience measurement, sales organizations and technology companies. It’s a highly integrated industry. The digital part of the industry, the one I’m most familiar with, modeled itself on the traditional offline industries of print, television and radio, so it’s not much of a surprise that things are as they are.

So what does this all mean? That’s the 64 thousand dollar question.  To me, it means that as the fundamentals of what works changes, the models based on those fundamentals will fail. And, whether the model is analogue or digital if it is based on a principle that is no longer true, then it will fail.

The fundamental principle of media has been the aggregation of audience and the selling of access to that audience to advertisers. That worked when there were huge barriers to entry in media. When only the few had the power to publish or broadcast. That has all changed, and yet we cling to the model.

Today, anyone can publish something. In fact, individuals publish billions of times more than the media does. That will continue to make traditional media less important and therefore reduce their ability to profit from their exclusive powers of reach. I’m not the first to point this out, but its impact is lost on most of us, especially, those inside the machine. I hate to see what will be the horrible impact on the people in the industry that I played a small role in building.

I don’t know the solution. I’m working on what I think is a model that will evolve to replace media, but that’s not going to solve this problem. The problem being, we created an industry on a failing model and all those involved are going to end up paying for it.

 

‘The Master Switch’ an absolute must read!

We’ve never blogged about a book here on Linking Local, but The Master Switch: The Rise and Fall of Information Empires by Tim Wu is so powerful a book, that it has caused me to want to write this. The book does an amazing job of analyzing what Wu calls ‘The Cycle’ - a predictable pattern that many of the early information industries followed. In reading the patterns of the cycle on the telephone, film, radio and television industries, I started to equate it to the cycle of human life; astonishing birth, precarious infancy, wild adolescence, steady adulthood, possible midlife crisis, relaxed retirement and ultimately untimely death. Though this pattern doesn't always map directly to the histories as laid out by Wu, I can’t help but relate them in this way, making it - in my mind at least - much more poignant.

 

Though the book covers the often perceived distinct industries of telecommunications, entertainment and media industries of the last century,  Wu wonderfully describes the entanglement of empires that constituted the dawn of the information age.  Starting with Bell and the telephone and continuing through to Google, Wu works his magic by tracing a critical involvement of AT&T in the existence of many, if not all, aspects of the information age.

 

Wu concludes his analysis of the information industries by calling for what he calls the Separation Principles.  Though I can’t do it justice here, I understand it as a call for creating a strong separation between content and distribution.  Much like the separation of the executive, judicial and legislative branches of the U.S. Government, he suggests that though a single central command system may be more efficient, it does not provide the essential protections we need in terms of rights and freedoms.

 

The lessons learned from this book made me reflect as to what might be the next period of the information age; the Communal Information Age or what we see today in its infancy as Open-Data and the Semantic Web. An era when not only is access to information ubiquitous through the use of the Internet, but where public ownership, aggregation and curation of many types of information becomes vital to how we interact with data/information in the future. Essentially, applying to many categories of information the principles that modern cities have applied to public water and other public utilities for centuries. What will happen when not only the transmission, but much of what is transmitted is seen as a public good? The concerns that the Separation Principles attempt to address will be even greater and the risks even greater.

 

By Jose A. Leal

Twitter:  @jaleal

TV, Radio and Newspaper Revenues are Down, Down, Down

Television revenues a cliff-hanger

In both an Olympic and presidential election year, U.S. television revenues are still projected to drop 7% according to BIA Advisory Services.  This represents a loss of over $3 billion. Subtract the $1 billion that NBC generated with the Olympics and the more than $2 billion spent by the political parties on TV and it all adds up to a $6 billion (-14%) shortfall when compared to 2007 revenues. 2009 looks to be even worse – cliff-hanger indeed.

Radio revenues continue to skid

U.S. radio revenues have just experienced the largest year over year drop in one month. The Radio Advertising Bureau just released the November numbers and they’re down-right scary. A 22% drop in national and local ad revenues. When you look at November over two years (2008 vs. 2006), it’s a 29% drop. Radio has not had a year over year revenue increase since April 2007, and that was only 1%.

Newspapers not delivering

According to the NAA, U.S. newspapers lost $15 billion, in the first three quarters of 2008, compared to 2007. In the third quarter, they dropped over 19%. Classifieds continue to be the hardest hit with a nearly 31% drop. The category has been hit hard for years. In 2000 Classifieds accounted for over $5 billion in revenues, this year it will barely crack $2 billion.

It’s not just the economy stupid.

Mass media advertising is heading for a world of hurt. 

What will happen to the advertising industry? I have a few thoughts, but they will make for future posts. 

As I have written before, the newspaper industry is dead. If you didn’t think so then, how do you feel about it now that the second largest newspaper company, Tribune Company, has filed for chapter 11? Add to that the fact that the New York Times (the nation’s largest metro newspaper) has been forced to put its office tower up as collateral for a $225 million loan and we have the beginning of the end.

There is no doubt that 2009 will bring a lot of change to the advertising landscape.  

We live in interesting times…