Creating the Future of Media: 4 Driving Forces, 4 Strategic Issues, 4 Essential Capabilities
I very rarely find the time to write magazine articles, but I was delighted to write the opening feature article for MediaTitles 2010, an annual publication which covers the media and magazine industry.
To see the article in the full splendor of the print version, go to the MediaTitles website, which has the full publication viewable using Realview Technologies (with the article reformatted to take out the lists of four, which I think is a pity). My article is on pages 7-10.
The (original) text of the article is below.
CREATING THE FUTURE OF MEDIA
These are the best of times, these are the worst of times. The global economic crisis, coming on top of a dramatic transformation wrought by the rise of the Internet, is creating the swiftest change in media industry structure ever experienced. Newspapers and magazines are being shut down at an extraordinary pace all over the world, journalists are losing their jobs, and broadcast media are under threat as sliding advertising revenue hit an unmoving cost base. Yet as the world shifts towards what will be truly an all-encompassing media economy, there are extraordinary opportunities ahead for media organisations.
This is a critical juncture to examine the future of media. Magazines have and will continue to be central to how we learn, socialise, entertain ourselves, and make buying decisions. Yet the magazine industry will undoubtedly look very different scant years ahead. It is our role and responsibility to create the future of media, rather than to let it happen to us. To do that, we need to examine the most central driving forces, strategic issues and capabilities in the evolving media landscape.
Four Driving Forces
The future is concealed behind a diaphanous veil. While the details are obscure, we can generate valuable insights into the emerging shape of media by examining the most consistent and enduring trends. Here are four of the most important trends you must recognise in mapping a path forward.
In a connected world, we have access to every publisher in the world that makes its content available in digital format. Not only that, literally hundreds of millions of people have effectively become publishers themselves, creating a phenomenal explosion in the amount of information available. Absolutely, just a small proportion of this infinite pool of information is worth digesting, but all of it distracts and entices readers throughout their day. Media has fragmented into literally hundreds of millions of pieces.
Advertising shifts from print to online
The advertising revenue figures are in. In the developed world, they point in just one direction. In the case of print, downwards. In the case of online, upwards. There is no good reason to believe either will change direction soon, particularly as the scope of online content expands.
Rise of mobile media
The majority of the more than 25 million owners of Apple’s iPhone 3G use their mobile phones to read articles and sometimes even books. This landmark in mobile media is just the beginning. The launch of a swathe of e-book readers and tablet computers is now shifting how we read digital documents from the desktop to lightweight portable devices that you can browse comfortably in a train, on a deckchair or sitting on the toilet.
Content discovery changes
One of the most fundamental shifts in media has been how we find the content we want. It is becoming rare to pick up a newspaper or switch on the TV just to browse and find what’s there. Now we discover the articles, music and movies we consume through recommendations, most-popular lists, social media and aggregators. Single source content is being replaced by word of mouth discovery.
Four Strategic Issues
In the complex media world generated by these and other driving forces, there are an array of issues to consider in creating and implementing effective strategies. Given the seismic shifts in existing media business models, the most important relate to how money will be made in the new landscape.
Scaling costs and revenues
As media fragments into a proliferation of smaller pieces, revenues are often sliding against a cost base that is difficult to move. This world strongly favours smaller and more nimble players. Media can still be highly profitable at every point along the famed “long tail” of media. However this requires carving out niches within which costs can be commensurate to revenues.
Media fragments may be small, but they can be brought together to create larger businesses. Companies that can successfully replicate media operations across communities, countries, industries, demographics or other slices will reap the benefits of multiple revenue streams while containing costs. Selecting multiple adjacent niches and serving them efficiently is one of the most relevant business models moving forward.
Adding value to content and communities
An increasing proportion of content is free, however high-value content still commands a healthy price. You can select from the wide variety of ways of adding value to content those that are most relevant to your market and positioning. Audiences are now communities, and any business strategy needs to specify how you intend to create exceptional value for your communities.
New revenue streams
An industry that has lived primarily on advertising, subscriptions, and classifieds now finds new revenue opportunities sprouting on all fronts. The Media Revenue Models chart above shows just some of the ways in which media operators can tap new revenue streams. Sometimes new relationships, competences and investment are required to tap these pools. That is the price of surviving and thriving.
Four Essential Capabilities
Media, in the broadest sense of creating and disseminating messages, will be central to the next phase of the global economy. As such, media players have an unparalleled opportunity to apply their existing competences to building existing and new businesses. However there are select capabilities – some new and some not – that are particularly relevant to media participants in shaping an extraordinary future.
Newswires and major newspapers decry aggregators who they say steal their content. However many other media participants (and indeed many of those crying foul) are finding that pointing their readers to a world of relevant content is one of the most powerful strategies available.
Social media engagement
As people spend more time on Facebook, Twitter, blogs and a plethora of other social media platforms, publishers must recognise that these are central to their business. Every media property will need to develop its own unique social media strategy (see Social Media Strategy Framework above). Few will prosper without tapping the connected world of word of mouth, recommendation and referrals.
Niche media used to be about creating content for a community. Now it is more about creating value for communities in a multitude of ways, certainly by connecting them with each other, and sometimes by creating the communities themselves. If you can create value for groups who share similar interests, you undoubtedly have the foundations of a sustainable business.
The guts to invest
Much of the focus in the media industry over the last few years has been on reducing costs. However the old adage that you can’t grow a successful business by cutting is truer than ever. The challenge is that in a time of accelerating change, investment is highly risky. No one can guarantee you a return. Yet the alternative is to shrink to oblivion.
I believe that the media economy will encompass an increasing proportion of the rapidly growing global economy. The rapidly blurring boundaries of the media industry represent an extraordinary opportunity to build on traditional strengths, and to hew out a world of growth, expansion and value creation. The future is yours to create.
Ross Dawson is Chairman of Future Exploration Network, an international consulting firm that specialises in helping media companies create their future. His blog (www.rossdawsonblog.com), ranked as one of the top business blogs in the world, features free chapters from all of his books as well as many reports on the future of media.