The worst may indeed be over for traditional media. Broadcasters and newspaper groups are posting figures showing a return to growth, or at least a slowing of decline. Unless the traditional media does more (much more) to innovate and drive new revenue streams, however, this will prove nothing more than a false dawn.
The fortunes of media companies are being driven by huge structural shifts, far more significant than accompanying cyclical factors.
Improving results are clearly positive, but miss the larger picture: that new media companies are innovating far faster, setting out to control the very business models that may sustain old media in the future. In controlling the platforms – both hardware and software – they are set to benefit disproportionately from new models of advertising and commerce, and the increased digitization of media. In this regard, a little bit of good news may prove a dangerous thing for ‘old’ media.
Take Facebook and their recent F8 conference, where they released no fewer than 15 new products. Among them was the Open Graph API, which represents nothing short of Facebook looking to create a new internet, or at least one that looks a lot more like it. In the short-term there are large advantages to integrating Facebook into your site. In the long-term, however, there is only one winner, with Facebook aspiring to own your online identity, advertising, micro-transactions, and the mobile space. By doing so, revenues may be generated for all, but amid the rising tide, Facebook would be the clear winner.
Repeat for Apple, the iPad and iAds. The saviour of magazines and newspapers – perhaps. A means of propelling Apple to a dominant position at the negotiating table – definitely.
The internet and the media are increasingly being characterised by who can innovate the fastest, and thus gain control of the platform and business models. Traditional media is right to embrace these new platforms and models, but it is their lack / speed of innovation that will ultimately lead to the likes of Google, Apple and Facebook dominating the digitization of all media. To use an analogy from Formula 1, would you rather be an F1 team, or Mr Ecclestone? I for one, am backing the latter, to control the flow of money and the fortunes of the former.
Oliver Snoddy
