Waiting for the great leap forward
All the traditional media are waiting for is an entrepreneur to deliver a eureka moment for content delivery
In February, Monitise founder Alastair Lukies told Growing Business that his time working for a media company gave him an invaluable crash course in business. He found that the constant tension between the integrity of the product and the commercial imperative provided a useful microcosm of a fine balance that has to be achieved in every business. The internet brought a myriad of opportunities for publishers of all descriptions, yet it also threatened the equilibrium Lukies spoke of in media firms’ business models. When new ways of viewing and selling a product become available, established companies must move quickly to adapt. Many incumbents in the media industry have spectacularly failed to do this. An intriguing article in last Sunday’s Observer told the tale of a dismal 2008 for newspapers across the US, with advertising revenues experiencing their biggest drop since records began. While the most significant short term factor is the parlous state of the economy, Google’s innovative advertising strategy has seen its revenues grow by approximately 40 percent year on year. The problem is not that the newspapers’ reaction was too slow – the debate is hardly new, and firms have had well over a decade to get their online strategy right. It was just the wrong one. Music companies fought tooth and nail to keep their product from being given away for free, with varying results, but newspaper companies unquestioningly gave the news away for free, making print news worthless. The article concluded that the newspaper industry will ultimately have to charge readers for original and exclusive online content. While online ad revenues will of course continue to grow, this may not be enough. Rupert Murdoch intends to maintain a $79 annual subscription fee for those who want to access all of the paper’s online content and the Financial Times does something similar here. But putting walls back up around content will be extremely tricky now that consumers are so used to free content.The age of the technology enabled media entrepreneur is upon us, but when it comes to content delivery, we’re still waiting for the great leap forward. Watching this play out over the next few years will be fascinating. When I spoke to Channel 4 chairman Luke Johnson a few months ago, he acknowledged that all the traditional media are facing enormous upheaval, a challenge that he’s finding both exciting and daunting.The media world has always attracted more than its fair share of innovators and larger than life characters. It feels like we’re approaching a turning point where someone will deliver a business model that significantly changes the way content is delivered, and it’s more likely to be a smart entrepreneur than a lumbering corporate.