Challenge&Possibilities

PreparedbyTerryGarrett(seelastslideforcontactinfo)

Thispresentationisdirectedtotraditionalmediaplayers,primarilyprintpublishers.

Theideasandconceptsrepresentasynthesisofthethoughts,opinionsandresearch,whichmanyhavecontributed.

Ihopethisprovidesanoverviewofthecurrentsituationthatleadstoquickandfuriousinventionandinnovation.

TherehavebeenmanygoodideasfloatedbyearnesteffortsofNewspaperNext,PewCenterandAJR.

There’stoomuchtoeinthewaterandnotenoughbaptismforimplementationofthoseideas.

Fairlysimpleandstable

• Youknewhowthegamewasplayed.

• Youactedaccordingly.• Supplyanddemandwerefairlystable.

• Milddisruptionsproducednewideasandyoucouldadaptwithoutmucheffortorpain.

iterateintuitiverelationships…aggregateseamlesse‐services…reinventstickyusers…HA!

Toomanylevelshappeningsimultaneously:Dryingupoffinancing,deepbudgetcutbacks,disappearingsalesandaudience…

Youdon’tknowwhattodo.

•  Youreactconstantlyandlosesenseofbeingproactive.

•  Youwanttimetosortitout.

•  Youhavetotrynewthings,butwhat?

•  WTF?

Marketdriveneconomy overpastfiftyyears

Consumerspending73%ofUSeconomy

Drivesadvertisingspendingandproliferationofmediachannelsandplayers

ConsumerspendingroserapidlyAND

Advertisingspendingfollowedandincreased10Xpre‐1980levels…

Mediachannelsbecameover‐saturatedwithplayers

Matureplayersprofitharvest,butmakelessinvestmentincontentquality,slowergrowth,losemarketsharegradually.

Start‐upsshowheadygrowth,investinmarketing,makelessprofitsthanincumbentplayers…

•Movefromgorgingonthe“mediabuffet”topost‐consumptionfatigue,over‐whelmed,overstimulated,toomuchofagoodthing

•Diminishedengagement,indifferencesetin…

Thenconsumersbegin

•Mentalsortingofmostmediachannelsandplayersinto‘allaboutthesame’,lumpymass

Orintoaslimmer‘musthave’niches

1908averagenewspapercosts5¢(fornewscontent,pre‐massadvertisingera)

2008averagenewspapercosts50¢

Adjust1908coststo2008

forequivalentprice:

$2.67percopy

In100years,Newscontentwasdevaluedinprice400%

Content Device Devicecosts Perceptionofcontent

TV TVsets *Relative FREE(exceptcable)

Radio Multi‐sets Relative FREE

Dailynewspaper Paper Nominalrecurring Paid,butnecessary

Magazines Paper Nominal‘+’recurring Paid,necessaryluxury

Otherprint Paper Nonerecurring FREE

* Expense of acquiring device was relative to consumer’s income

Twodevicescandeliverallformsofmediaanywhere,anytime

DeviceandserviceCost:relativetoconsumer’sincome

Perception:FREEcontent

VE

▼ Traditionalmediaplayersbundledcontent(manyarticlesbecamedailypackagedproduct)

▼ Webunbundlescontentpackages[atomizesit]

▼ Webplayers[search,aggregators,reconstructors]re‐bundlecontentintonewpackagesundertheirbrand,whichdilutesoriginator’sbrandbasedonsinglepackageidea

▼ Google,Yahooatomizesadvertisingandchangeprice/valuemetricandbuy/sellmethodology.

•  Newplayerscapturenewwebadincome,deviceanddistributionincomeandreducetheincomepotentialfortraditionalmediaplayers…wholackabilitytoscale.

•  Consumersgetafreerfreeride TellmesomethingIdon’tknow!

Newmodelsforcontentandadvertisingareurgentlynecessary.

Thereisnogoingback.

Majoroverhaulisrequired.

1  WillconsumerspayapriceaboveFREEfornewscontent?

2  Willadsalesaloneyieldenoughincometosupportanewsoperation?

3  Does‘qualityofcontent’mattertoconsumers?

4  Howdoconsumersparticipateincreatingthecontextofnews?

5  Doesbrandofnewscontentprovidermattertoconsumers?

6  Howimportantisdistributionofcontenttoconsumers?

Nameatleastthreeconsumeritemsthatwereoncepaid,butarenowFREE.

Nofairsayingnewscontent,oranythingrelatedtotheweb.

Freecheckingaccounts

Thepointistherearefewinstancesofconvertingconsumerproductsorservicestofree.

Thereasonisobvious,it’sadamntougheconomicmodeltomakework.

FREEcheckingasalossleadertowritingbadmortgages?

Theproblemisthatit’sbeenpricedatFREEbytraditionalplayersforsolongnowtheybelieveit’sworthlessandconsumersexpectit.

①  Traditionalplayersaremotivatedtothinknewscontenthasvaluenow,becausetheadvertisingsalesrughasbeenpulledoutfromunderthemandonlinepricessuck.

②  Theyhaven’tfiguredoutthenewvaluecreatedforcontentwhenconsumers,bloggersandothersrateit,shareit,commentonit,re‐bundleit.Asamatteroffact,theyhaveresistedthispracticewhentheyshouldworkitandseethevalue.Itcreatescontextfornewsconsumption.

Newscontent

Commodity

“Undifferentiatedquality”“Allinfoisequal”“Info=News”

Isthistrue?

o Newscontentpublishershavebeentoldandsomebelievethatnewsisacommoditythatisvaluelessinandofitself.

o Itisvaluableonly asameanstoattractaudienceandselladvertising.

EvencommoditieshavevalueatapriceaboveFREE.

gold silver soybeanscorn

copper porkbellies(yum,yum)

Howso?Commoditiesarethingsfairlysimpletoidentifyandvaluebasedonsimplersupplyanddemandvariables.

Newscontentisrapidlybecomingmorecomplex.Itisbasedonthoughtsandideasabouteventsandthings,andsubjectivelyvalued.

Commodityisthewrongnountoassociatewithnews.Itoversimplifiesitstruemeaningandvalue.

Valuedependsuponhowwellnewsis:

▼ Conceptualized

▼ Contextualized

▼ Whereandhowit’sdelivered

▼ Whenit’sdelivered

▼ Crediblesource

“Idon’tthinkIcaneatallthisonmelunchbreak”

FREErattlers,allyoucaneat!

Whatgivesthemmoreenjoymentforlesstimeinvested?

▼ Publishersmustknowtheutilityofnewsforconsumers[thinkNewspaperNext‘Jobstobedone’list]

▼ Helpthemfindit—makeitreadilyavailableviacomputerandmobile

▼ Helpthemshareit,rateit,evaluateitinanewcontext—connectedconsumptionfactor

Consumerssharecontenttheyvaluewithselectedothersortothecommons.

Connectedconsumptionhelpsthemfilteranddiscovercontent.

Didyouhear…?

X

Newscontentprovidersmustexploitandleveragethistogreatadvantageforall.

Think‐like

strategyDevicesand

Sharingapps

BloggersConsumersNewsAggregators‘Linkeconomy’

▼ Addstocontentvaluebyprovidinganewmeasureofcommunity‐propagatedcontext…communitytellsoneanotherwhatthenewsisworthandwhy.

▼ Notfixed,butconstantlymutableandelastic.

▼ Contextandcontentarenolongerone‐way,

Editor/writerconsumer.

▼ Whichmeans,italtersthenatureandvalueofcontentinameaningfulandpositivewayforconsumersandcontentproviders

FromthePewCenter’sStateoftheNewsMedia2008report

“Asurveyofjournalistsfromdifferentmedia...Majoritiesthinksuchthingsasjournalistswritingblogs,therankingofstoriesontheirWebsites,citizenspostingcommentsorrankingstories,evencitizennewssites,aremakingjournalismbetter—aperspectivehardtoimagineevenafewyearsago.Thesenewtechnologiesareseenaslessathreattovaluesorademandontimethanawaytoreconnectwithaudiences.Newspeoplealsoarelessanxiousaboutcredibility,thefocusofconcernafewyearsago.”

Freecontent

Donorsupported

Freecontent

Adsupported

Paidcontent

Paidcontent

Adstoo

Noads

Free&Paid

Free&Paid

Adstoo

Noads

AWordfromOurSponsor

Massadvertisingmodel

JosephPulitzer'sNewYorkWorld1890Adjustedto2007dollarsNet Income $916million

Google’sWorld2007NetIncome$5billion

Innovation

Createdadvertisingtoamassaudience

Createdbidpricingandself‐adminadvertisingtoaverytargetedaudience.

Targetedadvertisingmodel

Google’sinnovationreshapesalladvertising‐basedmedia,notjustonline.

Itisdisruptinganestablishedmarketplaceandconvertingvastsumsofmarketsharetoitself.

Themagnitudeofoperatingincomeat5timesthelevelofthepreviouslydominatingmodelshowsit’spower—amassivereshapingstrategy.

Thenatureofthedisruptionissosevereandshareconversionsoquickthatitwillwipeoutasignificantnumberoftraditionalmediaplayers,includingmajoradagencies.

PlayersneedanEntirelynewapproachtoselling,distributionand

businessadministration.

THINKMANY$mall$$$$$$$$$$$$$$$treams$$$$$$$$$$$$$$$$$$$$$$$$$

vs.

$$$

•  Bannerads:someincomebutnotenoughtosupportanorganization

•  Classifieds:ditto•  Affiliate:lotsofroomforgrowth

• Mobile:nascentstagewithlotsofupside

Unbelievablethishasbeenignoredbytraditionalplayers.

Canbe:1.  Locally‐dominatedorniche‐dominated

2.  Networkedglobally

3.  High‐utilityforconsumersandadvertisers

4.  Integratedwellonlineandwithmobile

Butbrandvalueisgenerateddifferentlythanbefore.

Connectedconsumptionplusatomizeddistributionplayabigroleinbrandvalue.

Alotaboutbrandworthbasedonthevaluetheyreceive.• Makeiteasyforthemtoconveythatinformationandhelpthemspreadtheword.• Consumerscanpromoteorkillabrandinquickfashion.• Themoretransparencyandthemoreplayersfacilitateconsumercommunicationabouttheirproductsandservices,thehigherthebrandvalueprobability.

① Newvaluechainbasedononeofthesixmodelsselected

② Qualityofcontentmattersmoreorlessdependingonthemodelselected

③ Adincomefrommanysmallstreams④ Webisthehubforcontentmanagement

anddistribution⑤ Connectedconsumptionisthenew

branddriver

Traditionalplayershaveadaptedandadoptedpractices—poorlyinmostcases.

It’surgenttobeinnovativeinstead.

Thatdemandsnewmodelsbaseduponbeingashaper,notafollower.

Withanorganizationalculturethatfosters:① self‐responsibility② creativity③ enthusiasm④ experimentation⑤ innovation⑥ integrity⑦ cooperationanddirectcommunication

traditionalplayershaveachance.

TraditionalPlayers

Gottamakethedonuts

IfIwantyouropinionbyGodI’llgiveittoyou!

Wannagoforarunafterwefinishcodingthatnewfeature?

I’mcreatingacompleteanalysisofeachmodel(6)includingrequirementsforeachvaluechainnodeandtherelationshipbetweenthem.Additionally,I’llcreateproformabudgetsforafewofthemorepromisingmodelsthatapplytotransitioningplayers.

I’mconvincedthattraditionalplayersmuststartthistransitionalprocesswiththeattitudethatsays,“Ifwestartedanewmediacompanytoday,whatwoulditlooklike?” It’stheonlyapproachthatremovesthebiasofwhichresourcesarevaluableandwhicharen’t.

Ifyou’reinterestedinlearningmoreaboutwhatyoucandobyreviewingtheanalysisofthemodelsmentioned,pleasecontactme:

TerryGarrettGarrett.tm@gmail.com415.302.9583ManagementandWebConsulting:BusinessAsIfContentManagementSystems:OasisWebLogisticshttp://bizasif.comandhttp://oasiscms.com