The acceleration in the disruption of media

By Tom Foremski - November 22, 2006


I'm often invited to talk to groups of people about what's going on in the media sector, and I often start with a simple observation: At no other point in our lives will we be witness to such a massively disruptive/destructive time in the media industry.


That's exciting to me because the transition in the underlying business models in media are happening much faster than in software, hardware or anything that Moore's Law has been able to unleash. The disruption means there are many opportunities to create new types of very viable media businesses while the old guard figures things out in committees.


The dark side of all of this, however, is not very appealing and it is something I've been writing about for nearly two years. To put it simply, what happens if the old media dies before the new media learns to walk? By which I mean what happens to us if we lose the "Fourth Estate" - that fourth vital "component" of our society?


I look at media--in all of its forms--as the way society thinks things through ...


, how it moves through a process and solves problems. The serious "60 Minutes," the investigative "Frontline," and the fluffy entertainment- type Fox news shows are all important in that process.

But this type of mainstream media is being torn apart--not by blogging--but by search engine marketing. Quite simply, it is more effective to sell products and services next to a search box than next to journalism.

That's not good. I'm not blaming GOOG or YHOO for the success of search engine marketing. But I'm asking who will pay for high-quality media?

We are in trouble if we don't find that solution. We need high-quality, trustworthy media, so that we can make the right decisions as a society.

And we have some very tough collective decisions to make: about the environment, healthcare, foreign policy and many other serious issues. How can we make the right decisions with an increasingly fragmented media sector, one that is rife with misinformation?

But that can be the exciting part, and the worthwhile part, in all of this. There is an opportunity to help in the speedy transition to a new media, a new society, one that is better than the old.

We can have a future media world that incorporates the best qualities of professional journalism, citizen journalism, and what I call "smart machine" journalism--the automated aggregation through search algorithms of relevant sources.

I'm confident that we will get to this type of better media world. But I'm concerned that we will first have to go through some troubling and challenging times. And some of those troubling signs are in the acceleration in the pace of disruption in the media sector.

This acceleration is seen in the recent revisions upwards of online advertising spend, across all markets. Here is a recent Merrill Lynch report:

Raising ML U.S. online ad forecasts - We are once again raising our online forecasts to account for both the Q3 IAB results and our higher Q4 growth estimate. We are now forecasting Q4 growth of 30% y/y, up from 27%, and FY06 growth of 34%, up from 31%. For FY07, we are now forecasting slightly higher growth of 23.3% v. 22.5% previously on the continued strength of search and branded.

Here is the full report: http://rsch1.ml.com/9093/24013/ds/072_4149.PDF

The old media companies can't benefit much from more online traffic because they can't monetise that traffic to the same extent as the new media companies GOOG, YHOO, and the others.

When I worked at the Financial Times my employer collected advertising revenues so that it could pay my salary so that I and my colleagues could produce high-quality independent journalism.

GOOG and YHOO have no interest in collecting advertising revenues to pay for journalism--no matter how useful that would be to societies and communities. Their content deals cover just a fraction of the cost of producing top notch journalism.

And that's the difference between the old media and the new media companies--the awareness of a social responsibility IMHO.


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By Tom Foremski - November 22, 2006 | Permalink | Comment | Category: New Rules Communications
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Comments (5)

Emile Petrone:

I think you are on to something but one thing you missed in the article is the importance of what the people's input as an audience.

"New media" will not only be a way to more truthfully and openly report on the news, but also as a way for the viewer to say what "we" want to know more about. Stories about K-Fed or some terrible company that a powerful blogger is propping up will be less frequent.

New media will be an organism that is so closely tied to the psyche of the people, that there will be a hard way to distinguish between what the truth is and what the people want to hear.

I think that is the real problem, not so much as to how will we replace true journalism, but how will we differentiate between truth and public lynching (for lack of a better term). The power of blogging and the ease at which people can reach a critical mass online is great and terrifying.

I believe there will always be an old trustworthy news source; the problem is that they are now more and more depending on blogs/online e-pinions. This will be more evident as time goes on.

I am worried that this will lead to mob mentality and ultimately the truth bits will be passed up (by the old trusty dinosaurs) for access to the masses. But then again maybe we are already there…-Emile

Posted: November 22, 2006 5:51 AM

Jeff Geiser:

interesting times indeed.. I think the flow of revenue will continue to shift to accommodate the new media environment. Rather than a few media companies paying for the production of high quality programming with ad revenue, new media companies will participate in gathering ad revenue in partnership with search companies.

The fragmentation of production and the new models for distribution will be very intriguing to follow..

Posted: November 22, 2006 9:26 AM

Michael Urlocker:

Tom:

You make some great point about the disruption of the media. It is a classic move that media companies run the risk of clinging to the old, proven ways for too long even as they fail and even as new companies and new mediums emerge.

But, there are ways that media companies can try to harness disruption to grow their businesses, if they can take the blinkers off to see new opportunities.

This has been done a few times: Think of Starbucks, RIM and Apple, all disruptive companies in highly commoditized markets. How did they get there? By changing the basis of competition instead of trying to imitate or improve upon what others already did well enough.

More on the disruption of mainstream media at:
http://www.ondisruption.com/my_weblog/media_meltdown/index.html

Mike@OnDisruption.com

Posted: November 27, 2006 5:39 PM

Jon Collins:

"At no other point in our lives will we be witness to such a massively disruptive/destructive time in the media industry."

How do you know?

Posted: November 28, 2006 12:28 PM

JJ:

I find the adjectives you used "high-quality, trustworthy media" kind of funny. Old media did themselves in by pumping out misinformation (ex. 1st gulf war - the patriot missile is a very effective anti-missile defense system ;) ) and low quality themes in tv shows/movies (excessive cussing, sex, violence, bad human behaviors).

Nowadays, blogs and smaller websites (found by search engines) are much more enjoyable to read and comment on since they don't need to kiss anyone's rear ends.

Posted: November 28, 2006 3:51 PM

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