06:07 AM

More Tales Of Internet Disruption...

Irving Wladawsky-Berger, one of IBM's top strategists, has an interesting post about a panel he moderated: Social Media Implications for Business.

Panelists included Marc Cooper, Jonathan Taplin and David Westphal from the Annenberg School, and Melissa Cefkinand Steve Canepa from IBM.

I'm always interested in stories of how Internet technologies are able to devalue businesses, anything that can be made digital.

Here are some extracts from the post:

Jon (Taplin) gave two examples. First, he talked about newspapers:

"Every single blog, every social network, every site in the world can have as much advertising as they want. So we all learned that value comes from scarcity, and in a world where there's no scarcity, when everyone can be an advertiser, then essentially the value of any individual ad unit is going to decline."

"If you look at The New York Times' business plan, they never imagined that they would have 20 million unique users a month, but they never imagined that the individual worth of an ad unit would be so low. And so it's totally screwing with any business plan that they have or any transition into a digital world."

The second example is about the music industry:

"They all look at the record companies and say, well, . . . there was a gigantic reallocation of value from four big media companies to Apple, right? Apple stock is 200 bucks and Warner Records stock is $1.20 or something . . . so all the value was taken away from the media record companies and reallocated to Apple. The [big media companies] are all afraid that's what's going to happen to them." .. .

Coping with increasing fragmentation and cannibalization

Steve Canepa, General Manager for IBM's Global Media and Entertainment Industry talked about the changes in the media industry, as it transitions from a B2B business model in which analog content is distributed over physical networks, to a B2C model in which digital content is distributed through digital networks to a variety of intelligent devices.

All of a sudden you have all this content, some still professionally produced, but a lot of it generated by users, available to consumers over a variety of devices. In the end, the average consumer has about the same amount of time they ever had to consume this new avalanche of content and experiences. The result is massive audiencefragmentation.

"What scares the media companies a lot is that it becomes incredibly hard to attract, retain and sustain a core audience around a brand, a network architecture, or a platform, because you have this fragmentation happening. It's really challenging the core foundations of the business models in the media industry in all the different segments. . . . music is just one example."

. . . The reality is most social sites that have video on them operate in the range of about 10 percent to 40 percent of the value that the same content would earn in a traditional television broadcast model."

Video of the panel can be seen here. You can read the full article here: Irving Wladawsky-Berger: Social Media Implications for Business