The acceleration in the disruption of media
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.