UPDATED to reflect Bewkes memo to Time Warner staff on the day of separation from AOL. (12/10/2009)
So far, new media technology has made Mass Media better by lowering distribution costs, performance-based advertising, and search technology that enables browsers to find the most popular result for their search.
Bewkes memo to staff on the day of the separation of Time Warner from AOL implies that better Mass Media is not a game changer. Specifically, Bewkes says:New technologies and business models have translated into much more access to content and choice for consumers. Today’s innovations in online, mobile and VOD services are changing how we live our lives. Despite all these choices, consumers are gravitating more than ever to blockbuster
content. In addition to generating a bigger audience, big hits attract more consumer spending.
The implication is paradox of choice is at work. When given abundant choice, people will choose the most popular. Since Mainstream media has the offline resources to drive popularity, they are winning the search war and the best creative talent.Operating scale and industry-leading brands and franchises enable us to capitalize fully on these trends. They give us the resources to offer attractive economics to our creative partners. That brings in the best talent, who build on our know-how and experience to generate top-notch content. We then package and distribute this high-quality, branded content worldwide, which in turn reinforces our scale and brands. It’s this process – or virtuous circle – that fuels our growth."
To change the game, solve the fundamental two problems with Mass Media. Everything has its costs. When the objective is mass appeal first, money later, the consequences are two: a) an audience with size but no substance, b) work, talent and money are risked (or wasted) by content creators before making dollar one.
When the objective is audience scale, you get a lot of disconnected, isolated individuals. It's a high rise apartment building where no one knows or cares about their
neighbors. This culture of "me" is not a franchise. Every time you introduce a new product, you start all over again.
When the objective is to make a lot of money on the backend, the risk is just too high for everyone. The independent content creator can't afford the risk. The big publishers/programmers focus on proven talent,commercial formulas to avoid risk.
However most new technology investment continues to be targeted to "better Mass Media". Jeff Jarvis, author of "What Would Google Do", has developed a range of business models for local news based on the objectives of the mass media model - develop a large audience first and get paid on the backend by advertisers. Our assessment is that these are not helpful to any new or established media company:
They are designed to make the case that an ad model is more profitable than a subscription model or a hybrid of both. They assume a 1% conversion rate to subscription. This assumes a marketing failure. Even the CJR estimates 3-5% based on what I would consider the currrent worst case “fly-by” conditions http://bit.ly/2d8dLzThe models do not indicate what the assumptions are behind the ad revenues. Based on ad spending trends and my familiarity with “formerly known as advertising” clients, counting on ad revenue is dicey.
We are not alone in questioning the value of Jarvis's models. The Dan Conover (@Xarker) post, entitled "The Imagination Gap":"Jarvis is pointing toward a new media economy that looks an awful lot like a steady-state extension of the old media economy, only better. Kelly is suggesting that we need to get better at imagining things that seem impossible."
Jarvis ignores that the most profitable, growing media companies, HBO, Showtime, etc., are advertising-free, subscription businesses. Presumably because these are entertainment media companies not information based. As we pointed out in our post "Jeff Jarvis takes Murdoch debate to a new level", everyone said HBO would fail:The person at Time Inc. who introduced HBO as a paid movie channel, when all the “experts” said it would fail, had the conviction to pay people to deliver a quality product that merits a premium price. The reward is being one of few media brands with increasing revenues and profits in today’s market that everyone would be proud to work for.
Ironically, Jeff Bewkes worked on HBO from the beginning. So, he understands what it will take for new media to change the game.
To follow the folks who appear to be the bold strategists who will accelerate changing the game, following the Comradity Twitter list bold strategists list
