[opendtv] Forbes: Old Media Can Still Thrive, But Business Models Need To Adapt

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sat, 27 Sep 2014 01:52:39 +0000

"So the key to competing in the age of digital is realizing that your business 
model will not last.  How you used to create, deliver and capture value is 
irrelevant.  If it doesn't make you money now, it's just baggage.  As Vivaki's 
Rishad Tobaccowala puts it, the future does not fit in the containers of the 

That says it. Not like ESPN and HBO haven't noticed.



1/10/2014 @ 6:13AM
Greg Satell 

Old Media Can Still Thrive, But Business Models Need To Adapt
My first media job was in New York, where I learned the radio business.  My 
company, Katz Media, had an outstanding training program, where for three 
months we were drilled 
in the basics of radio formats, research techniques, sales skills and marketing 

So when I first arrived in Poland in 1997, I felt well prepared.  Surely, in a 
newly capitalist economy, where the entire concept of a media business was 
novel, my experience and expertise would give me a leg up.  Alas, I found that 
often the opposite was true.

You see, I had not only changed geographies, but business environments, with 
important structural, cultural and economic differences.  I found that what I 
had learned as eternal truths in New York were often, in fact, principles 
derived from circumstance, not necessity.  Today, every media business is 
facing a similar dilemma and everyone needs to adapt.

A Tale Of Two Models

It used to be that the business of publishing content was dominated by two 
models: free and paid.  TV and radio broadcasting, historically, were fully ad 
supported, while movies relied almost 100% on box office receipts, with some 
residual revenue on the back end.  Newspapers and magazines were hybrids, 
earning money from copy sales and ads.

As the media market matured, the water muddied a bit.  Paid channels like HBO 
came to the fore and increased TV fragmentation made it easier for films to 
garner ad revenue.  The one constant has been that marketers have been more 
willing to pay for consumers than consumers have been willing to pay for 
content, so free models have dominated.

Yet the "free vs paid' dichotomy is misleading, because neither represent a 
full model.  To truly innovate your business model, you need to look at the 
full range of how you create, deliver and capture value.  What makes media 
today so exciting and so full of opportunity is that the options are exploding 
in each area.

Creating Media Value

It used to be that publishing was focused on owning and controlling content.  
Print publications would maintain a large staff and license a certain amount of 
output from contributors.  Broadcasters would produce or procure programming 
and so on.  Rights were almost always exclusive, at least during a specified 
time period.

So it's important that many of the new media juggernauts, such as Huffington 
Post, Bleacher Report and RealClearPolitics emphasize curation. By collecting 
and linking to content they feel is interesting, they've been able to build 
successful businesses.  All have been acquired, in whole or in part, by major 
media outlets for major money.

Others, such as Forbes and Business Insider, have been able to create value by 
building large networks of contributors (disclosure: I work with both), many of 
whom are not professional journalists, but subject matter experts in a 
particular area.  Amazon Video has taken a slightly different tack, developing 
new programing through crowdsourcing.

Still another way to create value is through satellite brands, where a major 
media outlet syndicates its own content to a vertical brand it owns.  Ted 
Turner pioneered this strategy with thematic cable channels in the 80's and 
others, such as The Wall Street Journal, have used a similar approach with 
verticals like All Things Digital.

Delivering Media Value

For a long time, business strategists argued that to attain competitive 
advantage, you need to dominate the value chain.  So, not surprisingly, the 
wisdom of marrying content with distribution was taken as gospel in media 
circles.  TV networks built studios; newspapers delivery infrastructure and 
magazines sophisticated databases of subscribers.

But of course, distribution was the first thing that the Web blew apart, 
starting with the walled garden model of AOL AOL +3.68%.   Rather than having 
to go through proprietary distribution, whether that be a delivery truck or a 
technology platform, consumers can now access the content they want through a 
web browser and everybody is on a fairly level playing field.

While many legacy media companies complain about this, it's generally a good 
thing for everybody.  Consumers, of course, get more choice, but content 
producers benefit as well.  The truth is that distribution was generally a loss 
leader and companies invested in it mostly to get better ad rates.  It was 
rarely a stand-alone profit center.

Nevertheless, there are ample ways to innovate distribution.  Firstly, zero 
cost distribution has opened up a wealth of opportunities for content 
producers, such as the burgeoning video ecosystem that's building up around the 
web. Some, such as Politico, have repackaged reporting as e-books and others 
have profited from events and conferences.

Capturing Media Value

Incumbent businesses have generally been very protective of their traditional 
revenue streams.  The movie studios waged a legal battle against video 
recorders for over a decade, before they realized that video sales were a 
goldmine.  The music industry thought the Internet would kill its business, but 
now is minting digital money.

The truth is that for all of the talk about "trading analogue dollars for 
digital pennies," the reality is just the opposite.  Never before have so many 
media brands become so valuable so fast.  Even AOL and Yahoo-often thought of 
as has-beens in the digital game-have multi-billion dollar valuations.

And the reason is that there has never been so many ways to make money.  In 
addition to advertising and subscription revenues, affiliate programs such as 
Amazon Associates make it possible for web sites to earn as much as 10% on 
e-commerce sales.  Other opportunities, such as sponsored content and native 
advertising, also show promise.

For many media companies, the biggest opportunity is web video, which is 
expected to grow almost 40% in 2014.  After years of salivating over TV money, 
now anybody can compete for those budgets.  The truth is that most legacy 
publishers really haven't made much of an effort.

The Future Does Not Fit In The Containers Of The Past

Today, every media business is experiencing something similar to what I did 
when I moved to Eastern Europe in the late 90's, except they didn't need to 
change geographies to change environments.  The world shifted beneath their 
feet.  It's possible that I had it easier, with obvious linguistic and cultural 
challenges to overcome, I knew I had to adapt.

And in time, I did.  It wasn't easy, but I learned the new rules and, as I went 
to do business in other countries-I lived and worked in four separate markets 
during my fifteen years overseas-I found that every place worked differently.  
I eventually realized that there are, in fact, limitless ways to make money in 
the media business.

So the key to competing in the age of digital is realizing that your business 
model will not last.  How you used to create, deliver and capture value is 
irrelevant.  If it doesn't make you money now, it's just baggage.  As Vivaki's 
Rishad Tobaccowala puts it, the future does not fit in the containers of the 

Once you accept that, all that's left is opportunity.

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