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

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sat, 27 Sep 2014 06:49:21 -0400

On Sep 26, 2014, at 9:52 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
> "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 past."
> That says it. Not like ESPN and HBO haven't noticed.

Thanks for posting this article Bert. Some interesting insights!

The key take away is obvious.

> "If it doesn't make you money now, it's just baggage."

The bundle is making both the content owners and the distributors who license 
their content A BUNDLE! 

On top of this new business models are emerging that allow the content owners 
to make more money off of their old program libraries. 

The author is correct that the media landscape has and will continue to evolve 
because of the Internet. He also points out that even some companies like AOL 
are now thriving because of the new opportunities to monetize content. 

This is truly the Golden Age of Content!

But there was nothing here to suggest that the bundle is threatened. 


> Bert
> --------------------------------------------------
> http://www.forbes.com/sites/gregsatell/2014/01/10/old-media-can-still-thrive-but-business-models-need-to-adapt/
> 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 strategy.
> 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 past.
> Once you accept that, all that's left is opportunity.
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