I’m contributing to the Media Futures conference next Friday as part of a discussion on future business models for media and content. This post sets out some of the ideas I will be exploring in more detail at the conference.
The “old media” business model
This was based on clear distinctions between platforms – print, TV, radio – each of which required scale to manage the means of production and distribution. Licensing in broadcast further raised entry barriers. Media businesses controlled access to consumers and charged advertisers a premium. Consumers relied on media brands to edit choice, and paid a premium for the privilege. Media businesses were mini-monopolies, could dictate cover price and ad rates, and reinvested their profits into quality editorial. The benefits of scale (print, production, newstrade negotiations…) encouraged acquisition of independents into large media groups – Emap famously did this in magazines and also radio; Newsquest and Johnston Press in regional papers.
And then the media world changed
Media barriers are breaking down – text, images, video, audio are all available from all media businesses, so magazine businesses find themselves competing with broadcasters, and newspapers with radio. The distribution monopolies and licenses have been unpicked – anyone can publish anything anytime they like. Advertisers can go directly to consumers rather than pay a premium for a publication or programme. Low entry barriers mean a proliferation of new content providers, and abundant ad inventory has pushed down rates. The BBC provides so much quality content for free it is hard for news-driven media businesses to charge for online content.
What will the media industry look like in future?
I anticipate severe consolidation among mainstream “old media” businesses as they have to dramatically adjust their cost base to cope with revenue decline. Already we are seeing the cracks with the secondary players – INM is in a precarious financial position, as are Trinity Mirror, and Johnston Press, and Setanta have just collapsed. ITV is struggling, and C4 may have to merge with BBC worldwide or another broadcaster. The businesses that survive will have strong brands, special funding, or very resilient owners. I’d put my money on BBC, GNM, News International, DMGT, NatMags (Hearst) and Bauer (family owned). Even these will see significant consolidation in their portfolios as weaker brands disappear. The survivors will need to reinvent their cost base, relying more on freelance contributors, identify sub-groups of their audiences who will pay for specific content packages, and exploit the international value of their archive content.
The new niche information businesses
Meanwhile there are a growing number of niche information businesses – some whose origins are in print, and others who have developed purely online. They serve tightly defined consumer or professional audiences, and operate on a subscription model across multiple media types – offering web content, video, audio, events, conferences, useful tools, networking and more. They target key businesses who want to reach their audience, and create bespoke commercial and sponsorship packages. As market knowledge is more important than scale, they are as likely to be independent as part of a large media group. They will be expert at repackaging content and exploiying international markets. Some will be ex-specialist publishers who have been able to diversify, eg Cricket World; others will be web-only new entrants, like the very successful econsultancy.
I also anticipate growth in the number of freelance content creators, who will supply the old media survivors and niche businesses, and will also self-publish online. Some may evolve into niche information businesses.
Does this look like a plausible future view? Have you got any examples of successful niche information businesses? I’d be keen to hear your comments, and if you are available next Friday, do come to the Media Futures Conference to continue the debate.
Carolyn Morgan runs Penmaen Media, a consultancy business that creates practical digital media and marketing strategies. Please contact us to discuss how we could help your media business thrive in future.