I try to get involved in lots of conversations about the future of the media industry. Having worked initially in the music industry (content creation) and later in the emerging media business (content strategy), I spend a lot of time thinking about were people spend their time accessing information and consuming content, and I’m lucky to live in New York, where there are a lot of really smart folks who think and talk about this a lot.
The media business is an interesting place right now, there are a lot of new executions happening on content development, distribution and monetization and the big changes aren’t over by a long shot. This innovation has created a lot of transitional friction. This is not new news but worth continuing the discussion.
Changes in consumer behavior create a great deal of what’s referred to in the investing world as secular risk. I take a class right now where someone mentioned newspapers and terrestrial radio, describing the two industries as melting ice cubes because the value is melting away as customers move to other parts of the media universe. I think that’s an apt description for what’s happening to a lot of businesses that used to make lots of money. Because customers are migrating to new media sources and away from old media sources, the value of these older models is….evaporating. It happens fast:
Want to change the music industry? Download your music for free.
Want to never walk into a bookstore again? Stop buying books.
Want to kill terrestrial radio? Don’t turn it on.
Media and entertainment are risky because, often, all it takes for you to become worth nothing is for your customer base to refrain from consuming your content. When Napster dropped an A-Bomb on the business in 1999, the argument from a lot of music fans who gorged themselves on free music was that “the music industry had been ripping them off for years, this was just a rebalancing”. The party is now over and SoundScan just had its worst week in history; which is an unfortunate blemish on a great achievement for Amos Lee.
Some great things have been growing, new businesses like Sirius XM, Pandora and Last.FM for music….and digital books and tablets are incredible; but these innovations have largely come at the cost of traditional media businesses and they haven’t found the type of profitability that is necessary for long-term sustainability. This is potentially value destroying.
Some of these changing businesses were desperately in need of disruption; I think others are just going to get run over and it’s the downside to innovation. I believe innovation is, net-net, an exciting proposition that allows for new players, new solutions and and overall better experience for consumers. With that said, the transition can be tumultuous and sometimes things like albums and books get lost in the shuffle…and they were really great products and I’m going to miss them. I do know one thing for sure, if content farms are the future, then we’re all going to start missing the past.