As I write this column, I am at an amazing conference session full of attendees who are influencing the world. Ranging from marketing executives to media consultants to top journalists, these people have influence over the perceptions that shape our reality.
In this session, every person in the room is electronically connected to the network and to each other, even though they are using a vast variety of laptop hardware, much of it from Apple. This is history in the making, and I’m incredibly honored to be allowed to watch it happen and participate a little bit.
The teams in this session were initially put together by the American Press Institute, and the event was called Metamorphosis.
The Death of the Newspaper
In the first session, we unilaterally killed the newspaper as we know it, and we put advertising-paid TV on deathwatch. Forecasting the future is never an easy task, but the opening panel concluded that newspapers, as we know them, are dead. And the only thing saving the traditional TV is that it is a generation behind the newspaper.
While it might take some time for the TV to die, it’s on the same path as the newspaper. The cause? News is free. The connection between the newspaper and TV models — to the dot-coms that also provide free things supported by advertising — is incredibly obvious.
The question that first the panel was struggling with is likely the same question that occurred to a horse-and-buggy retailer after looking at buying trends in the early 1900s: “The market is moving; what do we do to stay alive?” In what seemed to parallel what goes on in boardrooms, the panelists argued the issue back and forth. Will the cottage industry of blogs take out big media? Certainly not all of it.
In the end, if big media can acquire the cottage industry of blogs — or do a better job than the news outlets they can’t acquire — they will probably survive.
Profitable Online Business?
At the session, several newspaper companies bragged that they had a profitable online business that repurposed their content to the Web. However, the repurposed content came from print business units that generally had nearly 15 times the revenue of their online units. This means that the online services were effectively subsidized and that their profit likely came directly out of the larger, print entity’s margin.
In listening to this, I was reminded of some of the new cutting-edge organizations I saw while working at IBM. Those organizations showed substantial promise until you took into account how big a subsidy they were getting from larger organizations. I expect this little problem exists in most big companies. I began to realize at the conference that what the big media companies are facing is the same in many ways as the dilemma facing other companies dealing with technical change.
I wonder how many “profitable” open-source software groups are actually heavily subsidized by other groups. Maybe none, but it is an interesting question.
Do They Have To Fail?
The question is, what is the sustainable advantage that both sides have? For the bloggers, it is the immediacy of the news and the intimacy of knowing who is reporting and analyzing it personally. For the news services, it could be trust. But I don’t think that is sustainable. Over time, the bloggers might be able to match this trust through greater intimacy.
What began really to bother me was how people with little or no resources can compete effectively with firms that have massive resources. The answer is that the resources are not being properly applied and that, maybe, the news services don’t understand what their advantage really is. In other words, the “new guys” have chosen the field of battle, and the legacy players have conceded that field.
My sense is the firms got so involved in thinking about other things, like cutting costs, that they lost track of their customers while the bloggers moved in — much like the open-source folks have moved in — to fill the gap.
But if the legacy firms can bring to bear their superior resources, they should be able to stop — and maybe even reverse — this trend.
Superbloggers and Media Giants
Where the bloggers shouldn’t be able to compete is on “perspective” and experienced talent. Perspective, or what the news means to me, is the sustainable advantage. But to provide it, you need to know your customers very well; you need to move very quickly to respond to threats and change. And to do that, responsibility needs to be distributed out to the people who are closest to the customer. In a way, building a blend of what the blogger is and what the news services are would turn out a kind of superblogger.
But to get this perspective, the news agencies will have to bring in some fresh talent and allow that talent to create a more flexible, responsive organization. They’ll need to blend the old with the new, and they’ll need to think through the use of the massive technology and information they have at their disposal and find better, faster ways to apply that technology so that valuable perspectives can be created and communicated.
I think the software industry faces the same issue. The issue isn’t about being free; it’s about value. But both parties are currently fighting the battle on the other side’s terms. Bloggers and open-source software have the advantage. Understanding this fact and forcing the newcomers onto a field that favors the traditional companies is an achievable goal. All both groups have to do is realize the true threat and respond to it.
It’s incredible how big a word “all” can be. Sometimes you can learn a lot if you just take the time to open your eyes.
Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.