A Look Back from 2018
It seems so long ago. Yet it has been less than 25 years since the digital tsunami known as the Internet washed over media companies, disrupting their businesses and the lives of their consumers.
Looking back from the calmer perspective of 2018, it is hard to remember the turmoil that gripped the newspaper and broadcast industries between 2000 and 2012. Turmoil? Sometimes it felt like panic.
Listening to the new media pioneers reminisce, most of whom are retired from active pontification, today's media worker might assume that there would be no survivors emerging from that mayhem.
As you know, that didn't happen. There are lots of survivors. But there were also many casualties, including several big-city newspapers.
Even professional journalism survives, although it's still complicated to explain who is a journalist and who isn't. That's one of the most interesting side effects of the shakeout among legacy -- okay, call them old -- media companies: the flourishing of reporting and the sharing of information across communities.
What didn't flourish were the companies that kept looking at their assets and saying things like, "We have a competitive advantage because we have .... " You can fill in the blank. We did have some advantages, but not in the way we thought back in 2008.
Letï¿½s look at how far we have come with those strategic advantages and how some companies have succeeded while others failed:
The Press Advantage
Printing presses give you an edge -- if you want to print large, bulky newspapers. Most people in 2018 donï¿½t want a newspaper-sized newspaper. Even after the incredible shrinking of most broadsheet newspapers between 2003 and 2010, consumers looked at the format as out-of-date and an ecological disaster.1
Today, most of the companies that print a daily newspaper, and there are about 700 in the country that print seven days a week, have gone to a tabloid format or something smaller.2 In fact, The Old Growth Forest Protection Act of 2014 still has many companies worried about more restrictions on the raw materials needed to publish a physical newsprint product. This legislation -- jointly endorsed by environmentalists, city planners and the recycling industry -- is forcing many companies to look at ways to reduce the size of their paper consumption. Logging trees for newsprint will be outlawed in 2025 and most cities have started to ban old newspapers from their landfills, which are filling up very quickly.
Of course, we still have lots of printed material. There are lots of print publications, in lots of different sizes and on lots of different kinds of paper, all easily recycled. The recycling service provided by many media companies has been well received by the public and has managed to provide a little extra to the bottom line.
The Press Advantage has gone to those companies who have the means to print a variety of publication types.
The Distribution Advantage
For a long time, this was a key advantage for many media companies: the ability to drive by just about every household in a community and throw something on a driveway.
What got thrown was a newspaper. In a plastic bag. Nothing else. And usually, it was just that company's newspaper. The most progressive companies -- the survivors -- started to deliver the national newspapers3. The companies that thrive in 2018 have leveraged their distribution advantage into a competitive advantage to help advertisers and others (local governments and the tattered remains of the telephone companies) reach consumers.
The more innovative companies also realize this advantage won't last forever, as more and more of their customers subscribe via a household printing "press." This high-speed printer uses the WiMax networks in most cities to deliver digital content that can be printed [and bound] on demand.
Ultimately, distribution of the printed materials will be outsourced to companies such as FedEx or UPS/USPS4.
The Advertising Advantage
As those who study history learn, this advantage shifted the fastest. Those companies that held on to the display advertising model the longest felt the most pain. The survivors, and those who have thrived, realized two important shifts in the Advertising Advantage:
- The advertiser needs solutions, not space. Of course, getting advertisers to understand what kind of solutions has meant retraining the newspaper's sales force to be more consultative and help businesses identify what success looks like. That meant eliminating the commission-based compensation model. Most companies went for a "retention bonus" model for the advertising sales staff. If the company kept the business, there would be a bonus. One bonus from this model: The sales staff learned to sell across all types of media. In fact, the companies that have been wildly successful look more like advertising agencies, helping local and regional business succeed in the marketplace, even placing ads in competing publications. Success for your customers meant success for media companies.
- The customer is in control. The Digital Privacy Act of 2011 forced many Web-based companies to change the way they did business. Much of the advertising based on hidden browser "cookies" has been long gone. In its place, companies have developed trusted relationships with consumers. While fewer companies use a "cost-per-thousand" model when it comes to Web-based advertising, the thriving companies are delivering more targeted advertising on behalf of the customer when he/she needs and wants it.
The Content Advantage
News or information5, that is the question. Right? Well, maybe 10 years ago. But not in 2018. Frankly, media leaders and journalists have realized there really isn't a lot to be gained by endless discussions on the topic.
As we can see from the rich amount of content in today's media landscape, media companies have realized that their best opportunity is to present both news and information. Today they do both very well because they understand the two key elements that consumers want:
- Solutions to todayï¿½s problems. Not just solutions to what kind of car to buy or what to watch on the HDTVWeb6. They want solutions that explain what is going on in the world and why events such as the recent democratic elections in China matter to them.
- A sense of community. Once media leaders and journalists figured out they could bring communities together, they understood how to recreate the business model as the trusted source. The early adopters of this practice used both real world (neighborhood fairs, for example) and virtual communities on the Internet.
Getting to solutions and community-based media wasn't easy. One of the biggest challenges was overcoming the public's lack of trust in the journalism and lack of belief that the media company would look out for the community.
The successful companies recognized early that the audience is often smarter than the storyteller. And a good storyteller will enlist the aid of the audience to help make for a successful experience. Some of that happened in the rush to citizen-based journalism in 2006-2009. However, like most fads, it died out.
Many of the citizen-based journalism attempts also suffered from, well, just lousy writing and photography. Eventually, even YouTube recognized that there are only so many videos of cute cats viewers were willing to watch on their 50-inch LCD screens.
Another indicator of a successful media company is the number of non-English-language publications. As the country became less WASP and more culturally diverse, the survivors used their core skills to work with publishers serving newly arrived ethnic groups. Most large media companies and many smaller local groups publish in two or three languages.
Getting to the Future
It hasn't been easy getting to 2018. But the last few years have been fun for those companies that have worked through the "dip." They realized that getting to the other side would be very profitable.
Of course, while profit margins still matter, the transition back to family or other non-public ownership structures helped many media companies work through the rough years. Several companies took themselves private and, while the debt load was heavy, they did it early enough to take advantage of robust cash flow before the recession of 2008-2009.
Other companies allowed their stock to be battered -- the executives suffered the most-- and used the time to invest in new technologies and products. The companies unwilling to change, dreaming of the days of high stock values along with 25-percent profit margins, suffered the most. Few of them made it to 2018.
Several media organizations decided that their public mission was too important to leave to stockholders. After taking themselves private (a few were family owned), these companies offered their stock to non-profit institutes such as universities and training centers such as The Poynter Institute.
For all of the pain and suffering caused by technology, especially cheap computers and high-speed Internet access, by 2014 new devices actually made media companies more successful.
One of the biggest benefits came to those companies who managed digital platforms. (We stopped calling them Web sites in 2012.) The introduction of widespread WiMax devices has allowed media companies with their content in databases to reach new audiences. The distinction between cellular (phone) networks and computer networks was erased. That leveled the playing field when it came to sending content to devices that were the descendants of cellular phones.
Advances in other technologies -- speech recognition, for example -- also have been a boost to those companies with large assets of textual material (formerly known as libraries). Finally, the fracturing of local broadcast television markets opened up new opportunities for the distribution of video stories. Consumers stopped caring about the 6 p.m. news. Now, they just care about news.
The resurgence in news consumption came about the same time as the rollout of easy-to-use and very inexpensive flexible display devices. Pioneered by companies like eInk, these devices were a cross between a printed product and a personal digital assistant. Consumers jumped at the chance to use touch screens and voice to find what they want and be alerted to what they need to know.7
Even the keyboard seems a curiosity today. Most of us use touch screens and voice to find what we need or to get the latest solutions to an increasingly chaotic world.
The More Things Change
A cynic's view of the 2018 media landscape might be, "The more things change, the more they look the same." It's true.
Things don't change very quickly. Sometimes the basic concept of a medium doesn't change at all.
Take a look at movies. The concept is still the same as in the time of Thomas Edison. What changes, however, are two very important things:
- The technology to create and deliver.
- The business model to support the creative process.
There are still vast audiences for movies in 2018. We just don't go to movie theaters as much as in the olden days. There are still movie houses, but they are like opera houses. Places for special events or for the revival of historical movies.
What happens is technology's "unintended consequences."
The HDTV act that required broadcasters to give up analog spectrum in early 2009 introduced high-quality screens into households at an amazing rate. Prices fell for screens that were the same quality as what we once used for computer monitors. Hard to tell the difference when watching a movie at home. And the popcorn was fresher.
The picture and sound quality was as good as you could get in the movie theater. Sometimes better, since many movie houses still showed film. These once-important community centers failed to understand the shifting needs of their customers; they failed to offer better experiences than what customers could get at home. They failed to adapt.
From the federal government's goal of getting more broadcast spectrum, the unintended consequence was the disruption of the economic model of movie theaters.
We still watch movies, but we get them over broadband or fiber optical lines coming into our homes. We still enjoy good storytelling.
There are lessons here for all industries.
(1) The environmental movement gathered steam in 2008 with the push to eliminate plastic water bottles. After that came plastic bags. Eventually, newspapers and magazines were identified as eco-targets. Back to the text
(2) The most radical approach was to print in a size close to an 8-by-10-inch sheet of paper. In Europe this is called an A4 newspaper.Back to the text
(3) An interesting unintended consequence of local newspapers delivering newspapers like USA Today, the Wall Street Journal and The New York Times: the further development of a national newspaper audience. This led to new entrants, including The National Post & Observer. Back to the text
(4) The U.S. Postal Service and United Parcel Service formed a joint delivery company after the USPS lost most of its flier or junk-mail business in 2013. The concept of first-class mail is now something reserved for holidays, with most personal letters sent by secure Internet and automatically printed on a home press unit. Back to the text
(5) For consumers, there never was an easy way to define the difference between news and information. For journalists, news was about storytelling and journalism; information was about data, such as listings. Back to the text
(6) Another benefit from the sale of all of the high-definition televisions in 2008-2009 was the further merger of the "itï¿½s just another screen" concept. By 2014, consumers didn't think of owning "computer screens" or "0television screens" or radio "screens." [National Public Radio added visuals via its HD broadcast signal in 2012.] Back to the text
(7) Finally, one movie, "Minority Report," got the future right. Back to the text