Jul 112015
 
newspapers are dying as the media business models move online

The first industry to face the consequences of an age of data abundance was, not unexpectedly, the news media.

As the web took off, the old model of distributing news through broadcast bulletins and newspapers collapsed along with the advertising model which supported it.

Now the entire news industry is in transition as we look for a modern day David Sarnoff to figure out a business model that works.

Profiting from the transition

In the meantime that transition has opened up a whole range of opportunities for canny and fast moving entrepreneurs with a range of sites looking to profit from cheap or free content.

Most exploitative of these sites are the viral sites who, at best, lightly rewrite someone else’s work before posting it on their own pages. With the rise of Facebook, the social media referrals have boosted the traffic to these sites.

The acquisition of ViralNova by Zealot Media at a hundred million dollar valuation shows the value of those sites at present. Zealot itself is on an acquisition spree as this is the fifteenth acquisition made by the mysterious company this year.

ViralNova and the other viral sites don’t add a great deal to the internet with their glib repackaging of other peoples’ content based around what their algorithms believe will get the maximum traction from Facebook’s systems.

The end of the web

Some even believe this model marks the death of intelligent content on the web with Vice’s Carles Buzz declaring the dream of the highbrow internet is dead as sites like ViralNova and Upworthy come to dominate the web.

Wall Street Journal however sees the opposite in proclaiming the ViralNova move is the highpoint for the content farm business model as the economics and business risks of depending upon Facebook for traffic are ultimately doom these ventures.

Sites like The Awl in the meantime see their future in writing intellectual articles for a small but tightly defined audience. At the moment web advertising economics favour high traffic over highbrow however it may be in the medium term the higher quality will win.

High volume over highbrow

Recent history hasn’t been kind to those backing sites like The Awl however the viral media and content farms have seen their finances become increasingly shaky as online CPM rates decline and Facebook increasingly controls distribution.

The news model does need to be reinvented and someone, somewhere in the world will do it, although the person who cracks the code is as likely to be a smart kid in the Rio barrios or Mumbai slums as some VC backed Stanford graduate in a SOMA loft. For the moment though savvy entrepreneurs like those behind ViralNova will be making a quick buck.

Jun 162015
 
Should we be watching more TV in the Internet age

“We seek news on Twitter but bump into it on Facebook” points out the Reuters’ 2015 Digital News Report in its analysis of global media consumption.

The broad trends from surveying over 20,000 online news consumers in the US, UK, Ireland, Germany, France, Italy, Spain, Denmark, Finland, Brazil, Japan and Australia are clear – social media is becoming the main way people are finding their news while television is slowly declining.

Probably most concerning for the television networks how younger viewers have turned away from TV with only a quarter of those aged between 18 and 25 tuning in as opposed to two thirds of those aged over 65.

Given the aging of television network audiences it’s not surprising that last week Australia’s Network Ten, part owned by Lachlan Murdoch, found a lifeline from the country’s main cable network as the broadcaster is finding revenues declining.

The question is how long advertisers are going to stick with television as audiences increasingly move online creating a revenue gap estimated by analyst Mary Meeker to be worth around thirty billion dollars a year.

For the moment, the great hope for the online world is Facebook with Reuters finding the service is dominating users’ time. In that light it’s not surprising the company has such a huge market valuation.

The competing social media services are still facing challenges, particularly with Twitter showing a far lower level of penetration with the general public, leading Harvard professor Bill George to speculate the company risked becoming the new BlackBerry.

While the online services struggle for supremacy and television slowly declines, the real pain continues to felt by the newspapers who continue to find their relevance erode and few of their readers prepared to pay for their content.

The Reuters report confirms the trends we already know while giving insights into the unique peculiarities of each market.

May 312015
 
sydney-1920

I’m preparing a corporate talk for next week on the changing economy and one theme that sticks out is how the Twentieth Century was defined by cheap energy and physical mobility as mains electricity and the internal combustion engine became ubiquitous and affordable.

The picture accompanying this post illustrates that shift, Sydney’s Circular Quay a hundred years ago was just at the beginning of the automobile era. The previous fifty years had bought trams, the telegraph and reliable shipping but the great strides of the Twentieth Century were still to happen.

At that stage the steam engine and advances in electrical transmission had bought reliable power to the masses, although it was still expensive. What was to come over the next fifty years was that energy was about to become cheap and abundant. That drove the suburbanisation of western societies and the development of industries around the availability of cheap power and a mobile workforce.

At the time though information was still expensive, the control of broadcast networks by a few license holders and print operations by those who could afford the massive costs of producing and distributing magazines or newspapers made data difficult to get and worth paying for.

Today we’re at the start of a similar shift in information; it’s no longer expensive or difficult to obtain.

What that means for the next thirty years is what industries will develop in an economy where information is basically free and ubiquitous. Just as cheap energy created the consumerist economy, we’re going to see a very different environment in an age of cheap data.

May 182015
 
Alibaba-corporate_offices_china_hangzhou

Streaming video service Netflix is looking to launch in China reports Bloomberg Business.

The Chinese joint venture to be run with Wasu, a company backed by Alibaba founder Jack Ma, looks to increase Netflix’s global footprint.

Netflix plans “to be nearly global by the end of 2016,” the article quotes a company spokesperson answering questions about a possible China partnership.

The Netflix model is a major departure from the established broadcast television and movie business where studios and producers would enter distribution agreements with local TV stations and theatre chains.

With Netflix and the streaming model, the licensing of rights to local outlets becomes largely irrelevant with the producers – which increasingly includes Netflix itself – able to cut out the local licensees.

A similar thing is happening in sports, one of the mainstays of broadcast television, where the professional leagues are taking control of their own content and leaving the networks, at best, minor players.

Neflix’s move is part of a shift that’s affecting many industries, including those like broadcast television that thought they were untouchable.

Apr 202015
 
Local village

One of the tech buzzwords, or acronyms, a few years back was SoLoMo – Social Local Mobile. In reviewing the slides for the Future Proofing Your Business presentation next week, the term came up in one of the notes.

It’s interesting look at the fates of the three different concepts over the past few years; mobile has boomed and redefined computing and social has become big business with Facebook growing into a hundred billion dollar company.

Local though has struggled with Google, Facebook and a host of smaller and newer startups struggling while the Yellow Pages franchise dies. Despite the power of maps and geolocation, local just isn’t doing as well as the other two.

This could be down to the difficulty in harvesting the massive amounts of disparate data available to any service trying to draw an accurate picture of what’s in the neighbourhood.

Google Places tried to standardise that information for local businesses but the complexity of the service and its opaque, arbitrary rules meant adoption has been slow and merchants are reluctant to update details in case they fall foul of the rules.

Local services’ failure to take off has also had a consequence for the media as its in hyperlocal services that publishers have possibly their best opportunity to rebuild their fortunes.

That failure to properly harness mobile has also hurt merchants as many local operations are struggling to find useful places to advertise given Google Adwords and Facebook can be extremely expensive places to advertise.

So the mobile space is still ripe for a smart entrepreneur – a new Google or Facebook – to dominate.

Mar 182015
 
60_McDonalds-La-Deheza-Chile

A few days ago we covered the Great Transition research paper by Colonial First State Funds Management’s James White and Stephen Halmarick and followed up with a piece in Business Spectator looking at the ramifications for the Australian economy.

One of Halmarick and White’s assertions is that brands are dead as consumers in emerging economies don’t care about corporate names and in developed nations people have better information about local businesses.

The former argument seems flawed from the beginning; Apple for example is making huge inroads in China while local manufacturers like Lenovo, Huawei, Great Wall and Haier are all working hard to establish their names in international markets.

In developed markets, White and Halmarick’s views have more basis with brand names not having the cachet they once did now consumers have a global platform to voice complaints and find alternatives.

A good example of brands that are struggling are companies like Microsoft and McDonalds, although in the case of both companies this could be more because of a shift in the marketplace rather than better informed consumers.

However brands are surviving as they lift their game and adapt to changed marketplaces, in fact its possible to argue that today’s consumers are more responsive to brand names than ever in the past.

A good example of this is again Apple which has more fans than ever before. Apple are also a good example of how big corporations can invest huge amounts into new technologies and products to give them an advantage over upstarts.

We should also remember that brands as we currently know them are largely a Twentieth Century phenomenon born out of the development of mass media communications and many of today’s household names came into the culture thanks to television in the 1950s and 60s.

So as creatures of last century’s media it’s not surprising that brands are having to evolve to a changed world, some of them will thrive and grow while others will shrivel away.

It’s safe to say though that the concept of brands isn’t dead, although many of the names we know today may not exist by the end of the decade.

Mar 112015
 
640px-Red_Bull_Arena_TV_camera_perch

Since the beginning of industry technology has changed occupations in unexpected ways the demise of the sports TV cameraman is a good modern example of a highly skilled, specialised trade that may soon be redundant.

Years ago television studios largely replaced cameramen with remote controlled cameras but sports grounds needed skilled operators with excellent attention spans to video action at sports grounds.

At a lunch today in Sydney Michael Tomkins, Chief Technology Office of Fox Sports Australia, explained how a combination of high definition cameras and advanced software is changing the way sports are broadcast and recorded.

“Last year we put two 4k cameras in to cover the length of the ground,” Tomkins said. “Two 4k cameras can see the length of the whole ground so I get rid of four cameramen and replace them with one joystick bunny.”

“He moves a box around the screen and those become a virtual camera. The resolution of a 4k camera is four times that of our HD broadcasts. It’s quite cost effective and I don’t have to roll a crew out.”

A demonstration of how the technology works is in a YouTube clip of an Australian Rules football match from last year. While the ‘joystick bunny’ and the software is somewhat clumsy in the segment, the clip shows the power of the technology.

With abolishing most of the camera, the opportunity to rationalise the production suite also becomes possible; at present most sports events have a producer instructing a group of assistants to cut between cameras, prepare replays and all the other effects expected by viewers. With a software based system most of that labor and its skills become redundant.

Over time as higher resolution cameras become available this application is going to become common, in fact most junior and amateur sports will be able to afford static hi-res cameras for their ground that allows them to record their games.

While the demise of the sports cameraman and producers is a shame in the same way loom weavers and hansom cab drivers disappeared, it is a reflection of  changing technologies creating then destroying occupations.

TV camera image through wikipedia