“How many old media companies would you need to stack on top of one another to equal the value of Google?” That question was put to me last year by a reporter who was interviewing me for a story he was doing about the future of traditional media operators. I was explaining to him how many traditional media operators faced three ominous developments / threats that raised serious questions about their long-term viability: (1) Loss of consumer confidence / allegiance; (2) loss of advertiser confidence / allegiance; and, (3) loss of investor confidence / allegiance as a result of trends (1) & (2).
That first threat or trend was discussed in installments #1 and #2 of my ongoing “Media Metrics” series. Those essays documented the explosion of choices in the media marketplace and showed how many consumers are opting for new media and technology options over older media outlets and options. Installment #3 in the series documented the seismic shifts underway in the advertising marketplace, with ad dollars rapidly flowing away traditional media operators and toward new media and technology providers. Here in installment #4, I will discuss how traditional media operators and new media / technology operators are trading places in terms of investor confidence.
Exhibit 1
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This is the third installment in my ongoing “Media Metrics” series, which aims to evaluate the true state of America’s media marketplace. [See Part 1 for a complete description of the project and the analytical framework I use to research media trends and developments. Part 2 discussed household access to various media technologies]. In this installment, I want to take a look at how various media sectors stack up against each other in terms of advertising support.
You don’t need to have a PhD in media economics to understand the importance of advertising to media companies. “Advertising is the mother’s milk of all the mass media,” Wall Street Journal technology columnist Walt Mossberg has noted. And Harold L. Vogel, author of Entertainment Industry Economics, the definitive textbook for media market analysts, has noted that, “Advertising is the key common ingredient in the tactics and strategies of all entertainment and media company business models. Indeed, it might further be said that advertising has substantively subsidized the production and delivery or news and entertainment throughout the last century.” Mossberg agrees, noting that, “Without ads, most editorial products and other programming would be either unavailable or prohibitively expensive.”
Exhibit 1
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I spend a lot of time here pondering media industry business models, and I’m particularly interested in how traditional media providers are trying to reinvent their business models in response to new marketplace developments. One of the more interesting models I’ve been waiting to see rolled out is called “MagHound–The Magazine Lover’s Best Friend.” Time Inc. is the creator. I am a magazine lover–my house is practically wallpapered with magazines–and MagHound offers folks like me an intriguing business proposition: Instead of an annual subscription to a magazine, just pay MagHound a small monthly fee and then pick-and-choose which magazines you want each month. Essentially, it’s “Netflix for magazines,” as several other bloggers have already noted.
Unfortunately, the service has just been vaporware for the past few years. A website has been up and running for awhile now, but it doesn’t provide many details. There’s a small blurb about the service on the Time Inc. press releases website that says the service will launched in the second half of 2008 with over 200 magazines being offered. Pricing details were not offered there, but a recent Ad Age article said that the users will get 3 magazines for $4.95 a month, $7.95 a month for five, or $9.95 a month for seven. Again, people can mix and match online according to taste.
Will it work? I’m skeptical that 200 magazines will be enough to draw in a big enough audience to sustain the service. What makes Netflix so great is not just the convenience factor–no need to drive to video stores anymore–but also the huge selection they offer. Every once and awhile I will search for an obscure movie on Netflix and come up empty. But that’s fairly rare. Netflix still has a massive back catalog for movie buffs like me.
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In the first installment in this series, I outlined the new project “Media Metrics” project I have undertaken to evaluate the true state of America’s media marketplace. To reiterate: I want to use solid evidence to assess where we stand today relative to the past in terms of media choice, competition, and diversity.
In this brief second installment, I want to provide a quick snapshot of where we stand in terms of household access to various media and communications technologies. Some critics like to wax nostalgic about a mythical golden age of media in the past when the citizenry was supposedly far better informed and more engaged in deliberative democracy.
It’s all poppycock. The fact is that we are better informed as a society today than all of our ancestors were combined. To the extent there ever was a Golden Age of Media, it is now; we are living in it. Richard Saul Wurman, author of Information Anxiety, has noted that “A weekday edition of the New York Times contains more information than the average person was likely to come across in a lifetime in seventeenth-century England.” And a 1987 report by Susan Hubbard (Information Skills for an Information Society: A Review of Research) estimated that more new information has been produced within the last 30 years than in the last 5,000. And did you know that in 1900, the average newspaper had only 8 pages, according to Benjamin Compaine, co-author of Who Owns the Media? In the year 2000, by contrast, according to the Encarta encyclopedia, “Daily general-circulation newspapers average[d] about 65 pages during the week and more than 200 pages in the weekend edition.” I could go on all day with stats and comparisons like this.
Part of the reason we are better informed, quite obviously, is simply because we have access to more media services and technologies with each passing year. Exhibit 1 illustrates that fact.
Exhibit 1
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Alex Iskold has a very interesting post about “The Danger of Free” over at the Read Write Web blog. But I think he overstates the case a bit when he asks “is the concept of free taking us down a dangerous road?” He pretty much answers that question in the affirmative:
Marketers long ago figured out the attractiveness of free. For decades companies have been playing tricks using free to lure naive customers. But recently, our obsession with free has given rise to a new phenomenon – where the customer is never asked to pay. How? Because the business makes their money on advertising. Marketers are happy to pay for access to customers, who in turn love not having to pay. So the web plays the glorious role of middle man. Are we heading into dangerous territory? The paths that we are taking lead to confused customers at best; and monopolistic practices at worst. A culture where consumers think that increasingly more and more services should be free is not healthy.
I’m not so sure. I don’t want the digital generation to grow up thinking everything online is one big free-ride, but do they really think that? They still pay for plenty of stuff, after all. (I wish they’d be willing to pay a little something more than zero for copyrighted content, but that’s another story). Generally speaking, this generation is paying for plenty of gadgets and gizmos (think game consoles and games themselves, or iPhones and other mobile devices, or PCs, etc.)
But what’s so bad about them pushing for more and better services at a lower price, or even no price? They understand there are trade-offs to getting “free” goods or services just like previous generations did when the sat down in front of the boob-tube to watch “free” over-the-air television, or listen to broadcast radio in their cars. As Iskold correctly notes in the conclusion of his essay:
The bottom line is there is no free lunch. When you go on vacation and see a sign that says Free Lunch you know that the timeshare sales pitch is going to accompany it. The free on the web is not free either. We are receiving the services in exchange for our time and attention, in exchange for the opportunity to be advertised to.
Yeah, so what’s the problem again? Most of us understand the trade-offs and that there really are no perfectly free lunches. But the danger of Iskold treating “free” as a problem and going so far as to conclude (incorrectly, I might add) that it leads to “confused customers and monopolistic practices” is that it is just another invitation for government to come and muck things up. Think about it: the logical conclusion of Iskold’s argument is that the government should step in to protect consumers from free goods and services! We truly are a spoiled lot in America.
I have embarked on a major new research project that I am calling “Media Metrics: The True State of The Modern Media Marketplace.” The goal of this project is ambitious: I hope to paint the most thorough and objective portrait of the true state of the modern media marketplace ever constructed. To do so, my PFF colleague Grant Eskelsen and I have spent months collecting and reproducing as many datasets, charts, tables and other information that we can get our hands on. I will be publishing individual installments online–some short, some long–discussing various trends and developments in the media marketplace. Later, I will pull it all together and create a massive online database for the public, the press, and policymakers to use as a resource.
Why am I doing this? For far too long in this country–especially in recent years–debates about the media, and public policies governing the media marketplace, have been based almost entirely on emotion, not evidence. Critics are fond of using a variety of subjective barometers to gauge the health of the media market. In a sense, that’s not really surprising since many of us feel a strong bond with media. It touches our lives in a variety of important ways. It informs and inspires on one hand and shocks and repulses on the other. Consequently, everyone fancies themselves a bit of an armchair critic when it comes to media.
But, in recent years, media criticism has been infused with an unprecedented level of raging emotionalism, so much so that it sometimes borders on mass hysteria. Many people—including a large number of regulators and public policy makers—argue that America’s media marketplace is in a miserable state. Some claim that citizens lack choice in media outlets, and that options are just as scarce as ever. Others believe that “localism” in media is dead, or that many groups or niches go underserved because of a lack of true “diversity” in media. Others argue that the market is hopelessly over-concentrated in the hands of few evil media barons who are hell-bent on force-feeding us corporate propaganda. And still others say that the quality of news and entertainment in our society has deteriorated because of a combination of all of the above.
It makes for good copy, but is any of it true?
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“Cable-TV Industry Girds for New Threats.” That’s the title of an article today from Ben Charny of the Wall Street Journal, who is reporting on what he’s seeing at this year’s Consumer Electronics Show in Las Vegas and how it is upending the traditional TV market:
“[A]s evidenced this week by the Consumer Electronics Show in Las Vegas… thanks to the Internet becoming a bigger distributor of entertainment, and new gadgets and other developments that make it easier to show the Internet’s content on TVs. … As the Internet becomes a larger provider of video, and technology makers ease the flow of that content to television sets, it threatens the cable and satellite industries. Currently, the number of subscriber dropouts remains relatively small, according to cable and satellite operators, but anecdotal evidence suggests those affected by a souring U.S. economy are more inclined to keep their less-expensive Internet services than their cable-TV subscriptions.
FCC Chairman Kevin Martin was out at the show this week, too. Hopefully he was watching and listening so his outrageous regulatory “war on cable” can finally come to an end.
I’ve missed Dan. Four years ago, as Techliberation was just getting started, Dan Rather provided us (and most of the rest of the blogosphere) with a rich source of content and amusement as he tried to pawn off forged documents regarding George Bush’s National Guard service on viewers. 
In the end, Rather ended up with omelette on his face, and soon thereafter was ushered out of his anchor seat at CBS News.
Well, he’s now back in the news, thanks to his $70 million lawsuit against CBS for dropping him. Denying that he did anything wrong, the unashamed Rather says that CBS took him off the air in an attempt to pacify the White House. Right.
CBS is arguing — among other things — that it was under no legal obligation to keep Rather on the air. CBS lawyer Jim Quinn yesterday compared the situation to the New York Jets benching their star quarterback: saying that while he might not like it, but there’s nothing he can do about it.
According to the New York Post, Rather responded by pointing out that there’s a difference between him and the Jet’s QB. “I’m in the Television Hall of Fame,” he said.
And so humble too.
Stay tuned for more — the trial judge yesterday ruled against motions to throw the case out, meaning there’s much more fun to come.
It seems this week that “change” is on everyone’s lips, with every presidential candidate from Barack Obama to Duncan Hunter claiming to embody the word. But change isn’t limited to the campaign trail — with some fanfare, the National Association of Broadcasters announced this week that it was jumping in the game with some changes of its own. 
Change certainly would be welcome a the NAB, which took some rather oddball positions last year, arguing for subsidies to ensure that “no TV set…gets disenfranchised” (“One TV Set, One Vote: Broadcasters Assert Rights for Televisions“), and asserting simutaneously that broadcasters do and do not compete with satellite radio (“National Association of Broadcasters v. National Association of Broadcasters“).
So now will NAB retract these silly positions, starting out the new year fresh, with better-grounded arguments on behalf of its members? Sadly, no. The change implemented at the NAB is a new logo. And a new tagline: “Advocacy. Education. Innovation.” NAB President David Rehr says this will embody the interest group’s “reinvigorated sense of advocacy.”
Right. Now if only it can work on reinvigorating a sense of good policies to advocate.
Conservative lion Richard Viguerie doesn’t like Fox excluding Ron Paul from their New Hampshire debate, and he isn’t shy about saying it. (Nor is he shy about promoting his book.) He makes – and reveals – some interesting points about media bias. It’s welcome to see any media outlet criticized for any reason. There was a time when there wasn’t even a practical way to get the word out.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.