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Think Big, Think Small: The Conflict
Between Media Centralization and Decentralization |
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27 November 2006 |
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As major media consolidation deals bring more and more
publishing houses into private hands, the challenges of
converting these properties that can respond to the needs
of niche markets are becoming more acute. Combining
infrastructure and staffs cannot be the only factor leading
to more success in publishing markets that are by their
nature highly decentralized. There is a gap in management
skills, industry outlook and strategic vision in publishing
companies that is going to be hard to fill without
confronting the waves of users who are eager to create
their own decentralized media markets. |
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The abundance of private
financiers willing to purchase media properties seems to know
no bounds recently. As
Market Watch (registration) notes the hope of many of these
private investors is that after a few years of tweaks and tucks
out of the glare of impatient public markets major media
properties will rise phoenix-like to become hot investments yet
again. In the meantime the consolidation of media properties
into ever-larger private holding companies is accelerating
rapidly the move towards global consolidation of media
ownership.
Not every one of these moves to private ownership may be
huge from a Rupert Murdoch's perspective, but when you have a
multi-investor
deal for combining
Penton and
Prism
Business Media that reaches up to around USD 530
million in total value the bets on a bright future for
consolidated media properties are becoming pretty steep. In
business media, where high-end audiences in specific market
niches are more likely to be captive communities for efficient
and effective publishers, there is good reason to think that
these private bets are going to pay off pretty handsomely.
But in many instances these investors must face the broader
realities of an industry that is beginning to reflect an
increasingly narrow set of outlooks on both its audiences and
itself. While greater efficiencies are gained by consolidating
staffs and infrastructure to produce a wide array of
publications via large holding companies, the challenge that
many of these companies face is that cutbacks alone cannot
produce staffs that are efficient at creating new kinds of
online content that interest online audiences. The technology
may get lean and mean, but editorial operations are benefiting
far less from consolidations.
The resulting gaps in media content quality are being filled
increasingly by the audiences themselves. With weblogs, wikis
online video and a host of other tools both individuals and
enterprises are becoming far more adept at creating their own
editorial value. As Google's USD 1.65 billion deal for
YouTube
underscores the stakes for getting more diverse content from
user-generated sources are increasingly high - so high that one
wonders whether major media companies may not have created a
new bubble of their own as they
hunt for the next YouTube.
The problem with combining the consolidation approach to
traditional media with the "spend at all costs" approach to
capturing diverse user media is that you may wind up killing
both investments in process. Not many user-generated media
plays are going to wind up being the great revenue producers
that media companies may hope for, even if they do generate
significant amounts of audience share. In the meantime the
capital drained off on these oversized user media bets take
away badly needed resources to bolster up traditional editorial
content. There will be one or two user-generated content plays
next year that turn out to be (maybe) worth huge investments -
and the rest will be wasted money.
In the wake of these opposing forces of consolidation and
diversification, content producers need to think carefully
about how they are going to position themselves for
profitability moving forward. A few quick suggestions:
- Keep the focus on content, not distribution. An
acquisition like YouTube doesn't come along all that often,
and when it does there's the temptation to think that you're
buying a distribution channel. But user-generated media is a
very movable feast, able to switch at will to the next
interesting channel. A channel it is, but one that's highly
independent of the content producers using it. By contrast
CBS News, which has been making aggressive use of YouTube
as a venue, is thriving by trying to get content into the
hands of new audiences in a venue that they value. Media
companies need to think along similar lines where possible
and think more about how they can be leading producers of
content in user-centric venues.
- Keep the focus on adding user content to niche
markets. While the emphasis of late has been on the
"glory deals" that lead to major consolidation coups, these
mega-deals are not necessarily going to lead to
mega-solutions for publishers' problems. At its heart the
online revolution is about developing highly valuable content
for niche audiences, out of which can grow the enthusiasm for
more widespread distribution of content. When you're
faced with legions of user-publishers whose motivations for
putting out great content may be far more complex than the
typical ad-supported media outlet it's going to be harder and
harder to find an editorial focus that can out-run targeted
communities of users already empowered to communicate with
one another. Instead, learn how to help them run with one
another - one niche at a time.
- Keep the focus on getting the right leadership. At
a recent media industry committee meeting I was surprised to
hear some of the veteran industry insiders complaining that
recent industry event panelists had been a little too quick
to pat one another on the back and avoid some of the real
pressing issues facing media companies. The surprise was not
that this was happening - the "whistling in the dark" has
been all too evident for years, now - but that industry
leaders were challenging publishing companies to embrace the
challenges confronting them. In military circles power runs
with those who have leaders who understand the battlefield at
hand: being able to consolidate power is not the same as
knowing how to put in place top-level and middle management
who can use that power effectively to confront key issues in
distributed markets. Entrenched media management teams must
look beyond the next round of back-slapping events with
colleagues and think about who is really in touch with the
distributed markets that they need to conquer.
While many good things may yet come out of this latest wave
of media consolidations, private investors must acknowledge to
themselves and to others that the risks are far higher and
longer-term than many are willing to admit. In the meantime
smaller and more nimble independent publishers are springing up
left and right to fill in corners of niche markets that will be
hard to win back into mainstream media. To win big: think
small.
-
John Blossom
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