While the current economic crisis is unveiling a wealth of troubles for many businesses and industries, it’s also masking some fundamental issues. Advertisers, publishers and media companies will presume that, once the economy picks up again, and marketers assign larger budgets, that they, ad-supported media, will come roaring back with the economy.
But even Disney CEO Bob Iger acknowledges that changes in consumer behavior are due to more than the economy. Craig Moffett, an industry analyst at Sanford C. Bernstein & Company, told The New York Times that it's not correct to call the slowdown in cellphone sales "a cyclical problem."
Companies that seize market share and are able to do well over the next six months or year may, indeed, shoot out of the gates toward the end of ’09, or beginning of ’10 (advertising tends to be a trailing economic indicator, unlike the stock market, which leads). Traditional media that hasn’t done a good enough job of addressing the market shifts may do better then, but over time will be in jeopardy -- a possibility picked up noted by NY Convergence (which I've helped build as a consultant), contrasting the forward-looking mood at the AlwaysOn On Media conference with the somber orientation of media execs at the Crain conference across town in New York.
At the On Media conference you could almost feel a shift in the air. Everyone was questioning everything: What valuations are, whether the venture capital model really works, whether VCs ask too much for their money, whether ad targeting and re-targeting will fall prey to privacy concerns; even the demise of ad networks that bought lots of inventory who are now sunk by using arbitraging schemes of buying ad space in bulk from the likes of Yahoo, and are now unable to sell it at a profit. At the same time, a bunch of widget-makers like RockYou and Meebo, and ad networks, and early stage investors talked about great growth and huge opportunities. There’s some real disruption here, and it’s fundamental. Social media expert Larry Weber likened big media's practices of demanding control to mafiosi, and hinted that unpaid media would bust the system apart.
The shifts, I'd say, are more fundamental, even than the old saw about horse and buggy or train companies not understanding they were in the transportation industry. The new media industry may not be like the old media industry. Sure there is still advertising and aggregating audiences. Great stuff -- content, we now say -- gets watched and read and listened to. You can talk about audiences, and demographics, and screens and technologies. Fred Seibert, ex of MTV and other traditional media, now of Next New Networks, kept driving the point home in the most recent episode of Naked Media (soon to be live at NakedMedia.org) how much he could draw on lessons of the past to inform his practices today. Yes, but. And it’s a big but, because today’s media require not only a different set of technical skills, but also a different mindset, one where literally everyone with any networked device has the tools to do something they can call media. A world where media consumers want to talk back not by yelling at the TV or writing a Letter an Editor may not publish, but by getting a response from the media creators and purveyors. Where fans will take and make something their own, and a media company can be created from a search algorithm.
The mindset and skills of today require a type of openness to innovation and audience participation (and I even recoil a bit at that phrase, because it’s almost as if there is no longer an audience that’s separate from the producers) that’s quite alien to many folks who’ve made media for decades. When the economy gets better, that will help us see how fundamental the shift has been.