If you want an excellent summary of how bad it is in medialand, read Bob Garfield’s excellent overview on Advertising Age before it goes behind the subscription wall (If you’re too late, click here). The sky is falling, folks, and it’s not just for newspapers.
Garfield is the author of the forthcoming book, Chaos Scenario (right), and he’s obviously been doing his homework. Some stats from the story:
- In 2008, magazine newsstand sales fell 12%. They’ve dropped another 22% this year off of that awful base.
- TV Guide, the erstwhile 17 million-circulation goldmine, was sold in October to OpenGate Capital for $1, or $2 less than a copy at the supermarket checkout.
- “Bernstein Research predicts a 20% to 30% drop in 2009 TV station ad revenue.”
- “For the last reporting period, Nielsen Media Research said, CBS’s prime-time audience was down 2.9%, ABC’s down 9.7%, Fox down 17.5% and NBC down 14.3%.”
- “According to Media Dynamics, the average price of reaching 1,000 households with a 30-second spot in prime time, has jumped from $8.28 in 1986 to $22.65 in 2008 — but effectively more like $32, because between 150 and 200 of those 1000 households use DVRs to skip past the ads.”
- NBC Universal CEO Jeff Zucker recently admitted that he’s considering making NBC a cable channel. A CBS executive said much the same thing.
And why is this all happening? Quoting again:
“Today the average 14-year-old can create a global television network with applications that are built into her laptop…you have the ability to create virtually unlimited supply against what has been historically relatively stable demand.”
And that’s the problem. Also the opportunity. The ad-supported revenue model presumed that advertising space was limited, but today it’s abundant and growing faster than the supply of people to consume it.
If your business is to sell expensive advertising on the theory that you control a narrow channel to the consumer, and then your business is being vaporized by information abundance. This is the problem for mainstream media in general and it is the one that demands the most creative solutions.
Garfield quotes Philadelphia Newspapers LLC’s Brian Tierney ruing the failure of the free Internet model: “If you build it, they will come — I don’t think is working for media like ours. … I think we’re going to have to start to find a way to charge for it and not just rely on advertising.”
Advertising was a great business for many years when media was scarce and power was concentrated. The mass democratization of media is sinking all businesses that rely upon that inefficiency. The solution is not to continue doing more of what we’ve been doing but to deconstruct the centralized media model into something that looks more like the shape of this much flatter market. The goal should not be to preserve newspapers or television networks or magazines or whatever. It should be to preserve and enhance the quality of what they have long provided while finding a sustainable business model.
This entry was posted on Tuesday, March 24th, 2009 at 7:49 am and is filed under Business News, BusinessModel, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.