The digital challenge
Article Date: Jun 12 2006
Power shifts
In the keynote address of the recent Business XL Live event, Media & Money, active small-company entrepreneur Chris Akers added weight to the argument that consumers are hands-on in shaping content. Akers is chairman of sports consultancy Sports Resource Group as well as two media-focused AIM-listed cash shells and a host of other interests. He quoted the CEO of Yahoo, Terry Semel, saying, ‘Every medium mirrors the things people want to do. The world is moving from mass media to “my media”.’
Consider the habits of American teenagers, for instance. According to a survey by the Pew Internet & American Life Project, about 21 million teens (or 87 per cent of those aged 12 to 17) use the internet, and 57 per cent of them could be considered content creators. They’ve created a blog or webpage, posted original artwork, photography, stories or videos online or remixed online content into their own creations.
‘The my-media concept is really producing a ripple effect right now,’ reflects Akers.
‘Traditionally, above-the-line media were television, newspapers, magazines and radio but, as a consequence of the advent of the internet, iPods and mobiles, people’s media consumption is changing to the point where audiences are fragmented. As a result we’re seeing new communities form. That’s why ITV bought FriendsReunited and why News Corp bought MySpace – everyone has their own friends and contacts who they trust to share their views, including bloggers. People are becoming sophisticated digital consumers. Whether it’s a Ricky Gervais podcast or a “mobi-sode” of a soap opera, advertisers now have to adjust their method of communicating to take into account audiences’ new consumption habits, not the other way around.’
Akers says, ‘It’s like 1995 to 2005 were the warm-up years! Previously, media barons could dictate what people watched and when, but now digital is replacing analogue, people have the power to manipulate. They are becoming their own schedulers, editors and producers. That control shift is something that advertisers and agencies are having to deal with.’
Fragmented market
Simon Cole, chief executive of radio content and digital services supplier UBC Media, the second-largest owner after BT of digital broadcasting spectrum in the UK, has seen that shift in control result in much upheaval in the radio sector. ‘The industry is dealing with a revolution in its model,’ he explains.
‘We’ve gone from a single platform to one where you and I could start up a radio station tomorrow and broadcast on Sky. Previously, a few licensees had access to a walled-in audience and now the industry is facing up to the fact they have many competitors who have a variety of different platforms on which to compete. Technology accelerates the evolution of new business models, and the pressure of competition is going to force the creation of more and more. The barriers to access have fallen and the number of competitors has increased, but the amount spent by advertisers has not risen. So, media owners need to adapt if they’re going to keep advertising revenues up.’
In order to adapt, Cole explains that radio, as with all those challenged by the digital revolution, has had to (and will continue to have to) come up with new forms of revenue generation. ‘It’s what we once had to do with e-commerce,’ he explains. UBC is running a trial with BT Movio, Carphone Warehouse and Chrysalis Radio for digital radio listeners to be able to download songs as they listen to them.
UBC has also devised another service to capitalise on fragmentation of radio audiences and create opportunities for its advertising sales arm, called Network Drive. Cole explains that it gives advertisers access to national coverage through local stations. More than 170 stations broadcast traffic and travel bulletins supplied by UBC, which then ‘collects’ all the advertising time that all these broadcasts add up to and offers it to advertisers as a large chunk of national advertising.
Changing tack
Although competitive pressures may well expedite the formation of a digital strategy in this environment, business owners must reconcile this need to compete with having to waver from their original business plan. Many challenges arise from the blurring of roles between different businesses in the media space and Julian Turner, chief executive of specialist publisher Electric Word, points an exemplary finger at a well-known search engine.
‘Google used to be a search engine, but now it feels like a publisher or an ad sales agent. And look at Manchester United – its matches used to provide engaging entertainment, “content” if you like, which they sold through the Premier League. Now it has its own MU.tv television channel and a broadband internet service.
‘This illustrates what happens in a world where the number of outlets or platforms continues to proliferate – the people who used to be content providers are now channel owners,’ he observes. ‘The old definitions for media companies are becoming less relevant – traditional ideas of what constitutes, say, a publisher or production company are falling away. The challenge for businesses is to stop thinking so narrowly and start thinking about meeting customers’ information needs in whatever way is required.’
