The digital challenge
Article Date: Jun 12 2006
The changing media landscape is forcing traditional distributors and content providers to revise their approach or risk losing their grip on the market – and there are lessons for leaders in other sectors too, as GrowthBusiness discovers.
As consumers of media we’ve never had it so good. You name it, you can access it, download it and even carry it around with you to watch when you want. Price reductions and increased bandwidth have accelerated penetration of broadband internet in the UK and worldwide, having an incredible impact on how we view and use media content.
The statistics on consumer use are overwhelming. The Digital Radio Development Board shows that more than ten per cent of the population now own a DAB (digital audio broadcasting) set at home. Research house Forrester estimates that broadband is currently in more than 20 per cent of UK households, and forecasts this will be nearer 30 per cent in 2006 and more than 40 per cent by 2010. In March, the Internet Advertising Bureau revealed that UK online advertising spend grew by 66 per cent year-on-year to £1.4 billion and is expected to swell a further 43 per cent to £2 billion for 2006.
Businesses are increasingly appreciating the value of keeping in touch with the digital zeitgeist, and some are using strategic acquisitions of high-tech businesses to add to their traditional business offering. ‘Convergence’ is the watchword among media heavyweights, which essentially means taking disparate information technologies and media platforms and rolling them into one package. Take Sky’s purchase of internet company Easynet for £211 million, for example, and News Corp’s $580 million acquisition of Intermix Media, parent company of blogging site MySpace.com. And this was trumped by NTL’s entry into Virgin territory with a £1 billion cash and shares purchase of its mobile telephony arm. Thanks to the acquisition, the marketing and advertising departments at NTL are no doubt delighted to be able to promote ‘fourplay’ to Britain’s households, a phrase coined to describe a four-strong package of fixed and mobile telephony, broadband internet and pay-TV.
Reuters chief executive Tom Glocer said in his recent hortatory speech to the Online Publishers' Association that he thought News Corp’s latest acquisition would prove to be a major turning point for large media players. He considers that community sites such as MySpace are ‘redefining our world and providing an online forum for kids, music groups, their promoters and, basically, anyone with anything to share’. Via News Corp’s acquisition, Rupert Murdoch has now gained access to 54 million potential customers. ‘It’s the kind of market data that would make consumer industry bosses giddy – information which will prove to be an early warning system of future trends and brand choices for the world’s youth market,’ claims Glocer.
‘It is becoming clear that our media world is fundamentally changing again only a decade after the internet attracted the first wave of online publishers. A Gutenbergian transformation has resulted in wooden and metal letters being replaced by the laptop computer and the internet. It’s only taken five hundred years!’
Content is no longer king – delivery is everything
Britain’s digital landscape is evolving at such a pace that even dyed-in-the-wool, old-media barons are realising that dipping a toe in the digital water is simply not enough. Traditional media and publishing models must be overhauled and revolutionised in the face of new content delivery expectations. While old models saw content pumped one-way to consumers, now it must be searchable and accessible in a way that allows users to interact with what’s available and tailor it to their own needs. Content provision is now a two-way street.
In his well-publicised keynote speech to a City of London audience, Rupert Murdoch seemed converted, heralding, ‘The dawn of a golden age of information – an empire of new knowledge.’
He advised newspapers, and, indeed his words seem germane to providers of any media, to ‘give readers a choice of accessing their content in the pages of the paper or on websites or – and this is important – on any platform that appeals to them: mobile phones, hand-held devices, iPods, whatever.’
In a similar vein, Tom Glocer admits that his declaration last year that the consumer was ‘editor’ already seems archaic, now noting that media companies were only just beginning to catch up with this supply and demand model – ‘but, you guessed it, our audiences have already moved on,’ he says. ‘Now they’re consuming, creating, sharing and publishing.’
