The media industry around the world is facing a perfect storm of awful circumstances. Layoffs, closures, stock market price falls. What caused it? Whose fault is it? Is there any learning from the way B2B and specialist media have adapted?
Well, writes Neil Thackray, Non-Executive Director at Gambit Media and former AgriBriefing CEO, let’s start with something controversial.
The current crisis is not simply the inevitable impact of the drop in digital advertising or the shift of the tech platforms’ focus away from news or the upcoming demise of third-party data or the threat of AI.
What has gone wrong is the direct fault of the management of media companies. It is simply not good enough for them to bleat that some bigger boys have stolen their lunch money. It is a pathetic abrogation of responsibility for something that should never have happened but could yet be fixed.
A side note…
When we asked Neil to write this opinion piece for us, he was in Tanzania chasing wildebeest. The previous time we spoke, I think it was around New Year’s, he sent a photo from the Maldives.
But Barcelona won him over, and he will be our host at Mx3 Barcelona on 12-13 March.
Our Early Bird offer ends today, 14 February.
Get your discounted tickets here, and come say hello to Neil and other colleagues in Barcelona.
Lean ‘everywhere’
Like all accidents and disasters, this car crash began with a serious error many years ago. Back in the eighties, when I first started working in the media industry, there were three distinct kinds of engagement experience for consumers. The consumption of television, for example, could be called a “lean back” experience. Reading a newspaper or magazine is a “lean forward” experience, whilst playing games of one kind or another is a “lean in” experience.
These three types of engagement were quite distinct industries distributed and consumed in different settings and distributed on different platforms.
Today, the situation is entirely different. The competition for users’ time is conflated onto a single device and platform, typically the smartphone. Users no longer have a separation in their minds about when or how to engage in lean-in, lean-forward or lean-back experiences. Why does this matter?
What it means is that when media companies are competing for users’ time, they are now in a competitive set that includes not just lean-forward experiences but also lean-in and lean-back experiences. On our phones, we watch “TV”, read news, play games, and network with friends, all in a seamless and borderless way. We no longer distinguish between the types of engagement.
Silver bullet fantasy
So, what happens when competition for anything increases? Prices go down. Who knew? Not media owners, apparently. Many, if not most, have spent the last 25 years desperately trying to find ways of getting users to engage with the same product they had back then but in a new competitive environment.
They have seized on whatever the latest tech fad might be in the desperate hope that something will save them. It was going to be Web 2.0, it was pivot to mobile, pivot to video, pivot to native advertising, user-generated content, page-turners on iPads, programmatic advertising, Facebook or Google referrals, pivot to newsletters, focus on subscriptions and many more. And now, more delusion that the answer is AI.
‘Jim Mullen Paradox’
None of these enthusiasms or pivots stopped the rot. Prices fell, and the answer media management returned to over and over again was to cut costs. And this way, madness lies.
The end result is perfectly encapsulated by what we might call the “Jim Mullen Paradox”. In the midst of the third round of cuts to editorial in a year, the CEO of Reach was asked whether the strategy of flooding websites with stories and ads was wise. He said, “I am disappointed as anyone else that people don’t really want to pay for our content online. Not enough of them, nowhere near enough of them.” He told The Guardian: “We are in the real world. I need to get the page views, that is the way we sell advertising blocks, and advertising blocks deliver revenue. I know it’s not ideal. We don’t talk about engagement and quality. We do, but it is not in the trading report.”
So the Jim Mullen Paradox is that even though media companies know that what they do is not what their user customers want and that it creates a bad user experience, they see no alternative for fear of losing revenue. The madness is that they are losing revenue anyway.
So the strategy chain is this: More page views = more ads = price of ads falls = growth in ad inventory and fear of wasted inventory = growth of low-quality advertising = drop in user engagement = ad volumes fall = another round of cost cutting. Repeat, over and over again.
A different story
In specialist media, the story has been rather different, albeit sometimes stumbling and sometimes characterised by the same malaise I have described in mainstream news media. Nevertheless, many investors are getting great returns. Some business and specialist print titles are even thriving, but not by doing the same thing in the same way as they were in the pre-internet days.
Good specialist media has focused on the singular objective of solving a problem for their audience. It is focused, for example, on removing friction from business decisions. Most importantly, the way out of competition growth is to innovate distinctiveness. It is in distinctiveness that the route to revenue exists for every product on Earth. Media is not a special case.
Distinctiveness
The question often put is, what can news media/consumer media learn from business and specialist media?
Most people expect an operational answer, but of course there isn’t one. If there were such a panacea, it would inevitably fail the test of distinctiveness and, therefore, be a commercial failure.
So, the real answer to the question of what general media can learn from specialist media, is nothing more than what can be learnt from any other product sector that has faced systemic challenges.
The conclusion, therefore, is to innovate for distinctiveness.
Specialist media succeeds when it produces something that is both important to the user (especially if it is important to decisions they are making) and is difficult or expensive for them to produce or access by themselves. The greater the extent to which you can do those two things, the greater your revenue choices and margins will be.
Media that is not important to the user and which is easily replicable by the user for free, will never make an investor money. Newspapers, anyone?
