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Monday, February 23, 2009

Old Media: The End Came Suddenly

No, newspapers and other old media aren't dead.

But the wave of bankruptcies over the past year may just be the tip of the iceberg. Refusal to change fundamental assumptions has been the hallmark of many companies in dying industries, of course. But now, you can go back and look at the many ways in which companies of this nature have "stuck to their guns" and yes, given that in this case they are media companies, the relentless scare tactics (never-ending stream of news stories trying to scare us away from online life) they have employed against their new media competition.

Those who acted like titans just a few short years ago have been felled by economic recession and the utterly predictable decline in subscription revenues, print advertising, and classified ad revenue.

The wake-up calls came long ago, but many of the titans failed to heed them. Others diversified and survived. For those that continue to cling to the status quo, it'll get worse before it gets better.

A couple of underlying principles seem to be at work here.

Online, there is no shortage of potential advertisers lined up. What they lack is quality "programming" (content) to show the ads against. Ad rates are very low on similar types of content to the stuff that gets consumed offline. Does this mean online ad rates are too low, or that much of the offline advertising world has been wildly overpriced?

Offline, in, say, the television world, the advertiser base is declining but there is an absolute surfeit of content. In many ways, TV programming is becoming cheaper to produce. When it comes to newspapers, there are still plenty of advertisers, but they are slowly coming to the realization that the ads aren't working as well as they once did because fewer people are paying attention.

There are no shortcuts; no easy answers. But to unravel some of this puzzle, let's posit this much: you can't just shove ads in people's faces, crammed in next to other people's ads. Advertisers are getting savvier about actually knowing if their ads are being seen, having an impact.

So the true challenge is creating large swaths of unique "content" or "apps" or "environments" that delight consumers enough to be willing to look at ads.

That means huge investments from visionaries who have other means of making an income, or who are just willing to take a chance on building something new.

Those are the folks who succeed. Those who focus just on the ad side of it, those who keep on coming up with new ways to charge advertisers for things that don't have an impact on customers, will ultimately plateau, as they either annoy viewers or advertisers.

In light of the fact that the old media titans did make these kinds of heavy investments, and were the visionaries of their day, it seems only fitting to thank them, and to hope that they will try again, with new visions. Thanks to them, we had the benefit of huge news organizations. They did have the right idea at the time. That time may be past, however.

Posted by Andrew Goodman




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