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Posted on Nov 09, 2009 - 10:15am by John P. in Finance, Thoughts, Work
For a long time now I’ve been hearing people predicting the death of traditional media (you know: television, radio, books and newspapers). “Old Media is dead! Long live New Media!”
This is 50% crap, but it’s also 50% true. And since I’ve been fielding a lot of questions about this lately, let me see if I can break it down for outsiders in terms that are a little easier to understand and have some actual logic behind them.
The real magic of “new media” has nothing to do with the people. It is quite simply all about the delivery mechanism.
In any industry, the cost of goods produced are ultimately borne by the buyers of the finished product. So, for example, if the price of steel goes up, the price of automobiles goes up as well.
But imagine a situation where a radical new material is developed that costs 1/100th the price of steel, but which is actually stronger, can be made in an ordinary kitchen, and can be used to build cars just as well!
What happens to the auto industry?
With the introduction of this disruptive new technology, the auto manufacturers who quickly recognize that the game has radically changed and who are tough enough to make very difficult decisions and retrain / retool for the future have a chance at survival (those who don’t will cease to exist). And because of the new radically decreased cost structure, new entrants will emerge in the market.
Let’s apply the same exact logic to the Television industry. Consider that for most of the last century if you wanted to deliver programming to a large market, the barriers to entry were substantial.
Well, the good news is that the advertisers who supported the industry (the buyers) understood the cost to produce the end product and were willing to support it because there was, after all, no competing technology to deliver the same results.
But one day a few years ago, the industry woke up and learned that something had fundamentally changed. All of a sudden anyone with a camcorder, a computer, and an internet connection could reach the exact same audience – but for a tiny fraction of the cost! (The invention of the internet is like that new steel replacement we just discussed, for 1/100th the cost!)
The results of this radical change in technology? Well, its exactly the same as our auto industry above:
In this case, the buyers are simply the advertisers, who are deciding to hold off on the old advertising expenditures and shift some of that spend to the online medium to try and reach the same number of eyeballs at a dramatically reduced price.
Now, it’s not that the viewers or the advertisers have actually gone anywhere. In reality, there are more people willing to watch, and more people wanting to get their advertising message out now than ever before! But the reach of “new media” personalities has now matched their “traditional media” counterparts, and is threatening to overtake them. For example:
But our costs to reach these eyeballs are radically lower, so advertisers now have the opportunity to pay a lot less to reach the same end goal, while Cali, Leo and I can easily maintain the same or greater margins for selling our services.
So, yes you will see new personalities emerge in the New Media era. These are the ones who recognized the change early, tackled the learning curve, and effectively carved out their space. But you’re also going to see the old personalities stick around, if they are able to adapt in the same ways.
As I said, it’s not about the people. It’s about their technology.
Damn, that was a long winded explanation. I’ve got nothing left. But if you care to add to the story please drop a comment down in that little chatter box below cause I’d love to hear it.
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Dear John P. You rigth.
I think you’ve nailed the basics down really well. What do you think about the idea of the government “bailing” out “traditional” media?
Besides lesser cost for advertisers, they also have the option of laser precision targeting of their intended audience. New media is the hands down winner.
Technology will keep changing, its the duty of the people to keep up or loose.
I think the two types of media have a complimentary relationship: New Media provides an avenue for newcomers to make inroads into traditional media. Old Media can embrace new content and delivery mechanisms with new media, thus expanding their audience and energizing their base.
Great post John! I keep hearing news stories about how the internet is killing investigative jounalism. No, it’s killing newspaper and television holding companies’ investments and classical reporters’ jobs. So of course the old-school media is doing everything they can with the remaining power that they have to push out a message of “that competing technology will stab you in the back, remember who your true friend and ally is!”
I also hear people say that the internet will never support quality journalism. Really? Isn’t that exactly the same thing that the newspapers said about television when television journalism started gaining steam? The turning point then was the JFK assassination as reported live by Walter Cronkite.
I remember when the September 11th attacks happened, everyone around me didn’t turn on TVs; rather, they flooded the net since you can get the information you want on the net rather than having it spoon fed to you. That was eight years ago, so how much more likely are people to do the same thing now?
Well said with a great post, I have seen many papers in the past few years disappear many of which were around for hundreds of years before. Many of the local papers where I am at are trying to amp up the Online prsenece.
Great post, John, but I am going to have to disagree with your closing line. It is about the people, not only the technology. When I say this, I am referring to people’s habits, and ways they have been educated and raised on. If the people can not change with the times, then it’s the people that have failed, not technology is to blame for a demise of that certain sector.
Sometimes you can’t teach an old dog new tricks.
For the companies and people that have invested so much time and money into various things, they can simply cut their losses, or die off. That again is based on people’s interests and egos. I for one, like to keep up with things, especially if my business or industry is making large sums of money. Look at all the oil companies investing in “green” technologies. These are the things that will wipe them out, if they don’t adjust to the trend.
Smart companies leave their egos at the door, plan well ahead into the future, diversify, and make the switch when needed. The others, are left clinging to hope, which will fade in time.
Oh, Geeks! I thought it said Greeks! Same difference?