In all the talk of digital convergence, including from people like myself, you often get the picture that all of old media is history already and that it’s sinking faster than the Titanic. This is strictly speaking, not true. There’s plenty of life in Old Media – right from Newspapers, to Magazines, and from Television to hoardings. In fact, as the digital wave grows, the value of successful old media becomes disproportionately high.
The New York Times 2008 annual report is instructive. Revenues have shrunk from last year but still stand at $ 2.9 billion. That is an awful lot of advertising revenue. That revenue base would put NYT in the top 5 advertisement earning websites in the world. The NYT’s own website incidentally, attracts about a 10th of that revenue base.
Or consider the ITV figures for Britain’s Got Talent – 15 million for the final – or 25% of the UK population. How much would you have to pay to get your brand to be seen by 15 million people in one go? Increasingly, when faced by the dramatic fragmentation of media and audiences, brand managers will flock to the few areas where old media is actually able to create huge audiences.
Assertion #1: Successful instances of Traditional Media will be disproportionately rewarded.
Another great example is the deal struck by AON insurance company with Manchester United to be their shirt sponsors. The deal is thought to be worth around £ 20 million/ year for 4 years. Now I don’t know about you but to me for a certain type of brand objective, that is a killer deal. Specifically, when you’re seeking higher awareness and recall of a product, or seeking to go global for example. It’s not a complex message, but in 200 countries, millions of people – make that billions, will see AON on Man United shirts for the next 4 years. Over and over again. They will see the name every time a highlights package is shown or whenever there is footage of a Man United player in club kit. And the clincher is that every year, over 6 million Man United t-shirts are sold across the world. A huge percentage of this is counterfeit. But guess what! That makes not a jot of difference to AON – they actually get the benefit of all that counterfeiting as well, so there will be about 24 million walking billboards for AON all over the world in the next 4 years. How much would you need to pay to get that kind of coverage alone? $ 20 million sounds like a very sweet deal to me.
All of this might sound like an argument for “Old Media” to feel quite complacent but that would be a fatal mistake. First, the examples of such huge audience aggregation are increasingly limited and on the wane. As has been commonly pointed out an audience of 15 million wasn’t uncommon in the days of 5 channel television. Today it takes a Susan Boyle phenomenon to drive that kind of number. Second, even these numbers are going to require a closer inspection – ITV may have had 15 million watching it on TV but some 200 million people saw the Susan Boyle clip on Youtube and ITV made no money off that at all. Man United doesn’t make any additional money out of all those additional replica jerseys – but they should factor it into the commercials! And finally, it would be useful to remember that these disproportionate rewards are driven partly by inertia to change and by the yet un-evolved nature of digital media platforms. The biggest mistake you can make, either as a media owner or a brand manager is to therefore assume that things are rosy because some of your shows are doing better. This is temporary and the fall off will be steep. The next 3 – 5 years may be very lucrative for successful TV and print models, but unless that is treated as a cash cow and the money invested wisely in emerging platforms, the fall off would leave the same businesses high and dry with no migration plan for their audiences.
Sky has already started charging for online video access. The New York times will continue to grow its website. The iPhone is already changing the way content is used. All you can eat subscription models for music are being trialled. And new projects like Canvas and Picnic will sooner or later change the landscape.
So what are these changes exactly? Again, if you look at the NYT annual report, you find that NYT has about 10,000 employees. Among which there are jobs such as Paper Handlers, Drivers (for delivery), Machinists, Stereotypers and a few others, which are at great risk every time another newspaper or magazine gets shut down. The closing of “City & Suburban” led to 1350 such jobs being affected. Similarly, for television companies there will be a number of jobs which are to do with media handling (Tapes and physical media delivery) which might be at the greatest risk.
For businesses, this means planning for the transition or retirement of such jobs including long term plan and investment in place for retraining, where necessary and/or possible. And it means using all that cash that successful old media is generating to create and build up the emerging revenue models which will need to be in place and be robust within the next 5 years.
Assertion #3: if you are lucky enough to have a successful old media model on your hands make sure you milk it and invest the proceeds into your emerging business model because the winds of change are already blowing and current models will only get less and less effective.
