Colin's Corner

The User Revolution and The Media Divide

I recently read a couple of reports that examine the rapidly changing media landscape, its business models and the importance of involving the communities we serve.

The IBM report identifies four primary business models it suggests will coexist through 2010

Traditional media – This model relies on professionally made and branded content delivered through a “walled” conditional access environment and with dedicated devices. This is where most content owners and distributors operate today.

Walled communities – This model is based on distribution of niche and user- and community-generated content within a conditional access environment through dedicated devices. Typically, these are traditional businesses that have expanded their “walls” to include nontraditional features and experiences.

Content hyper-syndication – This model makes professionally produced content available in open channels, without proprietary access “walls” or dedicated devices.

New platform aggregation – This model relies on user-generated content and open distribution platforms. It is arguably the most disruptive model, as neither incumbent content owners nor distributors have legacy advantages here. Most media companies seeking entry will likely have to “buy in” for Speed.

The IBM report came up with 10 recommendations to help traditional companies face up to the immediate threat from the new media world and the eventual collision with their traditional partners. AlwaysOn provides a summary

1 Put consumers at the center of your business
Create a consumer-obsessed culture and place a premium on continuous consumer feedback.

2 Give control to consumers

3 Deliver experiences, not just content

4 Leverage virtual worlds

5 Innovate business models

6 Redefine partnerships, while reducing fallout

7 Shift investments from traditional business to new models

8 Create a flexible business design

9 Determine entry strategy for going “open”

10 Make user behavior a competitive advantage

The report quesitons whether or not traditional media is adapting quickly enough.

The other report is from Piper Jaffray The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium

1. Global online advertising revenue is exprected to reach $81.1 billion by 2011, representing a 21% CAGR (2006-2011).

2. The User Revolution. The advertising world is going through a revolution, -the "User Revolution" as it is happening primarily with the consumers, who are taking control of content consumption and branding. This trend will cause a significant rise in prominence of the Internet as a major content consumption and marketing medium.

3. "Communitainment." (Ugh!) The Internet has increasingly become a principal medium for community, communication, and entertainment--three areas that have collided together and are impacting each other's growth--generating a new type of activity that Pipper Jaffray calls communitainment.

4. The Internet Is Mainstream. The Internet has become a mainstream media outlet that now rivals traditional media for reach and advertising dollars.

5. Media Fragmentation. The proliferation of online and offline media outlets has resulted in shrinking television audiences and an increasingly fragmented media landscape.

6. The Golden Search. Search continues to gain ground, driven by the rise of search as the New Portal, the increasing use of search in branding campaigns, and the local search opportunity.

7. Google's wide variety of non-search-related products creates a virtuous cycle of brand affinity that drives incremental search volume.

8.Video Ads Could Drive The Next Wave. Internet video ads could become a game changer for large brand advertisers, who are used to the 15- or 30-second TV commercial

9. Internet Usage Patterns Are Changing. Portals maintain the highest reach, but the fastest growing category of destinations is communitainment sites such as MySpace and Facebook.

10. Ad networks are experiencing increased demand due to increasing Internet fragmentation, desire for more targeted inventory, increasing usage of networks for branding, and increased site visibility.
Agencies are rapidly evolving into more sophisticated, technology-savvy entities that combine best of breed offerings.

Companies to watch: Google (and YouTube), Yahoo!, Disney, News Corp, Time Warner, Microsoft, InterActive, Facebook, Craigslist, Brightcove, Yelp, SINA Corp., Baidu, aQuantive, ValueClick, 24/7 Media, Netflix, Wikipedia, MobiTV, Digg, and Hakia to be the most important players to watch.

The finding of the reports should not come as a massive surprise for those who have been watching the developments in our industry.

For me it is, always was and always will be about managing the relationship with those who consume and absorb our content. It’s about developing the audiences’ emotional connection with our brands. The communities around our brands – really define our brands and they need to be nurtured. Our communities are a competitive advantage in a world of search, aggregation, syndication, mash-ups and social networking.

The transformation of IDG

For over four decades we’ve had print blood running through the veins of the corporate body. But over the last few years we’ve seen dramatic change. Today the absolute dollar growth of our online revenues now exceeds the decline in our print revenues. This occurred in the US in 2006 and in Europe during the last quarter.

With this change in the revenue mix and the higher margins from our online businesses - the company is more profitably today than it has been previously.

IDG, where I’ve spent the last 14 years of my career, is a media company, delivering information on the information technology industry – from the Enterprise with B2B brands such as Computerworld, CIO, Infoworld and Networkworld to the Consumer Technology segment with brands such as PCWorld, Macworld and GamePro.

In the US, our online revenue now accounts for over 35% of our total US publishing revenues. Next year, for many brands online revenues will be greater than print revenues, if fact they already are at some of our key brands and by 2009 – approximately 50% of IDG’s US revenues will come from online.

To drive this change and to focus on online revenue we’ve changed the business mission of our organization away from print. Going forward IDG Communications will define itself as a web centric information company complemented by expos, events and print publications.

The brutal reality that we’re facing today is the costly process of dismantling and replacing legacy operations and cultures and business models with ones with new and yet to be fully proven business models. However, we face greater risks if we don’t transform our organization and take some chances.

In the past media organizations controlled content and pushed it out to subscribers, today’s media has to deal with a world of social connections, networking and collective actions enabled by the Internet.

The more enlightened in our media world will figure how to allow their audiences freedom to create and share their knowledge and content and to mash it up in a way that engages users.

We have to become facilitators as much as content creators – our brands are trusted, they have quality content and loyal audiences – these are our competitive advantages but we’ll only hold onto those assets if we truly listen to our communities and provide appropriate environments for user initiated conversations and user created content

Figuring out the transformation from print to online is only the start. The information we produce, facilitate and aggregate increasingly will be viewed on a number of screens - the Computer, the TV, the smart mobile phone, the iPod and other portable entertainment devices. Many of these screens are more suited to video and audio than text. Even more new skills for our organization to master!

We’re in an exciting growth industry. Let’s shake off the image of being in a beleaguered print industry and seize the opportunities afforded to us by the digital revolution.