*updated with new links at end of post*
This post is the closest I've ever felt to controversy with my old professional environment when writing the root trend. Onward anyway:
This AM's Wash Post has a discussion of how Internet radio is struggling to survive. The story is characterized underneath as a battle of political wills and lobbying strength in that arena. The issue is made by both sides to be one of fairness. It is offered indirectly by the writer that upstart competitors face many challenges...as if this disparity in treatment is not surprising. Maybe not but, the issues at stake are tremendous and transcend anything about music, the nature of competition in media, and politics in general. That no discussions of the very long term view (the secular trend) is available is disappointing but, not surprising. This issue will, one day, be framed as a generational conflict of interest. That is when this will be resolved and only then. I recently wrote about this topic (link above) but this update will frame it more briefly...I call it the (industrial) (r)evolution of media.
What follows will briefly frame this discussion in a very different manner than you see it told in the news today(Saturday 8 16 08); one that allows for both a changing social mood (the primary social trend) and our inexorable demand for information (content of all kinds). The generational divide must be breached in order for this conflict to be resolved. Killing off the competition will not make old media's struggles better....nor will it serve the evolving needs of the market for content.
The (industrial) (r)Evolution of Media is about how we will share ideas more effectively in the future. That social process is beginning with content. Media, content, and ideas(information), are all elements of how we will socially begin this new era where greater efficiency emerges from the social units we belong to. As it begins, many marketers already see the era of Choice clearly as a matter of "engagement" but before we can even get there we have to work through this old media mindset that still feels it is in charge of access to markets. This antiquated mindset is both subtle and pervasive. Again, the dividing line is along the generations and a changing social mood will highlight these fractures in the social contracts.
Ok, so this sounds intellectual and maybe even academic but, it can be seen as very practical right now. Here's why: The baby boom generation lived their life thinking their ideas were so important that they own them all in perpetuity. And while this form of social expression has been socially supported for many generations, it is my belief that the next generation will begin to break this monopoly on idea ownership allowing them to be seen as perishable, and in the process, freeing them up to creativity in our (now developing) more efficient social groups. Naysayers to this big idea point to how no one will ever sing Bruce Springsteen's work better than he and as long as he is performing; it is his right to own it! This very general idea is what the business of record labels made us believe over five or six decades. Without this strong social contract on their electronic product, the business model would have been selected out of profitable existence before now. The hard reality in all of history is that even the best minstrels have mostly worked for a living (+) and only in this generational recent past, with the dawn of modern recording, have we been so mystified by the electronic nature of our musical creations as to create iconic superstars. Music, it will be seen, is directly related to the aspect of sharing ideas in the brand new digital environment. In time, the generational shift in this matter by the younger people who are growing up sharing much more than just songs(electronically), will be seen to dominate court definitions and decisions. In the process musicians will revert more generally back to the traditional business of being minstrels from social superstar status and ideas will seize the social momentum and begin to be shared widely and more efficiently. Long before this can happen the politics of present circumstances must be seen in another light. So rather than make a political point about song royalties, I'll make a very big prediction that isn't too hard to see from this very big picture perspective. As social mood changes, how we value things of all kinds will change. In the process, how we see this argument will change and, copyright law will evolve, content will become probably perishable for the first time, and the next generation will use this process to gather social momentum in many productive social endeavors...far removed from music. So what's the immediate business point in writing about this? Read on after the quote:
Here's the money quote and the link to the Wash Post story:
..."The transformation of words, songs and movies to digital media has provoked a number of high-stakes fights between the owners of copyrighted works and the companies that can now easily distribute those works via the Internet. The doomsday rhetoric these days around the fledgling medium of Web radio springs from just such tensions.
Last year, an obscure federal panel ordered a doubling of the per-song performance royalty that Web radio stations pay to performers and record companies.
Traditional radio, by contrast, pays no such fee. Satellite radio pays a fee but at a less onerous rate, at least by some measures.
As for Pandora, its royalty fees this year will amount to 70 percent of its projected revenue of $25 million, Westergren said, a level that could doom it and other Web radio outfits."...
My favorite part of the article was when a Sound Exchange employee was quoted saying "Moreover, they complain, Internet radio stations have done too little to make money from playing their songs."
I can't help smile when I read that. What better way to defeat the entire premise of marketing than to suggest they just aren't trying hard enough! Read on and focus especially on "Choice" below.
So, why spend time on such a seemingly esoteric set of ideas to make a point like this that is obviously not socially supported right now?
So What!? If this is all 10 or more years away why does discussing this now mean anything other than trying to grab bragging rights for a prediction down the road? (oh if I had a dollar for every time I heard this or saw it in someone's eyes) My intention in offering this perspective is to show the big picture relevance first, and then mine down into a vertical using both historic trending as perspective and developing present quantitative techniques using data from the industry. Applying what I call the root trend platform (socionomics +) is a discipline and not a use-it and forget-it prescription. It is my intention to introduce and inspire a new set of methods of vertical analysis for proactive businesses.
So for media, here's the business implication: In 1996 we saw the Tel com deregulation Act signed into law by Clinton. Consolidation ensued in all old media properties. The result of this own everything competitive shift in thinking was really best seen as the social precursor to the Internet/digital age's effect upon this vertical. Consolidation was the market's first step toward old media becoming obsolete as the digital age began to be socially dominant. (Market's, aggregates of people, have both memory and vision) The political apparatus of old media is still intact because the generation that made it even more robust it is still doing business but, the functionality of it is losing/lost relevance. The emotions that tie us to (over the air) broadcast are longer lasting than the practical nature of the tool. This is easy to see in how political favor-ability is being given to an industry that is facing being obsolete now and will be in a decade...made that way by ubiquitous blue tooth connections between personal storage devices in cars, at home, broadcast from Wimax signals, and through this, in general, the emergence of the era of "Choice " (where all consumers can have whatever content they want, whenever they want it.) This newly defined period of "Choice" will make sense to Boomer's but the sacrifices will not. It is the job of the younger generations to demonstrate how business will be better conducted by allowing Choice to happen as the Boomers argue about fairness and 'how it always has been done'. The profitability margins will be very different at first but the growth behind a consumer friendly business model(s) of Choice will confirm the new social momentum. Business will respond. Growth is the reward of true marketing practices. Margin management, shrinking revenues, and shrinking shares of broader vertical revenue is what happens when an industry is out of sync with the markets they serve. This very basic point is driven home by separating young from old media use and the fact that overall media consumption is up. Then, as soon as one adds in better and more immediate use metrics, well then, the entire era as we knew it will have begun to transform even further into the era of Choice. These metrics are essential because they will foster meaningful communication about evolving behavior and that will spur better marketing.
If your old media business is struggling for profitability, that is a good sign your enterprise is no longer in tune with (basic social trending) and that any business in a vertical that can also be seen in in those circumstances must either change or cease(eventually). Strategic planning that simply extrapolates trends forward is not really strategic marketing in the emerging era of Choice. I don't know about you but I call that pretty damn practical insight, even if it is very Macro by nature. Sure the experimenting is the next step and requires entrepreneurial spirit and a willingness to try what is different. Most old media enterprises do not have internal structures that support innovation. Risk taking in a corporate environment is not socially supported. So no matter if there seems to be time to wonder about this for a short while, I suspect many old media enterprises will wither out of existence as margins increasingly erode as the younger demographics demonstrate this new behavioral trend toward (Choice) remarkably ahead of the older sector (demographics). When your business is in tune with social trending patterns, profitability will not be the constant challenge....keeping up with the right kind of growth will be. The right experience will not include outsmarting content consumers to gather information about them. The right business plan will see this information handed over freely. I humbly submit that even Rupert Murdoch needs to learn that lesson. Attaching spying programs to your customers browsers is not the kind of relationship that will dominate successful media business growth in the next 20 years. Think about that dynamic in a marketing context for a minute. Trust must be established first as part of a social contract that is to be enforced.
A penny a transaction is a better prescription than no transaction at all and leaves wonderful room for growth opportunities later. Even if this simple suggestion confronts a "too-demanding" corporate business structure directly (think common stock), the enterprise cannot ever be more than a tool for the market (being served) to use. Seeing it any other way is short-sighted. In an era of incredibly sophisticated consumers, trust (between provider and consumer) is the first holy grail on a long and winding path.
And while much of this post is being derived from old RT posts, the where to next ideas have also been offered generally without being as specific as could be if I were focused on just one small vertical. No matter what anyone prescribes for the future of the media enterprise, trial and error are essential, and so is establishing an accurate picture of media consumption alongside a new era of understanding between consumers of content and distributors of content.
UPDATE This AM the NY Post has a story about Yahoo's unveiling of a new business model for getting advertising placed on the web for newspapers more effectively. This is exactly the beginning of the transition to a clear distinction between producers of content and distributors of content the (industrial) (r)Evolution of Media promises us. And while newspaper and radio have always been separate in our thoughts of use; in the new world of digital content, this amounts to a substantial step forward. The relevance to this post is how royalties need to be part of a new social contract....one where defunct record labels stop influencing the growth and evolution of media consumption in the digital environment. Ubiquitous content requires a new business model as Yahoo is showing us. For the world of old media: ready, set, go.
Second update.....This NYT article from last week is (indirectly) telling on this topic. Newspapers and then later, all news content producers were the early entrants what I call the industrial revolution of media. Music's early entry was squashed legally as Napster was soon seen to be socially out of step. I submit it was only a first salvo on the way to a long social negotiation between generations of how copyright is to be handled fairly with a substantially changing environment. This does not mean I recommend stealing other people's ideas and work. It means that perpetual ownership will be socially renegotiated as the value of social sharing is supported in the developing social mood. This distinction is very important. Plagiarism will still be plagiarism. The dynamic is best seen from a supply/demand perspective before adding the dynamic of the developing social mood.
NYT link is coming....(where did I put it?)
An education in the Dangers of Online Research WP (timely reading about crediting sources and the social values behind the essential practice)
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