Those clever guys at Google have done it again. The new search algorithms for Google News offer personalized results. Yeah, the cookies they stick in your PC collect a lot of goodies but pushing up search results based on every individuals profile and history will be quite satisfying.
This will not, however, please everybody. Those who believe Google is a content parasite and plan, once everybody agrees, to force the search giant to pay up have just seen an example of how far ahead Google is. That would be ten steps, around the corner and over the rainbow.
Those on the other side – and that includes most search users – can only say ‘YES!’
By the way, whatever happened to Bing?
Google getting into real estate advertising, merging Google Street with AdWords, won’t please some. Google getting into the mobile phone business and the web browser business is more worrisome. Big and rich as it is, brand extensions are out of season.
Yep, it was Iranian hackers who took down Twitter last week. Smack. Then it was Facebook ‘adjusting’ their privacy policies.
Social media are games, meant to be games. Some people enjoy playing. Some people take social media seriously. Some people enjoy playing Monopoly but nobody takes it seriously. Anybody who plays Texas Hold ‘Em is serious.
There is a showdown coming.
New Journalism is Here
Actually, journalism hasn’t changed. There’s just less of it. If journalism is giving context to facts and figures, the practice is still with us. Reporting – names, dates and numbers – fills our heads, mostly with random headlines.
The new journalism gives context, in a sense. Headlines aggregated by robots – machine and otherwise – allow one and all to construct context, subtext and pretext as desired. The result is called noise.
Are people better informed? Who can tell?
Smartphone Wars Are Just Starting
Through the miracle of technology, richly aided by venture capital, mobile devices leapt into the hands and pockets of just about everybody. At the beginning of the last decade a mobile phone was, well, just a mobile phone; very convenient, yes? Not for a second has the mobile gizmo business stood still.
Apple’s iPhone blew a hole in a business plan that, by mid-decade, was stagnating in its own success. Not only did the mobile phone become a fashion accessory, they did cool stuff. You’re nobody without a smartphone app.
There’s money at every step in the mobile phone value chain. Handset makers make money. Multiplex owners make money. Developers make money. All this money in the mobile gizmo system causes a Pavolvian response from investment bankers and venture capitalists. Google is hours away from launching its mobile gizmo. Whoopie!!
The Internet Becomes Public Service
That’s the good news and that’s the bad news. About half of all Europeans access the internet at least once a week. The ubiquity is at a point where vital services may only be available on the Web, widely accessible by broad populations.
But the Web performs poorly as a money magnet. Oh, you say? Isn’t the internet lifting money by the bucket-full from newspapers, magazines, television, radio and the rest of old media?
No, not really. Less than 10% of all advertising and communications spending has gone to the Web. The rest remains with the tattered old media.
And, giga-byte for giga-byte, people are spending less for internet access. Major cities are offering free wireless internet access. Hello!!
Some Web pages are still created by humans, once referred to as writers, photographers and graphic artists. Accountants prefer machine and algorithm content. The race to provide vast content as cheaply as inhumanly possible is a race to the bottom.
The Loyalty of Advertising
Advertising people are as loyal as hyenas and laugh just as loud. With easy credit fueling lightheadedness among consumer products clients, the ad people spent it like they’d earned it. Remember all those ads for amazing mortgages, more amazing automobiles and incredibly amazing other stuff?
The advertising people made two convenient discoveries during the noughties. The first was that the cost of internet advertising always moves lower. This benefits the advertising people by pushing down all ad placement costs. Soon it will be zero.
The second major discovery was that corporate communications – that’s PR to the rest of us – is extremely profitable.
Public Broadcasting Reverts to State Broadcasting
Public service broadcasting faced down its crisis of mission at the beginning of the last decade. With money flowing like water, PSBs became popular, dynamic and independent. For politicians that was too popular, too dynamic and far too independent.
Private sector competition was left in the dirt until the EU Competition Commissioner started asking questions about State aid. All of a sudden, politicians began weighing the relative merits of the old system: state broadcasting. And, too, changing laws frequently to accommodate every wish is tedious and torturous. Private sector broadcasting, concessions awarded by regulators appointed by politicians, can generally be trusted to keep controversy to a minimum. Renewals are guaranteed with the appropriate gratuity paid.
Politicians also like being on television and radio. They like it best when inconvenient questions are never asked. The infamous words of former US President Ronald Reagan, “I bought this microphone,” resonate with those needing media that gratefully accommodates.
Europe’s dual public-private broadcasting system yields far more benefit than harm, both to the public and to the media sector broadly. At their best, they are good competitors. Preserving a balanced dual system of broadcasting – with all implications understood – is a challenge worthy of statesmanship. Sadly, that is not rising to the surface.
If you loved the Soviet Union, you’ll love a return to state radio.
Globalization is Dead
A little reported OECD analysis (December 8) recently showed that foreign trade is slumping. Direct foreign investment in mergers and acquisitions, it said, has fallen 60% since 2008 in OECD countries, the world’s 30 most developed, the biggest one-year drop since 1995. Private equity firms and big companies have stopped spending.
M&A activity is a significant economic indicator. Investors spend strategically when same sector opportunities arise. Purely financial investment is often a hedge against unstable economics. When both drop there’s trouble right here in river city.
The €1 billion deal by Mediaset for Prisa, announced Sunday (December 20) is big money – about one-third what was originally expected. It qualifies as a strategic opportunity for Mediaset. The next year will tell if it is worth the trouble.
Signs that attitudes toward global media are souring have been popping up over the course of the last several months. M&A activity in the media sector isn’t just cold, it’s freezing. That’s only one aspect. Ad spending – such as it is – is turning toward local markets. Global brands, some suffering, are concentrating their marketing investments in ‘close-to-home’ and ‘sure-bet’ markets.
The digital dividend and other scams
At the beginning of the now departed decade, the digital dividend was supposed to make everybody happy. There’s no other way to put it because nobody could explain what it was supposed to give us. Ten years later, most in the media sector realize the digital dividend went to somebody else.
Digital television, yet to be completely fulfilled across Europe, was to bring quality, choice, interactivity and – most of all – money. Yes, the number of channels available has nearly tripled in a decade; picture quality is better. Instead of 100 channels and nothing on TV, it’s 500 channels. The major beneficiaries are telecoms and governments; telecoms need spectrum for wireless broadband, governments want license revenue.
Starting out in the last century as a relatively benign experiment in spectrum management, digital radio’s failure is emblematic of the digital dividend. The tail, so to speak, tried to wag the dog. There was no misunderstanding except, perhaps, by the public. Digital radio was a cure for which there was no disease. Radio listeners queried by policy makers’ consultants always talked about wanting more choices. Nobody had any real idea what that meant until the Apple iPod arrived.
By then it was too late.
Can’t Do It
Late in the last century the iconic “Just Do It” ad campaign from Nike sent a fever through the media world. It traveled around the world, fueled by the warm climate of globalized media and Nike’s profit margins. The ad writers’ brilliance found new language for desire, media powered it and people believed.
In the first decade of this century, once the original dot coms were written off, reality took off. The originating hook for Big Brother and its derivatives – an important term during the last decade – was the power of everyman, the not so subtle reality that every person wanted their 15 minutes of fame and people will watch. Whether or not people watched Big Brother is irrelevant; people talked about it.
Well-crafted (and scripted) television comedy and drama has become expensive. Financial advantage was lost on the realization that people watch nearly anything and costly production bore little short-term fruit. High cost content production, whether for newspapers or television channels, is out.
This isn’t exactly news. Reality show Big Brother, which arrived at the beginning of the decade, was designed as cheap content, literally and figuratively. Lots of TV viewers were satisfied. Broadcasters with 168 hours a week of time per channel to fill were also satisfied. Now reality TV programs are considered too expensive by many broadcasters.
Sports is another guaranteed audience draw. To the consternation of some, major sporting events are being pulled behind a pay-wall. Rights fees continue to rise as telecoms enter the bidding. Free-to-air broadcasters, public and private, can’t find the money.
What Happens in America Stays in America
The most dynamic media in the world has been American. And the world rushed to emulate its every appearance. Those days are over.
I write this as news arrives of yet another American media company – Citadel – filing for bankruptcy. It joins the Tribune Company, Clear Channel and other smaller companies crushed by debt and management of questionable competence.American bankruptcy law allows companies to keep operating while “restructuring” obligations.In most of the rest of the world the doors would be slammed shut.
American media invented modern popular media - radio, television and newspapers – and with it the advertising styles to pay for it all. American pop culture, attached firmly to pop media, traveled around the globe in spite of the best efforts of cultural critics. It’s so last century.
American media, by the end of the last century, was noteworthy for its business practice. Modestly profitable enterprises became wildly profitable in the aggressive quest for bigger audiences, pent-up consumer demand from the 1980’s and easy credit fueling a rise in ad spending. Stock traders and investment bankers took note, believing the tide would always rise, and threw even more money into the system. Multi-millionaires were made, the American dream.
In Europe, more than the rest of the world, American media and the millions it made for owners and operators was an object of deep admiration or deep fear. While American media companies only occasionally tested European ownership, American consultants flooded in. American productions continue to dominate European TV channels. American style ad selling has become the norm. Most every newspaper, radio station and TV channel shows, to a greater or lesser degree, the influence of American media.
Several European countries passed laws to limit foreign – code for American – investors in the media and other “strategic sectors.” Those opening their media sector to outside investment wanted American money, accepted a certain amount of knowledge transfer and hoped they wouldn’t stay too long. The media sector became simply another part of foreign trade.
But American media changed. Financial innovation (think Enron and WorldCom) replaced innovative audience building. Now American media is one of the fastest shrinking sectors in its economy. Two-fifths of journalists jobs have been lost since the beginning of the century. DJs have left the radio stations. Whole newspapers have disappeared. Don’t blame the advertising people.
It Will Be Smaller
No matter how we slice it, the media sector will be smaller. Simple economics has its way of dictating far more than producers, politicians or, even, consumers. Nobody will be pleased.
Consumers, more than ever, will drive media sector restructuring. We have scant understanding – time being critical – of the effect of social media, greater access to broadband internet, fewer television programs being produced, advertising shifting more to direct response, less interest from investors, not to forget generally lower expectations. Innovation, historically, has carried the day. Nobody knew they wanted an iPhone until one arrived.
Still, there will be ‘big media,’ mostly distribution companies. Investment will, if not pour, at least remain steady for key holders of the payment gates. This includes ISPs as well as cable and satellite distributors. They are, of course, one in the same.
The media sectors’ size will be determined by the cost of that content – whatever it is – and the relative value consumers place on it. Mr. Murdoch is, of course, correct when he says that stuff is expensive and for it to be produced somebody has to pay for it. All my snarky, insidious comments about Rupert Murdoch over the last few years notwithstanding, he’s one of the few trying to take a stand for the value of content.
Being smaller – hopefully more agile – could give the media sector a burst of energy. And facing the challenges we know will take energy. Facing those just over the horizon will take more. But media people have met these before. It’s a remarkable skill.