In this week's subscriber-only Jack Myers Media Business Report, I outlined the economic collapse of the newspaper industry that is leading its advertising revenues to decline from a 32% share of total ad spending in 2000 to only 7.5% in 2020.
It may be too late for newspaper publishers to reinvent their collapsing media empires. And as we begin a new television season, it's not unreasonable to ask if the broadcast television medium is at its peak both as a content producer and as a distribution system. Or is the industry reinventing itself as it has throughout its history? By 2020, thousands of media companies, including many of the largest and most prestigious, will have disappeared from the landscape or undergone radical changes to their core business models.
We are now two decades into a 30-year transformation (Mosaic was launched in 1993) away from the mass models of the Industrial Age and are accelerating into The Relationship Age® business models built on interpersonal and interactive relationships among discreet groups with common interests. Media and advertising companies and marketers are just beginning to comprehend the dimensions, implications and economics of this shift even though they have been readily apparent since the late 1990s.
The media industry's greatest failures over the past two decades have been:
- an inability to effectively monetize "media brands;"
- a blindness to the power of interactivity as a tool for marketers;
- a mind-boggling adherence to a business model that has focused almost exclusively on investments in expanded media supply even though this invariably results in pricing erosion;
- economic models that assume advertiser demand will continue to grow and that advertisers will blindly embrace technological "bells and whistles" with no true measures of value or return-on-investment;
- a refusal to acknowledge that the trend toward free news, information and entertainment is inexorable;
- a failure to connect the dots between the Internet, cheap content creation and distribution tools, and an erosion of consumers' need for and interest in traditional media.
While these truths are more generally accepted today than they were a decade ago, only a few media and advertising companies are proactively responding to them and it remains to be seen whether they will be successful. The sad truth is many will continue to ignore these realities -- and as a result their business models will erode and collapse in the near future.
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