5.30.12 - Humpty Dumpty sat on a wall…Humpty Dumpty had a great fall…
It amazes me how often the human animal avoids facing danger until it’s too late. In many of our “Think Tanks” over the years we’ve thought about the dangers of the vanishing newspaper industry; many shows with little response. For me I saw a crisis.
I must admit it pains me to defend an entity that hates me and would like to see me hurt. But to see and respond to danger one has to put aside personal agendas. I did that as much as anyone; if not more than anyone after Katrina, with my constant public praise for the Times-Picayune. Now that reality appears, there is much angst in the public collective.
I submit that now there are even bigger threats facing the vehicles being selected for the fourth estate, the entertainment industry and our economy.
Ask yourself, will we get news, movies, or books from Facebook, twitter, television, google, Hulu, anonymous, websites, blogs, podcasts, radio, or…? If the combination is one, four or more of these, I’m as much confused as concerned. No one seems to know, how do we pay for it?
FACEBOOK. Facebook has 900 million users, but advertisers can’t figure out how to use them. General Motors stopped trying altogether. Many big investors stayed away from the huge IPO May 18th. According to Webtrends, the workings of Facebook are “far too complicated for most marketers to figure out.” The Los Angeles Times says, “Facebook gives marketers the ability to slice their target audience into hundreds or thousands of tiny slivers based on age, location, hobbies and preferences and to alter campaigns on the fly based on which groups are most responsive. This can be overwhelming to marketers used to simpler requirements of print, radio and television advertising.” But newspapers are going the way of the dinosaurs and television is shrinking its audience.
DISPLAY ADS. Display ads appeal to firms selling low-end products and services or pitch cars or home loans. Web readers have learned to tune them out. Only 1 in 1,000 Web readers click on the average display ad. On Facebook that number is closer to 1 in 2,000. Both Facebook and display ads are facing another conundrum—the shrinking screen. Smartphones and Ipad screens are smaller and consequently can’t fit in as many ads as a PC or laptops. 900 million Facebook users; millions of display ads and the system still can’t figure how to pay for content.
TELEVISION: Three television networks filed lawsuits against Dish Network because of something called Auto Hop, a feature that allows Dish subscribers to automatically skip all the advertising during primetime shows. Last week the cable industry joined the fight; Time Warner, Starcom Media Vest Group and others. Ironically, Dish Network is a major carrier of television programming, which means the networks might pull programming from cable and both industries would be affected. Someone has to pay for the product.
AUDIENCE: 88 percent of television households are now watching something else other than primetime. And, how many who do watch primetime TV, RECORD or DVR the programs only to skip through all the advertisements? In the first quarter of 2012, NBC in spite of a Super Bowl bonanza, lost money. Everyone loves the Super Bowl. How do you pay for it?
HBO: HBO new series “Girls” is very popular with the young audience. Many cannot afford to pay for HBO so they’re convincing parents and older friends to give them their password to get on HBO Go and watch the product for free. Showtime is having the same problem with their online service. Great product, but how do you pay for it?
STREAMING: Lots of young people stream to find their reading or entertainment, but many skip the ads and some (in growing numbers) don’t like paying and simply download the program for free. How do you get them to pay for it?
BROADBAND: Internet broadband might be one of the very few with some sort of pro forma that ensures some payment. Even if you’re stealing a movie, the movie takes a lot of broadband and you have to pay more to watch. But this still doesn’t explain who pays the movie makers. Movie makers and cable owners’ only hope is that when youngsters become adults and earn salaries they’ll get tired of hunting and pecking for free downloads and decide to pay the $120 a month for cable, but downloads are oftentimes as easy as googling a subject and hitting “download.” How do you get adults to pay for something so easy?
DIGITAL NEW FRONTS: “New Fronts” are platforms like Hulu, Flash and YouTube and now involve about 15 platforms. The new fronts are short 10-15 minutes movies for a “Twitter” type movie look. If this new concept works, there will be millions of them and they will pull money from the better known communications outlets. Both YouTube and Netflicks are bidding to becoming digital answers to movie production. All digital “new fronts” plan to eventually go to a pay-per-unit model. If there are thousands or millions of “new fronts,” which ones will ever be big enough to do what television and movie studios now accomplish? No one seems to have a proven business model. No one knows how to pay for it.
PAYWALLS: Wall Street Journal and a few other national publications now require a payment before you can join their websites; websites that have been free for years. I’ll use my show as an example of a potential problem for this model. I access up to 30 website and publications every two days to prep for the “Think Tank.” I will pay for WSJ, but not for Washington Post (too many website that do the same). If more of the 30 websites put up pay walls, I’ll eliminate them and I need those websites to make a living! I simply cannot afford to pay for the information that I now get free. I will be forced to rely more and more on simply “goggling” a phrase. Ex: “Is Louisiana really the world’s biggest incarcerator of citizens in the world?” If that story has been done on WSJ or Washington Post, it will often pop up. Now, if I am forced to stop reading a website that I need to do my show, how many young people do you think will pay the paywall? Where is the money to come from?
PAY FOR ON LINE: Comcast, the largest provider of the internet in America, has started charging for broadband…much in the same form as we now pay for wireless service. The New York Times reports that Comcast may be preparing subscribers for future internet pricing. If you’re paying for Hulu, cell phones, Netflicks, YouTube, websites and blogs are you ready to pay for the amount of time you use on the internet? Is that a business model that can be sustained and maintained?
It’s all very complicated, but here (I think) is a simple question. Imagine a pie. It used to be cut in three parts called television networks. Now we have hundreds of channels on cable that we pay for. Same pie, many more slices. Then add more slices for movies, books, news, entertainment of which we pay for. Now, other new platforms demand our attention. Twitter, Facebook, emails, instant messaging, texting, ipads and iphones to name only a fraction. More and more authors of books, musicians, artists, and news writers are finding it hard to produce quality-volume products that can be sustained by consumers paying for them. Lots of new shiny stuff…same pie, but far less money for every slice that gets added…more volume less quality.
There are potential Humpty-Dumptys everywhere; all of which will affect our lives, our businesses and our ability to communicate. Will we ignore them and then protest their demise? Or, will we stop a fall that will scatter so many pieces that…ALL THE KING’S HORSES AND ALL THE KING’S MEN CAN’T PUT HUMPTY-DUMPTY BACK TOGETHER AGAIN?
And, of course, the obvious question –what about your platform, Garland? How’s radio? Well, the facts are encouraging. Radio is stronger than ever. It’s one of the few vehicles not facing the same crisis as others in the communications industry. Despite attacks from all sides… radio dominates; it continues to reach 93.1% of people each week. In 2012 the average person still spends 14 hours & 58 minutes each week with radio; 93% of listeners don’t tune away during commercial breaks…and it’s free!
Check out the tweets from our Entercom CEO David Field, who had a reminder for everybody... (link to David’s tweet.) David’s a leader in the industry; an interesting man to follow on Twitter.
Garland, like a Navy Seal you always see it coming. I'm sure it's a blessing and a curse. Unfortunately, like you said at the beginning of your blog the human animal always avoids danger until it's a crisis. We'll see how the city/citizens handle this TP crisis and how we consumers handle those yet to come. For me it's not so much a crisis; I'm glued to WWL from morning till night.
I used to buy the newspaper, then I realized I was throwing it away daily without reading it every day, so I cancelled. I listen to WWL; go to WWL.com and WWL-TV.com.
Garland- Part of the problem is the content
I cancelled my subscription years ago because of Ashton Phelps and the direction of the paper. They don't understand that the majority of the readers are conservative and not liberal. We don't want their liberal bias's shoved down our throat. Look at all the "liberal biased" publications; New York Times, LA Times, etc. They are all in trouble. While conservative and unbiased publications are fine, aka Wall Street Journal. It's mostly content, not delivery methoud.
I gave up my subscription to the Times Picayune years ago when I realized there were more advertisments than substance. As the newspaper got thinner and thinner and the content disappeared I went to other sources for my news.
Provide value and the money will come
Many commentators are missing the mark. They are trying to make money (which is great), but forgot about the quality of their product. The TP problem is one of journalistic quality. Give me insight, value, and something worth reading - the truth - that I cannot find through other outlets, and I'll gladly pay for it. I believe others would also pay for true journalistic ability in a good newspaper - aka the WSJ.
It Won't Be Free For Long
It will not be long before what is free on the Internet comes at a steep price. Sales and federal taxes on Internet purchases are sure to rise as state/local tax revenues decline. Likewise, once the newspapers are gone or severely compromised the news on the web will become a subscription service, too. Radio in its infancy was virtually unregulated and within a relatively short period of time become highly regulated and loaded with advertisements. The era of the Wild West with respect to the Internet will likewise melt away into a Federally regulated part of life.
Seeing the crisis
Check out the film at the URL below that was created in 2002 and updated in 2004. I use it in a strategy class as an example of projecting significant trends in an industry.
Sign of the times, progress or not
I ended my subscription three months ago. I scan NOLA.com daily
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