Posts from — October 2008

In a document from Newspaper Association from America we find two business cases of small newspapers facing business transformation from print to mixed models (print/online): Times-Mail and Shakopee Valley News . Its title is very descriptive: How Two Smaller Newspapers Energized Their Web Strategies.

Both of them were newspapers with certain credibility and integration within their communities that were passing a critical time for their offline business.

This document tell us about the concrete transformation that took place, and it nowadays may look basic and obvious in practical terms, but there is something really not obvious for bigger companies:

1. Top management must be convinced that the change has to be pushed in a centralized (often top-down) way and taking the picture as a whole, both, in terms of contents and in terms of revenues. Revenues have to also be integrated in decision making so decisions are adopted taking into consideration impacts in both sides.

2. Workforce needs to be qualifed to really transform their skills otherwise they would be just a heavier weight in the mid term.

3. An out of the box vision and leadership may be very helpful in order to transform a media.

4. Community is a key factor, and as community leaders, we have to change the way we interact with our readers

5. Technology is not core to our business in a media company, it’s an instrument, a commodity, and it’s has to be at the service of the organization, and it cannot be a bottleneck. Of course having strong technology in-house remains an important factor but more in terms of know-how that when talking on execution. Technology is really important as rotaries were in the past (but not more than that).

These are my own conclusions from those very simple business cases and these conclusions are a kind of basic philosophy on how to transform a media. I find media companies losing their focus and goal because they believe they are something else. They believe they are a technology company, a software development company, a service provider… In other words, if we lack management consciousness, workforce qualification, out of the box visions, community interaction and technology aligned and at the service of our goals, it will be much more difficult for us to run a sustainable business.

PWC is now presenting its Global Entertainment and Media Outlook 2008-2012. Manuel Martín Espada partner and responsible for Telecom., Entertainment & Media in Spain points the “windows fragmentation” and the fact that “content is king”.

Not getting into the concrete figures -they are just a reference that will be soon invalidated- main growth drivers in the period are:

- DVR. C3 and Live+7 (viewing of contents 3 or 7 days after broadcast). In fact DVR was born with the purpose of avoiding advertising. (The study here seems to give not much importance to this fact, but the possibility to watch contents without advertising with DVR is in my opinion another threat to online media sustainability as we understand it today).

- IPTV and streaming: HULU (NBC + News Corporation) is an example of online alternative to DVR. In fact, DVR could be of little sense if this alternative develops quickly.

- HD (High Definition) is already growing and it will grow exponentially in 2009 as people move to digital TV. One problem could be that if other qualities are good enough, this one could be a nice technology with minor adoption.

- Unavoidable advertising in streaming.

- Hyper local and geolocalised advertising

- Advertising networks will be key facilitators and they are a strategic node

- Publishing: digitalization is key and on demand printing could finally take off

- e-books and audiobooks will grow exponentially

- Videogames. MMGOs (Massive Multiplayer Games) will impulse growth. PC games decrease although they remain to be sometimes a requirement to play online

Definitely, content and services are king. I think GEMO should have pointed out more other services, like organizing information (i.e. google) and, maybe even more relevant, qualitative content selectors (social:like digg or wikipedia; institutional: like universities or business schools). An added value could be just to give credit to what is really valuable. Providing added value services around content will be another key growth driver in the coming years.

summary:

In his article Comunication, Power and Counter-power in the Network Society, Manuel Castells points how the rise of “mass self-communication” changed communication landscape enabling social movements that were before aside of main media. In fact, mass media and those “horizontal” movements, are converging.

We moved from a one-way message from one to many to a network society in which communication is global and horizontal. Although, there is to some point, a certain degree of “electronic autism”, that means people who are developing contents for themselves instead of doing it for an audience (like this blog, for example); even in this case, contents are able to be taken, read, and use by others. Traditional media are in a contradictory position when adopting horizontal content production approaches and this is due to some political and businesses struggles.

Main characteristics of new situation according to Castells:

- massive; potentially global

- self-generated; self-directed; self-selected (I would summarize it as customized)

One example of the shift towards mass-self communication in media businesses are their investments: Newscorp acquisition of Myspace.

To some in the traditional media business, these are the most stressful of times. But to us, these are great times. Technology is liberating us from old constraints, lowering key costs, easing access to new customers and markets, and multiplying the choices we can offer. (Murdoch, 2006)

We have seen other movements in the same direction and there seems to be an absortion of new networks by older media. Castells concludes that we are in the struggle fo humankind to free our minds.

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comment:

We are going to an asymetric rather than horizontal communication model, and it is due to differences in culture, time and priorities among individuals. Our profile when facing new technologies differ, and some people will tend to get more power than others (with the mentioned power balance change mentioned by Castells). This will shape society in a different kind of power relationships (not purely horizontal). Of course, horizontal in Castells, is more related to “potentially horizontal” than to really horizontal.

Looking for information on media organizations I found a really interesting work by Ming Hang called Media Business Venturing. It is a dissertation for a PHd about “how to organize venturing and why to choose a certain organizational mode for the development of new business”. Two approaches are used in this analysis: IO (Industrial and Organizational Theories) and RBV (Resource based view).

Adapting to changing environments is crucial for media businesses nowadays, and it is the only way to profit from new opportunities arising. Corporate venturing is the concept that summarizes all related to new businesses creation in an established organization.

RQ: Given the emerging business opportunities, (1) how do firms organize their
new business venturing activities in a structural dimension and (2) why do they
choose a certain organizational mode for venturing?

We all know how media has undergone great changes and challenges from both, internal and environmental factors. Media companies are looking for new revenue streams by stretching their competitive advantages and diversifying their activities/risks. Media compete in a triple market: content, audience and advertising.

New media business oportunities: internet, mobile, webcasting, gaming, digital tv and venture capital.

“Corporate entrepreneurship is the process whereby an individual or a group
of individuals, in association with an existing organization, create a new
organization or instigate renewal or innovation with that organization.”
(Sharma & Chrisman, 1999, p.18)

This work covers several business cases in a deep analysis: Internet Business Venturing and Mobile Media Venturing in News Corporation; the New York Times Company, FiOS TV Venturing and Online Gaming Business Venturing in Verizon Communications, Mobile Distributing Consumer Media Venturing in YouTube, Webcasting Business Venturing in the China Telecom Corporation.

After this analysis, his conclusions are:

Proposition 1: when the level of ‘economics conditions’ and the level of ‘resource conditions’ are both high, the hierarchical modes will be preferred by media companies while venturing for new business.

Proposition 2: when the level of ‘economics conditions’ and the level of ‘resource conditions’ are both low, the more market-oriented modes will be preferred by media companies while venturing for new business.

Proposition 3: when the level of ‘economics conditions’ is high and the level of ‘resource conditions’ is low, the hierarchical modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the direct incentives.

Proposition 4: when the level of ‘economics conditions’ is high and the level of ‘resource conditions’ is low, the market-oriented modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the indirect incentives.

Proposition 5: when the level of ‘economics conditions’ is low and the level of‘resource conditions’ is high, the hierarchical modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the indirect incentives.

Proposition 6: when the level of ‘economics conditions’ is low and the level of ‘resource conditions’ is high, the market-oriented modes will be preferred by media companies while venturing for new business, if the venturing activities are primarily driven by the direct incentives.

It can be a bit difficult to understand those propositions without having read the whole book before. The conclusion is that media companies show unflexibilitiy when dealing with relatively small projects (low resources and economic conditions) and when having a complex initiatives they may adopt a hierarchical mode, but not always. In other words, media companies are not good innovation companies within themselves and their business model development may happen mainly through acquisitions. In some cases (like in News Corporation) it is reflected in this book how they deliberately prefer to allow others to move first, and then jump into the market paying the acquisition of an expensive monetary cost but saving the pain of a failed project.

Anyone working in media would more or less presume that these propositions are true by having a look to their own evironments. It is no longer a feasible to keep media businesses in the long term with organizations that are not flexilbe. Media must assume that change is not just merely about how to manage and adopt new techologies but a process that wont stop. Change is our new model, we must continuously be changing, we must be changing organizations on our own, and we have to permanently adapt in order to continue offering what our consumers demand. An organization that does not embrace change, that does not love change will die today or tomorrow.

In communication, media (Singular: Medium) are the storage and transmission tools used to store and deliver information or data. It is often referred to as synonymous with mass media or news media, but may refer to a single medium used to communicate any data for any purpose. (wikipedia)

Following this definition that wikipedia borrowed from 3 different dictionaries, media is a set of tools to store and deliver information or data. But, more than merely data, media delivers data put into context, or, what Popper calls world 3 knowledge and Craig McDonald concretize in “statements”. Popper’s 3 worlds of knowledge are helpful to understand what is media. According to this cosmology we have 3 worlds of knowledge:

world 1: physical universe

world 2: subjective personal perceptions. Mental procedures to buid thinking.

world 3: statements. Those productions expressed through language, descriptions. Necessarily, statements are related to a context.

Therefore, media is something from worlds 1 and 2 that composed of world 3. The process through which media allows statements to be sent from one to another is communication. In order to have a complete communication, we need a common code of symbols and values. There may be lower levels of communication when there are less shared values and symbols. Therefore, communication is very much related to common values and symbols. Values and Symbols play a central role in Media.

Men lived in a world of direct communications centuries ago, then in a world of mediated oral communication through tales, leyends or songs… we lived later on a continuous technological improvement: ink, paper, printing… information technologies… we have reached more capacity to communicate (data) than ever. But communication remains to be the same, because what we are doing is just to put knowledge in common, statements, not just data. The fact that we can transfer more data in a given second does not necessarily mean we are transferring more meaningful information (statements), it may just mean that statements are more clearly defined or supported. Our business is more in statements than in data, or, to make it easier, in what we communicate than in how we communicate it.

It is of a great relevance in order to understand what is this business about, to have a clear idea of what is communication. Media exist because there is a need for communication, and so we need vehicles to communicate. The end, the goal, is to communicate statements. Producing a sustainable media, is a result of a successful communication process. Accordingly, media business developers are a medium, a resource, not a goal. Our goal as online media is to communicate as much as we can to as many people as we can, then, because there is a lot of communication going on, we monetize it making it a sustainable and profitable business.

Written by Luis S. Galán Lozano, this diary intends to collect articles and thoughts on online contents industry, mainly about construction and development of profitable business based in audiovisual contents and new information techonlogies.

There are many blogs on new journalism, web analytics, marketing and advertising, but, when it comes to media business development I am finding it harder to get other people’s views. That is the reason why I am starting my own aggregation.

My main purpose writing this blog is collecting for myself what I find interesting within my area of interest apart from giving a personal point of view, but this blog is opened to everyone. Please, feel free and welcome to input your ideas. On the other hand, this blog is under Creative Commons License and so, all content can be used for non profitable purposes.

Most of my hours are nowadays invested in trying to cooperate building the biggest Spanish language media group into a world class player within Internet. It is both: a professional and a personal goal.

My job is developing businesses around our online audiences in order to generate revenues making our business healthier, and thus, more independent our journalists and collaborators. I have the hope that my efforts will result in a better and more independent journalism, and, as a result, in a more solid democracy in -but not only- Spain and in a wider range of opinions freely expressed and defended. Communication is more than a business; it is a meta-business that goes further than a mere economic transaction.

No audiences will come to our media in search of our code behind our contents, nor our design, nor promotions… none of this will allow us to grow a sustainable online media. It is a shared set of values what makes it possible for a media to succeed. Everything else may be very helpful, but they are just order winners and not qualifiers for a successful media.

Nevertheless, media is not just content because it would be not sustainable on its own. In order to run a media business we do also need, of course, good design, great code, solid information systems and architechture, and a sustainable business model supporting it (apart from many other attributes). This work intends to concentrate on what modern media buinesses can do to be profitable and sustainable from a strategic/commercial side without forgetting any other implications.

We all know that new technologies are a challenge for traditional media. Business development professionals have to actively contribute to find a way to embrace new technologies converting them in an opportunity for incremental growth.

I wish this topic, although quite specific, was for you as interesting as it is for me and I invite you to introduce any contributions you feel may help in this debate.

Luis S. Galán Lozano

www.onlinemedia.es

www.mediosenlared.es

Disclaimer and apologies on my written English

I have decided to write in English for several reasons being the most important of them that English is today’s most established exchange language and I would like to learn from what is being talked about out of Spain.

I would like to apologize for my language not being as accurate as it should be sometimes.