I just moved into a house, and the nice fellow from Verizon came yesterday and installed FIOS, which is the new 800-pound gorilla in this whole TV/Internet thing. Everything’s available on-demand. There’s a button you push that shrinks the screen and reveals real time weather and traffic information, provided by some distant company (why not a local media company?).
Everything is IP-driven, so the system is two-way without a phone line. Viewing metrics won’t be based on panels or algorithms or statistical analysis or any formula-based guesswork.
If you can do it online, you can do it on your TV. Widget development has just begun. The thing is absolutely amazing, and Verizon makes everything customer-friendly. (BTW, My internet is lightning fast, although not up to what’s advertised.) I mean, I hate to sound like a commercial, but you cannot imagine the difference until you have it. I’ve been writing about Fiber To The Home (FTTH) for years, and it lives up to its potential.
I have never been more convinced that the business model of television is at serious risk and that broadcasters who continue to believe that their real competition is the guy across town (see Steve’s excellent piece below) are on a one-way path to the tar pits. It is not a time for same-old, same-old, and reaching for revenue in a multi-platform delivery paradigm alone is not going to produce enough revenue growth to offset losses to our incumbent businesses.
Local information is rapidly becoming commoditized, and that’s our core competency. You can’t scale a content business in such an environment; the economics have to come from elsewhere. This is path two of our Simulpath™ strategy for local media.
The report also says that our total media usage is declining, though what’s interesting to me is that part of this, they say, comes from efficiency and that’s an important concept in the morphing of media: The internet exposes the inefficiencies of old media for both “consumers” and advertisers. The internet makes direct connections. Note also in the report that we are taking in less ad-supported media because there is more media without ads and also, again, because we can connect directly to information around advertising.
The vector here is not toward more advertising online. It’s toward less advertising overall, and a less “mediated” world.
This is a world where The Media will only be part of the mediated picture. Consumers will always be legion, but with producers and intermediaries becoming legion as well, what makes the rest of the picture? The short answer is anything. This should be good for the economy, as well as civilization, even as it threatens every institution that ever called itself “media”.
What inflates the Web 2.0 bubble is not the technologies and practices it encompasses, but the belief by businesses old and new that advertising will sustain everybody as a “business model” (a term which, along with “content”, became buzzvogue during the Web 1.0 bubble). Free money is a huge reality distortion field, but that’s how too much business looks right now from downstream in the tidal flow of advertising money from many old media to one big new one.
But, to mix metaphors, trees do not grow to the sky.
Advertising has always been woefully inefficient. Improving targeting and making advertising accountable by counting click-throughs does not solve the problem that advertising has always been an exercise in guesswork. At some point the guessing ends — not by absolute improvements in targeting, but by the creation of new methods by which demand finds supply. These methods will be anchored in better tools for customers, and better means for sellers and intermediaries to satisfy demand by connecting to better-equipped customers.
The Net revolution has always been about radically improving the connections between demand and supply, and about equipping profusions on both sides of the relationship — while reducing intermediary costs and frictions in the direction of zero.
As a term for describing this development, “commoditization” is a misleading failure. Roles are changing far more than “content” — a term which itself misleads by reducing the informing of people to deliverable commodities. People still need to inform other people. More ways to do that will emerge. There will be business models there. Supply and demand will find each other. We need to figure out how to make new and better money with new and better roles. Advertising will still be part of that picture, but it won’t fund the whole thing.