Peter Cochrane's Blog: Media wars

Written at the Institute of Directors in London and dispatched via free-to-air wi-fi at Liverpool Street Station

The internet has put the audience in control while traditional media is still trying to call the shots. Well, they have already lost the battle - the genie is out of the bottle and there is no going back.

As recently as 10 years ago people were denying the potential impact of the internet. While gurus and pundits were trying to get over the simple message that everything was going to change entire sectors went into denial. But sure enough, sector by sector the uncomfortable effects have become increasingly visible.

Numerous published reports have highlighted the impact of the internet on TV and radio audiences - and the likely knock-on impact for advertising - and it isn't a pretty picture.

See:
http://www.redclay.us/Blog.htm?bid=15

http://www.newpolitics.net/node/209

http://tinyurl.com/49jn8 (Blog)

http://www.variety.com/article/VR1117969131.html?categoryid=18&cs=1&nid=2562

http://news.bbc.co.uk/1/hi/technology/6959864.stm

http://news.bbc.co.uk/1/hi/technology/4779329.stm

While there has been a rapid decline in audiences, it is not all that apparent as to where they have gone. It turns out that this is all about user participation, choice and control. Meanwhile, the broadcasters are clinging to their old model where they call the shots. Users on the other hand:

want what they want
when they want it
where they want it - fixed or mobile
in a form that pleases them
at a price they can control
and…
they want to input/influence and be in control

While most reports lay the responsibility for this rapid change at the feet of those aged 25 and younger, there is a great deal of evidence to suggest that older people are in the game too. It starts with time-shifted programme feeds, plus movie and music downloads, but then moves on to new diversions such as social networking, online games and virtual worlds.

See:

http://news.bbc.co.uk/1/hi/technology/4582831.stm

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/08/23/nofcom123.xml

http://tinyurl.com/37n7th (Daily Mail)

http://news.sky.com/skynews/article/0,,30400-1281020,00.html

http://www.comscore.com/press/release.asp?press=1019

It seems that this is all fuelled by the basic human desire for participation and reward. Or at least some form of result born of the user input. No doubt there will always be those who will live such a regular existence that they can schedule an hour for their favourite soaps and talent shows but increasingly they will become an insignificant minority.

In the same way youngsters generally have a mobile phone and no fixed-line connection for anything other than broadband, it turns out that they are not buying TV sets either. More and more are choosing to use their PC for everything: radio, TV, games, VR and networking.

And why not?

I was just in an electronic store where a HD-ready TV set is sitting on the shelf at £320 while a similar-sized PC monitor is only £140. The difference of £180 seems a bit steep for a TV tuner and remote at a combined manufacturing cost of less than £10! Economically this makes no sense at all and many are choosing to bypass the old broadcast hardware world for the all-embracing and more engaging online software alternatives.

What are the old broadcasters to do? Change. And fast. In those countries that extort a licence fee for merely owning a TV, revenues are set to nosedive. Clearly they need a new business model and a new mode of operation. There are many opportunities to make money but they do not include fixed schedules, limited content, limited access websites and one-way communication. It means making everything globally available on-demand at a price that everyone can afford.

A country with 10 million homes might be servicing a global internet audience in excess of over 100 million. This could be supported by targeted advertising or a yearly fee of just $1. But as far as I can see most of the old broadcasters seem to be going in the opposite direction - making sites exclusive, expensive, difficult to use and with no downloads. The problem for them is that they will most likely only get one bite of the cherry and my guess is that over the next 10 years quite a few will be biting the bullet instead.