Wednesday, April 09, 2008

Dealing with Disruptive Innovation - Richard Withey, Digital Media Consultant

Richard Withey starts by saying that though a trained librarian his background is in newspapers, an area so stressful he's lost the long flowing locks of hair that once got him mistaken for a female prostitute in Paris... Now there's a start to a talk...

Newspapers are declining in print but there are areas for growth online. Many pages are printed online and not just in the US. Newspapers make their money from advertisting and online advertising is growing consistently with page level classified ads a particular breakthrough.

The UK is the biggest and most volatile part of the world for the internet and the advertising spend in the UK on the internet far higher than elsewhere in the world (including the US). In 2009 online advertising will be main medium. 60% of UK homes now have broadband and, at the same time, tv watching and other key advertising activities are on the decline.

If newspapers are to remain as print vehicles they would go against the trend. So analogue (print) will die out. One thinker has suggested the last paper will be printed on April 11th 2041 but Richard thinks this is wrong: there will always be print niches.

Business models have to change in the move from print to online. Newspapers make up to two thirds of their money from advertising. Only the biggest could survive on cover price alone. Newspapers are subsidised by advertising which has led to a cosy virtuous circle that all but excludes the consumers. Newspapers and advertisers are in constant communication with each other and prices reflect prestige not neccassarly value of that advertising spend. There remains a lot of discussion on fragmentation of audience, disintermediation and personalization. People can now do things on broadband that were only thought of in the '90s and were not possible on dialup.

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(see Epic 2015 flash movie) imagine a future without newspapers. It's a concept that Rupert Murdoch has taken note of with recent re-investment in the web. Search engines invest constantly to keep their technology relevant and effective. Newspapers don't invest in search enough but it's hugely important. Thus many newspaper companies are undervalued as investors still see their development in old terms.

Usage at the moment of all medis channels is declining though there is an upward trend in multi-channel viewing in the Sky/Virgin/Freeview type direction. Traditionally print papers have done give aways to boost circulation but if you have to do that how useful is it and how relavent is it to the new audience?

Digital is changing business models (a good source on this is Charles Handy's The Empty Rain Coat.

And that is leading to a new emerging media ecosystem. Blogs, wikis etc are now much more important as newspapers become a community activity. Thus the work of newspapers have changed so much in the last 10 years.

In a very short time the whole industry has changed. Trained in the new media readers are now learning habits that have significant effect on publishing business. This is the first technology roll out that has been consumer rather than business led: they are beginning to control the agenda and this is the first time this has happened really.

Publishers are sometimes reluctant to engage with new models - the margins are less, audiences are fragmentary and new delivery mechanisms have flourished (Richard argues that content was never king, distribution always was). And the industry may only respond too late - most newspapers now running at a loss.

We can however learn from elsewhere. The music industry has been informative (terrible at first, much better now) as has the response of television (BBC iPlayer etc) etc. There are also new distribution formats and new devices (phones, Amazon Kindle etc). You do all engage personally with many of the new formats but whether you do so professionally is another issue - publishers certainly aren't doing this enough yet). We also need to engage well with issues surrounding copyright. You also have to engage with audiences on their own terms and release control of your content to remix (but it is hard to make money from it).

Technology isn't the only consideration. You need to engage with readers regardless of format, get the right type of staff in house and make sure your board is younger and more engaged. Richard also suggests you should "stop employing people who are building careers rather than businesses" as it takes 5 years in a high level job to bring about real change.

Richard concluded with showing the now infamous (and excellent) YouTube video by Mike Wesch: The Machine is Us/ing

3 Comments:

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12:46 pm  
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4:28 am  
Anonymous Brian@Assertiveness Training said...

I really like your intro. Haha. Definitely hooked me and made me read the whole post. People should really take your approach more often.

7:09 pm  

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