The Media Format Bill Of Rights: A Manifesto for the Next Generation of Media Products

Today I have published the first Media Industry Blog report:

The Media Format Bill Of Rights: A Manifesto for the Next Generation of Media Products

The report is available free of charge to subscribers of Media Industry Blog (to subscribe simply submit your email address in the form on the top right of this page).

The Media Format Bill of Rights builds upon a series of concepts and frameworks first discussed in the report ‘The Music Format Bill of Rights’ (which can be downloaded here).  Although some principles translate cleanly across other media industries many others have a more complex story.  This report looks at just how diverse the challenges are, and makes the case for a media product innovation framework across multiple media industries.  Here are a few highlights.

The Future of Paid Content Is At Stake

With the notable exception of games, media industries have failed to translate the digitization of consumer media consumption into digitization of their revenues. Digital revenue shares will continue to either remain stuck in single digit percentages or help pull down total revenues for as long as the digital products they depend upon fail to fully embrace the capabilities of digital interactivity. Digital content products need dramatically reinventing for the digital age, to be built around four fundamental and inalienable principles of being Dynamic, Interactive, Social and Curated (D.I.S.C.).

This is the case for nothing less than an entirely new generation of media formats and products. Products that will be radically different from their predecessors and that will crucially be title-specific, not store or service specific. Rights owners will have to overcome some major licensing and commercial issues, but the stakes are high enough to warrant the effort. At risk is the entire future of paid content.

The Consumption Era Has Yet To Be Monetized

Ever since consumers started downloading from Napster and ripping DVDs and CDs the balance of power across all media industries shifted from media company to audience. The digitization of content consumption is firmly established, yet the same cannot be said of media business revenues.  Digitization is transforming consumers’ relationships with content and threatens 20th century media business practices with obsolescence and irrelevance. And yet, even though the PC and connected devices are stealing ever larger shares of media consumption, only the Games and Music industries have managed to convert more than 5% of their total revenues to digital products. And for the music industry it is hardly a success story, with overall revenues declining more quickly than digital can make up for. Underlying the cross-industry inability to successfully monetize the consumption era is a recurring theme: the lack of new products and formats tailor made for the digital age. The Games Industry got it right (witness the continued growth from mobile and social gaming, and the ability of consoles to flourish even as the retail channel perishes) but other media industries have yet to get there.  Three core factors underpin these challenges:

  • Content scarcity is gone
  • Concepts of ownership are fluid
  • Consumers consume more yet pay less

Piracy is Both Cause and Effect

Piracy is routinely held up as a root cause for media industry problems but is in fact as much symptom as it is condition.  Piracy has flourished in its many forms because it has moulded itself most closely to changing consumer demand.    The history of 20th century media businesses can be mapped by format milestones: vinyl, VHS, the DVD, cable TV, the CD. The download and the stream were the first tentative steps towards a new wave of formats and didn’t ever get out of first gear. They are transition technologies that failed to become the holistic format milestones for their age that predecessor formats were. Previous media formats shaped and dictated revenue growth, digital heralded decline. Why? Because the download and the stream are owned by audiences as much as they are by media companies.  And media companies haven’t yet realized that because these democratized quasi-formats are fantastic consumer tools they therefore need to ensure their products do more, much more. This is no longer a dubbed-cassette-copy-versus-original-CD arms race. Consumers can create digital content every bit as good as good as that of media companies.

The harsh reality is that convenience, portability and quality are the standards which consumers already get from free and illegal digital content products.  Paid content strategy must be founded on going above and beyond these digital basics.  Premium digital products and formats must deliver rich and interactive experiences that are:

  • Dynamic – always change and update with new content
  • Interactive – empower user participation and customization
  • Social – place social functionality and connectivity at the core
  • Curated – curate discovery and editorial

Embracing Disruption

It would be puerile to suggest that the D.I.S.C. principles apply uniformly across all media types. Applicability varies and of course implementation must be tailored, but the fundamental principles have vital relevance across all major media industries. The media industries are now at a juncture where embracing disruption can save them from perpetual decline and potential annihilation. The paradigm shifts in media industry business models and consumer behaviour have been happening more quickly in the last 15 years than ever before, but these changes are still only a small part of much bigger processes that have many years yet to play out and which will come to full fruition when the Digital Natives generation come of age. D.I.S.C. strategies need pursuing now, before the condition is incurable. Media companies can identify the size of the format innovation opportunity by combining the applicability of D.I.S.C. principles to their industries with the scale of industry-wide disruption they are experiencing (see figure). But acting now rather than later will be the difference between using D.I.S.C. as a catalyst for growth as opposed to an air bag to cushion the blow of a market crash. Timing is everything.

To read the full report, which includes industry-by-industry analysis, simply subscribe to Media Industry Blog using the email form at the top right of this page.  If you are already as subscriber but haven’t yet received your free copy please email musicindustryblog AT gmail DOT COM.

Full table of contents of ‘The Media Format Bill of Rights’

  • The 20,000 Foot View
  • Setting the Scene
  • The Media Consumption Pendulum Has Swung Sharply
  • (Apparently) The Revolution Will Not Be Digitized
  • It is Time to Jump Off The Treadmill
  • Digital Does Not Need to Mean the Death of Ownership
  • The Media Format Bill Of Rights
  • Applying the Laws of Ecosystems to Media Formats
  • Building the Future of Premium Media Products
  • Applying the Media Product Bill Of Rights Across all Media Industries
  • Embracing Disruption is Risk and Dangerous But a Necessity
  • We Are In the Per-Person Age, Not the Per-Device Age
  • Conclusion

Google Consumer Surveys: A Third Way for Content Strategy

Google’s new Consumer Surveys product is a typically disruptive innovation from the search giant.  Leaving aside the massive disruptive threat to survey vendors, Google Consumer Surveys gives publishers a new consumer monetization tactic that will help reduce the recurring conflict between paid content and ad strategy.  A struggle which often begets strategic paralysis.

Freemium Strategies Don’t Work So Well When Advertising Pays the Bills

Paid Content hasn’t been the runaway success story publishers hoped for.  The real success stories of paid content are tied to device ecosystems: iTunes, xBox, Play Station, Kindle etc.  Publishers however don’t have the benefit of ecosystems and have instead had to grapple with converting small single digit percentages of their audiences to digital subscriptions whilst desperately trying not to kill the golden goose of advertising revenue, the tactic for monetizing free use. The problem with this twin track, freemium model is that though it works well enough for music services like Spotify for publishers it creates a tension that threatens the core of their digital revenue strategy, putting paid customer acquisition in direct competition with ad revenue.

Take the example of the New York Times.  The Times is one of the more progressive and innovative of publishers in the digital arena yet they are grappling with how to grow their paid content customer base.  Despite having a very popular website with more than 30 million monthly unique visitors and a monthly print circulation of 30 million the New York Times has only converted 454,000 of those consumers into paid digital subscribers.  That’s a free-to-paid conversion ratio of 1.5% compared to Spotify’s US conversion ratio of roughly 13%.  Freemium just doesn’t translate as well for online news.  The Times’ near term solution is to scale back what is available to non-paying site visitors in an attempt to nudge the next wave of potential subscribers over the paid content hump.  But such a strategy has massive risk.   With just 1.5% of its monthly visitors paying for content, the Times relies heavily upon advertising for monetization rather than being able to view it as a loss-leading customer acquisition funnel in the way that Spotify can.  Scaling back free content will inevitably have an impact on site traffic and thus on advertising revenue. So publishers are faced with the risk of an overly ambitious paid content strategy killing off their advertising business, with the hunt for extra revenue effectively having the polar opposite effect. This is problem that Google  Consumer Surveys helps solve.

Consumer Data: the Third Way for Content Monetization Strategy

One of the most important dynamics of the shift in consumer content consumption in the digital age has been a paradigm shift in perceptions of value.  Because most of the content that is consumed digitally is free it is easy to, wrongly, assume that consumers do not value content anymore. Consumers do value content, they just don’t have to pay for it anymore to value it.  They also value much more than just the quality of the content itself, they value things like convenience, experience and immediacy. The problem with paid content strategies is their fundamental assumption that consumers still only transact in monetary currency.  Digital consumers in fact transact in three equally valuable currencies (see figure):

  • Money
  • Time
  • Data

Freemium strategies predominately play to the first two of those currencies.  Google Consumer Surveys enable publishers to start harvesting that third currency by getting consumers to part with personal data in return for ‘free’ access to content that they would otherwise pay for.

Google Consumer Surveys are not an alternative to paid content or advertising, but instead a complement.  They enable publishers to more easily build blended content monetization strategies that soften the increasingly adversarial relationship between advertising and paid content.  Of course some best-practice publishers already pursue effective triple tier content strategies, but now Google have just made it a lot easier for everyone else to join in.

Amazon’s and Apple’s Mirror Opposite Content Strategies

Amazon’s announcement today of their media tablet the Kindle Fire was long anticipated.  I won’t add to the countless virtual column inches discussing whether it can be an iPad Killer (though I do agree with my former colleague Michael Gartenberg that it is competing more with the iPod Touch than it is the iPad).  Instead I think it is worth comparing and contrasting Apple’s and Amazon’s strategic reasons for being in the tablet game.

As I stated in a previous post, Amazon and Apple are 2 of Digital Music’s Triple A (Android making up the third).  Both have in their respective ways shaped online music more than any other company (Apple with iTunes, Amazon with online CD sales).  Both willplay a major role in digital music’s, at the very least, mid-term future.  But they are in digital music, and digital content more broadly, for mirror opposite reasons (see figure).

Put simply, Apple is in the business of selling content to help sell devices whereas Amazon is in the business of selling devices to help sell content.  There is a poetic symmetry the identical yet polar opposite strategies of the two companies.

The differences have direct implications that are also mirror opposites:

  • Apple can happily ‘just about break even’ on music downloads because of the way it helps sales of their high margin i-devices
  • Amazon can happily price the Kindle Fire so aggressively that it is priced more like an MP3 player (and expect to lose money for the near term at least) because of the volume of sales of content it expects / hopes it will drive

Perhaps most importantly music, video, games, books and all other forms of content are crucial to the success of both.  20th century media business models may be tumbling around our ears but the fact that the future of the tablet market depends so heavily upon media products will be among the foundations for future growth.