In the media industry, we’re seeing an unbundling of a highly vertical business, with the most lucrative parts being siphoned off by Internet-based low-cost rivals. – Om Malik
Unfortunately it is something of a misreading of how media is being transformed by the MobCon.
I say that because the Telecoms industry has merely had its industry value chain unbundled. Yes this has resulted in some competitive pricing activity across the value chain but it has also presented the industry with new opportunities to expand its value chain. That’s why the telcos have spent the past 15 – 20 years developing lucrative online and mobile revenue engines. Media on the other hand has seen its product rendered meaningless and its old revenue model fundamentally disrupted.
Om Malik’s article contains all the right ingredients. It’s just that he misses one fundamental point. Here’s the bit he gets right.
“Many of us confuse the media companies as creators of media and content. In reality, their barrier to entry was ownership of distribution platforms. Just as telecoms of the past maintained their near monopoly by controlling the last mile of the network, the media companies maintained their money machine by controlling the distribution network:”
The problem is he fails to make the connection that because the Telcos now own the distribution network it is the Telcos, and not the Google’s, the Facebook’s and the WordPress.com’s, that are the ones eating the media industry lunch.
As I explained before in Who profits from the 6 degrees of separation? and Here’s why Analog Dollars equal Digital Pennies the Telcos and the handset manufacturers enjoy the bulk of the ARPU’s in this new MobCon media model. Just as the Telcos and the Computer Hardware manufacturers enjoyed the bulk of the ARPU’s during the dot-com era.
In this new industry value chain the old media has been reduced to the role of primary producer or manufacturer. One only has to take a look at the new MobCon industry value chain to understand just how far removed from the customer the role of the content provider (i.e. Old Media) has become.
In the end Om Malik suggests that
“Perhaps it is time for the media industry to come to terms with unbundling and re-imagine the definition of media. If it isn’t the medium, then what is it?”
The problem with that of course is it is the nature of the medium to render meaning redundant.
As we should all know by now Information Theory and Communication Theory are two mutual exclusive ideas with competing objectives.
Communication Theory is essential a feedback loop driven by meaning. Stories, reputations and audience grow due to this feedback phenomenon which is fuelled primarily by the search for meaning.
As Freeman Dyson points out at the end of his excellent review of James Gleick’s latest book “The Information: A History, A Theory, A Flood”
“The enormous success of information theory came from Shannon’s decision to separate information from meaning. His central dogma, “Meaning is irrelevant,” declared that information could be handled with greater freedom if it was treated as a mathematical abstraction independent of meaning. The consequence of this freedom is the flood of information in which we are drowning.”
If you understand this paradox then it becomes self-evident that you will struggle to extract revenues from a medium where meaning is irrelevant by creating content. The only way to profit in this scenario is to create platforms that allows the audience to construct an infinite number of personalised meanings (e.g. Lists) from the meaningless chaos.
The reason Google wins and old media loses in this new age is because Google creates the illusion of personalised meaning (i.e. the “Top 10″ lists) from the chaos for everybody who embarks on the search for meaning.
Having said that it isn’t Google who is eating the lunch of the old media… it’s the Telcos.
Posted on February 25, 2011
0