You’ll often hear at conferences that new forms of media don’t destroy old forms. The speakers say the new forms take their place alongside the old forms.
That’s simply not true. These new forms of media will undermine traditional media because they collapse the production and distribution costs to nearly zero. One person can communicate to a billion people at nearly zero cost. Traditional media can’t survive on zero.
- Print is being destroyed because the web allows free distribution of text. Newspaper and magazine revenues are in steep decline. Book publishing and bookstores are in a downward spiral.
- The collapse of the music industry has an odd history. Up to the 80s, you listened to music on the radio or records. In 1981, music changed from an audio-only format into what we now call videos, where music became a soundtrack to the video image. It was easy to move music videos to the web, so YouTube, Vimeo, Vivo, and others became a better way to watch music videos because you can pick what you want to see. MTV, which created the music video in 1981, finally abandoned it in 2008 and has become just another TV channel. Radio music is disappearing because online music sites let you select what you want to hear or you use iPods or cell phones to listen to your music collection. Kids also swap massive amounts of digital music among themselves.
- Broadcast TV will end because video production and distribution is now basically free. A video can be made by a child with her phone and a kitten. The advertising revenue for web-based video is a fraction of broadcast TV revenue. The average CPM for TV advertising in the United States is US$24.68. For web banner ads, CPMs are US$2.66 (that’s 11% of TV’s CPMs. Forrester Research, 2012). This will be catastrophic because TV is expensive to produce and distribute. It can’t survive a 90% cut in revenue.
The traditional distribution of information worked because there was tight control over distribution. Most countries had only two or three TV networks and these stayed within the countries’ borders. The only choice for TV viewers was to watch those few channels or turn it off. TV viewers couldn’t talk back to the TV. It was top-down one-way broadcast.
Newspapers, radio, and TV didn’t realize that the loss of control over distribution would lead to their end. Newspapers earned 30% of their revenues from the local classified ads in the back of the papers. In 1996, I shared a cubicle in Silicon Valley with a guy who was building a website so his high school friends could buy and sell stuff. Late at night, we would talk about his side project, but it never occurred to Craig and me that it would kill the newspaper industry.
Here’s where it gets really interesting. When people began to use the web, they slowly began to realize they had freedom to do whatever they wanted. You could read anything you wanted. You could see anything you wanted. You could talk with anyone anywhere. You could copy music, books, video, or photos onto your computer and share with your friends. Whatever your interests, you could quickly find new friends and like-minded communities.
- People began to look for information on their own. Instead of relying on salespeople or marketing, they looked on search engines, asked in forums, read articles by experts, and discussed with friends and family. Suspicious of advertising’s one-sided self-interested claims, people researched on their own. People now have completed most of their research and made their decision before they even contact a salesperson. Sales no longer sells; they only take the order. When Stephanie wanted a new car, she collected articles, looked at reviews, and compared information. She compared prices at all dealerships within a 90-mile radius and forced the closest dealer to match the lowest price.
- People began to create. People write blog postings and digital books. People use digital tools to create their books, music, video, and photos and then other tools to distribute those via the web to friends. They do this without talking to traditional services for production or distribution. Justin Bieber was just another kid who was posting his video clips to YouTube. My last eight books were printed and distributed by publishers. With digital publishing, I can do this myself on a scale they can’t match.
- People began to share. They wrote reviews, voted up or down, or forwarded information to each other. When I was looking for a new refrigerator, I asked on a social site and a friend told me about Sears Outlet, where I could get a new refrigerator at a 70% discount. Naturally, Sears doesn’t advertise this.
The Internet and Web 1.0 created a system for digital distribution. Web 2.0 enabled social communication. The audience can talk with each other. The audience can talk back at the organization. The organization can’t control the conversation. Marketing can no longer push a message at the audience. The audience just walks away. Or just clicks away to another site. In a way, the new Chief Marketing Officer of your company is your audience. They decide what they want to hear.
Content provided by ContentOro.
About the Author, Andreas Ramos
Andreas is an author and SEO expert that has worked at SGI, SUN, and other leading companies. He has contributed to over 25 startups, co-founded two digital agencies, was a director at Acxiom, and Manager of Global SEO at Cisco. Andreas was also the analytics strategist for Stanford’s MBA school. He currently manages worldwide digital advertising for MIT OpenCourseWare (in 14 languages), and Harvard medical school’s research hospital (in 42 languages).
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