Over the last 12 months the state of the economy and the impact of the recession have been topics in virtually every meeting I've been in. The discussions have ranged from detailed analysis by "leading" economists (one in particular at a meeting in March was thrilled when at the end of his 60 slide deck now predicting a decade long slide in the economy, I asked if he had predicted the recession 6 months ago) to debates on financial trends, to simply sharing the anxiety the recession has caused for all of us. In general the common thread in each of these conversations has been the attempt to gain a sense of context. "This is just like 1987 or 1991, or perhaps 2001". "This isn't a tech bubble like 2001, this is a credit bubble".
So is this economic downturn like the others? Are there lessons to be learned? As an early management mentor of mine used to say "the only accurate predictor of future behavior is past behavior". So yes, there are comparisons to be made and lessons to be learned. Based on previous cycles it's safe to assume that the economy will continue to change, and these changes will outpace our ability to forecast them. It's safe to assume that we will see an economic rebound and it will happen with more speed than we expect and with unique twists that we won't anticipate. What else can we learn from the behavior of past economic downturns? New innovations will be launched, creating new opportunities and new challenges for existing businesses. In each downturn and recovery, innovations emerge and with them a new calculus, that changes the business rules. Nowhere is this more true than in the media business.
The center of gravity in media has been on a decade long transition from analog to digital. Traditional media companies have taken their lumps during this transformative phase. At the same time many pure play digital media businesses haven't yet demonstrated the scale some predicted. The recession has accelerated these trends but also shut off the main driver of growth over the last decade;readily available, cheap capital that enabled P/E backed M & A. So we can safely predict that a series of new media rules will emerge out of this economy; driven by the perfect storm of the recession and the continued impact of technology. We can also safely predict that all of us will be challenged to rethink our businesses. So here's our take on the 9 new rules of media:
- Reach No Longer Equals Revenue. The new calculus is: Content Equals Engagement-Engagement Equals Revenue.
- The Moment of Singularity in Media Has Arrived. Content and the applications and technology with which it's viewed and interacted with have become inextricably intertwined.
- Below the Line Marketing Has Become Above the Line Marketing. The Traditional branding and advertising market has been devastated but not simply because of the recession. Branded response is replacing traditional branding.
- Content as a Marketing Platform. Advertising is being rapidly replaced by knowledge exchange based on content.
- Integrate, Integrate, Integrate. People naturally create their own information networks by integrating content from various sources. Make it easier for your audiences to integrate content or someone else will.
- Live Media is the Original Social Media. Ironically live media, conferences and trade shows, showed extraordinary growth at the same time social networks were launched and started their growth curve. Live media will continue to serve as a central part of the media ecosystem.
- Brands Matter. As Eric Schmidt CEO of Google has stated "the unbranded web is a cesspool". You will see a return to branded content as audiences and marketers drive a flight to quality and wake up from the hangover of the "User-Driven Content" era.
- Paid Content Will Thrive. Given the amount of money the average person pays to have web access there is an inherent irony to the proclamation that the web is making all content free. People always have and always will pay for quality content. The challenge that many media companies are wrestling with is that their traditional advertising supported business model has been blown apart. When cable was launched there were dire predictions that people would never pay for television that they had been getting for free since its inception. Taken a look at your cable or sattelite bill lately? We will likely see several new business models emerge but there will be a vibrant and growing paid content business.
- Challenge the Assumptions that Made You Rich. One of the hardest things to do is to change the core strategy that built your business. Even when you see it in decline. Company philosophy and culture should sustain. Strategy and business models should evolve and in some cases be blown apart. Redefining your business to adapt to today's market is tough. Far easier to simply cut costs and hope for an economic recovery. Saving your way to greatness isn't a business model however. This economy will recover but it won't come back as a clone of the economy before it. Use this time to truly rethink your business and challenge the core assumptions in your business models.
We know for sure that innovation and change will come with the resurgent economy. What new rules do you see emerging? Any you'd add to this list?,