This is a follow-on to an analysis that I wrote for The Media Briefing, published on 4 January. Simply put, I think a shake-out in the media business is coming due to a glut of content and advertising. I am not alone, and it would seem that 2016 begins with a lot of concerns about the sustainability of the current path in terms of media businesses. I’ve seen a raft of reports over the last week that sound like the beginning of this shake-out, both between legacy players but also amongst digital media pure plays.
Never have we had so much choice in terms of news, information, music and entertainment. The democratisation of production brought by digital technology has made it easier than ever for people to create content, but it has also made it more difficult than ever to get paid to create it, both for individual creators and many companies. This cannot last.
The bottom line is this: Pressure on legacy media businesses and the current state of digital advertising means that you either go premium and paid – think The Economist, The New York Times, pay television, business intelligence – or you go mass and scale, trying to reach as many people as possible as cheaply as possible. There is a limit to scale, and a limit to the model of producing as much as possible as cheaply as possible, especially as the digital ad space is as super-saturated as the world of digital content.
As I said over on The Media Briefing:
For a long time, we’ve been creating too much content, so much so that I think that we’ve already reached Peak Content, the point at which this glut of things to read, watch and listen to becomes completely unsustainable. There hasn’t been enough ad revenue to sustain it for years and, with 2015 ending with a rush of acquisitions, consolidations and funding rounds with eye-watering valuations, 2016 will mark the beginning of a shake out.
Market crashes are the tsunamis that sink, if not all, then a lot of boats, and it’s time to take strategic action.
And although I’ve spent most of my career working in journalism, I’m not just talking about journalists and the commentariat, I’m talking about every kind of content. We’re producing too many podcasts, too many TV shows, video games, status updates and images than we could consume in a million lifetimes. Social updates are as much about communication as they are publishing or broadcasting, but they still eat up that scarce resource of attention. As a data journalist, I like hard numbers, and streaming music service Pandora gave us one on just how scarce attention is.
Attention is such an important topic for marketers this year because living in a connected world means our attention spans are at an all-time low (8 seconds1, to be exact), turning people into master jugglers of devices and content.
As my piece went live on the Media Briefing, it coincided with a number of articles indicating that a shake-out is already in progress. Ricardo Bilton at Digiday predicted a “winter of discontent” for digital publishers as many high-profile sites saw their traffic plateau, including Buzzfeed. Some of this is to be expected. It’s nearly impossible to maintain triple digit growth. He writes:
The challenges on the business side are fueled by the overabundance of publishers on the Web. Ad buyers are looking for deeper deals with a handful of partnerships, which is bad news for the sites that don’t make the cut.
This year will begin as 2015 ended, with a rush for digital publishers pivoting or looking for buyers. Bilton wrote that Mashable is shopping itself around, and it wasn’t too long ago that we heard that The Atlantic was exploring a sale of Quartz. For those not seeing the growth that they need to sell at a valuation that will sate their funders, we are seeing retrenching and pivots, or both in the case of Upworthy. Even seemingly safe and stable digital media players such as the Huffington Post are announcing layoffs in one area that had seen a lot of growth over the past 18 months, video.
This is all to say that those people commenting on my original piece who focused on the disruption in the legacy media business are missing the main point: This glut of content is hitting everyone who operates in the digital media space, apart from the only true unicorns of Google and Facebook.
We are fast approaching the end of this cycle though that has prioritised cheap scale above all else. As I wrote for The Media Briefing:
…flooding a glutted market only leads to a deflationary spiral until it becomes completely uneconomic to produce that commodity. It is a simple matter of economics, and it doesn’t matter whether that commodity is maize or media.
Tom Mullaly said in a comment on the post: “The market does not ‘abhor super-abundance’. Businesses trading in a super-abundant commodity abhor its abundance, and that’s an entirely different thing. Consumers of it revel in it, and that means you can monetize it, even if it’s not quite the news you knew.” Sure, for lovers of high quality content, it’s a golden age of choice in terms of incredible TV, international journalism and audio content, but it cannot last if it cannot be paid for. As Clay Shirky said years ago, “Abundance breaks more things than scarcity does.”
What happens now?
For years now, one of my conference presentations begins by laying out this issue of overabundance and different ways to try to deal with it. As Peak Content becomes more well-known as an issue, we’re seeing a number of different prescriptions.
Tom Goodwin of Havas has written that in this flood of content, attention shouldn’t be our focus but rather clarity.
And I’m far from the first person to use the term Peak Content. It’s been circulating in marketing circles for a while now, and Erica Berger used the term in a Medium post in early December. She wrote:
To sum this up, the ecosystem we’re in right now is at highest editorial capacity for content, coupled with a shifting revenue stream away from publishers and to networks and large tech companies. There’s no hack that I or many smart people can see. That’s why we’ve reached “Peak Content.”
That said, she is optimistic about the passing of Peak Content seeing it as “an opportunity of a generation” to remake media.
But having survived both the dot.com crash, when an early generation of digital content companies were wiped out, and the Great Recession, which I survived by building my own global media consultancy, I know that when a bubble bursts it wipes as many good companies as bad. Yes, there is an opportunity here, as there always is, but it will also get messy. I absolutely agree with Tom and Erica that it’s a time for clarity and an opportunity to make something better than what came before.
I’m not going to rewrite my Media Briefing piece, but I think media companies, and this goes for you whether you’re a seed-funded start-up or a legacy media business trying to ride out what seems like the perfect storm, need to as a minimum:
- Sharpen your strategic focus – If you’re not going to play the volume game, ask yourself what audience you serve and how will you monetise that attention. Get creative and think of things beyond the ad/subscriber dichotomy.
- Iterative agility – Screw fail fast; instead learn quickly. Yes, failing fast is about the willingness to experiment and take risks, but the major challenge that I have seen in a lot of companies is that they fail to funnel the lessons, good and bad, back into the business.
- Decide what you stop doing – When I worked for the Media Development Investment Fund, one of the key lessons we realised that digital start-ups had to learn was when to let go, when to stop doing something because it wasn’t supporting their success. The same goes for legacy media companies. As I wrote at Media Briefing, “one of the biggest challenges I had as an executive editor, (was) figuring out what we could stop doing that would free up enough staff time to innovate in a way that could really move the dial.”
- Invest in revenue innovation – Never launch anything without revenue streams in mind. For every editorial innovation, I’d invest in two on the commercial side.
I want to amplify that last point because the biggest issue we have right now is that, in terms of unique users, we can reach a larger audience than ever, but no one can monetise millions of single unique users who spend 30 seconds or less with you each month.
Of all of the predictions and forecasts that I saw at the end of 2015, Amanda Hale’s, of Talking Points Memo, struck me as the clearest. She wrote for Nieman Lab:
We’ve reinvented journalism school time and time again and have nobly funded countless entrepreneurial journalism fellowships aimed at equipping journalists with basic tech and business skills (“entrepreneurial journalism,” while adjacent, is a different discipline — email me and I’ll explain), but as an industry, we have done very little to identify, pipeline, and train the publishing talent that will be responsible for securing the financial future of news.
Amen. She notes that her Twitter bio says, “Without a business plan, there is no freedom of the press.” Yup. That. As this shake-out gathers pace, scale at all costs will fade as the goal. To quote my Media Briefing piece a final time, “huge audiences don’t matter in the absence of a business model”.
If you want to hire me to work with your media, advertising or marketing company or start-up, I have just launched a consultancy, Ship’s Wheel Media, to provide digital product development, content strategy (especially social, mobile, data and visual) and content services. I am also open to discussing full-time roles. If interested, send me an email – kevin AT charman-anderson.com – or connect with me on LinkedIn.