The start-up world has kept me hopping these past few weeks and I've been a very bad blogger. Time to get posting again! And I'm starting with the keynote presentation I delivered to the Atlantic Community Newspaper Association on May 13th.
Slide-by-slide commentary is below the SlideShare.
2. My name is Judy Sims and my day-job is as the COO of a Toronto Internet start-up called CanSport LIVE where I’m busy revolutionizing the business of amateur sports.
3. But up until 2009, I worked at the Toronto Star where as VP Digital media, I was responsible for thestar.com and also launched 4 digital products in 2 years. Though my day-job is no longer in the newspaper industry, I keep a toe in the water as a member of the PostMedia Digital Board of Advisors. I’m going to set the stage for our conversation today with a few slides on the new economics of media. My apologies, there will be some charts and graphs, but I’m a nerd and I can’t help myself. But the truth is, I find that talking in scientific terms, rather than emotional ones is the most effective way to begin discussing change.
4. What we’ve seen happening over the past 15 years is a fundamental shift in the way the economics of media work. The root of that shift is the move from a world where media content was relatively scarce to one where content is very abundant. The barriers to entry are down and anyone can become a publisher.
5. And not only is there a lot more content available, that content has become “atomized”. Media is now consumed in smaller and smaller chunks across a wider and wider range of media sources. The average YouTube video is only 3.5 minutes compared to a 30 to 60 minute TV show. A blog post is only 3 to 10 paragraphs verses 20 or more in a newspaper or magazine article. Twitter has reduced this even further to only 140 characters.
6. And now we’re even seeing this happening in the advertising world. Ads have become unbundled from news. Flyers are becoming daily deals.
7. Workopolis, Kijiji, Autotrader, Flyerland, Craigslist – the ads are the content. They’re the prime attraction.
8. The result of this atomization is that economics of this new media world are the inverse of the old media world. Where content was once scarce and attention was abundant.
9. Now content is abundant and attention is scarce.
10. Okay, here we go with the charts. The economics of media, like the economics of any product or service are based upon supply and demand. Where supply is low, demand is high and where demand is low, supply is high. Where the two curves intersect determines the balanced market – the quantity produced and price it sells for. This applies to the cost of a newspaper or movie or the cost of advertising.
11. This is what supply and demand for media looked like before the Internet. Because there were significant barriers to entry as a media company, i.e. you needed a printing press or a TV studio or movie camera, supply was relatively limited and demand was relatively high. Thus prices were high. In our case, that meant that we were able to charge high rates to our advertisers. Looks good doesn’t it? We could even do a little marketing or increase circulation by moving into a new town or subdivision and we could even grow our demand and increase the price we charge advertisers. It was awesome.
12. This is Umair Haque. He’s an Oxford-trained economist who has been studying the impact of the Internet on various industries. He defines this media 1.0 world as the Age of the Blockbuster. The blockbuster resulted in very high revenues and profits for media companies for decades.
13. But Media 2.0 changed all that. Reduced barriers to entry have increased media supply exponentially. All this new content has made it easier for us to find what we like online so we actually consume more of it, shifting the demand curve out. Good news right? Well, the problem is that the demand curve hasn’t shifted out nearly as much as the supply curve. The result is a hyper-deflation of media prices.
14. And we are in fact seeing this in action in the online world where supply of advertising inventory is much higher than demand. And, technologies are being created everyday that make the purchase of advertising inventory increasingly efficient and increasingly complex. As a result, there has been downward pressure on advertising rates both online and offline.
15. Umair Haque believes that we are witnessing the end of the Blockbuster Age