Competition from online news is hobbling newspapers. Streaming and file-sharing have done the same to the recording industry. Web-based video providers are mounting a serious threat to network television and cable companies.
All of this is undeniable.
Curiously, there seems to be no small number of old-media customers cheering for the obliteration of industries that have long served them fairly well. Not so curiously, I find that discomforting considering what I do for a living.
I believe there are two reasons for the impunity with which some greet newspapers’ presumed doomsday. One is perfectly rational, the other almost totally delusional.
Let me preface the first reason with a confession: I, like many news followers my age, am gravitating toward online consumption because technology makes it increasingly convenient, powerful and simple to experience over new platforms. With my iPod, my entire music collection fits in a device the size of my wallet. With my mobile phone, I can read an Island Packet story or watch a television show just about anywhere and at just about any time I please.
Indeed, old media was just a little too fat and comfy in the marketplace, as evidenced by one-newspaper markets, music sub-genres that couldn’t get airplay or record contracts, and thoughtful, artistic movies most theaters would not (and still do not) show. I don’t mean to sound snobbish or disdainful of the “unwashed masses;” I merely recognize that the digital age has ushered in greater choice for consumers and greater challenges to old industries that force it to get leaner and more relevant ... or perish.
That’s the way a market economy works, and it works well, notwithstanding the temporary discomfort of the displaced.
But much of the enthusiasm about technology also is predicated upon fairy tale pricing — i.e., the fervent belief that content is and should be available for free.
Sorry, folks. An MP3 file might not entail the overhead costs of a vinyl record, but it still entails some overhead cost. The question is who, ultimately, is asked to bear that cost — the consumer, an advertiser vying for the consumer’s attention or some combination of the two? (I suppose this excludes the munificent Santa Clauses out there, but their existence, however beneficial, won’t cover every cost for every consumer.) New businesses must answer the same old question as the industries they seek to supplant, and they’re just as vulnerable when they answer incorrectly: Witness the dot.com bubble burst, MySpace and Facebook’s IPO uncertainty.
What consumers should remember is that the first rock of crack is always free. Digital businesses might operate on goodwill and seed money for a while, but they must produce reliable revenue streams eventually or bite the dust, too.
It is for this reason that old media, despite the need to retool both its production and business model, is likely to be around a while longer. It still serves a demand, which might even rise for a time as consumers are asked to shoulder more of the true costs of technology.
Blogger Dan Frommer made a somewhat similar point recently in his article “If You’re Expecting The TV Industry To Just ‘Collapse’, Keep Dreaming.” He writes:
A lot of the complaining about today’s TV business — the bundles, the nickel-and-diming, the DVR fees, whatever — is about its price. ... Sure, you can stop paying $100 for cable and watch only Netflix and Hulu videos for $8 a month. ... (But) if 100 million households eventually shift to watching TV à la carte via web connections, the cost of content and bandwidth could easily increase substantially, or at least stay the same.
Eventually, consumers will either pay a higher price for what is very cheap right now or decide that the marginal utility of the new technology doesn’t warrant abandonment of the old. (Frommer, for instance, says he ditched cable for Hulu for a time while he was pinching pennies, but eventually went back to cable.)
It also is possible that the purveyors of new technology will adopt tried-and-true business models — for instance, getting advertisers to underwrite their expenses so that consumers continue to enjoy the illusion that what they consume is produced for free. Of course, in such a scenario, the consumer will have to put up with intrusions — like pop-ups or streamed audio commercials — and some of them will find that annoying. Some services — for example, music-streaming service Spotify — will capitalize by offering free service with ads or service for a fee without the ads. That’s pretty ingenious — greater choice, greater customer satisfaction and two revenue streams.
But it doesn’t make Spotify “free.”
In the meantime, don’t expect old media to go belly-up any time soon. For every buggy-whip manufacturer, there are 10 companies that manage to adapt, re-tool and remain in business, even if in some less-lucrative form. There are reasons [url=http://www.bizcommunity.com/Article/224/90/76624.html]investment guru Warren Buffet recently increased his U.S. newspaper holdings, HBO still has the confidence to resist web-only options some potential customers seem to want and as many as half of the users of mobile technology still subscribe to print publications.
My guess — and, obviously, my hope given what I do for a living — is that newspapers and newspaper companies will be around for a while longer, even if we share markets we once cornered.