Move On

Capsule:  Content and distribution should bundle their normally competitive media businesses across platforms with two goals in mind: improved products that are easier to buy and use; and, more profitable growth gained by leveraging the competition.  With the wreckage of 2007, 2008 and 2009 in our wake, can we agree it's time to build new business models and move on? (www.audiencedevelopment.com/2009/order+economist+demand+your+cell+phone)


Are the dog days of media value destruction coming to an end along with the dog days of summer?  In truth, the Summer of 2009 wasn't too "doggie" weather-wise, but it was on a commercial death-watch.  Let's hope we're back.


A slew of digital media announcements since September 1st suggests a revenue awakening.  The Economist, a news-magazine for thoughtful masochists willing to spend their week working through its dense, worthwhile content, announced the expansion of its UK impulse delivery program to New York.  New Yorkers will soon be able to order a print Economist on demand for next-day delivery before 6 am, in time for their morning commute or post-Yoga Mensa-stretch.


The Economist's typically earnest New York-launch prognosis: if our New York experience is anything like our London launch, we'll see impulse orders initially in the hundreds, not the thousands.  Damn; they're good.  The importance of what they're beginning is not about launch volume.  It's about The Economist's willingness to strike a new digital distribution model for a traditional product--print--with revenue attached.  


The Economist-on-Demand will cost $6.95, the same as its newsstand price.  But it will be physically delivered to the home.  Also available: the online, audio, podcast and video Economist versions, all neatly bundled for a monthly fee.  What courage it takes to launch a low-tech version of the news and to charge for it to boot.  The Economist shows a real respect for its customers: creatively enlarging the distribution menu in order to make a better meal.  


Ads for the Economist-on-Demand will come to prospects via e-mail and direct mobile connections and the ads will fulfill the sale of the on-demand magazine.  "Click" on impulse and get your smarts delivered to lobby and driveway without wasting your precious time.  The potential of impulse fulfillment makes print seem modern.


Speaking of the new low-tech, Google, smartly touting its developing video compression sensitivity--a must for digital distributors reinforced by the purchase of compression-aid On2 by these masters of digital and commercial efficiency--announced it would make YouTube a video store.  Google is shopping Hollywood deals for streamed new release films for "rental" through YouTube.  Just what we need in the middle of a recession: another video store.


But Google's ambitions are on the money.  A whole new audience for VOD visits YouTube every day.  Google's extreme talent for marketing through the distribution form means it will be able to work all of its generally mindless YouTube video avails into promos for the movies and other digital content (and products and services) it wants to sell.  Things may be getting exciting again.


Even better, a new modernity may be emerging in the digital world: one that seeks out collaborative partnerships in order to support new commercial ideas, even amongst enemies.  Comcast is placing its mPortal application onto AT&T's iPhone, bringing Comcast customers the ability to unify their broadband and mobile experiences.  The nation's biggest cable distributor will enhance the wireless profitability of its chief telecom competitor in order to continue to grow its customer base profitably.  It's a risk, but it's also common sense.


How about experimenting with some more media models combining the best of our brains and our instincts?  The news content and distribution challenges necessitating life support over the last two years were a marketing as well as a product failing.  Rather than continuing to view one another as competitors, could newspapers and online news brands market together as frenemies?


One of the biggest flaws in the thought process around moving from paid print subscriptions to free online content was the fantasy that each brand's news audience would grow without bounds once the friction of price was removed.  This idea--that there was no "typical" reader for each news source and that "everyone" would want whatever news they could get for free--was unsophisticated and wrong.  If every news source could count on replicating the growth success of USA Today and its massive distribution based on free copies at major hotels, the commercial world would be a lot simpler and more forgiving than it has turned out to be.  


Bulk distribution deals are tricky and can be highly lucrative for periods of time, but because they don't contribute to organic growth--I like your product and so I'll buy it and buy it again--bulk distribution is rarely a business foundation.  USA Today has scaled back its hotel bulk distribution significantly, partly because hotel chains can't afford to keep paying even a fraction of subscription prices for everyone who stays in the hotel, regardless of whether they read the paper.  The value of USA Today has been called into question relative to its cost.  This is a good thing.  Value should drive distribution and profit; just like consumers should think before they spend their money.


A new "bulk-hybrid" could spur news growth based on who the real audiences are for each news brand.  The readers of The Economist are likely reading The New York Times, The Wall Street Journal, The Financial Times and maybe The New Yorker or even New York magazine, if they're local.  Screen-reading all of this content assumes a reader without a life.  More likely, as The Economist intuitively believes, like-minded audiences are reading all over the place using every available print and electronic form based on whatever works. 


Comcast or any major cable distributor with video and broadband customers, in partnership with AT&T or any major wireless distributor, could profitably sell a collection of print, online, audio and video versions of any news combination to targeted segments of its customer base.  The cost to a Comcast AT&T partnership of making wired and wireless navigation that enhances these group news subscriptions by integrating topics, stories and utilities would be light.  (For example: links inside these product packages between related stories from different clearly identified brand sources could be a valuable navigation and focusing aid.)  


The news companies themselves, however, would have to accept being mashed-up with their competitors in order to make new news profits.  The business case for this collaboration would be built on the belief that news audiences--just like the prospects for different types of entertainment, cars, clothing and even food--are particular, finite and can be targeted based on tastes, lifestyles and beliefs.  There's cross-over amongst target segments for every product, but exploding past segmentation boundaries to new profits requires aggressive and thoughtful product and price bundling.  Cable distributors are master bundlers in search of new products to realize their amazon digital subscription dreams. 


When the cable industry began inventing cable TV networks, each brand established its niche value with strong marketing management.  Cable content pioneers thought deeply about the audiences for whom their specialized content would have relevance, sometimes more than the content itself.  Very quickly, cable distributors mashed up these distinct network brands into packages with a monthly bill attached. The economics became strong enough to enable content companies to expand their brand families with more networks and more advertising, enhancing cable's value and supporting rate increases all around. 


Cable forced a pay TV revolution that moved our commercial prospects on.  CNN was different from broadcast news: there seemed to be more of it and it cost money.  It was acceptable to charge for CNN because it was part of a package of even greater value and because generations had already accepted the idea that the news was worth something.


It all depends on priorities. Listening to the experts describe the new news eco-system, it's still hard to see the intended order of things.  (Like the well-intentioned but muddy mash-up of national health care strategies, let's hope this was an August problem.)  If the news costs nothing to consume, its cost basis and quality will shrink as well.  But if the news costs something--for those who buy a news package, something more for the package and less for the individual brands--it could grow according to its perceived value and its distributors' appetites for market risk.