Media business revenues are dropping so might your Company’s!

T-Ford business modelThe challenges are huge and concern all of us. Rapid changes are hard to handle. I put an image of a car with this blog posting. What does that have to do with the media industry? Henry Ford’s introduction of the automated assembly line changed the car industry.

In short, his actions forced the whole of the car industry to adapt. It took years for them, and at a point it seemed that a Ford was the synonym for a car. In just a few years the market had changed. “Everyone” could afford a car, and not only the wealthy.  Only twenty years later the Ford Company got  problems. Competitors start to offer cars in all kind of fancy colors. Henry Ford didn’t realize the change; he still lived by his “old winning strategy” and the famous quote:  “The customer can have any color as long as it is black”. This looks a bit like how the media industry meets their challenges nowadays.

The audiences are moving away from traditional media arenas, toward social media arenas. We know the news papers are in trouble with dropping readers. Also in the online news business descent revenues are hard to achive. has to let 10% of their online staff leave. The 4th largest commercial TV station in Norway closed down their TV news this week. What happens when media revenues drop as they do so for the time being? Advertising companies also get into trouble, and so are businesses trying to market their products and services.

There’s been a lot of focus on social media the last year, and a lot of confusion. It does not seem like businesses, nor the media industry, is as eager to embrace the phenomena social media as the users of internet are. Strategy Analytics inc. reports that 628 million users today are active users of social media. That is 60% of all broadband users.( Within the next five years it’s expected that Social Media Applications, such as MySpace, Facebook, YouTube and Flickr, will attract over one billion broadband user.

The media industry seems like they would rather that social media didn’t exist. Companies and businesses seems like they think; it’s a “hype” and of no real relevance to their marketing and sales strategies. If one look at the point of the Gartners “Hype curve” is that it starts off as a “Hype”, and develops into mainstream. Social media have become mass market phenomena, whereas the media and advertisement business, yet haven’t understood it. Advertising companies seems like they don’t know quite what to do about it, but are trying to figure out what’s going on. In this perspective we do have “power to the people”. Except that it’s a downward spiral. From somewhere and somehow revenue streams have to be involved. Content and news won’t continue to exist without it. Advertisement requires a belief of a return of investments from a business perspective. If the media industry looses their audiences, advertisement will lose businesses interest, but what to do then?

The confusion is great. Businesses search for some to answer the question, what to do? Media doesn’t seem to have the answer, advertisement companies seems to go by the media industry and would probably have liked things to continue as before. But people have embraced the “hype” social media to an extent that cannot be overlooked.

Few business developers in the media and advertisement business seems to have looked closely at how do the revenue streams in the internet business function as is? What kind of activities are at the internet, and how are they providing added value to the customers and the market? The media and news industry will need to adapt to the environment they have their audience in. Advertising companies will have to change in order to provide their customers with product that meet audiences in totally different manners than we are used to.

Companies will need to market their products, in order to do so they will need to go where the audiences are, and meet the customers in manners of which the customers can engage in. It amazes me that Management in companies today seems to not understand the importance of social media and what business changes are required to be able to meet their customers in a rapid changing world.  Avande reports that 75% of management admits that social media is important 60% doesn’t have social media on the agenda, and only  18% have some kind of strategy. I expect to see some huge surprises the coming years, where established businesses will lose their market shares, and even disappear all together, whereas unknown companies will grow huge in a very short time. It’s time to watch out and be proactively present to avoid being left behind.

I’ve written several blog postings (below) about this what, and how I believe that business models and revenue streams will be created. My point of view is shared by many and the key point are like Strategy Analytics report in their latest  report, The People’s Revolution: Implications of Web 2.0 and Social Media Applications, notes that media companies must view social media both as a tremendous opportunity and a competitive threat. The report also concludes that the ability to develop successful targeted advertising techniques will be the key to long term financial viability for social media sites.


One Response to “Media business revenues are dropping so might your Company’s!”

  1. Media business revenues are dropping so might your Company’s! Geir Stene's Weblog is an interesting name for a blog, keep up the good work, thanks, from Ariel Rhodes

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