This is the sixth in a series of blog posts analysing how brick and mortar industries have responded to outside threats and competing technologies. The aim of the series is to review how certain industries reacted to these threats and what if anything was done to keep these threats at bay. As this is a series, it’s worth reading this introductory blog pst first.
During the late 90’s there was an intense push on the part of enterprises to do everything they could to control content and acquire content driven companies. Content was king, but it was physical content that was being pursued. To this extent, there were a large number of newspaper acquisitions and takeovers focused around acquiring finished goods. These finished goods included several physical media products like CDs, DVDs, books and newspapers. Whilst the drive to acquire content may have been a sound strategy, pursuing physical media content was not. So, what happened?
In order to answer this question, think of Chris Anderson’s concept of atoms vs. bits and the power of online driven content. Think of the impact of the free economy and the rise of online social media networking sites over the last decade. Content is still king, but it has gravitated away from a physical media and onto the online revolution. Online access has provided users with the ability to search for all kinds of information on a myriad of subject matters. This revolution has spawned an entire industry predicated on helping content providers secure the top page rankings on Google, Bing, Yahoo and other search engines. Content farms dominated the market based on the premise of providing free, and mostly inaccurate, information. Why would companies fight for top billing and the highest page ranking just to provide users with free content?
Advertising has and always will be one the biggest revenue sources for online content providers. The biggest source of that revenue comes from pay per click (PPC) and cost per click (CPC) giants like Google, whose AdWords program accounts for most of the company’s revenue, deriving over $28 billion in 2010. Advertising also happens to be the biggest revenue source for newspapers, magazines and other publications. It’s not the price of a newspaper that drives profit for its owners. No, in this case, these media publications make their money from advertising. The classified ads portion of any newspaper is its biggest revenue driver. It’s no different with the free economy, except in this case, the actual sale is much more subtle.
Companies like Craigslist, Kijiji, Oodle and even eBay, have all made a name for themselves by adopting that aforementioned subtle sales approach. In the process, they have effectively stolen market share from newspapers and their classified ads. These online entities provide a multitude of services at a fraction of the cost of print media. Most users aren’t even aware of the sale they’re being exposed to. Companies reap huge profits on the ability to reach large masses of readers and users at a fraction of the cost of conventional print media.
Newspapers and print media have definitely taken notice. They have accepted their online competition and have responded by investing in their own online reputation. However, they have also shown a willingness to push back against online content providers by charging users and readers online subscription fees. Whilst the jury is still out as to how this will all play out, it’s obvious that online media is here to stay. For the print and publication industry to survive, it must be willing to accept that reality and learn to embrace it.