2 Topics Do old media have a problem? The dynamics of competition An innovator’s dilemma for old media The evidence for old media displacement What’s next
3 A paradoxical snapshot of old media At first glance, the evidence for old-media decline appears contradictory Are old media in decline? Or doing better than ever? And how can we make sense of this mess? Edison Research. (2006). Time Spent Listening by Teens (12-17) down 22% since 1993. from http://www.edisonresearch.com/home/archives/2006/09/followup_edison.php Radio: Time Spent Listening by Teens since 1993 TV: Average viewing time p/ HH since 1995 Nielsen Media. (2006). Television's Popularity is Still Growing. 2006, from http://www.nielsenmedia.com/nc/portal/site/Public/menuitem. 55dc65b4a7d5adff3f65936147a062a0/?vgnextoid=4156527aacccd010VgnVCM100000ac0a260aRCRDhttp://www.nielsenmedia.com/nc/portal/site/Public/menuitem
6 6 Dimensions of media competition Gratifications sought Entertainment Information Sociability Gratification Opportunities Times Places Relevant opportunities Time spent on media Easy to measure Last one to change A function of opportunities Advertising investment Cost of sales Reach Paid content Variety Cost of goods sold Distribution Subscriptions Dimmick, J. (2003). Media Competition and Coexistence: The Theory of the Niche. Mahwah, NJ: Lawrence Erlbaum Associates.
12 Gratifications sought Information Entertainment Sociability Information Entertainment Sociability (micro) dimensions of competition Stafford, T. S., Stafford, M.R. (2001). Identifying motivations for the use of commercial Web sites. Information Resources Management Journal, 14(1), 22. Ruggiero, T.E. (2000). Uses and Gratifications Theory in the 21 st Century. Mass Communications & Society. 3(1), 3-37.
13 Gratification opportunities previously empty spaces underutilized spaces core spaces Old Media New Media Games on the handset Reading one’s “local” newspaper while abroad Playing musical ringtones Watching TV while at work Streaming video on demand, instead of broadcast TV MP3 and podcasts instead of radio in the car
14 Advertising investments Ad expenditures have been remarkably stable –Growing year on year –But stable as a % of GDP Growth in Old/New Media ad investment tells another story –Old media increased slowly, year on year (5.4%) –New media increased rapidly, year on year (45.3%) Old media’s pie is getting smaller
15 Smallest ad investment that CBS can profitably accept The Innovator’s Dilemma in Practice Smallest ad investment Google can profitably accept 5¢ $20,000
16 Content Arguably, old media’s strongest suit –Until Napster, KaaZa, etc. are taken into account –And the Apple Store Have you noticed that ABC, NBC, CBS now put most of their primetime programs on the net? Think of ringtones, wallpapers, and games downloaded to phones By the way TV and Radio have never had paid content
17 Subscriptions Virtual worlds Real gambling in virtual casinos Premium “adult” content Games for consoles make more money than movies
18 Time spent on media Newspapers and magazines already heavily displaced –Any city where craigslist is in, the classified are out –Why do newspapers still print the stock prices? Radio is under sustained pressure –MP3 players, satellite radio –Time spent listening is dropping –Ad revenue is dropping TV’s turn –Broadband penetration only recently reached levels of dial-up penetration –Quality of alternatives constantly improving –Other dimensions favor new media
19 Summary Old MediaNew Media Gratifications sought Gratification opportunities Advertising Content Subscriptions Time spent on media
20 Conclusions There is no coexistence, just the appearance of it Will television companies go away? Doubtful Will TV go the way of the dodo? Most likely