Strategies to deal with losing readers through the newsfeed evolution

newsfeed evolution

By Mark Schaefer

For the past year or so, I’ve been working on a project I’ve called the “re-invention of the blog.” My vision is to create a space that was more than content … it would also present my ideas in such a beautiful, creative and interactive format that the presentation would be as conversational as the content.

I’m at the point where I actually have a prototype but I’ve been stopped in my tracks because I’ve come to realize that since I started the project, the world has moved rapidly, and dramatically, away from options that would enable me to invest in something this risky and creative — we are in the newsfeed evolution.

In particular, Facebook and Apple are hastening the demise of a publishing industry that is already in trouble by hijacking valuable content for their newsfeeds.  In a world where social platforms not only own your content, but your audience and advertising, publishers are scrambling, whether it’s The New York Times or a blogger like me.

To get a view of how some major players are adjusting to this new world of endless free content shoved into little gray newsfeed boxes, I interviewed leading experts from The Economist, W Magazine, Ebony, Foundr, and a rock magazine media group in London. Let’s look at how the world is changing, and what they say this means to you.

The publishing transformation

Twenty years ago, most people subscribed to a paper magazine … maybe a couple. I loved Esquire and National Geographic — a feast for the eyes as well as the mind.

With the dawn of the web, these publications moved to online versions. People still subscribed and the large, bright screens of a desktop computer offered new creative outlets for the content.

Then content moved to apps. This presented a dramatic problem for the artistic look and feel of content. Now, it had to look good on a device that was the size of your hand — in any way you hold it!

But there have been advantages, too. Moving away from paper to electronic versions means:

  • Lower production costs.
  • Reduced inventory risks.
  • Faster, more timely publishing.
  • Higher margins for e-versions.
  • Broader distribution possibilities.

What’s next: The newsfeed evolution

But if apps were disruptive, the next evolution — content in a newsfeed — throws the foundations of publishing into a buzz saw. In general, people expect content for free, and can’t even be bothered by clicking an app. Many people today want their content organically in whatever newsfeed they prefer … Facebook, Snapchat, Apple News, etc. Even Amazon is getting in on the deal, offering traditional print subscriptions to Prime members.

In these channels, there is little or no art associated with the content. In the blurry stream of Apple News, the content from Esquire looks the same as the content from Sports Illustrated — blocks of gray stuffed into tiny boxes. One analyst even proved that the content display guidelines for many social platforms is literally unreadable. The art of our content is gone, the soul is gone.

And even worse, the subscribers are gone.

To maintain a presence in the newsfeed space, the content must be offered by publishers for free. Subscriptions and ad revenue for most magazines are in a freefall. Facebook and Apple have promised broad exposure for the content that would ultimately increase subscriptions and ad revenue, but it hasn’t worked that way. Why subscribe to anything when there is so much good stuff for free?

Today, publishers say 30 percent of their traffic comes from Facebook, but nearly 60 percent say it’s not creating any revenue.

The demand for continuous free content by Facebook and Apple is crushing the organizations historically known for the best content.

Jeff Bezos, the founder of Amazon and now owner of The Washington Post said subscription content and paywalls are going the way of records in the music industry. People have demonstrated they are unwilling to pay for content.

Bezos said in an interview that he wants to move the Post from “making a relatively large amount of money per reader, having a relatively small number of readers—that was the traditional Post model for decades, avery successful model by the way,” to, “a model where we make a very small amount of money per reader on a much, much larger number of readers.”

Traditional publications like the London Guardian have had massive staff cutbacks to adjust for the revenue shortfalls. Eamonn Store, CEO of The Guardian’s U.S. operations, told staff that the changes were due to low ad sales and to revenue projections that are “not enough to maintain our current cost base.” Store said the company needs to make up for a revenue shortfall of $4.4 million over the next six months.

I was curious as to how mainstream publishers were dealing with the newsfeed evolution, so I talked to five professionals in the publishing industry about how they’re adjusting to the shift.

Here’s what they had to say.

Alex Burrows, Editorial Operations Manager at Team Rock, a publisher of classic rock, metal and blues music magazines

newsfeed evolution“It is certainly a very, very challenging time. Facebook is trying to own the news. Publishers are being forced to use Facebook and Apple as a delivery platform because that’s where the audience is today.

“How successful is our content on Facebook? In a way, that’s up to Facebook. They prioritize what they want to prioritize. Facebook is a necessary evil. We put out content that will have high engagement on Facebook. Hopefully we’ll entice them to check out and visit our website but we haven’t seen meaningful results yet.

“The print subscriptions have been in steep decline, however we are not going to force people online. Many people love paper magazines. They may end up being a labor of love but they will survive. Our readers love the convenience of an online edition but many people love the tactile experience — kind of like vinyl records.

“Our online edition is the music equivalent of an mp3. Some people want to own it and have it available all the time. Publishing on Facebook is the content equivalent of Spotify. It’s basically streaming content and the economics for us are terrible. We don’t think we can run a publishing business relying only on ad revenue from Facebook and Apple.

“Just like any content producer, we are getting creative with our revenue models. We’re creating content partnerships with related products. We have more than 30 years of content available — very valuable. So we’re looking at licensing and other ways to monetize that content. We need to consider very non-traditional revenue streams because the ad revenue might not be there any more.”

newsfeed evolution

Jeff Pundyk, Senior Vice President, Global Integrated Content Solutions at The Economist

Jeff Pundyk“The choices you make are driven by the business model. Some publications are dependent on mass reach and advertising, but that’s not our model. We’re trying to reach a very specific audience. Obviously we do need advertising but we are insulated from some of these pressures because we don’t have a need to reach everybody … we need to reach global decision makers.

“In order for us to do that effectively we have to control the environment.  We’ve created a thought leader salon. It’s an experience. The magazine was founded in 1863 and if somebody from back then saw it today, it would feel familiar. I think that is an advantage we have … the experience of the content.

“Facebook and Apple News are important ways to spread our reach — to show the world what we’re about — but we’re not dependent on mass audiences or Facebook advertising like some other publications. Whether by great design or by luck, we’re not in the same trouble.

“We understand that our value proposition is our brand. We have built trust and pure editorial content unswayed by sponsors. Every business decision we make is guided by that value.

“I don’t see the print publication going away any time soon. We still have millions of print subscribers and they love it. Even when we talk to millennials they like the print version. It’s a magazine that is ‘finish-able.’ You can sit down, read it, and get a great view of the world in time for your dinner party!

“We are in good shape today because our content is an experience.”

newsfeed evolution

Abby Silverman, Senior Designer at Condé Nast (W Magazine)

abby silverman“Our focus is on fashion, film, and art, and we’re known for the way we present things in new ways. So that is a strong image for us that we maintain on every channel.

“We have unique content for every platform. We’ll do something for Instagram or Facebook but it will be produced only for those mediums. We’ll create something for Flipboard and something different for Snapchat that does not necessarily lead people back to the magazine. It is simply connecting with those audiences.

“We haven’t jumped into the Apple News stream yet. We are still considering that strategy. It would be a significant effort.

“We have to be all over social because that’s where the people are today.  We’re creating a lot of social-specific content. We find that an older audience is still reading the paper version.

“I do feel like there is so much stuff out there and the magazine industry is just producing more and more content aimed at getting views. It is definitely moving away from quality to quantity. In the fashion and beauty space, I just keep seeing the same topics over and over. At W, we are staying focused on quality because that will be the only thing that helps us stand out.

“I’m 26. When I consume content, I want it to be in-feed and organic. I like seeing the content I love within Instagram and Snapchat. I go to apps less and less for news. I still go to blogs because I follow those people on the social channels. It makes me interested in them as a person and I want to learn more about what they have to say.

“In-line and organic — that’s the model everyone will have to serve eventually. You have to be where the people are.”

newsfeed evolution

Kevin McFall, director of media operations, Ebony magazine

Kevin McFall“We have an important voice in the African-American community and we have maintained a decent print subscription rate. We’re still trying to figure out the digital transition. How do we move from print to a full-fledged media company? How do we make up for the lost ad revenue?

“The challenge we face is to have a presence in these new media channels and not cannibalize the content our readers are paying for. We have decades of available content and images that people seek for licensing. Probably an opportunity to focus there.

“We have been a leader in getting our content into Apple News but have not monetized this. To be eligible for monetization, you have to use a special Apple ad format. We have not made that commitment yet. We want to see if we get some traction from the news feed and see what happens before we commit to those changes, which will take some effort.

“When Facebook was promoting publishing via Instant Articles, we tried to move in that direction but frankly it was difficult to get answers from Facebook. It was hard to even get their attention. Facebook has pulled back from the Instant Article direction so our future on Facebook is uncertain. Right now our only real presence is a Facebook page where we feature breaking news, maybe a stand-alone post, or a reference to an article in the magazine.

“We’re in epoch one of our digital transformation. We’re creating awareness in the digital space and weaning ourselves off the dependency on print advertising.”

newsfeed evolution

Nathan Chan, publisher of Foundr, an online-only magazine

Nathan ChanFoundr is a magazine devoted to young aspiring entrepreneurs. The focus of the magazine is to show you what it takes to become a successful entrepreneur.

“I didn’t have a lot of baggage to get over, or any transition to make. I have no history in the publishing business — I’m an IT guy and I started the magazine four years ago. What I carved out is something that feels right to me.

“Today, you don’t just have a magazine, you don’t just have content, you build a multi-faceted brand. The magazine is a great influence-builder for us but we are constantly re-purposing the content in our podcast, social, blogs, educational courses, premium content for a membership site.

“Our core business is not the magazine. Our core business is the content and being very, very good at leveraging that in different and creative ways. Our new project is taking some of our best content and building it into a beautifully-designed coffee table book that can stand the test of time. We may look at what the Harvard Business Review does in bundling content into short paper and electronic books.

“I agree that Facebook and Apple are taking over content distribution and threatening the direct relationship we have with our readers. So we have to have extra effort to engage with readers and build up our email lists. You need to maintain that direct relationship to succeed. Probably 99 percent of our content is free, so we’d like to have at least 1 percent of our readers buy something.

“I don’t believe we need to be everywhere but we have to master each channel one by one. We have had a lot of success on our blog. It has been the source of a lot of great content. We’ve been seeing success getting exposure on Instagram, now.

“Our strategy is focused on premium, long-form content. We don’t take any shortcuts. And we are being very successful with that.”

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Common themes

Here are some of the key take-aways, which are probably applicable to bloggers, podcasters, and publishers of every size entering the newsfeed evolution:

  • Branding is more important than ever. Strong names like The Economist and Ebony command attention in any channel.
  • Turning content over to Facebook or Apple not only jeopardizes economic models but also dis-intermediates the direct customer relationship. Publishers need to get creative to find new ways of maintaining a direct connection to their readers.
  • Publishing in newsfeeds won’t make up for subscription and ad revenue losses but this is where the new readers will be. A strategy would be to use these channels for brand-building like W, and provide highly-engaging content that would prompt a reader to go back to a website for more.
  • Publishers need to shed the idea of having a “publication” and embrace the transition to a multi-faceted, multi-media brand (Examples: A New Orleans newspaper has started a profitable speaker’s bureau for its reporters; The New York Times offered readers a paid event where they could watch election returns with their political reporters).
  • New economic models are required that might include licensing and re-bundling evergreen content into new forms.

The newsfeed evolution should be very interesting indeed. What do you think? Have any thoughts for the comment section?

Update: In December 2016 TeamRock declared bankruptcy and folded despite the fact that their site was receiving more than 3 million hits per month. 70 employees were discharged without warning or severance pay.

SXSW 2016 3Mark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant.  The Marketing Companion podcast is among the top business podcasts in the world.  Contact Mark to have him speak to your company event or conference soon. 

Illustration courtesy Flickr CC and Irina Slutsky

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  • Hi Mark,

    Great insights! I love the focus on branding. People remember brands. They may not remember businesses but do remember brands, built around 1 core theme. I thoughtfully built my blog and all of its elements on a brand. Which attracts readers in increasing numbers 😉 Thanks for sharing!

    Ryan

  • Steve Woodruff

    Many of us rejoiced in the disintermediation of content publishing/access over the past 10-15 years. Now we’re heading back to re-intermediation – just new hands (Facebook, Apple, etc.) on the levers?? Ugh.

  • Yes, I believe you have that right, Steve.

  • Well. We’re so happy for your blog! : )

  • Thanks for digging into this important topic, Mark! Facebook, Apple and (I’d argue) Google are trying to take over (and control) content distribution. But from what your results seem to indicate, publishers are not necessarily accepting this. What’s really interesting about your findings is that they are stepping up their efforts to find alternative solutions to the overall problem. Arguably the impact of social media on the publishing business has been “creeping” up incrementally on these folks for a while but now these three big guys are really increasing the impact. Maybe this is the catalyst needed to drive publishers (and users) to actually address the issue. One can only hope (unless your Facebook, Apple, Google etc. of course).

    The one point you did call out this really intriguing to me is the fact that 60% of publishers are seeing little monetary value. It would be interesting to know why relative the 40% who are. The answer to the question could easily be the secret that helps address the issue.

  • Good question. Might need to dig into that!

    I have had the opportunity to meet a lot of great people in the publishing business over the years and I think that overall they have tried to deal with this aggressively. But in addition to the obvious challenge of losing much of their revenue, they have had to deal with the speed of that change, huge infrastructure issues, cultural issues and the fact that Facebook can’t seem to really figure out what they want to do. Not an easy business. Thanks for the great comment!

  • Thanks Mark, I’ll be interested to hear what you find out. LMK if I can be of assistance!

    But, I do believe in one thing and that is Facebook and the like absolutely know exactly what they want to do and are taking continual steps to accomplish just that. It’s the same strategy certain unnamed major retailers have been executing on for a long time, crushing competitors, suppliers and to a great degree, our economy for their own short term gain. What I liked most about your post was the point that many of these publishers are now understanding they need to go to where their readers are. And, are learning that where they are and how to reach them may not be where & what they’ve been lead to believe.

    And, you are absolutely right! It is not an easy business, no differently than it has ever been (pre and post internet). So to assume that throwing all of their cookies (pun intended) into a few jars has never been, nor will be, the answer.

    Years ago, the predecessor to the FTC (https://en.wikipedia.org/wiki/Presidency_of_Theodore_Roosevelt) dealt with monopolies for much the same reason and as those regulatory bodies catch up (as they are slowly doing) to the new age, a lot of this will be cured. In the meantime, IMHO, those businesses who can figure it out in advance of regulatory influence may win big as they will capitalize on this eventuality.

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  • The problem is not the aggregation of content through Facebook et al. The problem is a business model that depends on advertising, and on drawing people to your site so they see it. The feed scrapers are a platform, and their value is in presenting a variety of information in the way people want to consume it. You can’t opt out of that, unless you have an extremely narrow niche high-value product (like The Economist) that people will seek out no matter where it is. And, I’d argue that even The Economist shouldn’t opt out, because they’re cutting themselves off from future readers who don’t know the quality of writing and value of their content.

    The problem most publishers have is undifferentiated and low-value content. Think about it — how different is the news you see in Time, Newsweek, People or BusinessWeek? The differences are almost entirely in what they choose to curate from their feeds (Reuters, AP, Businesswire, etc) and their page design and photography. That means they don’t have the same options as The Economist (or WSJ or FT or Washington Post). In the modern world, if they aren’t adding more value than that, they don’t deserve to survive.

    The reality is that for most publishers, your content IS your advertising, and you need to figure out a different way to monetize the value you’re providing through that content outside of advertising. Putting up paywalls or hoping that there will be some pass-through from Facebook is effectively writing your own epitaph, because you are both cutting off your audience and your revenue stream if you persist in believing that you can force people to consume content via 19th century business models.

    Consider pop musicians, as an example. In the 1970s, a mediocre album could sell millions of copies. Live performances were essentially break-even advertising jaunts to promote record sales. Today, mainstream music listeners don’t buy much music, or they pay a lot less if they do. Live performance is where all the money is (the part that is the ‘experience’ and what’s unique), and dropping a new album is about promoting the tour, and hoping you’re close to break-even on sales and streaming royalties.

    To varying degrees, the journals you chose to interview are mostly niche providers serving specific communities with their content, and to the degree that those communities view that content as unique and essential, they will keep their audiences if the business models chosen make sense to their readers (not to the publisher, because the publisher can’t force their target audience to do what they feel is ‘right’). Branding is important only inasmuch as the brand promise is delivering the expected value and user experience. The other (traditional) aspects of brand, such as look and feel, positioning, messaging, etc are much less relevant.

    There are many, many other ways to make money than advertising, and publishers need to evaluate the core value that they offer and consider the best and most natural alternatives to advertising. Advertising, frankly, is a drug. It’s the easy money, but not necessarily the best way to earn it and be strong, and that fix is going to be very hard to come by anymore. If you think of your content as the advertising for your real product, then you could be selling books, conferences, public appearances (speaking engagements), education, t-shirts/posters/other collateral, consulting services, market research, analytics, financial services, sponsorships — the list is almost endless. If those other things are where you make your money, your content will also likely improve as its focus becomes more what your readership needs/wants rather than what advertisers want. Advertising, if you can still get any, is simply about defraying costs, or one of many revenue streams, but rarely the most important.

    If you can’t find an alternative business model that makes sense, then you won’t publish anymore, and that might be a good thing. Transition is always painful for those who’ve always done things a particular way and built all their assumptions around a particular model. But, none of us can stop the world from changing, and success goes to those who adapt and understand the job their users are trying to get done and what part of that they’re willing to pay for.

  • I agree with much of what you say here but here’s what pushes my hot button — an implication that publishers have been lazy or stupid because they have too-long relied on advertising for much of their revenue. Is Facebook stupid? Is Google? Guess what? They’re in the same boat. More than 90 percent of their revenue comes from ads!

    It is far too simplistic to suggest that many of these traditional companies — run by experienced and passionate people — have been negligent by letting the world pass them by (of course some have). You suggest that there are lots of ways to make money. Yes, there are. But there are few that will make up the huge revenue losses provided by advertising … as facebook may find out one day when it is dis-intermediated. You can’t make up that kind of a loss selling t-shirts. If there were a near-term solution we would have found it by now after 30 years of the web. Content is funded by ads. It was 100 years ago. It is now with Facebook and its brethren.

    I think the other thing that is overlooked in these arguments is what is being lost. Thousands of professional journalists are losing jobs. They are not being replaced by a “great journalist” equivalent. And don’t get me started on the music industry. How many stars today started on the Internet? I can name one – Justin Bieber. We are losing entire genres of music. The fact is when musicians can;t make steady money through their content, very, very few can make a living on t-shirts and touring (and I have been a first-hand witness to the devastation in that business).

    We can’t stop technology but this does not mean the consequences of technological innovation is always good. We are faced with a world of really lifeless, soul-less content made by bots. We are entering a Wal-Mart world of content. The “boutique” content and music is slipping away and the mega-store of content has set up shop. Quality newspapers are dying and with them great and important journalism; the beauty of a magazine is dying, replaced by blocky gray newsfeeds.

    Reality? Yes. Progress? Not necessarily when we replace great with cheap and convenient.

  • I never said anyone was lazy or stupid, nor did I imply it. Unprepared for change, unable to adapt, victims of disruption by business models they can’t compete with — all these are true. Sometimes you are bound by a cost structure and set of processes and a culture which prohibits change (and often this IS the reason incumbents are disrupted). This doesn’t imply stupid, especially since business schools have been teaching organizations to manage in a way that makes them susceptible to these problems since the 1950s, but it absolutely suggests that people need to think differently and respond.

    The thing is, no company is entitled to survival. No company is entitled to have their business model work in perpetuity. No company is entitled to fat profit margins. All of us have the right to try to improve and compete more effectively, and that means when there are winners, there will often be losers. There are ways to make yourself more adaptive and better prepared for this kind of change, and I don’t deny that these necessary changes are painful when they are forced on you. C’est la vie. The world changes, and lamenting the change isn’t going to make anyone better off.

    I have a predisposition to dislike advertising. I think most consumers do, even if they tolerate it. In my opinion, poor implementation of advertising is one of the reasons that Twitter is struggling (there are many reasons, but ads really interfere with the reason people use the tool). Is Facebook wrong for building a model around ads? I guess it’s working for them, but frankly, they are missing a much bigger opportunity, and ads are harming engagement on their platform as well (and causing young people to abandon Facebook for alternative social media). Ads are more appropriate as a model for Google, since a big part of the reason people search for things is they are looking for things to buy, but even there, ads are far more intrusive today than they were 5 years ago, and diminish the experience unnecessarily. We can’t all build business models around selling ads to each other — somebody has to make and sell things of value that consumers are willing to pay for.

    So when I say ads are a drug, take it with a grain of salt. I understand different perspectives, and I understand that the money is hard to replace (just like the high when a junkie goes into withdrawal). But, as I said, it’s not an entitlement. The world has changed, and that probably means that publishers’ products need to change, along with the rest of their business model, or many will die. It’s natural selection, and it’s inevitable.

    I would challenge your assertion however that ‘great’ needs to be replaced with ‘cheap and convenient’. Most publishers aren’t great — most are mediocre to bottom of the barrel. There are a few newspapers that are still great, but many others that should fail. The great ones need to understand what their value is, and why people choose them, and build business models that are different from how they’ve previously done things. And many more should view the changes happening in the world as an opportunity rather than a problem. There are new companies starting with nothing every day, experimenting with new business models and succeeding on a global scale in a way that most publishers never have.

    This isn’t news. Everyday, people face functional obsolescence and unemployment when their skills are no longer relevant to employers. If they don’t keep up with change, continuously retrain for new roles, and adapt, they won’t have jobs to do. Similarly, publishers need to face the reality that what they know, and how they’ve succeeded in the past is different now. It just is.

    And, I don’t agree at all that people have spent 30 years trying to find a better way. Publishers have spent most of the last 60 years trying to avoid changing. That is what incumbents who are being disrupted do. Has a single one changed their business model materially? Content does not need to be supported by advertising. I write content. I don’t take or want ads.

    To your other points:

    – journalists losing jobs. Yup. That’s life. They can be independent contractors, or write something else, or create a new business model themselves. We don’t need as many journalists today, sorry to say. We still need writers and content creators in lots of other areas though. The steelworkers and autoworkers and furniture makers who’ve lost their jobs over the last 40 years will all commiserate with you, but the jobs aren’t coming back. The job I did 30 years ago isn’t coming back either.

    – musicians. Justin Bieber did not start on the internet, although he did figure out how to make it work for him. So could anyone else. The fact is, musicians have adapted to the new reality rather successfully for the most part (some haven’t), although the publishers (labels) are still resisting change. Genres don’t disappear because of changing business models — they disappear because insufficient people are interested in them, or because the artists stop creating for them. Again, that’s about the “job to be done”, and it’s driven by consumers, not by you or me wishing for something different. Besides, I’m OK with disco being gone.

    Finally, the thing to remember about technology is that it is neutral. It isn’t good or bad, and it doesn’t necessarily replace the “less advanced” tools and ways of doing things. Technology is an amplifier, and a enabler of new business models that allow us to do more with less or get more of what we really want. Lots of advanced technologies fail — in fact, more than 99% of startups don’t make it to their first birthday. When old things disappear, it’s not because of evil technology, but because millions or billions of us made a choice to do something differently and spend our money elsewhere because it provided more value to us. Journalists and publishers, just like everyone else, need to consider what their value is, and how much of that value they can capture from consumers if they want to keep going. There was a time when there were no newspapers, no magazines, and no journalists. The need for those things is not preordained.

    btw, a free tip for publishers. When people want to sit down and read something, they still overwhelmingly prefer paper (which supports the old business model). When they are skimming, doing stuff for work, or searching, they prefer online. People reading newsfeeds on Facebook are grazing — they would never look for Time magazine and read it cover to cover online. Publishers should view themselves as curators of quality, and packagers of the essential things I need to know today or this week. They are the mavens, or the arbiters of what is important in a domain, and if anything, they should do that to a higher quality standard than they’ve done historically. If they provide sufficient value that’s relevant to me, I’ll buy the magazine or paper. (And in this role, publishers are better off serving their target audience only, rather than targeting what advertisers demand). At the grazing level, there are opportunities for traditional journalists, bloggers and others to feed the stream, but for that to work we require a micro-payments model, similar to how ASCAP and BMI collect royalties for musicians based on airplay. The industry could form such an association itself, and compel Facebook and others to pay a small amount each time the content is served — I don’t see any other way going forward that ensures content creators are paid for content directly.

  • I don’t recall you commenting here before but I must say that I am impressed and grateful for this very well thought-out dissertation. I actually do not think we re too far apart in our views.

    I would like to challenge you on two points.

    The musical biopic was once a vital film genre. One of the reasons it was so successful was that film producers could make profits from a soundtrack, which supported licensing fees, which supported artists. Because nobody can make money from a soundtrack any more (music is free) the genre is dead. I recently read that a biopic of Jimi Hendrix could not use his music in the film because they could not afford the licensing costs. In short, this genre, and others, is dead or dying due to economics, not consumer choice. The economics are driven by disruption and frankly, unintended consequences.

    On the second point. Is a law neutral? No, it isn’t. It is something created by humans that has a purpose and a consequence. Some people will hate it, some people will love it, but it is not neutral.

    It is politically correct in the IT world to declare that technology is neutral. It is how humans apply it that mess things up, as if we are corrupting some inherent purity.

    But like a law, technology is created for a purpose that creates consequences. Some of those consequences we may assign a positive emotion, some of it might create a negative emotion, but something is good or bad because we name it that way. I would say technology is rarely created without a purpose and consequences and that will create a judgment.

    Once again, thank you very, very much for your very professional and intelligent discussion. I hope you’ll come back to this blog often.

    PS Justin Bieber did start on the Internet. His mom made videos of him and they went viral. : )

  • Some very interesting points. Regarding the FTC, clearly the laws are not keeping up with the tech or the consequences. Nobody in our federal government (or yours!) understands what is happening with tech. I know this is an unpopular view but there needs to be more regulation around tech (and security for example) but I truly believe most lawmakers don’t even know what questions to ask, let alone what laws to propose. Here is a prediction. There will be some hack that significantly disrupts national security that goes public. That will be the condition that forces an international debate.

  • So, it’s a small point, but Bieber got his start competing on Stratford Idol, a small local Canadian version of American Idol. His mother posted a video from that competition (he placed 2nd) on YouTube, which was seen by Scooter Braun, and that’s how he got into the business. Bieber didn’t actively try to court a record deal via the internet — it was a happy accident. Don’t ask how I know this — I recall seeing it on tv many years ago, and thinking it was funny that such a sugary bad pre-teen pop singer got a deal from a poorly shot home video because he was photogenic rather than particularly musical.

    I don’t agree that money can’t be made from movie soundtracks, or that music is free. If biopic makers don’t feel they can afford licensing costs for the music, that’s a business decision by the copyright holders and the accountants/producers of the movie. There is nothing inherent in the form or the economics that prevents the film from being made, rather it’s about lack of creativity in finding a business model that works, or unwillingness to negotiate a price that both find acceptable. Economics have changed, no doubt, but a great movie will sell tons. Ask this: how much are copyright owners making by NOT licensing the music? This suggests they simply don’t want to, or want far too much, or the buyers have a maximum they’re willing to pay. It has nothing to do with disruption (although you inadvertently have hit upon a key attribute of disruption that most overlook — it’s about economics, not technology).

    Also, it’s important to distinguish between technology and products — it’s easy to co-mingle the ideas (and most people do). TCP/IP is a technology. HTML is a technology. Technology is a tool, or the core that we use to create products and services such as Facebook. The technology is an engineering invention which can be applied in myriad ways — to enable Donald Trump to send tweetstorms at 3 a.m., or for doctors to perform remote surgery — both using the same protocols. We choose to apply things for good and bad, and these aren’t absolute concepts. From Trump’s perspective, and his supporters, what the platform enables is a good thing; to others, not so much. We have to remember that individual perspectives are what inform the goodness of a utility. Is atomic energy good or bad? Depends on who is evaluating, for what purpose, and at what point in time.

    Products are envisioned for purposes, but frequently the use cases that the market adopts them for are very different from what the innovator conceived. A trendy word in Silicon Valley is ‘pivoting’. That’s because most of the time, innovators don’t even know how or why their products will be used, but rarely does anyone set out to create something evil (OK, hackers creating spyware, or advertisers building tracking technology might qualify, but they are definitely in the minority.) On the other hand, the first computers were originally built for the military to do more accurate and quicker calculations of ballistics tables to aim mortars and missiles, and they’ve certainly developed beyond that for lots of unambiguously positive uses. So, when I say technology is neutral, I think it’s easy to back that up. How we apply it, sell it, regulate it, and pervert it is up to us.

    To your point about laws, it’s apples and oranges. Laws are always written with a motivation to control or regulate or permit something, and carry punishments for those that run afoul of the rules. The people who write them think they’re doing something good, but often those who disagree think the opposite. Taxi regulations, for instance, were originally written because city fathers thought too many people during the depression were flooding the streets looking for fares and wanted to control that. Drivers just wanted to earn money to eat and support their families (presumably a good thing). It was presented to the public as a good thing for consumer safety, standards compliance, and licensing (revenue generation), but it prevented lots of people from earning money for food. Clearly there were many less honorable motives, and today those same regulations are used to beat up innovators like Uber who are providing superior service at lower cost and satisfying unmet market demand. Technology isn’t designed with any implicit motivations the way laws are, even when it has negative externalities (which aren’t usually obvious at the time of invention — the engineers who designed email protocols never envisioned a world where we would all use computers and email, and certainly couldn’t have imagined the plague of spam that we have today, which is why there’s nothing built in to prevent it).

    I don’t subscribe to political correctness. Hopefully that’s obvious from my comments. Humans are not universally corrupt, but we definitely pervert things and misuse them. It only takes a minuscule percentage of bad apples to do that, and if it can happen, it will happen.

    Regarding coming to your blog, I hadn’t ever encountered it before. Despite disagreeing with you on a few points, I found your writing to be well-crafted and thoughtful, and worth responding to. Although we can do almost anything today, we rarely discuss whether we should, and what the impacts are on people. Most blogs today don’t provide much value or make people think, so compliments back at you. My dissertations aren’t particularly thought out though. More stream of consciousness and reactive.

  • Thanks Mark! Governments globally are lost when it comes to this kind of stuff, no question! And, I totally agree (always have) that the problem will become front and center when (not if) something of major consequence happens. It’s just unfortunate that even though we all have the fundamental concern, it will not be addressed until it becomes a crisis and then it’s too late. But again, those the figure it out now (in advance) will win big given the expected eventuality.

  • Indicting filmmakers for “lack of creativity in finding a business model that works” see, there you go again. Sometimes there IS NO MODEL. That’s the hot button that drives me nuts. There are so many smart people out there trying to make a buck. That’s the beauty of capitalism: If there were alternatives, they would be found. What’s the model? Let me guess. Tee shirt sales. You’re again implying (not saying) that experienced, professional, passionate, creative people are failing because they’re too lazy to find alternatives. Dammit, sometimes there are no economic alternatives. Sometimes technology kills stuff. Great stuff. We live in a world of unending unintended consequences because it is cheaper to create and enact than test and think.

    And your other major point, “Technology isn’t designed with any implicit motivations” just seems … strange. I would guess a very small percentage of technology is created for non-economic, altruistic means. Technological development must be funded, and only funded if there is going to be a return. And that means there’s an agenda.

    You use Uber as an example. Uber would not exist without an economic agenda. People do not create technology that has no purpose. Where there is purpose, there is an agenda.

    WalMart was built on disruptive supply chain technology. It killed tens of thousands of small local businesses. Was that good? Was that what people really wanted for their communities? Were the family businesses who failed lazy because they didn’t find an alternative economic model that could compete with WalMart? It is simply wrong to think that technology is neutral and without consequence, and that there is room for everyone if they just work hard enough. You are issuing a rose-colored view of the tech world. There are winners and losers — real losers, not lazy ones — in the wake of disruption.

  • Hey Mark,

    I thought we were close, but we’re probably just going to have to agree to disagree. In my experience, the evidence for what I’ve suggested is pretty strong. There’s nothing personal about this — I’m certainly not “indicting” anyone. However, when faced with a binary choice, it’s always one or the other.

    re: filmmakers. As I noted, the problem could have been on the other side — unwillingness to negotiate a deal at any price. Economically speaking, that doesn’t make sense, but it’s possible (in which case, it isn’t a general genre problem, but an issue with the holder of those rights). If the problem wasn’t the copyright holder, then the filmmaker was either unwilling to figure out a way to make it work, or they assessed that there was insufficient market opportunity to take the risk. If there is truly no market for such a product today, then that would be the only reason there is no model that works. I don’t believe the evidence supports that contention.

    re: technology. Uber isn’t technology, it’s a product/service. As I explained above, there is a difference. Uber was clearly designed as a business venture with intent to make money. If that’s your definition of “having an agenda”, then I’d have to agree with you that Uber had a purpose and a problem to solve (although the problem they set out to solve wasn’t “making money” — that’s an outcome, not the raison d’etre.) That is a trivial example however, because I suspect that we all want to make money (rare exceptions like Mother Theresa notwithstanding). For most of us, that isn’t the driver of decisions, nor is it a corrupting influence EVEN WHEN there is a direct conflict of interest to navigate. Technologies have applications, but they don’t have biases or intents. Those come from the people that use them, and how they are applied.

    Most technologies arise from pure scientific exploration, which rarely has any motivation other than discovery of new things and how the universe operates. Even in an extreme case, such as research funded by the military, most of the technology that comes out of that research has more peaceful positive uses than applications that involve killing people, suggesting that the tech is neutral — only the application is not. The distributed and open architecture of the internet is a great example of this, and most don’t even realize that it was originally funded by the DoD.

    re: Walmart. Walmart was not built on a “disruptive supply chain technology”. For starters, no technology is inherently disruptive, so on that alone, it’s a false statement. Secondly, Walmart was “built” on a business model, long before they applied systems to improve it. The business model was simple: offer everyday goods that people need at the lowest price possible. To do that, Walton understood that he needed to sell from inexpensive locations, buy in large quantities from low cost suppliers, and optimize his logistics. The software applications Walmart built that helped them manage their rapid growth through the 80s and 90s were more about distribution logistics and ensuring that inventories were replenished as efficiently as possible. Supply chain wasn’t even an issue until much later when much of their merchandise started to be sourced from China and other low-cost offshore locales.

    Was it good that smaller businesses with higher costs failed to compete effectively with Walmart? That’s a philosophical question of economics that has little to do with Walmart. It was certainly good for consumers to be able to buy things at a lower cost, or they wouldn’t have overwhelmingly chosen Walmart over the mom-and-pop retailers that were forced out of business (although in fairness, that’s how Sam Walton began — as a small retailer who kept prices low, and costs lower. Anyone else could have replicated that model if they had chosen to.) It was less good for the retailers who couldn’t compete with inefficient business models.

    Whether you like or dislike Walmart, it’s hard for me to say that consumers should pay higher prices to subsidize the existence of higher cost retailer. To give that kind of preference is suggesting that the small guy with high prices is somehow morally superior to the big guy with low prices, or otherwise deserving of handouts. As long as both are operating legally, that’s a decision best left to individual consumers, regardless of whether any of us prefers one outcome or the other. The question of good or bad isn’t for me to decide, except that I have the choice to support the little guy if I want him to viable. In most cases, the market said it didn’t care, and preferred lower prices.

    Would you prefer that Walmart didn’t invest in systems, operated less efficiently and charged higher prices? That doesn’t seem good for anyone. But it is patently wrong to blame technology for putting small retailers out of business. The respective business models of Walmart and the small shops were the determinant. And significantly, there are small guys who’ve been able to compete with Walmart on their doorstep and continue to thrive — again, with a differentiated business model that their consumers prefer.

    re: laziness. That’s a pejorative value judgment that I have never said or implied, although you’ve tossed it my way twice. More likely the failing is closed-mindedness about the “right way to do things”. Incumbents get disrupted because they won’t change, or sometimes can’t change, or because they don’t recognize change is coming, and wait until it’s too late for change to matter. That’s part of being business-smart, resilient, adaptive and always ready to take on new competition. Lazy people can fail on their own, and don’t need disruption to help it along.

    re: disruption, and winners and losers. Disruption always creates winners. It doesn’t have to create losers, although it usually does. The disruptor and disrupted both make choices every day that they are free to make which either enhance or degrade their ability to compete when things change. Most business that are victims of disruption have created processes and cultures that are rigid and therefore vulnerable, have anti-customer policies, provide poor service, charge prices that are too high, or won’t consider alternative ways of conducting business that consumers prefer when offered the choice. There are strategies they could employ to fix all of these, and we know enough about how disruption happens today that it is entirely predictable, and thus avoidable if you educate yourself about its causes and how to deal with it. I can sympathize with the plight of people caught up in a dying business or industry, but not the business entity or managers who enable it to happen.

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