Great experiences

I was in conversation this morning with a colleague who attended an event yesterday focusing on the book publishing industry. The general mood, he said, was that there was anger towards what the likes of Amazon and Google had done to the industry.

Media industries in general have, it has to be said, had a torrid time in recent years. At the root of it all, it seems to me, is one simple truth: in an age where any sort of information can be transmitted just about anywhere for marginal cost, the proprietary, medium-specific and closed networks that are at the core of traditional media businesses just don’t have value in them any more.

What do I mean by proprietary, medium-specific and closed?

Take newspapers for example: traditionally journalists, printing facilities, distribution and (for some) a closed retailing network (the old Evening Standard sellers spring to mind) generated revenue through the cover price and through the value of advertising space. The cost of entry for new competitors was very high and the alternatives (a daily shot of news or a daily provision of printed advertising to an audience) were few and far between. And, certainly before the rise of DVD, you couldn’t have used this complex and expensive channel to distribute video.

Or take telephones: a closed voice network, devices installed in a large proportion of homes and businesses. The value to customers being in being able to speak to others in real time.

Or the recorded music industry: a venture capital business making investments in a number of acts, some of which would be successful, most of which would barely break even. A content distribution and marketing model that got first sheet music, then vinyl, then CDs via shops into the hands of music lovers.

At the core of the disruption in all of these communications industries (and more) is that these days, with a connection to the Internet, and some (often free) software, it’s possible to distribute content of just about any sort anywhere in the world almost instantaneously and at relatively low cost (certainly at a lower cost than setting up a newspaper, telco or record company).

The knock-on effect of this is felt more broadly in other parallel industries: the marketing world, which for years has been intrinsically linked to the media world through the shared value in advertising space, is seeing huge disruption with changing consumer behaviours whether it be the emerging trend of multi-screening or the move away from reading news in newspapers.

I was working at the BBC in the 1990s when the first wave of the consumer Internet hit – Web 1.0 saw lots of talk about how “content was king”. Looking back now, I think that that view somewhat missed the point: content was the way in which one lured consumers into monetising the costs of closed networks (great content=valuable advertising space). With the rise of content-agnostic high-speed networks in the home, the challenge for media content owners has been that in many cases the unit cost of content has headed towards zero: if, for example, I no longer have a physical item that clearly symbolises some intrinsic value (like a book), I find it difficult to rationalise how the content on its own with no physical manifestation can cost the same*. This becomes increasingly challenging when non-media brands look to develop (free) content as a way to engage their consumers.

Maybe these days content should be replaced by experiences being king. Look at the way in which, for example, Spotify is extending music consumption to be a shared experience with friends through integration with social networks; or the way in which the music industry has become more focused on live events in recent years. Crafting great experiences, whether digital or real world or a combination of the two enables media organisations to provide a service to end consumers that is seen as valuable in its own right and therefore has the opportunity to be able to generate revenue.

*Actually I do get it – and the amount I spend on Kindle demonstrates that fact…