Media business models need urgent attention
Australia’s mass media need to overhaul their business models if they are to survive.
Managers have neglected business models appropriate for the digital economy, such as de-bundling and re-bundling of content to cater for digital natives. An example of de-bundling would be isolating a single song from a CD, or a single article from a newspaper. Re-bundling involves selling collected pieces of de-bundled content on different platforms.
Professor Arne Krokan of Norway’s University of Science and Innovation said technologies to re-bundle newspaper content and enable micro-payments online or via mobile phones were available “but they have not been embraced”.
Professor Krokan, who consults to media groups in Scandinavia, told the first Australian meeting of the Association of Internet Researchers that newspaper companies around the world had been slow to benefit from the digital revolution.
In Australia media companies move dated content from newspapers and broadcast outlets to web sites. This is shovelling, not re-bundling.
Newspapers also refuse to de-bundle in the physical world. Why not sell separate sections? As soon as I buy weekend newspapers I discard the sports, recruitment, cars and real estate sections without opening them. Why not sell only the business or sports section to interested readers? Just as Apple sells single songs via iTunes.
A song can be replayed and enjoyed several times. Would this happen with single pieces of journalism? Perhaps the answer is a reflection of the quality of some newspaper writing. Or perhaps people perceive newspaper content as ephemeral, the sort of mindset that sees newsprint as wrapping paper for tomorrow’s fish and chips.
Much of the success in the digital world relates to perception as much as reality.
Professor Krokan said convergent technologies permitted new media services. It was important here to understand the whole picture or context. “We need to take into consideration a range of factors including available technologies, changing markets and consumer behaviours, the influence of geography (local is becoming highly popular because of its ability to provide unique content), consumers’ knowledge and competence, variations of culture, and digital business models.”
The main driving forces in the digital economy were convergent technolgies, changing consumer behaviour and deterritorialisation. In the last case, this is where multi-national companies sell into domestic markets. “Amazon sells more books in my country than the combined sales of the three largest Norwegian bookstores. The market is worth about $US 20 million.”
An example of convergent technologies is IPTV, or television available over fast broadband, which undermined the business model of commercial free-to-air TV networks.
European newspapers had started to offer services beyond news to align with changing consumer desires. One of the most popular sections of some papers is a weightwatchers’ club, for example.
Professor Krokan said another feature of digital services was the blurring of the roles of consumers and producers. Consumers were fast becoming producers of content. “In Norway, people take videos with their mobile phones and post them to newspaper web sites.”
Dr Axel Bruns of Queensland University of Technology said citizen journalism provided an example of this blurring of roles, for which he had coined the term “produsage”.
A variety of citizen journalism models had emerged, but “produsage” had some key characteristics. These included content generated by average citizens, limited editorial oversight, continuous updating, more comment and debate than in mainstream media, and multiple perspectives for stories, Dr Bruns said.
Some of the best-known examples included OhMyNews in South Korea, Kuro5hin, Plastic.com, and the Al Gore-funded Current TV. “We see constant and collaborative evolving of content,” Dr Bruns said.
Progressive media such as the BBC were adapting their business models to accommodate changing audiences, and this provided an example of “harvesting the hive” – taking advantage of the vast content that citizen journalists produced. But the long-term economic sustainability of this model remained a “significant question,” he said.
Professor John Hartley of QUT said the business model for broadcasting needed “a makeover”. “Broadcasting as we know it is over.” TV was heading into a post-broadcast phase, driven by the Internet. “Mass media do not last forever. Some simply go away.”
Young people were becoming “produsers” via Internet sites such as MySpace, Flickr and YouTube.
Australia needed faster broadband services to accommodate this change. “We must revise our view of creativity, and revise the broadcast model of creativity, which leaves the general public sprawled brainlessly on the couch.”
* Published in the Bulletin of the Pacific Area Newspaper Publishers’ Association in January 2008.
Broadband disrupts business models
The spread of fast Internet is bad news for the business models of traditional phone and media companies around the world.
Even with slow ADSL I make Skype calls internationally for a fraction of what I would pay phone companies for the same talk time. Skype is free software, downloadable from the Internet, which lets people phone anyone else with Skype for free. In April last year (2007) Skype passed the 100 million user mark. On any given day in early 2007 about 8 to 10 million Skypers were online.
If the Internet connection is relatively fast Skype provides good voice quality. If the other person does not have Skype, it is still possible to phone them cheaply by depositing money into an account via credit card. Calls from Australia to non-Skype users in most developed countries cost about three cents a minute. The $16 I deposited last July has allowed me several hours of talk time all around the world.
The technology behind Skype is voice over internet protocol, or VOIP. US broadband management company Sandvine reports that Skype accounts for almost half of the VOIP calls in North America. Skype also has call forwarding. So when I’m travelling I can still receive calls on my mobile even in areas with no Internet access. Skype is currently working on video phone calls, voice-to-text and voicemail-to-email translation.
Around the world, private companies and groups are setting up free wireless networks in cities or parts of cities. Google has offered to provide a free wireless network over the 49 acres of San Francisco at download speeds of 300 kilobits a second. That’s faster than the 256 ADSL Telstra sells me for $60 a month. In reality for rural folk like me, the 256 kilobits a second is usually 120-140. My American and European friends always phone me via Skype because it is free. Imagine the telephony possibilities when you have wireless Internet.
Meanwhile, media companies are investigating television delivered via the Internet, known as internet protocol television, or IPTV. Last month (subs: Dec 05) Rupert Murdoch swapped his shares in DirecTV, John Malone’s satellite TV company, for more of his own News Corp shares. It was the clearest sign yet of how much Murdoch thinks high-speed Internet will change the television business. IPTV lets people view high-quality video online. Murdoch acquired his interest in DirecTV in 2003 after years of bitter wrangling. Satellite distribution helped fuel the popularity of News Corp’s television and cable content, such as the Fox News Channel. But satellites are expensive. It costs about $US 300 million to build and launch each new one. NDS, a News Corp subsidiary, is developing IPTV technology. It already produces technologies for securing transactions over wireless networks.
Technology also changes the business model for free-to-air commercial TV. Personal or digital video recorders (TiVO is the best-known PVR in the US; Foxtel’s iQ in Australia) allow people to record programs on a giant hard disk. PVRs let audiences skip advertisements as they play back programs. Given that commercial TV and radio get their revenue from ads, the arrival of IPTV or Internet radio makes the traditional business model look ill over time. Late last year channels 7 and 9 in Australia refused to air commercials for a model of LG plasma television screen with a built-in digital video recorder. The Multi Channel Network, which represents the major pay-TV providers, also tried to censor the commercials. When the advertisements were eventually aired, the offending line “And when you replay, you can skip the ads” was replaced with “And when you replay, you can skip straight back to the action.” Colin Segelov, executive director of the Australian Association of National Advertisers, told industry magazine B&T that the ban was “understandable”. But he said censorhsip was contrary to the long-term interests of the advertising community. The industry would learn to live with commercial-skipping technology the way it had learned to live with the remote control, Segelov said.
The business model for music-format commercial radio is also in trouble. Why would a teenager endure advertisements on their FM radio while waiting for a favorite song when they can download music to their iPod? Whither the companies that spent millions for licences a few years ago?
The key unknown is the time frame for the disintegration of these business models. In 1992 Paul Saffo, director of the Institute for the Future in Palo Alto, California, proposed his 30-year rule, suggesting it takes a generation for a new idea to fully permeate a society. It took the Internet, which started in 1964, about a generation to become a part of our lives. But we are living in an age where technology is shortening the time frame.
* Published in The Age January 2008
Al-Jazeera reaches multiple audiences
Friday April 24th 2009, 10:50 am
Filed under: television
Al-Jazeera is the fifth most recognised brand in the world and Mohamed Nanabhay, head of new media, plans to make it even better known by connecting with a range of new audiences. The only other better-known global brands are Apple, Google, Ikea and Starbucks.
In a world of information overload with thousands of competing television channels, Nanabhay’s brief is to get Al-Jazeera’s content to multiple audiences, he told a capacity audience at the XMediaLab conference in Melbourne. “My job is to produce content that appeals to the next generation of consumers.”
Audiences have embraced the notion that sharing is cool, along the way creating new business models. The line between professional and amateur content is blurring and traditional media face competition from scores of niche players, Nanabhay says.
“It is the age of do-it-yourself television.” Nanabhay cited vidding and machinima as examples in a wide spectrum of DIY TV. Vidding occurs when fans create music videos by combining clips from their favourite TV shows, anime series, movies or DVDs. The results are also known as songvids or fanvids. Machinima arose out of online games. Gamers apply traditional film-making techniques to a virtual environment, using powerful computers to create 3D animations to tell stories.
Samples can be found at Nanabhay’s blog. These new media forms created many challenges, including the issues of licensing and copyright, which “would not be fixed for a long time”.
DIY TV on platforms like YouTube will “slowly chip away” at Al-Jazeera’s audience unless the broadcaster finds ways to embrace audience-generated content, Nanabhay says. Mainstream media like Al-Jazeera need to find ways to remain relevant in an environment of multiple voices.
Al-Jazeera manages change by embracing audience-generated content, and stationing people in “hotspot” areas of the world. It also employs technology to get news to its audiences. “We have deep knowledge of our region, and we station people in places where news occurs. We have a lot of people in Africa because it is a place where things are happening.”
Al-Jazeera has 62 news bureaus around the world, and more than 2000 staff. It has focused on technology and innovation. For example, it was the first cable news channel in the world to broadcast in high definition.
The experiences of two Al-Jazeera reporters, Baiba Ould Mhadi and May Ying Welsh, illustrate the use of technology to get news from isolated regions. As part of a special series the reporters travelled across Mali and Niger in the Sahara desert to cover a conflict involving uranium, the environment and the Tuareg, the nomadic animal herders who live in the Sahara. “They are among the world’s poorest people,” Nanabhay said. Yet their region contains some of the world’s biggest uranium deposits.
The reporters carried Nokia N95 mobile phones. They took high-quality images that were also geo-tagged, using the phone’s GPS function. This provided the exact location of where the shot was taken, which allowed Al-Jazeera’s new media team to plot the route of the reporters’ journey through the Sahara on an interactive map.
Audiences can follow the reporters into the heart of the conflict via Google Maps mash-ups. “The project was initiated by Al-Jazeera Labs to demonstrate some of the innovations coming out of our new media group,” Nanabhay said. “Keep in mind, though, that some of these tools are still in development.”
Nanabhay’s team is also looking at the potential of Twitter for newsgathering and the iPhone for distribution of news. Twitter software allows people to blog via their mobile phone, but with a limit of 140 characters for each post.
Examples of the Sahara photographs and the mash-up of the reporters’ journey can be found here.
* Published in The Age August 2008 after interview with Nanabhay.