Ray Finkelstein and Matthew Ricketson are no doubt still infused with the sense of high purpose that comes to all inquirers as they begin inquiring, armed with a Terms of Reference and a small platoon of energetically capable public servant sepoys.
As conductors of the Independent Media Inquiry, Finkelstein and Ricketson have been asked to explore the regulation and business model of print media, including online publications.
They are Burke and Wills, cheered on by thousands as they confidently set out from Royal Park in Melbourne, followed by a train of sepoys, horses and camels.
And they will die in the middle of nowhere, tragically leaving their final report for Stephen Conroy under a tree marked “Dig”.
Their problem is not that the territory to be explored is a desert – quite the opposite – but that the destination keeps moving further away.
For example, it was revealed this year that if you exclude Facebook, internet consumption in terms of minutes actually shrank 9 per cent in the year to March 2011. Facebook consumption grew 69 per cent, and it now has 750 million users.
Social media – Facebook, Twitter, Google+, LinkedIn – has moved from being another web destination to fundamentally changing the nature of the internet. In other words, even before traditional media has learnt how to survive and make money in Phase 1 of the internet, it has moved to an even more difficult Phase 2.
The first chapter of the internet involved a simple but profoundly disruptive lowering of barriers to entry and the shift of power from producers to consumers.
This applied to many industries, but let’s focus on media, specifically print.
Newspaper publishers had built a great business constructing a daily package of information and entertainment that they were able to persuade themselves, their readers and their advertisers had a higher purpose: they were, after all, the Fourth Estate, defending democracy, as well as being the very glue of their community.
They did this from CBD citadels and dispatched the daily creations to a grateful public via newsagents. Publishers had no idea who their customers were; they didn’t want to know really.
It turned out, as Internet 1.0 got going, that they’re actually just producing a fast moving consumer good (FMCG) that had suddenly became both very competitive and disaggregated.
They had to fight for audience item by item, story by story, against global and local competitors and have had to scramble to establish a relationship with the customers, having first tried to find out who they are.
The customers, liberated from having to read one publisher’s package of stuff, skip from website to website, challenging the publishers to capture their attention for a minute or two.
Traditional media is all about channels: you get a printing press and distribution deal with newsagents, or a TV or radio licence, and off you go. In the digital world it’s all one channel: media is divided into single items that can be viewed alone.
As Ben Elowitz writes on the website paidcontent.org, “that means digital content has to earn an audience – item by item.”
Advertisers can suddenly see how many people looked at their ad, and then how many responded to it. Naturally enough, they only want to pay for results, and with so many millions of web pages available to them, they don’t have to pay much.
Thus the 'business model' has collapsed. As a result, the higher purpose is under threat along with the FMCG purpose. What’s to be done?
Let’s ask Finkelstein and Ricketson to look into it with a term of reference that says: “The impact of… technological change on the business model that has supported the investment by traditional media organisations in quality journalism and the production of news, and how such activities can be supported, and diversity enhanced, in the changed media environment.”
Meanwhile, the technological change itself is undergoing technological change.
The essence of social media is that not only are consumers now in control of what they consume, other consumers control how to get to them and persuade them. Distribution to people is now via other people.
In other words, having been one step removed from their customers, publishers are now two steps removed. Far more content is flowing between consumers than from producers to consumers; even if publishers knew and understood their audiences, which they don’t, they can’t compete with their audiences’ friends.
And the real power of social media is that it is an expression of an innate human urge – to connect, socialise and, most importantly, to trust other human beings.
As a result, Google itself is under siege. The past decade of the internet’s growth, and the challenge it posed for publishers, was defined by the incredible growth of Google and its search engine and the way it supplied traffic to digital media publishers.
In 2010, Facebook passed Google in terms of visits. It now gets three times as many minutes per month as Google.
Twitter said this month it now has 100 million users, which is an increase of 82 per cent since the start of this year. Think about that: it has nearly doubled this year already.
And 55 per cent of Twitter users do it on smartphones, which is the other, more general, revolution going on in the internet – the shift to mobile devices.
Pass the Nardoo seedcakes, Ray and Matthew.
This article was first published by Business Spectator on September 27. Republished with permission.
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Time for a social Media Inquiry
Ray Finkelstein and Matthew Ricketson are no doubt still infused with the sense of high purpose that comes to all inquirers as they begin inquiring, armed with a Terms of Reference and a small platoon of energetically capable public servant sepoys.
As conductors of the Independent Media Inquiry, Finkelstein and Ricketson have been asked to explore the regulation and business model of print media, including online publications.
They are Burke and Wills, cheered on by thousands as they confidently set out from Royal Park in Melbourne, followed by a train of sepoys, horses and camels.
And they will die in the middle of nowhere, tragically leaving their final report for Stephen Conroy under a tree marked “Dig”.
Their problem is not that the territory to be explored is a desert – quite the opposite – but that the destination keeps moving further away.
For example, it was revealed this year that if you exclude Facebook, internet consumption in terms of minutes actually shrank 9 per cent in the year to March 2011. Facebook consumption grew 69 per cent, and it now has 750 million users.
Social media – Facebook, Twitter, Google+, LinkedIn – has moved from being another web destination to fundamentally changing the nature of the internet. In other words, even before traditional media has learnt how to survive and make money in Phase 1 of the internet, it has moved to an even more difficult Phase 2.
The first chapter of the internet involved a simple but profoundly disruptive lowering of barriers to entry and the shift of power from producers to consumers.
This applied to many industries, but let’s focus on media, specifically print.
Newspaper publishers had built a great business constructing a daily package of information and entertainment that they were able to persuade themselves, their readers and their advertisers had a higher purpose: they were, after all, the Fourth Estate, defending democracy, as well as being the very glue of their community.
They did this from CBD citadels and dispatched the daily creations to a grateful public via newsagents. Publishers had no idea who their customers were; they didn’t want to know really.
It turned out, as Internet 1.0 got going, that they’re actually just producing a fast moving consumer good (FMCG) that had suddenly became both very competitive and disaggregated.
They had to fight for audience item by item, story by story, against global and local competitors and have had to scramble to establish a relationship with the customers, having first tried to find out who they are.
The customers, liberated from having to read one publisher’s package of stuff, skip from website to website, challenging the publishers to capture their attention for a minute or two.
Traditional media is all about channels: you get a printing press and distribution deal with newsagents, or a TV or radio licence, and off you go. In the digital world it’s all one channel: media is divided into single items that can be viewed alone.
As Ben Elowitz writes on the website paidcontent.org, “that means digital content has to earn an audience – item by item.”
Advertisers can suddenly see how many people looked at their ad, and then how many responded to it. Naturally enough, they only want to pay for results, and with so many millions of web pages available to them, they don’t have to pay much.
Thus the 'business model' has collapsed. As a result, the higher purpose is under threat along with the FMCG purpose. What’s to be done?
Let’s ask Finkelstein and Ricketson to look into it with a term of reference that says: “The impact of… technological change on the business model that has supported the investment by traditional media organisations in quality journalism and the production of news, and how such activities can be supported, and diversity enhanced, in the changed media environment.”
Meanwhile, the technological change itself is undergoing technological change.
The essence of social media is that not only are consumers now in control of what they consume, other consumers control how to get to them and persuade them. Distribution to people is now via other people.
In other words, having been one step removed from their customers, publishers are now two steps removed. Far more content is flowing between consumers than from producers to consumers; even if publishers knew and understood their audiences, which they don’t, they can’t compete with their audiences’ friends.
And the real power of social media is that it is an expression of an innate human urge – to connect, socialise and, most importantly, to trust other human beings.
As a result, Google itself is under siege. The past decade of the internet’s growth, and the challenge it posed for publishers, was defined by the incredible growth of Google and its search engine and the way it supplied traffic to digital media publishers.
In 2010, Facebook passed Google in terms of visits. It now gets three times as many minutes per month as Google.
Twitter said this month it now has 100 million users, which is an increase of 82 per cent since the start of this year. Think about that: it has nearly doubled this year already.
And 55 per cent of Twitter users do it on smartphones, which is the other, more general, revolution going on in the internet – the shift to mobile devices.
Pass the Nardoo seedcakes, Ray and Matthew.
This article was first published by Business Spectator on September 27. Republished with permission.