The changing media ecosystem: from channels to contexts

by eskokilpi

The Internet is disaggregating media content and media logistics. To get to the desired content, you don’t need to go through a channel or subscribe to a newspaper. The number of people going to a newspaper or a TV channel is going down because more and more people don’t get any value from this detour, turning the channel into an extra transaction cost as Paul Graham has pointed out. In this situation what you do, is go straight to the source following the easiest and most direct route, which is what all kids do. However, the traditional role of the channel was not only delivery, but to charge for the content and pay the authors. This creates the problems we have today.

For decades, media companies enjoyed a geographically defined monopoly over the ad market. The iPad and the efficient Apple sales people prolonged the situation and supported the false idea of a digital channel. This is still evident as newspapers are trying to cling to their earnings models, and now try to force customers back to outdated modes of user experience.

The earnings model crisis has been emphasized because of the criticism of the inefficiency of the sales funnel. Advertisers claim that they have overpaid the channels and been under served by them. So is the challenge of the Internet really about people not wanting to pay for content, or what is going on?

The future-oriented alternative would be following what young people do and learning from that. The information related habits of digitally native people are much more efficient and create much more value than the models we were forced to in the past.

There is a fundamental change taking place that is perhaps not fully understood yet.  Aggregation, meaning the decisions on what to include and what to exclude, why and when, is changing from the server-side to the client-side, typically to the smartphone and the user. The context the customer is in matters more than who the customer is. The server-side aggregation/editorial process was largely about decisions on servicing defined customer segments. But because what really matters is the context, the situation the customer is in, the reader/viewer is becoming the editor and wants to decide for herself what to bring together in a bundle. This means that the buyer, not the seller, makes the editorial decisions. Again, why then pay for something that you do yourself?

The Internet is not about channels and sites but contexts and purposes. The concept of a digital channel is not only unhelpful but wrong. For media organizations this means that the unit of competition is changing. For example, newspapers don’t only compete against other newspapers. The articles about a given topic are in competition with writers outside of channels writing about the same issue. Newspaper articles compete against the best stories on the Web and newspaper staff members compete against the best writers on the Net.

People are willing to pay for content, but it has to be good content. The relevance of an article is easy to measure on the Net: how often is it recommended or linked to? Channels can turn into a network also for newspapers, radio and TV. “Social Proof” is the new content filter and an example of future media logistics. Why pay for content of lesser quality when a recommended alternative is available, and often much easier, with fewer clicks, and for free?

The Internet makes the traditional, institutional model of journalism harder to sustain but not impossible. However, if media organizations don’t see what is happening around them, and don’t change their content and channel based focus towards understanding the purposes of people and contexts people find themselves in, we are going to see an irreversible shift from the old types of institutions to a very different information ecosystem.

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Thank you Paul Graham, Ralf Blomqvist and Clay Shirky