There’s been some debate online in the past few days regarding ABC’s announcement that it will make some of its key programs (including Lost and Desperate Housewives, two of my favorites) available on the Internet for free. Fred Wilson and Jeff Jarvis celebrate this as major news, indicating that at least one major media company finally understands what the future of media is about. Umair Haque jumps in on the other side, arguing that “Disney is making exactly the wrong move.”
I find myself somewhere in the middle, although leaning much more in Umair’s direction. I wouldn’t say this is exactly the wrong move, but Umair is on to something when he observes:
The point: unbundling media is only half the game: the value creation half. And it's exactly and totally the wrong half from a strategic point of view.
Rebundling is where value capture will happen - at communities, reconstructors, markets, networks - that direct people's attention to individualized 'casts. This is where branding will be reborn - and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)
Umair draws too bright a line between value creation and value capture. Providers of unbundled media will be able to capture some of the value or there won’t be incentives to create engaging content in the first place. But he is spot on in the belief that rebundling of media will be where the bulk of value capture occurs in the media business. It will certainly be the key to building scalable and sustainable media businesses.
That is one of the consequences of the growing relative scarcity of attention – anyone who can help audiences connect with the most relevant and engaging content will be richly rewarded.
Umair is also correct that branding will be re-born in the process. Branding in the traditional media business still remains largely with the talent rather than the intermediary. Few people go to a movie because of the studio that produced it, watch a TV show because of the network that broadcast it, buy a CD because of the music company that produced it or read a book because of the publisher that issued it. Magazines and radio are partial exceptions that prove the rule – it is not accidental that these are the two traditional media businesses with the most “micro-chunked” content.
As content proliferates, this is going to change profoundly. The most powerful brands in the media business will be held by successful intermediaries that help to consistently improve return on attention for audiences. In the process, the nature of the brand promise will change in a profound way. It will be a massive opportunity for media companies that understand the shift in economic and competitive dynamics and that focus on the rebundling plays required to build these brands.
There’s another way to frame the strategic opportunity/challenge for media businesses going forward. In addition to unbundling and rebundling of content, media companies face a choice: do they want to remain product businesses or do they want to become audience relationship businesses? (I developed the distinction between these two types of businesses more fully in a broader article that I wrote for Harvard Business Review on “Unbundling the Corporation” – unfortunately only available online for purchase.)
Of course, media companies have elements of both embedded in their companies today, but their hearts and minds are firmly in the product business. Here’s the test: how open is the media company to providing access to third party content on behalf of their audiences? If the answer is not very open, the company is primarily a product business. If the answer is very open, then the company is primarily an audience relationship business.
Let’s look at ABC’s website in this context. You would have to look long and hard to find anyone else’s content on this website – it is all about ABC programs. This is not a walled garden, it is a vacuum sealed bubble where third party content is treated like a virus to be exterminated. To its credit, ABC does sponsor message boards where audience members can contribute their views, but how are the message boards organized? You guessed it, the message boards are organized around ABC programs. It is all about the product. Anything else is irrelevant.
Now, there is nothing wrong with remaining a product business in the media industry. If you come up with compelling and engaging products (content), you will still own a profitable business. You may even attract a loyal audience. But the challenge will be to build a scalable and sustainable business. In a world of intensifying competition and proliferating options, that is going to get harder and harder. In most cases, audience "loyalty" is only as good as the most recent product issued.
In contrast, audience relationship businesses take these proliferating content options as an opportunity, rather than a challenge. The more options there are, the more value that can be created by organizing, packaging, presenting and adding to these options for specific audiences. It’s a completely different mindset, skill set, culture and economics.
Media companies that want to make the transition from a product business to an audience relationship business don’t have to do this overnight. There is a pragmatic migration path that evolves from product mindsets to platform mindsets and then eventually leads to a full blown audience relationship mindset. I wrote ever so briefly about the transition from product to platform in the media business before, but a fuller discussion of this transition will unfortunately have to wait for a future posting.
So, where does this leave us with ABC and its decision to offer hit programs on the web for free? It is an important break with traditional media company practices. It will have lots of potentially painful implications in areas like syndication and network/station relationships. It therefore suggests significant courage. It also indicates a realization that survival in the media business hinges on making content more easily accessible.
But it also reveals that ABC is still firmly in the product business. The move does not suggest that ABC recognizes that the path to scalable and sustainable media businesses in the future depends on the transition to an audience relationship business. It certainly does not suggest that ABC “gets the future of media.”