Media Companies and Technology

Why is big business so inept at harnessing the power of new technology? I was reading Mark Cuban’s blog and I just found myself wondering if the Underpants Gnomes from an episode of South Park were more in tune with business decisions than these media companies. Linked below is a clip from SouthPark featuring the Underpants Gnomes obviously strong language will be featured in the clip.

http://www.southparkstudios.com/clips/151040

The Good

Books
I’m not sure how its possible but one of the oldest forms of medium has made the transition to the digital age the most gracefully. Both by offering eBooks as well as capitalizing off bloggers willingness to pitch books to their audiences publishing companies are really doing a great job of staying relevant in the digital age.

Add to that the fact they’ve not seen the huge problems with piracy the other industries are seeing and it looks like the next few years will be quite good for these publishers.

The Bad

Movies
On the plus side bandwidth limitations have mitigated a lot of the potential damage piracy could cause; it just takes too long to download multiple feature length films. Additional benefits movies are enjoying is the inability to recreate the theater experience, and movie subscription services like Netflix.

It’s not all a bed of roses for the movie companies, as torrents have become increasingly popular as bandwidth continues to rise. At the same time because of a reluctance to abandon the first run model on television and sell into online content aggregators like Netflix the film industry is not reaping any of the profits of deals that their own customers brokered instead.

Television
Its hard to imagine something that was freely available (broadcast) or has the depth of content that people feel compelled to spend upwards of $50 a month for would become threatened so fast. They had some good ideas with projects like Hulu, but it seems that even in success they start thinking about how best to fail.

While I’m a big fan of intellectual property management and am a huge proponent of enforcing rights against outfits like YouTube, I still think you have to offer the content up or risk piracy that dilutes the product.

Seeing lawsuits against YouTube for $1 billion I had hoped that would force the content holders to establish the value of the product by promoting it on their own web properties. Whether its pulling content or trying to divert a successful business model away from what made it a solid option for consumers.

The Ugly

Music Industry
Early on Napster had been looking for an exit strategy from the illegal download model to a subscription based model. Unfortunately the music industry was either not capable of understanding the business opportunity of converting music pirates into real customers, or was too spiteful towards the business that built their customer base upon it.

Instead the music industry shut down Napster allowing Kazaa, torrents, and Limewire to become the new medium of illegal file sharing.
Even now the music industry still hasn’t recovered from the wasteland that piracy has brought them. They’ve still yet to establish a lasting revenue stream which replaces the inflated prices of the CD days. They still haven’t fully adopted a subscription model that could bring them a substantial annuity, and while their work with iTunes and Amazon has yielded some solid revenues it has been pennies on the dollar of what it was before.

Newspapers
How it is there are so many bloggers out there making big time bucks and yet newspapers can’t unlock this equation to save themselves from the downward spiral that is the end of the circulation business? I’ve seen bloggers who do nothing but talk about how much money they make and yet they somehow manage to continue to sell advertising.

I don’t see any future for the majority of newspapers as they’re struggling to even figure out how to get online. There’s been a lot of talk about bringing the medium to the iPhone or Kindle but it’s yet to be seen how this will work, and how many papers will adopt this model.

Conclusion
Most of these companies haven’t done a great job of figuring out a solid business model, and it may be because they’re used to having a monopoly. The problem is copyrights don’t mean a heck of a lot on the internet, if one person gets cut off another 20 will upload the infringing work.

These companies should start focusing on the reality that they’re now competing against free, and if they want to engage the audience they better be somewhat more accommodating than they’ve been in the past. It’s not enough to stamp your foot on the ground and expect the justice system to protect you, that doesn’t get your shareholders the earnings they want.