What Would Google Do?

What would Google do? Creative destruction in the new global media marketplace ~ Richard Landry richmedium February 2008

“Hollowing-out” or “Creative Destruction”? •  “Google is like a gigantic parasite that hollows-out existing (media) businesses.” --Jason Pontin •  “Media companies should stop complaining and ask themselves, ‘What would Google do?’” --Jeff Jarvis May 6, 2009 slide 2

“Creative destruction” •  The process of market transformation that accompanies radical entrepreneurial innovation •  Sustains long-term economic growth, even as it destroys the value of established monopolies What is being destroyed: •  Corporate media’s role as information gatekeeper •  Monetary value of copyrighted content •  Commercial and creative value of professional editorial expertise •  Business models that sustain professional media creation, production, and distribution May 6, 2009 slide 3

Now for the bad news... Google and friends are not done yet: •  Big aggregators continue to grab the lion’s share of online advertising revenues, even as the pie continues to grow •  Advertising revenues are leaving the media market, as other players get into the act •  Advertising is entering a period of long-term, irreversible decline, due to the disruptive impacts of web technology May 6, 2009 slide 4

Online advertising is exploding... Source: PricewaterhouseCoopers LLP May 6, 2009 slide 5

But the big players control the action... Source: PricewaterhouseCoopers LLP May 6, 2009 slide 6

And Google is the biggest of the big Source: PricewaterhouseCoopers LLP May 6, 2009 slide 7

Thought experiment: Can current advertising economics support a startup media venture? Lightspeed Venture Partners: Three ways to build a $50M, ad-supported digital media company: •  General-interest, broad-reach site –  ~$1 CPM or equivalent –  Must be in top 10 in page views •  Demographically targeted site –  ~$5 CPM or equivalent –  Must be in top 25 in page views •  Special-interest site –  ~$20 CPM or equivalent –  Must be in top 125 in page views May 6, 2009 slide 8

“Chaos Scenario 2.0” “Consider something barely imaginable: A post-apocalyptic media world substantially devoid of brand advertising as we have long known it.” --Bob Garfield, Advertising Age 1.  People don’t like ads 2.  But they crave information 3.  The consumer is in control...no, really 4.  Diversion of ad budgets to online customer engagement infrastructure 5.  Pay per view May 6, 2009 slide 9

Now for the good news... •  “Chaos Scenario 2.0” plays to the greatest strengths of traditional media: –  Being the recognized authority on a special-interest topic –  Forming a niche community of avid enthusiasts with shared interests and values –  Creating an editorial environment where advertising is viewed as information •  Aligns with web 2.0 trends that threaten to rain “creative destruction” on existing global media monopolies: –  Open media platforms –  “Global tribes” –  Micropayments May 6, 2009 slide 10

Open media platforms “‘Open’ is the new black.” --Linda Barrabee, Yankee Group Open media enterprises: •  Adopt the tools, business strategies, and values of the “open source” software movement: –  Blogs, wikis, media sharing, social networking –  Radically downsize the economics of developing, marketing, and monetizing intellectual property –  Actively embrace the practice of widely borrowing, quoting, referencing, and sharing content without restrictive conditions •  Produce cultural products of surprising relevance, depth, and sophistication •  Tap into revenue streams that lie outside the reach of global media monopolies •  Engage global media in ways that create financial leverage, rather than destroy value May 6, 2009 slide 11

Open media examples •  Standalone news sites •  Collaboratively edited repositories –  Huffington Post –  Wikipedia •  Blog networks •  Public journalism ventures –  Federated Media –  AlterNet –  Gawker Media –  Global Voices Online –  Glam Media •  Special-interest social media •  Community bulletin boards –  AlwaysOn Network –  CraigsList –  Internet Evolution May 6, 2009 slide 12

May 6, 2009 slide 13

Global tribes: The next marketing frontier “We're seeing global tribes forming around the world that are more and more interconnected through technology.” “We used to be focused on discovering the common hopes and dreams within a country, but now we're seeing that the real commonalities are in generations across geographical borders.” --Melanie Healey and James Haskett, P&G May 6, 2009 slide 15

Micropayments “There has been an understandable focus on the Wall Street Journal, the world’s preeminent business newspaper. But Dow Jones has a plethora of prestigious brands and a range of content that will provide us with a remarkable opportunity to take advantage of the two most profound social and economic trends of our age, globalisation and digitalisation. (Our purchase) comes at a moment in history when there is a confluence of content and digital delivery and of increasingly sophisticated micropayment systems. (This means) the value of analysis and intelligence to a business user can be far more accurately reflected in the price of the content--that trend is as true for a businesswomen in Bangalore as it is for an investor in Idaho.” --Rupert Murdoch, The Australian, 9.18.07 May 6, 2009 slide 17

“Don’t make a meatball sundae” --Seth Godin •  Don’t slop a web 2.0 topping on the same old content and business practices •  Do engage in your own act of “creative destruction”: –  Adopt open media platforms –  Create great content that people want to talk about –  Make sure it is available everywhere they are –  Give them the tools to share it with their global tribes –  Identify the unique value you provide, and reflect that value in the price of your content May 6, 2009 slide 20

< richmedium > new media strategy and consulting Richard Landry CEO richmedium@pacbell.net 415.309.8391

What Would Google Do?

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