Media business models need urgent attention

Australia’s mass media need to overhaul their business models if they are to survive.

Managers have neglected business models appropriate for the digital economy, such as de-bundling and re-bundling of content to cater for digital natives. An example of de-bundling would be isolating a single song from a CD, or a single article from a newspaper. Re-bundling involves selling collected pieces of de-bundled content on different platforms.

Professor Arne Krokan of Norway’s University of Science and Innovation said technologies to re-bundle newspaper content and enable micro-payments online or via mobile phones were available “but they have not been embraced”.

Professor Krokan, who consults to media groups in Scandinavia, told the first Australian meeting of the Association of Internet Researchers that newspaper companies around the world had been slow to benefit from the digital revolution.

In Australia media companies move dated content from newspapers and broadcast outlets to web sites. This is shovelling, not re-bundling.

Newspapers also refuse to de-bundle in the physical world. Why not sell separate sections? As soon as I buy weekend newspapers I discard the sports, recruitment, cars and real estate sections without opening them. Why not sell only the business or sports section to interested readers? Just as Apple sells single songs via iTunes.

A song can be replayed and enjoyed several times. Would this happen with single pieces of journalism? Perhaps the answer is a reflection of the quality of some newspaper writing. Or perhaps people perceive newspaper content as ephemeral, the sort of mindset that sees newsprint as wrapping paper for tomorrow’s fish and chips.

Much of the success in the digital world relates to perception as much as reality.

Professor Krokan said convergent technologies permitted new media services. It was important here to understand the whole picture or context. “We need to take into consideration a range of factors including available technologies, changing markets and consumer behaviours, the influence of geography (local is becoming highly popular because of its ability to provide unique content), consumers’ knowledge and competence, variations of culture, and digital business models.”

The main driving forces in the digital economy were convergent technolgies, changing consumer behaviour and deterritorialisation. In the last case, this is where multi-national companies sell into domestic markets. “Amazon sells more books in my country than the combined sales of the three largest Norwegian bookstores. The market is worth about $US 20 million.”

An example of convergent technologies is IPTV, or television available over fast broadband, which undermined the business model of commercial free-to-air TV networks.

European newspapers had started to offer services beyond news to align with changing consumer desires. One of the most popular sections of some papers is a weightwatchers’ club, for example.

Professor Krokan said another feature of digital services was the blurring of the roles of consumers and producers. Consumers were fast becoming producers of content. “In Norway, people take videos with their mobile phones and post them to newspaper web sites.”

Dr Axel Bruns of Queensland University of Technology said citizen journalism provided an example of this blurring of roles, for which he had coined the term “produsage”.

A variety of citizen journalism models had emerged, but “produsage” had some key characteristics. These included content generated by average citizens, limited editorial oversight, continuous updating, more comment and debate than in mainstream media, and multiple perspectives for stories, Dr Bruns said.

Some of the best-known examples included OhMyNews in South Korea, Kuro5hin, Plastic.com, and the Al Gore-funded Current TV. “We see constant and collaborative evolving of content,” Dr Bruns said.

Progressive media such as the BBC were adapting their business models to accommodate changing audiences, and this provided an example of “harvesting the hive” – taking advantage of the vast content that citizen journalists produced. But the long-term economic sustainability of this model remained a “significant question,” he said.

Professor John Hartley of QUT said the business model for broadcasting needed “a makeover”. “Broadcasting as we know it is over.” TV was heading into a post-broadcast phase, driven by the Internet. “Mass media do not last forever. Some simply go away.”

Young people were becoming “produsers” via Internet sites such as MySpace, Flickr and YouTube.

Australia needed faster broadband services to accommodate this change. “We must revise our view of creativity, and revise the broadcast model of creativity, which leaves the general public sprawled brainlessly on the couch.”

* Published in the Bulletin of the Pacific Area Newspaper Publishers’ Association in January 2008.

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