Why There Is No Dominant Trend Toward New Media
Out with the old and in with the new?
In media and marketing circles today it is fashionable to talk about the trend toward “New Media.” The story is dramatic and exciting: innovative digital entrepreneurs are making old ways obsolete while fat media incumbents sit on their hands. The wave of the future is destroying the overgrown giants of the past.
Despite appearances, the talk doesn’t reflect the evidence. The dominant trend is actually toward greater media diversity.
Why There Appears to be a Trend Towards “New Media”
To people who focus on Digital Media, the story seems simple: Digital technology is enabling people to communicate in ways that are truly new and different. We are becoming a “publishing society” where amateurs compete with professionals and consumers are responding to new choices.
Advocates of this view proclaim that it is just a matter of time before the “Old Media” is obsolete. The attitude isn’t hubris alone. There are some facts that give the appearance of momentum.
A quick look at internet statistics shows that internet adoption rates are the most dramatic of any technology in history. From virtually nothing a decade ago, there is a 75% penetration rate in the US. At the same time, Digital Media has become a multi-billion dollar business capturing one out of every ten ad dollars.
It’s not just an American phenomenon either. Fully one quarter of the world’s population is now online – 1.6 billion people! Considering the fact that, according to the World Bank, roughly one quarter of the world lives on less than $1.25 per day that’s truly an astonishing figure.
However, for there to be a trend toward “New Media” there would have to be a trend away from “Old Media,” and that’s where the argument breaks down.
An Evolutionary Analogy
A similar misconception pervades common views on evolutionary biology. The popular, but inaccurate, view is that there was an onward march from simple to complex organisms culminating in the human race.
An initial examination of fossil evidence would at first appear to back up this account. As time went on, organisms did become more complex.
However, as Stephen Jay Gould pointed out in his book Full House, there is no direction of progress in evolution. Natural selection is just as likely to produce simpler organisms as it is complex ones. More diversity creates more niches, reinforcing the trend towards greater variation.
Because life started out simple, an increase in diversity would give the appearance of a tendency towards complexity. However, that’s a mathematical illusion.
If even a small minority of new organisms was more complex than precursors, ever more complicated organisms would be created with no general trend toward complexity. While the concept is a bit counter-intuitive, it is also a mathematical fact.
Media evolution follows the same pattern. While there is ever more new media, there is more traditional media as well and small moves in established business can easily eclipse dramatic developments in start-ups.
The New Media Reality
The truth is, while Digital Media is growing, most traditional media are remarkably stable if not growing as well – and at much higher penetration rates than digital media.
According to Nielson (pdf), TV viewership in the US was at an all time high in 2008. While some viewership is timeshifted on TiVo and online, that percentage of viewing is remarkably small, much lower than DVR and broadband penetration rates would suggest and a surprising amount of ads are watched when timeshifting.
Although consumers increasingly possess the technology to bypass programming, they seem to prefer it. Mostly, people use technology to augment their traditional media consumption rather than replace it. That may change, but for now there is no evidence that it will.
Revenues tell a similar story. According to ZenithOptimedia, there has been no significant drop in advertising expenditure shares for most media. In the US, Magazine revenue shares are up, TV is down but only slightly (from 36% to 33%), while Radio and outdoor have been relatively stable. Although trends vary by region, the basic narrative holds for the rest of the world as well.
The one anomaly is Newspapers, which do seem to be in serious trouble. However, even that exception would seem to prove the rule. The decline in Newspaper revenues accounts for the entire increase in Digital Media over the last decade and much of that is due to classifieds rather than display advertising.
Content: The Once and Future King
One reason for the resiliency of traditional media is content. Magazine Editors, TV Producers and Radio Programmers draw on an enormous body of collective experience and wisdom. Moreover, they are very talented people. As a group, they do their jobs well – they have to, competition is fierce.
Technology doesn’t alter the basic reality that communication is essentially a human endeavor. The ubiquity of mobile phones doesn’t change the fact that it is frustrating to talk to an idiot and enjoyable to converse with interesting people.
Nor does technology diminish face-to-face contact, if anything, it is becoming more valuable. Richard Florida has gathered an enormous body of evidence that as technology increases the talented people that drive it tend to congregate in the same places.
This is more than theoretical. The value of content can be measured. Advertisers are willing to pay ten to twenty times more to advertise on branded content sites than they are to advertise on social media sites. With good reason, much of the social content is crap.
Professionals who devote their lives to producing content generally do a much better job than amateurs who do it part time.
The Folly of Picking Winners
As Mark Penn points out in his book, we are living in an era of microtrends. A potential market penetration of merely 1% can be viable; it can even create a hit. While capturing 1% of the US market can make a very successful business, it doesn’t qualify as a dominant trend.
So while it’s easy to get lost in the excitement of new possibilities, it’s important to remember to put them in perspective. When Facebook announced that it was cash flow positive, little was made of the fact that most media companies are expected to make profits.
While the odds are that Facebook will eventually become profitable, they’re the market leader. How many digital initiatives will fail? Is the probability of success in “New Media” any greater than in “Old Media?” Maybe so, but there is nothing in the data to substantiate the claim.
The truth is that in a world of ever increasing diversity, consumers have more power to choose. The only sure bet is to create products that entertain, inform and excite audiences, service them well and create value. The evidence suggests that is a media-neutral proposition.
What’s the future? More of everything (except newspapers).