How Traditional Media Can Successfully Make the Transition to Digital
Traditional media businesses run on profits.
Unfortunately, in the digital world that can be disadvantage. When you have not only employees to pay, but loyal audiences and advertisers to keep happy, you’re going to be less aggressive than digital upstarts whose profitability is years ahead, if ever.
However, media incumbents can do a much better job than they’re doing. Here are some ways to make that happen:
Disregard the Myths about Traditional Media in the Digital World
One of the biggest obstacles to overcome is the myths that exciting new digital moguls like to tell and journalists like to repeat when they lack a real story.
Myth #1: They don’t understand the Digital Opportunity. Media executives tend to be intelligent and well informed. It is folly to believe that they could miss the daily headlines and exploding valuations surrounding Digital Media.
Ask any media CEO and he/she will tell you that digital is a major priority, list multiple initiatives and affirm his/her commitment to the digital revolution. Of course, they will agree that traditional media doesn’t take digital media seriously enough, but they mean other companies, not them!
Myth #2: They don’t invest in Digital. Nothing can be further from the truth. Whether they invest well is another question, but media giants put big money behind both internal initiatives and acquisitions.
From Time Warner’s ill-fated acquisition of AOL to News Corp’s MySpace buyout to thousands of smaller, more successful initiatives (especially those of Conde Nast), media moguls are ready to take big risks and put big money behind them.
Moreover, some legacy media companies have developed impressive technology. I can’t think of any stand alone content site that has anything close to the functionality of the New York Times, CNN, or BBC. They obviously invested in some very good development people and technology.
As I pointed out in this article, technology isn’t the problem, getting full value out of their investment is.
Myth #3: Mainstream media ignore their audience. There is probably no other industry as responsive to their consumer as the media industry.
Every major media supports regular, and in some cases daily, audience monitoring. Qualitative focus groups are regularly held, content is tested and audiences are encouraged to participate. Numbers are sliced and diced, argued and agonized over.
In fact, understanding audiences in one area where digital media companies are far behind traditional media. It is often cited by advertisers as a reason they don’t invest more in digital.
Overcome Structural Rigidity
Legacy media companies, generally speaking, do understand the problems and opportunities that the new, digital world presents. The problem lies not with talent, for no industry is as creative or innovative as the Media Industry.
Rather the problem lies in their organizational structures, which were set up for a slower, analog environment which required much more planning and investment. Over the years, structures have been built up to produce big hits and contain the damage of occasional bombs.
Digital development, on the other hand, is mostly about small initiatives that grow into big ones. You have to be comfortable with failing small, cheap and often. Media incumbents need less gatekeepers and more evangelists.
The Way Forward
As I wrote before, the economics of digital are significantly different than analog, especially with regard to transaction costs and externalities.
Integration: One problem that needs to be solved is that today’s media people are actually too good at what they do. Probably the most difficult and complex thing to do in the media is shoot film. Even for a 30 second TV spot, there can be over 100 people on the set (and sometimes a lot more).
The reason they can perform so well under such adverse conditions is that standards have been built up over time. In the new digital world, there are relatively few standards and people don’t know how to do their jobs as well. Moreover, they know each other’s jobs even less.
This new reality requires a different kind of organization. Smaller, more cross-functional teams need to be built so that problems can be worked out on the spot. Strategy and implementation need to be done simultaneously.
There are few rules to follow, so talented people have to figure out how to work together on the front lines not just at the senior level.
Walls need to be broken down and turf wars need to be abandoned. This holds especially for the deep chasm between the business and creative sides of the business.
Small Scale Initiatives: Media companies are faced with a large scale problem, so it’s understandable that they try to come up with large scale solutions. Invariably, they end up with large scale failures.
Digital Media is still new and nobody really knows how to do it all that well. Creativity researchers say that it takes ten years to acquire the skills needed to be really great at something. Who has really truly had that ten years of hard practice in digital? Very few.
What is required is more small scale efforts and more experimentation with less senior level involvement. That requires smaller, more flexible budgeting. It’s much easier to scale up than it is to scale down.
Empowerment: There is really no way to know beforehand what will be successful. In the Digital World, implementation is strategy and it has to be done on the ground level. If you have to hold a board meeting to make every decision, you will be too slow.
This last point is probably the most difficult, because it requires senior management to take a back seat. Senior people are, almost by definition, ambitious and therefore like to direct strategy. However, they will have to learn to channel their efforts into creating the right environment for success rather than making the prescient product strategy decisions.
What traditional media companies need most is to realize many of the practices that made them successful in the past will be liabilities in the future. Planning cycles will need to be drastically shortened; large, creative egos will have to be held in check; and “greenlighting” will need to be done much further down on the organization chart.
Big digital success comes in small packages.