New Business Models

Question: In the era of abundance, you not only have access to a variety of media, you also can find specific items more easily. Take note of the current time, then try to find where you would need to go online to watch the following films. After you have determined this state the amount of time it took you and where you needed to go.

A Culture of Scarcity

New Business Models. The mass media industries have roots that go back as far as the 1700’s in book publishing in the US, the 1800’s for music publishing, and the early and mid 1900’s for film, radio and television. Their entire way of operating was set up in eras of lower competition and it is instructive to see how these practices are continued today, even though they aren’t necessarily useful for consumers any more.

A.  Legacy media operate on a culture of scarcity. A main advantage they had is that they offered something which was not easily attained otherwise. Movie theatres were the only way to see films: no home video, no cable, no downloading was available. As a result they could focus more on what they wanted to make, rather than exactly what the audience wanted. The results were acceptable, but limited in diversity and depth. Look at the following chart of Portland, Oregon tv offerings from 1965 when TV was available only through the air, and only from 5 channels.

Similarly, in rural communities in Ohio in the 1980’s they could have a much reduced video selection because of the lack of competition. It was common to see selections such as the following:

1. This scarcity could be caused, as it was in Portland television broadcasting, simply by the newness of the medium and how expensive it was to enter the market. In the 1950’s Portland had only one television station to start. But this scarcity worked so well to the advantage of the producers that they often would try to maintain the scarcity as long as possible.

· In film production, for example, studios owned theatres and would show their own films and only a few others, until the government broke up the monopoly in the 1940’s. This didn’t stop the control that distributors had on film selection however. It is common for a film such as The Avengers to open at 5 theatres in Portland, while a foreign film may open on only 1.

· It is unsurprising to have a large number of films, such as this list of 2017 films, that received little publicity or exposure to the public. You can see this maintenance of scarcity in a variety of media today.

a. Libraries are limited in their ability to check out e-books: some can check out a book only 26 times before it disappears from their servers, others can check out the digital book to only one customer at a time.

b. Film companies delay the release of new films to DVD and streaming until months after their theatrical release.

c. Music producers will keep songs off of youtube for weeks until it has had a chance to be sold on CD or iTunes.

d. Books will be unavailable in e-book format until after Hardback book sales have gone on for 3-6 months.

e. The Wall Street Journal online is available only to those who pay subscriptions.

2. Scarcity meant the audience had to take what the producers gave them, whether it was films, books or music. This is great for increased profitability of products.

· As the following chart shows, the music industry was able to force people to buy entire albums even though they might want only one song from the performer. Once people had a choice, they started buying just singles to get exactly what they wanted.

· Scarcity is maintained to enable increased profits as desired items are more rare. Disney is a master of this, releasing their films to theatres for only short periods and limiting how they are available such as their Netflix contract removing streaming rights starting in 2018.

· New Business Models.

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· A Culture of Abundance

· Digital age media operate on a culture of abundance. There has been a major challenge to legacy media systems in the digital age. The limits of copying and access that made media products more rare have largely disappeared. There is no technical  reason that a film or song or book or tv program cannot be released on the internet and available to everyone at once. This is a change, and a threat, to the past ways of doing business in the media industries.

· A. There has been a huge increase in media accessibility. Without the artificial limits of past systems we have seen how easy it is to have access to what we want, when we want, and in formats that are easiest to use. When a new idea develops, such as Wikipedia, it is widely used and copied in many different variations. Books, once available mostly in libraries and bookstores, are now available anywhere and at anytime in digital sites such as Manybooks.net, which are free public-domain books.

· 1. New media have selections that are easily found and easily sorted as well. If you want to find rarely-seen classic Russian films, Netflix lets you find them with an easy search.  If you want to find the Eurovision entries of last year, Youtube search finds it instantly.

· B. Choice for the consumer is the competitive strategy of new media systems. Rather than scarcity, they offer as much as you could want. Music services such as Rhapsody online offer over 1.5 million songs, while the physical selection of Walmart has less than 60,000. It is estimated that 99% of current music is not available at Walmart. Book sales have quickly shifted to online sales as customers like the convenience of digital books. Borders Books stores could have up to 100,000 titles, but this was easily matched by Amazon.com which had an additional 25% of its sales outside of its top 100,000 titles, and 60% of its sales in e-book format.

· C. Niche focus is a defining factor of this culture of abundance. Once people have a large number of media choices, and easy access to them, the producers focus on more defined audiences in order to be competitive. Cable television easily demonstrates this in their expansion of narrow-focus channels such as Home improvement programs, Religious programs, Car restoration programs and others. Sites, such as Youtube trends , are also suggesting new ideas to audiences as they attempt to follow public interest, rather than force interest in their products. We see this trend in many ways as sales of products that aren’t offered in stores not account for up to 50% of online revenues.

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· D. Business Adaptation is necessary to succeed in this system of abundance.  Their products need to be easily available, cheap and adapting quickly to audience interests. All-new entrants, such as online comics, are free, highly nich-focused and changing with current interests.  Newspapers have suffered in this age as audiences have moved to online news rather than reading home-delivered news. The ones that are successful have moved online with fast-changing, entertaining news.

· I

· The challenges to the media industry seem to have all been to the benefit of consumers: faster access and more selection. If this is a permanent part of future media then audiences will be well-served and producers will have to be very active in trying to meet audience interests on either a broad or niche focus.