The disintermediated world where no one pays ‘is more or less going away’: Michael Wolff

TORONTO—The fragmentation of consumer audiences across a variety of platforms is the top problem facing today's media companies, Michael Wolff, author and editorial director of Adweek, said Monday at the first day of the nextMedia conference in Toronto. In a talk entitled “The Digital Tsunami: Who Will Bring Order and Profits to the Digital World?” Wolff suggested that the web is undergoing a profound change largely because the current economic model does not work. “The flat, disintermediated world in which everyone participates for little cost is more or less going away,” he said. The problem, Wolff said, is that “the website is a non-linear experience in which you can’t really direct people’s attention.” “Even when you do get attention … it’s not that valuable,” he said, causing advertising rates online “to continue their long road downward.” As a result, companies that can hold consumers in one place are beginning to flourish, Wolff said, pointing to Facebook Inc., Netflix Inc. and Apple Inc. as the most obvious companies providing such platforms. “They have much more of the standard media properties’ of dominating customers’ attention,” Wolff said, and that runs contrary to most web experiences. But during another panel discussion, “Open vs. Closed: Content Distribution in the Digital Age,” Michael Hennessy, senior vice-president of regulatory affairs at Telus Corp., said vertical integration—what some may view as a similar kind of media content centralization—is something Canadian consumers should be concerned about. “You should worry about carriers who are pursuing vertical integration,” he said. “It won’t work as a long-term strategy. Customers will revolt if they see too much exclusivity.” Unlike competitors Bell Canada, Rogers Communications Inc. and Shaw Communications Inc., which offer exclusive content from their media properties on their websites and wireless networks, Telus is the lone major Canadian telco that has not acquired content or broadcasting assets. Hennessy said vertical integration and exclusivity may prompt government regulation. “When you look at Apple, what they’re very good at is taking hardware, marketing and rights control, and putting them together in a very tightly controlled ecosystem,” he said. “But I don’t think they can maintain that kind of trajectory without running into political or anti-trust issues.” Richard Kanee, director of business for CTVglobemedia Inc.’s digital department, CTV Digital, said another problem is that new models for distributing content can be found, but monetizing them is easier said than done. “At the end of the day, it’s a problem of trying to manage declining scarcity,” he said, referring to the wealth of options available to web users. “Closed is great for managing scarcity,” Kanee said, adding: “That’s ultimately what all media businesses are built upon.” Kanee said traditional media emulate the idea of being open, but suggested they should aim for what he called “faux-pen”: a closed system that gives the appearance of being an open one. “What Netflix is doing is really great,” he said. “They have a closed system that you have to pay to get access to, but they understand the consumer wants control and choice, and so as a Netflix subscriber, you can get it on a PC or Xbox or iPhone.” The challenges and opportunities in managing audience fragmentation across devices, particularly on mobile platforms, was taken up in another panel discussion Monday called “From Mass Media to Fragmented Media: The Rise of the Promiscuous Consumer.” Candice Faktor, vice-president of strategy and new ventures for Torstar Corp.’s digital department, Torstar Digital, said there is no one-size-fits-all approach to mobile. “Each brand must look at mobile and see how that applies to their business,” she said, pointing out that Torstar’s WagJag group shopping site operates in a markedly different manner than The Toronto Star’s iPhone or iPad apps. Marina Glogovac, chief marketing officer for Kobo Canada, which offers ebooks through its own e-reader and applications for mobile devices, said at the conference that multiple platforms offer a net benefit to content providers. “You cannot be afraid to cannibalize your own business,” she said. “Multiple mobile apps drive consumer adoption of your brand.” But Angus Frame, vice-president of digital media for The Globe and Mail, said he does not see various platforms cancelling each other out. He pointed to the success of the Globe’s iPad app, saying that mobile “is not a simple question of cannibalization. It’s that each medium complements each other and can depend on the time of day it’s used, among other factors.” Frame noted that mobile app use spikes during the time of day that most people are travelling to work. Faktor noted that media businesses must remain wary of consumers’ tendencies to wander. “If you don’t cannibalize your own business, someone else will.” news@thewirereport.ca

The disintermediated world where no one pays ‘is more or less going away’: Michael Wolff

Broadcast | November 30, 2010

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