Fossilized culture, not lack of funding, put news media on deathwatch
Legacy media mismanaged change and missed most of the critical trains of the digital revolution as a result.
The following is based on a talk I delivered last week at a Google gathering in Majorca, Spain. It is the compilation of years of work for the Monday Note for which I met with numerous publishers and chief digital officers from large or small media companies. Funnily enough, after my speech, people came to me and said, “…Oh, what you described is exactly what I experienced in my [British, German, Spanish…] company”. Sometimes, it came from media outlets I would not have categorized as laggards.
Looking back over the last ten or so years, it turns out that many of us share the same feeling of powerlessness and frustration. It is not exactly a relief to see how, on both sides of the Atlantic, the transition to digital appears so painfully difficult for so many news media.
I have long considered that the sector's financial situation, stemming from audience losses and advertising depletion, was the main culprit. I no longer think this is the case. The main cause of legacy media failure to make a successful digital transition lies in its inability to overhaul its ancestral culture. The phenomenon cascades from top management down to every layer in the company, and the fossilization makes little distinction between generations. As a European CDO told me recently, pointing at his immediate surroundings: “…It's in the walls of this company”, he said. “We can deploy all kinds of efforts, spend as much energy as we can, it’s very difficult to offset the burden of the past…”
The two-planes metaphor
Picture two planes poised to take-off, engines at idle. On the left runway stands the Legacy Media plane. It is powered by a low tech, small engine, good enough to barely lift the plane above the ground. The same goes for fuel: grade and tank level are kept to a minimum. As for the crew, it is neither great or bad, just average. No one really cared to recruit the best team. However, there are several captains on the flight deck, and a long chain of command on the ground.
On the right side stands the Media Startup aircraft. Compact, well-designed, featuring a carbon-fiber airframe, it has a powerful engine set to burn a load of high-octane fuel. The crew is the best one money can buy. On the flight deck, one captain who knows exactly what the mission is. Her qualifications and leadership are unquestioned. She is both trusted by her superiors and accountable: after all, her life is on the line. On the ground, a seasoned flight director embodies a strong ally.
It is now take-off time.
On the left, the legacy media plane gains speed slowly, eating up the whole 2.5 km runway before lifting up. In the cockpit, captains argue just about everything, especially petty details. Ground controllers are deluging the crew with conflicting directions and opinions.
The Media Startup plane goes full throttle, wheels-up in a few hundred yards with a dangerously steep incidence. The cockpit is almost silent. Everyone is focused on his or her tasks. The captain dispenses very few orders in a calm voice. Communication with the ground is almost non existent. The crew was set to be autonomous. Ground controllers scrutinize every piece of data send back by the aircraft’s telemetry.
After a while, the situation looks like this:
The Legacy Media plane bears a metaphorical resemblance with Howard Hughes’ Spruce Goose: ten feet above sea level, not climbing much. It will stay there as longs as there is gas left in the tank, with both little risk and almost no further rewards. No one is elated nor scared. On the ground, a controller whispers a perfunctory “Good Job” in a tone that suggests a minimal, but good enough, achievement.
The Media Startup plane is in a much more critical situation. It burns its expensive fuel like a furnace; its structure is stretched to a maximum; wings are twisted to the limits of their resistance like in this amazing video of a 787 Dreamliner’s spectacular take-off. Both in the cockpit and on the ground, everyone knows that the aircraft is pushed to its extreme. It could stall or disintegrate at any moment. Despite the tension, everyone stays cool, knowing that this critical phase of the flight might take a while before things clear up —hopefully for the good.
One one side, a Low Risk/Low Reward situation, a High-Risk/High-Reward on the other.
A couple of considerations about this little tale.
First, the aircraft metaphor is not as bad as it looks. It is widely used to describe a wide range of situations. Atul Gawande’s Checklist Manifesto, a book well worth your time, features a medical account that borrows from the art of piloting improvements that greatly benefited modern surgery. (To me, surgical procedures are the ultimate quest for excellence as the outcome can be life or death; other compelling opuses include two books about neurosurgery: Another Day in the Frontal Lobe by Katrina Firlik, or this moving account by prominent brain surgeon Henry Marsh, Do No Harm, also featured in this Anatomy of error piece in the New Yorker).
Similarly, when looking at YouTube videos, I've always been impressed by the economy of words and the focus during the most critical phases of a space flight. High stakes, high level of professionalism.
Next, for a better understanding, let’s make a few vocabulary substitutions :
FUEL ➔ Refers to the level of investment and resources poured into a project. A legacy media will keep all levels to a minimum, a startup will seek to maximize its chance of success. Here is an example: In 2012, when Uber decided to conquer London, its first UK manager was allowed to pay £25 ($36) an hour to any driver willing to work on the Uber platform whether they got jobs or not. Lifted from this excellent Guardian piece on Uber’s saga in London:
…By the autumn, [Uber’s UK manager] had around 100 drivers on his books and an “allowable burn” of £50,000 a week to recruit drivers to the platform. “I was often told, ‘Burn more’ [said the manager]. “We never had a numbers target. It was always just more drivers, more drivers, more drivers.”
Example abounds of large funding and long term vision applied to media companies such as BuzzFeed or Netflix.
Let’s continue with vocabulary:
CREW ➔ The difference boils down to assigning the right skill sets to the right task. It means sparing no effort to look for the best talent, providing the best training and devising the best procedures. It is also about leadership qualities.
TAKEOFF ➔ That phase is defined by a team’s level of commitment to success, the crew's decisiveness and, more important, the acceptance of possible failure.
GROUND CONTROL ➔ It refers to essential things such as the autonomy left to the team (supposedly) in charge, the level of trust granted by top management in exchange for full accountability, and also the clarity of management’s vision.
TELEMETRY ➔ The set of KPIs measured against goals. (The fact that many tech companies rely on OKRs –Objectives and Key Results– a doctrine invented by Intel and largely implemented in Silicon Valley, is no accident. This is the best way to run complicated projects).
A long, sorry list of missed trains
The result of the Low-Risk/Low-Reward attitude elected by traditional media world is a sad list of missed opportunities such as:
- Apps ➔ Take a look at your smartphone's home screen: not a single mass market app created by a legacy media company.
- Aggregators ➔ The segment has been left to startups and media are begging for sent-back traffic.
- Advertising Technologies ➔ A huge ecosystem has been created, taking a vast share of media’s ad revenue in the process.
- Recommendation Engines ➔ Amazon in 1998, followed by Netflix, built their success on suggesting clusters of products to their customers. Twenty years into the news digital world, many outlets prefer to rely on Outbrain or Taboola to recommend their own stories to their own readers.
- Audience building ➔ Again, as nature abhors vacuum, scores of companies took over the field of audience profiling left open by the media sector.
- Social platform ➔ A long standing community of readers was supposed to provide a great foundation for a social network. Instead, a huge and global system aimed a connecting the world has been build in less than a decade out of a how-delicate girl rating system devised by a clever man in his Harvard dormitory.
- Shift to mobile ➔ Media who complain that mobile accounts for the majority of their audience but only for 20% of their digital advertising revenue can only blame themselves.
As the result, century-old media companies now see a large chunk of their revenue controlled by dozens of intermediaries that didn’t exist ten years ago.
They now face a massive reintermediation of their business and the loss of the relationship with the user.
As if this wasn't enough, scores of media companies have been taking initiatives out of fear and desperation, often clinging to the day's most hyped feature. This leads to a long string of “mandatory features” that sometimes worked and sometimes carried their own toxins:
- “Collect eyeballs”, “Go for volume” ➔ The byproduct is a race to the click… and a race to the bottom in terms of journalistic quality.
- SEO, SEM, A/B Testing, ➔ See The Huffington Post, Business Insider, Buzzfeed, none of them quite intellectually uplifting.
- High Impact Ads ➔ They led to massive user rejection, which in turn bred the ad-blocking explosion.
- Videos ➔ Great in terms of revenue, as long a you produce strings of eye-grabbing stuff. Real substance costs a bundle to produce and, revenue-wise, brings next to nothing.
- Programmatic Ads ➔ They vastly increased the dependency on ad networks and led to a massive price deflation.
- Native Advertising ➔ Fine, but most media companies did it in the “slow plane mode”, assigning too few resources to gain critical mass (for an opposite example, read a previous Monday Note on Industrial Scale Branded Content)
- Subscription/paid-for contents ➔ Once seen as the possible savior. In reality, only works for a handful of publications.
- Distributed content ➔ The latest digital media industry fad. Works for some large new players, but entails a complete loss of control over distribution & audience growth.
Let’s see if we can conclude on a hopeful note. Like modern science, the media sector is not through with promising innovations. For instance, publishers could still build large communities of solvent readers that could yield great ARPUs. As we said many times here, a key avenue for quality media is to do whatever it takes to tailor the service (editorial, ads, ancillary products) down to the individual, to warrant both revenue and loyalty; this could be achieved using A.I. and Deep Learning technologies. As for new interfaces such as voice or virtual reality, they could become a great way to widen the pool of users.
More trains are ready to leave the station, and it’s up to the media industry to catch them.
