Why Are Media Companies So Big?
The trend of the last decade or longer within the media industry has been one of acquisition and consolidation. By gobbling up other media properties you could have access to massive libraries of content, a much broader range of distribution options, and you could cross license this content across these new distribution options. My favourite example was when NBC merged with Universal Pictures giving Conan O’Brien free access to a whole library of silly, out of context, Walker Texas Ranger clips. Every night Conan would surprise us with a new clip, absolutely hilarious, and all because of media mergers.
While I loved the Walker Texas Ranger clips on Conan, I think the problem now is that a number of media companies have gotten too big, and too difficult to manage. By and large media companies are tightly connected, or they should be tightly connected, with the zeitgeist. That used to be the case for big media, for traditional media, but they are failing to stay connected. With the internet and social media taking hold of a whole new generation of media consumers traditional media companies are struggling to adapt.
Traditional media companies are used to an editorial model where they get to dictate the conversation. They tell us what we get to read, listen to, and watch. Our options are limited to what they are offering, which is not as broad as we would like it to be. The internet has increased our ability to connect and communicate with each other like no other invention since the telephone did, and as a result we have the tools available to create content for every type of interest. Traditional media companies are going to need to learn how to collaborate with their audiences, to ask them what stories they want to here, and to ask for their help in creating these stories.
Eventually media companies are going to start shrinking again, at least from the content production side of the equation. The new media companies are going to be leaner, size won’t be as important as profitability. The real money is going to be in connecting people together, in consolidating audiences together, and then segmenting them for your advertisers to reach the most specific of niche markets. That’s how Google will become the most powerful media company, and other companies are going to need to find ways of doing a very similar thing.