This presentation is for leaders and funders of media organizations undergoing digital transition.

1. What would Google do?
Creative destruction in the new
global media marketplace
~
Richard Landry
richmedium
February 2008

2. “Hollowing-out” or “Creative Destruction”?
• “Google is like a gigantic
parasite that hollows-out
existing (media)
businesses.”
--Jason Pontin
• “Media companies should
stop complaining and ask
themselves, ‘What would
Google do?’”
--Jeff Jarvis
May 6, 2009 slide 2

3. “Creative destruction”
• The process of market transformation that accompanies radical
entrepreneurial innovation
• Sustains long-term economic growth, even as it destroys the value of
established monopolies
What is being destroyed:
• Corporate media’s role as information gatekeeper
• Monetary value of copyrighted content
• Commercial and creative value of professional editorial expertise
• Business models that sustain professional media creation, production,
and distribution
May 6, 2009 slide 3

4. Now for the bad news...
Google and friends are not done yet:
• Big aggregators continue to grab the lion’s share of online advertising
revenues, even as the pie continues to grow
• Advertising revenues are leaving the media market, as other players
get into the act
• Advertising is entering a period of long-term, irreversible decline,
due to the disruptive impacts of web technology
May 6, 2009 slide 4

5. Online advertising is exploding...
Source: PricewaterhouseCoopers LLP
May 6, 2009 slide 5

6. But the big players control the action...
Source: PricewaterhouseCoopers LLP
May 6, 2009 slide 6

7. And Google is the biggest of the big
Source: PricewaterhouseCoopers LLP
May 6, 2009 slide 7

8. Thought experiment: Can current advertising
economics support a startup media venture?
Lightspeed Venture Partners: Three ways to build a
$50M, ad-supported digital media company:
• General-interest, broad-reach site
– ~$1 CPM or equivalent
– Must be in top 10 in page views
• Demographically targeted site
– ~$5 CPM or equivalent
– Must be in top 25 in page views
• Special-interest site
– ~$20 CPM or equivalent
– Must be in top 125 in page views
May 6, 2009 slide 8

9. “Chaos Scenario 2.0”
“Consider something barely imaginable:
A post-apocalyptic media world
substantially devoid of brand advertising
as we have long known it.”
--Bob Garfield, Advertising Age
1. People don’t like ads
2. But they crave information
3. The consumer is in control...no, really
4. Diversion of ad budgets to online customer
engagement infrastructure
5. Pay per view
May 6, 2009 slide 9

10. Now for the good news...
• “Chaos Scenario 2.0” plays to the greatest strengths of traditional media:
– Being the recognized authority on a special-interest topic
– Forming a niche community of avid enthusiasts with
shared interests and values
– Creating an editorial environment where advertising is viewed as
information
• Aligns with web 2.0 trends that threaten to rain “creative destruction”
on existing global media monopolies:
– Open media platforms
– “Global tribes”
– Micropayments
May 6, 2009 slide 10

11. Open media platforms
“‘Open’ is the new black.” --Linda Barrabee, Yankee Group
Open media enterprises:
• Adopt the tools, business strategies, and values of the “open source”
software movement:
– Blogs, wikis, media sharing, social networking
– Radically downsize the economics of developing, marketing, and
monetizing intellectual property
– Actively embrace the practice of widely borrowing, quoting, referencing, and
sharing content without restrictive conditions
• Produce cultural products of surprising relevance, depth, and sophistication
• Tap into revenue streams that lie outside the reach of global media monopolies
• Engage global media in ways that create financial leverage, rather than
destroy value
May 6, 2009 slide 11

12. Open media examples
• Standalone news sites • Collaboratively edited
repositories
– Huffington Post
– Wikipedia
• Blog networks
• Public journalism ventures
– Federated Media
– AlterNet
– Gawker Media
– Global Voices Online
– Glam Media
• Special-interest social media
• Community bulletin boards
– AlwaysOn Network
– CraigsList
– Internet Evolution
May 6, 2009 slide 12

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15. Global tribes: The next marketing frontier
“We're seeing global tribes forming
around the world that are more and
more interconnected through
technology.”
“We used to be focused on
discovering the common hopes and
dreams within a country, but now
we're seeing that the real
commonalities are in generations
across geographical borders.”
--Melanie Healey and
James Haskett, P&G
May 6, 2009 slide 15

16. May 6, 2009 slide 16

17. Micropayments
“There has been an understandable focus on the Wall
Street Journal, the world’s preeminent business newspaper.
But Dow Jones has a plethora of prestigious brands and a
range of content that will provide us with a remarkable
opportunity to take advantage of the two most profound
social and economic trends of our age, globalisation and
digitalisation.
(Our purchase) comes at a moment in history when there is
a confluence of content and digital delivery and of
increasingly sophisticated micropayment systems. (This
means) the value of analysis and intelligence to a business
user can be far more accurately reflected in the price of the
content--that trend is as true for a businesswomen in
Bangalore as it is for an investor in Idaho.”
--Rupert Murdoch, The Australian, 9.18.07
May 6, 2009 slide 17

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19. May 6, 2009 slide 19

20. “Don’t make a meatball sundae”
--Seth Godin
• Don’t slop a web 2.0 topping on the same old content and
business practices
• Do engage in your own act of “creative destruction”:
– Adopt open media platforms
– Create great content that people want to talk about
– Make sure it is available everywhere they are
– Give them the tools to share it with their global tribes
– Identify the unique value you provide, and reflect that value
in the price of your content
May 6, 2009 slide 20

21. < richmedium >
new media strategy and consulting
Richard Landry
CEO
richmedium@pacbell.net
415.309.8391