2013: The inevitable rise of corporate media and Silicon Valley's disruption of all media

Corporations are becoming media companies and they're using Silicon Valley technologies to do it.
Written by Tom Foremski, Contributor

When it comes to making industry predictions I always resolve not to make any, but as you can see, I have trouble keeping my new year's resolutions.

Two year's ago I made the same resolution and failed when I wrote: 2010 Prediction: The Media Tsunami Is Coming...

The media is dead, long live the media. We now have more media, in more formats, in more times of the day and night, from more people -- than at any other time in history. And we will get even more in 2010.

When I talk about media, I mean anything and all things that are published: news stories, magazine articles, TV, radio, video, music, advertising, photos, web pages, and of course social media. All of it, all the media that's fit to print and all that isn't. 

The low cost of the tools to make media content is a big driver, more important however, are the media hungry platforms that make it easy to publish anything and distribute it widely. One-click uploading to Youtube, or Facebook, or wherever, it's all very easy to create and publish media. A tsunami of media.

Tsunamis come in waves...

The horror of Japan's tsunami showed that it's not just one big wave but a series of large waves that collectively aggregate a force of unimaginable destruction. Similarly, the media tsunami that we are caught in, has several waves, some have yet to hit the shore.

The social media wave is one that is easy to see and it's still moving fast but there's another wave close behind.

The rise of corporate media...

As traditional media organizations struggle and mostly fail to deal with the massive changes disrupting their industry, corporations are rushing in to fill some of the empty spaces by creating their own media content. 

Every company is a media company -- not because they want to be but because they have to be. They have to be seen in the world or they cease to exist, which is why they are ramping up their output of corporate media. And we are just at the start of this trend.

I've worked with Intel on some of its internally sourced media projects; Cisco Systems with its "The Network" publication; and ambitious ventures such as Nissan Motors' TV news channel, are all examples of how corporations are becoming media companies.

They know the value of high quality media content about themselves and about their industries is essential to their bottom-lines.

Since the traditional sources of high quality media, the newspapers, trade publications, magazines,TV shows, etc, aren't producing enough of it, corporations have to produce it themselves.

This trend could be viewed as stop gap measure that buys time until traditional media businesses figure out their new business models, and start growing again. But it's not. There has been a fundamental shift in the business of all media that can't be turned back.

Unstoppable and inevitable...

The reason the rise in corporate media is unstoppable is because the disruption in the media industry is unstoppable.

When your industry is in the path of a disruptive technology huge numbers of businesses will not survive -- no matter what they do. This is why disruptive technologies are called disruptive and not because it's an edgy term.

Even if a company sees the train wreck well ahead on the track they are on,  it won't save them. I've seen it time and again during my 25 years in Silicon Valley, they will slam into that train wreck. The vast majority won't be able to down size, change tracks, or reform their business model in time. Disruptive technologies disrupt.

Making cars and making news programs...

Nissan Motor Company has built a full sized TV studio and has staffed it with top TV journalists from the BBC and elsewhere. It's producing high quality news shows that cover everything that is news, even if it's about Nissan or its competitors, even if it's the riots in China over the territorial dispute with Japan, where mobs were burning Japanese cars and attacking Japanese restaurants. If it's news it gets covered, no matter what it is, as any top news organization would do.

When I met Simon Sproule, Nissan's head of global marketing late last year, I asked him why not just sponsor a TV news show? Why go through the trouble of a very steep learning curve in figuring how to build, staff, and operate a TV news show?

His answer shocked me but it also confirmed that my seven year old analysis of the global media industry was spot on. He said he didn't trust that traditional media companies would succeed in figuring out the new business models.

It makes sense. Why should Nissan invest several years of its massive advertising spend with TV networks if they won't survive the disruption? Taking away Nissan's money will certainly hasten their decline but spending that money in the same places won't help either.

The risk for Nissan is that if it doesn't take action of some kind today, its investments of money and relationships with traditional media companies over the next few years will have been for nothing, and it'll be at square one trying to figure out what to do next. It's better to start now.

If the media companies manage to survive the disruption, Nissan can use them to sell cars; if not, then it has another way to sell cars, by producing high quality professional media itself.

Corporate media Pulitzers...

If Nissan is thinking that traditional media organizations won't survive then other large corporations must be thinking about this too. Will they follow Nissan's example? This is why I've asked the question: Is Corporate Media The New Funding Model For Serious Journalism? - SVW.

It might seem crazy to think of Nissan, Toyota, and Ford Motors competing for Pulitzer prizes for excellence in reporting but it could happen. Could we trust such media sources? Yes, why not? Nissan is already producing serious journalism, and what's to stop others doing it too? Since corporations are very serious about protecting their brands, they would be highly motivated to produce high quality journalism.

The rise of corporate media is unstoppable and inevitable, and it might just be essential to society. If we can't figure out a funding model for serious journalism we will be in serious trouble, special interest groups will have more power than ever before.

More media leads to even more media...

The problem when there is more of any thing, is that the value of that thing is less. Lots of diamonds are valued less than less diamonds -- which is why De Beers tries to control supplies.

The value of a piece of media content is determined by how much money can be earned from it, via selling ads, services, etc.

All media companies, traditional and new, know that producing more media creates opportunities for more revenues. 

In the print world producing more media is constrained by high costs of production and distribution but not in the online world. For each media company, the more media it can produce, the more revenues it can capture.

The more it can lower the cost of media production, through using machine generated/scraped content, and user generated content, the more it can profit.  

This is why producing ever more media content is the strategy for every media organization, and since every company is a media company, it's also the strategy for every company.

But with every company producing more media, the resulting inflation is a killer. 

For example, it takes ever more traffic to earn the same advertising dollars from the same amount of content. Companies have to produce more media to make up for the continued fall in the value of their media. But producing more media further lessens the value of all media.

Reporters at popular online news web sites now have to produce five or more stories per day.

Back in the heyday of print journalism, ten years ago or so, newspaper reporters were expected to produce four or five news stories per week. At some of the large national magazines such as Businessweek, Newsweek, etc, journalists could make high six-figure salaries producing five or six articles a year. 

More media also means that we see more low quality media being published, it's like the dirty black water that a tsunami grinds in its wake. If you can produce higher quality media you'll be able to rise above the rest. There's a lot more high quality content being produced but so what? It still has to compete against more of all types of media, including more high quality content.

Some are focusing on producing "compelling" content, I see a lot of PR "gurus" espousing the need for compelling content, compelling story telling. It's true, compelling content is a good thing to have and we are seeing a lot more compelling content being produced. But so what? It still has to compete with more of everything.

The value of all media content as a whole: news media, corporate media, compelling or mundane media, photos, videos, social media, will fall in 2013 and continue falling well into the rest of this decade. 

What will this mean? We can expect higher marketing costs for companies. Traditional PR will have less impact. Advertising will become even less effective.  And governments will have trouble communicating with their people.

These are just some of the things ahead for us. A cacophony of voices becoming ever more shrill and difficult to hear, the good and the bad, filtered and unfiltered, a mass of media, a media tsunami on an unprecedented scale.

The epicenter is here...

Silicon Valley is at the epicenter of this tsunami, it became a Media Valley years ago. Our top companies and startups are essentially media companies -- technology-enabled media companies. 

Google, for example, publishes pages of content with advertising. Facebook, Twitter, and multitudes  of startups are media companies.

Silicon Valley is the source of technologies disrupting the media sector, and the source for tools and services that companies are using to transform themselves into media companies. It's an incredible place to be right now because it's becoming a massive Gutenberg machine that's about to start cranking out new types of media in formats as yet unimagined -- and as it's effects on us will be too. It's by far the most interesting place in tech, imho.

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