Is media in the wrong business?

Is media in the wrong business? Looking at business model imperatives it seems that it is…

In the excellent book Business Model Generation, by Alexander Osterwalder & Yves Pigneur, there is a chapter on “unbundling”. Where the concept is that there exist three fundamentally different business types, and that a company should separate these types from each other to avoid conflicts and undesirable trade-offs.

From the book:

    “The concept of the “unbundled” corporations holds that there are three fundamentally different types of businesses: Customer relationship businesses, product innovation businesses, infrastructure businesses.”

And then continues:

    “Each has different economic, competitive, and cultural imperatives. The tree types may co-exist within a single corporation, but ideally they are “unbundled” into separate entities in order to avoid conflicts or undesirable trade-offs.”

Under the imperative “competition” there is an interesting revelation: Where product innovation focuses on being employee centered, and customer relationship management on being highly service oriented. Infrastructure management has its competitive imperative set to “Cost focused; stresses standardization, predictability and efficiency”.

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Now looking at these three models I would say media definitely puts itself in the infrastructure category – which also might be its biggest mistake.

Media used to be in the infrastructure business, providing mere opportunities to traffic messages from the brand to the consumer. But today this is costing media dearly. Having little or no unique content, having standardized every piece of real estate available for the brands to purchase, and thus removing any advantage in the bidding war. Thus resulting in trying to sell its identical product by having the cheapest product (or the biggest discount) and flooding its editorial content with advertising in order to compensate for the low price per. unit sold.

Its sometimes seems like media doesn’t see that basic marketing economics (scarcity and demand equals higher price) also applies to their business.

If media is in the infrastructure business, it is in the wrong business.

I would suggest media position itself to the relationship business, and be selling completely different, more scarce and more valuable products to brands.

What I would like to see is a change of business model focus. From infrastructure destruction, to creating valuable relationships – providing new and interesting products for brands to sponsor in order to increase the value being created between media and the participant – as opposed to flooding the available real estate with messaging as uninteresting and generic as the format it has chosen to be presented in.

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4 Comments

  1. January 19
    Reply

    Interesting. I agree that media tend to put itself in the infrastructure business. This also has interesting ramicifations for industry innovation, or the lack thereof. Arne Krumsvik dealt with some aspects of this in his Phd treatise last year (UIO). Seems like I’d better get hold of a copy of that book.

  2. January 20
    Reply

    Hi Kristine
    I agree, and as the (most brilliant) book, which I am referencing claims; the infrastructure model is not only fundamentally different from the product innovation and relationship model – it can also prove to be damaging to them (create conflict and undesired effects).

    That is not to say that these models can’t live side by side, several corporations manage this balance. But to me it seems that media is so overly focused on infrastructure that there really isn’t – or really isn’t room for – any of the other models.

    But I know some companies are trying – and that is the only way forward. :)

    Thanks again for contributing, please let us know the name of the book if you have it.

    Best
    Helge

  3. January 20
    Reply

    Arne’s Phd treatise is called “The Online News Factory: a multi-lens investigation of the strategy, structure and process of online news production at CNN and NRK”. Although the research already is a bit outdated, it offers some really good, universal insights into why innovation is so difficult for the news industry. Unfortunately I don’t think it’s available online. It’s one of those things I’ve been planning to blog about for ages and have yet to find the time to do so, but one of these days I will.

    I agree that mainstream media unfortunately tend to be overly focused on infrastructure, but we are starting to see many start-ups who aren’t (even if that’s a development we have yet to see much of in Norway).

    Journalism.co uk is certainly one start-up who’s more focused on community, curation and building relationships (though I should say that I know them well because I have worked for and with them). I’m more and more thinking that we’ll see the most innovative media projects take place outside mainstream media (MSM) as MSM is too bogged down by institutional inertia, other institutional constraints and complacency…

  4. January 21
    Reply

    Again Kristine, excellent additions to the post. thanks again for contributing :)

    Best
    Helge

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