Fuse lit

Diane Mermigas writes a good summary of the fuses lit under big, old media and how they’re burning down this year.

In truth, it all comes down to the caliber and vision of company management and leadership — something media and entertainment industries have in perilously short supply. In a quest to conquer the digital fast track, an aging ruling class is anointing their next-in-line top executives and their next-of-kin, few of which have the “right stuff” to reinvent these industries during the next several decades. While many will move their companies into the thick of a digital transition, few are skilled enough to ingeniously mine it.

That will require a new generation of graduates from the Steve Jobs, Bill Gates and Steven Spielberg school of mavericks and free-thinkers. It also will require a new standard for innovation and imagination, concepts that these weary industries have difficulty budgeting for much less mandating.

Can the incumbents do it? I’m not sure.

She goes on to give them their assignment. It’s very simple: Empower the consumer.

Companies will need to be thoughtful about reshaping industry economics and logistics according to the new rules of play.

The bottom line: they likely will make more money than they do today beckoning to the whims of emancipated consumers….

If the likes of Google (through search and other online analytics) and Apple (through portable devices) taught us anything in 2005 it is that empowering consumers is very good business….

…it looks like the “killer application” of new media is what the consumer wants, when they want it, where they want it.


  • dan

    Can the incumbents do it? I’m not sure.

    If the open source has shown us anything……

  • Jeff:
    I know you have a libertarian streak, but I think it is time you reconsider your “empowering the consumer” mantra.

    Since the days of Thorstein Veblen, Vance Packard and John Kenneth Galbraith social critics have been claiming that producers sell what they want and influence consumer tastes to conform.

    “Have it your way” has the built-in premise that you are going to buy a hamburger for lunch because that’s what the store has decided you are going to get. The consumer choice is not a real one, the lack of a pickle doesn’t empower me to buy a falafel instead.

    The truth is that the balance between the consumer and the producer continues to shift towards the producer as businesses consolidate and the range of meaningful choices continues to narrow. There are now 50 kinds of toothpaste on the shelf, but if you check you will find that almost all (Tom’s seems to be an exception) contain some subset of exactly the same ingredients. I don’t want saccharine (a known carcinogen in my toothpaste).

    As a matter of fact when the cancer link was found the industry pushed through special regulations to keep it on the market, so much for consumer empowerment:

    Industry is centralized and can amass the power of advertising and, when necessary, government to promote its products. Consumers are diffuse and effectively powerless to influence meaningful product choices.

    So, unless you can suggest a way consumers can actually influence the marketplace, your empowerment arguments will remain utopian.

  • Baa.

  • Robert
    It’s nice that you insert the word “meaningful” into your statement “range of meaningful choices continues to narrow.” But it’s so vague.

    The fact is big companies launch over 25,000 new products every year. And most of them fail because consumers choose not to buy them or buy them often enough. Consumers aren’t powerless. If you are running a business big or small you’ll find consumers are the long tail that wags the dog. There are a few exceptions but fewer as the decades roll by.

    BTW I’ve had falafels for lunch in big towns and small and in several Western countries. Often they have been available in the same neighborhood as a Burger King or Burger Queen. There are lots of choices.

  • LH:
    I purposely picked rather trivial examples because I didn’t want to get sidetracked into a discussion of what proper social policy choices might be. So I’ll just cite a few others of the same flavor:
    1. Music releases. As you are aware the young are very annoyed about the way their options have been limited in what music is released. The worldwise music business is now down to five companies. A similar situation has taken place in the radio area. Two companies control most of the radio stations. Now it is true that alternate business models are starting to emerge, but they still constitute a small part of the market and there has been a period of over a decade where the oligopolies called the tune.

    No company or oligopoly controls its market forever, just long enough to limit consumer choice and control what is offered.

    2. Cable/satellite TV. In most regions people have only one cable TV company. They may or may not be able to get satellite depending on location. Even with this option, they are forced to take the program packages the companies offer, rather than being able to select those channels they desire themselves. That doesn’t look like consumer choice to me.

    In many areas of life we have gotten so used to having our options limited that we don’t even realize the limitations. When the auto companies started running things during the 1920’s they managed to eliminate all the light rail system (trolleys) in almost every metropolitan region. These were replaced by buses made by the auto makers and private cars.

    It is only now, about 90 years later that some small efforts are being made to restore light rail service. A cynic could say this coincides with the decline in political and economic power of the auto industry. Even with this small movement, new fringe communities are always built with highways as part of the design, not public transportation. Consumer choice, or a loss of imagination, or continuing pressure from the big industrial components (autos/steel/rubber/highways/oil)?

    If you haven’t read any of the classic texts on consumerism and the power of advertising I would recommend them. The classics are all well written and witty, even if some of their examples may seem a bit dated. There are many current works in the same genre as well.

  • I have read a few of the classics (actually quite a few in advertising) but not all. Which ones did you have in mind? I read “The Road to Serfdom” for example on consumer choice.

    The world of radio and cable are two sectors I’ve been following very closely since the 70s. I don’t think either is a good example because unlike your choices for lunch (or many other areas of your life) radio and cable have been and still are protected from feeling the wrath of consumers by government regulations. It’s not a free market at all as Jeff (I think) would like to see.

    But still both are subsets (along with music) of the entertainment choices we have. Now who can show that we have fewer total entertainment choices than our parents or grandparents?

  • The case study here is music. Thanks to Apple, you no longer have to buy what the record company chooses to package as an “album.” Thanks to MySpace, you don’t need a big record company to get exposure and promotion. Thanks to Google, you can find it all.

    Tell the record company executives reading their unit sales reports that the power of consumer choice is a utopian vision.

    I’ve heard lots of people argue that no one would click on an ad on a search results page. Hmm, wonder where Google got that $5B from.

    As Diane Mermigas points out, the proof is in the quarterly earnings statements. You just can’t argue with the numbers any more.

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