Changing the Channel
advertising aggregators on the Web, who can claim much of the revenue before the content is even consumed. For example, Google provides consumers with access to newspaper site stories and claims most of the potential advertising revenue associated with the consumer before the consumer even gets to the newspaper’s site. Device manufacturers can also lead to “value leakage” from content investment as they create and sell devices that store and replay content but which don’t necessary have to make any contribution to that content (e.g. people can download their existing CD library to an i-Pod with no further payments for the content). So while it is certainly true that the advent of the web may provide opportunities for new revenue streams and monetising quite niche content it may also create more “value leakage” from advertising and pay TV models alike. Markets left to themselves in this environment may be very innovative at creating new ways to retrieve, mash up, share and store existing content, but it may not provide sufficient new content leaving everyone to live off a past golden age of commercial and public service TV investment.
Changing business models and the new aggregator monopolies The internet transforms and challenges existing business models and supply chains, creating new entrants and sometimes destroying incumbents. In many cases this is to the long term benefit of the consumer, bringing down prices and improving convenience. Services such as Amazon, Betfair and Google have helped transform the book trade, the betting market and intention based marketing for ever. The rise of high capacity digital TV systems in the early 1990s and then broadband internet connectivity in the late 1990s has certainly reduced physical barriers to entry and allowed for more globalised competition. Yet it has also led to the emergence of new wave of powerful players in pay TV (BSkyB accounts for over 70% of all UK pay TV homes), Google accounts for over 80% of all search based advertising in the UK, Amazon for over half of all online book sales, Facebook for a majority of new social media registrations and Ebay for a large slice of UK online auction traded value. The seeming paradox of lower barriers to entry and more market capacity leading to new monopolies is accompanied by a second more puzzling paradox. These new monopolies do not appear to behave like classic text book monopolies, restricting output, pushing up prices and reducing quality. In many cases, these players offer a vastly superior service to their physical predecessors and to their internet/digital TV rivals. Pay TV customers are not complaining about the quality of service from Sky (even if the entry level price is quite steep), and advertisers and consumers are not complaining about the quality or price of Google’s service. Yet while these new powerhouses of the global media sector seem to be offering better and cheaper services to traditional alternatives, the challenge their business models pose to the traditional media sector value chains and ecologies may well be storing up real consumer problems for the medium and long terms, problems that were hidden while traditional media sectors remained fairly healthy but are now being exposed by the current recession. If more monies shift
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