Even though we are back at the office, we will continue to share what we learned at SXSW '16. We just can't stop sharing. :)
The first session of my SXSW experience was short, sweet and incredibly informative. Delivered by Ben Lerer, Founder and CEO of Thrillist, the session was a blistering shotgun history of media with an emphasis on the emerging role of digital content creators and distributors. Lerer began the session with a brief history of traditional media. In 1950, for example, only about 10% of Americans owned a television. At the time, the technology was both severely content limited (because there were only three networks) and too expensive to be within the reach of the average consumer. Lerer draws a parallel between these early days of television and the state of the Internet in the mid 1990s – the basic elements existed, but there was a technological shift needed both to make this new media widely available and affordable.
For traditional media, this shift came in the 1980s with the first big wave of cable companies like Viacom, Warner and Comcast. Cable brought television to remote areas, and cable penetration grew exponentially throughout the 1980s. As a result of this emerging market, many of the huge media companies we now know came onto the scene as startups. These include companies like ESPN, Discovery, BET, MTV and many others. This new group of media companies started mass-producing a huge range of content, and it is this new wave of content production that led to their success. Something very similar is happening right now with digital content.
The central point of Lerer’s Theory of Media Evolution is a recurring trend: changes in technology lead to changes in consumer behavior, and these changes in consumer behavior lead to a massive opportunity in content creation. Relating this trend to the present, a new opportunity is now arising. The predecessors of the digital age built great wonders out of stone. Their rise was historic, but their product lacks the versatility of digital media to produce inexpensive content and distribute it quickly and organically to users. The cost of production and talent acquisition in this old paradigm is staggering compared with that of its digital counterpart.
A change in technology, namely the rise of the inexpensive and accessible Web, opened the door to the new school of players like Google and Facebook. These companies are more versatile and forward-thinking. They acquire digital content producers at the speed of light and invest catastrophic amounts into the future, while investing very little in maintaining the status quo, as their traditional media rivals have done for over a decade. On the frontlines of these, the new school is the contemporary equivalent of the MTVs and ESPNs of the 1980s – companies like the Huffington Post and Vice and Buzzfeed. And Google and Facebook are becoming the new Viacoms and Time Warners, acquiring these content producers and distributing them organically where users are spending their time.
Here’s an illustrative statistic: 44% of Millenials pay for traditional television service, but 56% of this same audience check their phones multiple times every hour. The new arena for digital content is clear. Mobile platforms are the new venue, and their MO is proving less than compatible with traditional media business models. The “new normal” is instant and easily accessible content without the tollbooths in the form of blatant advertisements that characterize traditional media. New advertising exists where users live. Even sponsored content has value outside the product or idea it is attempting to sell. Users simply have no patience for the sales pitch. They want something real, and those advertisers and content producers who can provide real content will be the winners in this high-stakes race.