Umair Haque / Bubblegeneration

Tuesday, November 08, 2005

Media 2.0

The media industry is changing. Radical technological, management, and business model innovation is reshaping all segments of the value chain. This is the result of nothing less than a fundamental inversion of mass media economics, as well as the strategies that dominated those economics.

This inversion offers huge benefits for incumbents and new entrants alike to derive superior returns through new and strategically powerful sources of value creation. These new sources of value are laying the groundwork for an entirely new media value chain; one which leverages micromedia to deliver personalized, post-branded attentionstreams of chunked and microchunked disposable and essential media to communities of connected yet ever more hyperpolarized consumers.

What is micromedia? Micromedia is media produced by prosumers (or amateurs; sometimes, it's called "consumer-generated content"). Micromedia differs fundamentally from mass media. First, it�s usually microchunked. Second, because it's microchunked, it's plastic. Third, micromedia is liquid: prosumers can trade info about it � via ratings, reviews, tags, comments, playlists, or a plethora of othes. These are also micromedia; micromedia whose economic value lies in its complementarity with other micromedia.

Consider blogs. Their microchunking into posts is frictionless; lightweight standards like HTML and RSS coordinate it. This makes blogs plastic: posts can be cheaply linked to, syndicated, remixed, or otherwise filtered and tweaked. The open-access platforms that bloggers use to produce blogs also allow others to contribute complements, like comments, tags, and ratings; making micromedia liquid. Other kinds of services can then access, aggregate, and filter this micromedia, and, for example, individualize streams of content for communities or individual consumers.

Three acquisitions demonstrate the emerging segments of this new value chain: microplatforms, communities, and reconstructors. Fox�s recent acquisition of MySpace, largely for it�s community, illustrates the potential of Media 2.0 to reshape the way media is traditionally marketed and branded. Yahoo has already begun leveraging its recent acquisition of Flickr, which was driven by Flickr�s deep microplatform insight, to begin refocusing many of it�s properties, as well as to begin building a new competence in community-building. And although TiVo is in dire straits, it is not going down without wreaking havoc on the traditional broadcast value chain, forcing cable operators to incorporate DVRs with program guides into their core offerings � in effect, simple reconstructors which are already upsetting the delicate balance between networks and advertisers.

Conversely, it is not just that Media 2.0 offers new entrants alike the potential for economically compelling and superior returns. The costs of not entering the Media 2.0 market may simply be too high to ignore. At the limit, by ignoring Media 2.0, players may be ceding not just near-term financial gains, but also long-term strategic control of their industries to competitors. Two recent examples illustrate why.

For the last several years, the music industry has experimented half-heartedly with business models designed more to protect their decaying strategies and business models than to leverage the potential of new media technologies to revolutionize their value propositions: models fitting 1.0 economics essentially into 2.0 clothing. The list is long, extensive, and well-known Listen, Rhapsody, and the post-acquisition Napster are just a few names on it.

Now, the music industry finds itself suddenly confronted by a competitor whose competences, in the past, have only been tangentially related to music: Apple. As the dominance of the iPod & iTunes platform grows, Apple is increasingly able to dictate terms to suppliers like record labels � and is also increasingly able to command a greater and greater share of revenue from digital music sales.

Similarly, book publishers have recently been confounded by a new threat from a competitor whose competences, in the pat, have only been tangentially related to print media: Google. Google�s Print initiative, whose modest aim is to index all the books ever printed, threatens the print media market in almost exactly the same way that iTunes threatens music industry incumbents: that Google, by acting as the monopoly distributor of books over the www, will be able to dictate terms and command the lion�s share of revenues from digital book sales.

That two traditional media industries find themselves in such remarkably similar (and remarkably problematic) competence traps is no coincidence: both situations are the result of the media industry�s ongoing reluctance to fully embrace the possibilities that 2.0 technologies offer, and experiment with new business models focused on creating new value, rather than protecting old strategies and ways of doing business.

The iTunes and Google Print examples are a mini case study writ large: because very few traditional media players invested in building edge competences, a huge market gap was left open. Economics � the rich margins and scale and scope economies offered by 2.0 models � attracted new competitors from outside the industry itself, who had, in contrast, invested a great deal of capital in building exactly such competences.

These new entrants into the media industry, in effect � players such as Apple and Google � are now busy reshaping the way business is done on their own terms. Invariably, these terms are bad for media incumbents.

Bubblegeneration's pioneering and influential work on Media 2.0 and micromedia (we coined the terms) is detailed in this presentation.

To get started thinking about Media 2.0, ask yourself:

To what extent are microplatforms, micromedia, and aggregators and reconstructors a substitute or a complement for production, publishing/marketing, and distribution in my value chain?

How can I use micromedia platforms strategically, to build resources and capabilities which drive a sustained competitive advantage across my products, services, or businesses?

To what extent is increased micromedia penetration likely to erode the power of publishers, distributors, and marketers in my value chain, and shift value to the edges?

-- umair // 8:18 PM // 9 comments

Comments:

Thanks Umair. These are very good articles. But I'm a bit hazy about the distinction between "plastic" and "liquid".

Might be worth saying a bit more about these two properties some time.

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phil jones // 8:56 PM

Hi Phil,

Thanks for the comment.

The distinction isn't made crystal clear here, but it will be as my longer piece on this is published formally soon (that's also why I can't elaborate too much here).

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umair // 3:24 AM

I used the analogy of a Pez Dispenser to demonstrate your concept of "Unbundled Microchunks".

I continue to find that you have captured concepts that I believe in, but I had been unable to explain them succinctly. You have achieved that. Thanks.

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Tim Stay // 6:14 AM

The King asked the Queen
and the Queen asked the Parlourmaid,
"Can we have some writing
for the wooly folk to read?"

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Anonymous // 9:45 PM

This is a fascinating post! It could not have been expressed better.

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John // 8:09 AM

hi umair i know this is a very old post but i'm an italian student and i'm very interesting in your topic of micromedia for my thesis. I try the link to the presentation but it no longer works. Can you give me the new link to the presentation or some other documents ? Thank You and compliments for the post

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Scattlebrain // 4:09 PM