Old media bubble?

Fascinating report out from Kagan Research earlier today. The report notes that even though cinema is the text book definition of a mature industry, private equity money keeps pouring in to the industry.

“This volatile business, amazingly, never seems to be short of investment capital,” notes Wade Holden, analyst with Kagan Research. “One big reason is that the major studios have a knack for turning every new technology that, at first glance, is threatening into a source of money. That goes back to the VCR and before that broadcast TV itself.”

True enough. Coupled with the steady cash flow still generated by old media, the sector’s a pretty good hedge against the inevitable burst of the social networking bubble. Think about it. How much money is there behind a social network? According to Fast Company’s hype machine, a lot.

It’s a tough read without a Web 2.0 jargon dictionary. The article focuses on the work of a 28-year-old “internet anthropologst.” Enough said?

Personal connections–forged through words, pictures, video, and audio posted just for the hell of it–are the life of the new Web, bringing together the estimated 60 million bloggers, those 72 million MySpace users, and millions more on single-use social networks where people share one category of stuff, like Flickr (photos), Del.icio.us (links), Digg (news stories), Wikipedia (encyclopedia articles), and YouTube (video).

Gotta love that 60 million bloggers quote. Let’s assume that about a third of the world’s bloggers are Americans – a conservative guess. That means that about one in ten American adults are bloggers according to FC. I think not.

It gets better.

“Social networking isn’t a product or, God forbid, a company, but a feature that lives in service of some other mission,” says Bradley Horowitz, head of technology development for Yahoo. “The spirit of social computing is the concept of leaving value in your wake.” That value starts with expression. Users of social-networking sites are producing and freely sharing a whole universe of content for others to consume. Some of it approaches journalism in quality, some approaches art, or advertising, and a great deal of it is more fun and appealing to the 18-to-34 target demographic than whatever is on TV. Why watch fake “reality” shows when you can connect with actual reality?

Yeah, every 18-34 year-old’s all about leaving value in his or her wake. Where do they come up with this stuff? Oh, and by the way, 18-34 year olds aren’t the demographic they used to be. They don’t represent the proportion of disposable income in the economy they used to.

Why watch that fake reality? Because that fake reality is edited by a professional. It’s fun to watch passively. I understand Horowitz’s point… to a point. This social networking stuff might eat into old media consumption, but what it’s really going to eat into is good, old-fashioned face to face social networking. Our personal social networks will become broader, but also shallower. That will be social networking’s legacy.

5 Thoughts on “Old media bubble?

  1. Love that you called out the “leaving value in his or her wake” comment for what it is.

    OTOH, don’t be too quick to dismiss the consumer generated media. It’s not a case of consumer generated being the alternative to “professional” media production, it’s both at the same time. Some people will consume less “pro” media in favour of consumer generated “genuine” content, but professional production doesn’t go away.

    Cheers Philip

  2. Philip, we’re on the same page. I was reacting to the 1998-like hype that Web 2.0 and participatory media have garnered. Participatory media and its virtual conversations will have a profound effect on people’s social networks and the public discourse. This will be a good thing.

    Participatory media’s effect on journalism will be profound.

    What I meant to say is what you said more elegantly — the three act drama’s not going away. I find it interesting that so many big private equity players realize this as well.

  3. I think you’re misinterpreting my comment “leaving value in his or her wake.” The point is not that this is deliberate, intentional, or altruistic. It’s not as if folks are waking up and asking “How can I make the web a better place today?” The wake a boat creates is by-product, not the prime motivation of the sailor.

    The point is that their natural traversal through systems can create implicit value that can be mined and reflected back to subsequent users. For instance, consider last.fm. It’s a fantastic service that depends on folks giving them the right to effectively spy on their listening habits. In aggregate, things like recommendations and discovery are enabled. This is what I mean by creating value in one’s “wake.” Nobody listens to music because they wanna make last.fm a better service. But through opting in, goodness happens.

  4. Bradley,

    Thanks for the clarification. Your point’s well taken. Perhaps I placed to much weight on the context of the quote (a rather bubbly piece of not-quite-gets-it psuedo-journalism) rather than the actual quote.

    Granted this is a direct quote from a conversation, so all nuance is lost. I latched on to the “spirit” incorrectly. My bad.

    Had the article mentioned last.fm instead of del.icio.us, I might have gotten your point more clearly. Don’t get me wrong. I love del.icio.us, but I’m less certain about the value I leave in my wake when I tag something there. It’s an incredibly handy tool, but for the most part I (and most other people I talk to) use it as a personal bookmark assistant. Very rarely tapping into the potential value of public tagging. Sometimes I poke around and look at other stuff people who’ve tagged the same links as I have tagged, but I can count on one hand number of interesting things I’ve found through those means.

    Thanks for weighing in on the conversation.

  5. Pingback: The TV Weasel » Blog Archive » Totally cool browser-based NLE

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