How serious a downturn? Media pros don’t ask the Times
Early last year, or maybe the year before, I bought the domain WorkingClassMBA.com – don’t go there, it’s not active. It was a joke. At the time my studio was feeling the early signs of economic contraction, our margins were being squeezed, and we thought it would be funny to chronicle the less than glamorous life of a couple of MBAs. I’m glad we didn’t. It would look pretty tasteless today. Shortly thereafter opportunity knocked and I was off to my current gig, but that studio and Xprove continue to grow.
Today that URL is no joke. The New York Times featured this story about the situation faced by many formerly high-salaried professionals. Many of us in the media business have spent a good portion of our careers “between positions” and “freelancing here and there.” We’re used to our fortunes being closely tied to the business cycles, but not your typical executive. He or she has made $150,000/year rain or shine.
Nine months ago [Mark Cooper] lost his job as the security manager for the western United States for a Fortune 500 company, overseeing a budget of $1.2 million and earning about $70,000 a year. Now he is grateful for the $12 an hour he makes in what is known in unemployment circles as a “survival job” at a friend’s janitorial services company.
No need to rehash freshman econ. The ripple effect is profound. There’s no point in advertising a Lexus to Mr. Cooper. In fact there’s little to be gained advertising the Denny’s $3 breakfast special to him. As advertising dollars shrink, the media – already hurting – further contracts.
So it was with more than a little surprise when I read Gail Collins column in the same NY times. Her shock that soap operas are stooping to product placement to generate revenue is, well, shocking. They’re called soap operas for a reason. Their job is to sell soap. In the broadcast model, entertainment is a catalyst for economic activity – not an end unto itself.
Collins is a very entertaining and often spot-on columnist, so I was ready to cut her some slack until I saw this among the most emailed articles from today’s Times. Broadcast TV Faces Struggle to Remain Viable – an excerpt:
The future for the networks, it seems, is more low-cost reality shows, more news and talk, and a greater effort to find new revenue streams, whether they be from receiving subscriber fees as cable channels do, or becoming cable networks themselves, an idea that has gained currency.
You don’t say, Gray Lady. What have your media writers been watching for the last decade?
Post Election Day blues
This year broadcasters will mourn the passing of the US election season more strongly than they have in the past. As noted in an NPR piece yesterday, the billions spent in television advertising during the primaries and the final election barely covered the advertising revenues lost due to the economic downturn.
Couple this with the finding that about one in five televisions that receive over the air broadcasts will not be upgraded to receive digital signals in February, and it’s clear broadcast television is in for some challenging times. It should be noted that only 15% of US televisions use a traditional antenna. The other 85% will continue to receive satellite and cable signals as they always have, so only 3% of US televisions are slated to become doorstops.
As noted in the NPR piece, many local broadcasters will be motivated to move more offerings online. In tough economic times, internet advertising becomes even more appealing with pay per click pricing models and more precise audience tracking.
Content producers will be producing more content specifically for internet distribution to further differentiate their local news and public affairs offerings in a hyper-competitive environment. Workflow enhancements that speed the process of versioning and publising video online will be in demand.
Most interesting will be to see which platforms and business models broadcasters choose. Will they host their own content? Though much less expensive than building an operating a transmitter, few broadcasters in a tough economy will enthusiastically embrace increased headcounts and infrastructure costs. Look for Akamai and Brightcove to thrive in this environment.
