I used to deal with the US TV channel NBC in the 90s, buying advertising and enjoying their hospitality (apart from one mortifying experience at a recording of the Conan O’Brien show). Cheers, Seinfeld and Friends were a few of their successes; the channel was massive and one of the most profitable divisions of General Electric, which Comcast has just bought in a deal, valuing NBC as worthless, zero.
Big media companies are struggling; EMI, a former music giant doesn’t know how to define its position in the current landscape and has been forced to cut thousands from its workforce. The Washington Post, DC’s oldest newspaper and winner of 47 Pulitzer prizes, has also shed staff and closed its national bureaux, saying: “We are not a national news organisation of note.” Film studio MGM was recently purchased for less than half its 2005 value.
These wounded media giants are quite simply not getting enough revenue for their traditional work (writing articles, making films or music). People are consuming as much media and music as ever, probably more, but they are increasingly using the internet for their consumption, which has, in turn, destroyed the traditional markets for these media.
Previously, companies that created media, controlled its distribution. EMI owned its recording studios, pressing plants and the means of distribution to the record stores. They were always troubled by piracy but it wasn’t a major problem. Now people simply use the internet to download music for free. The same is true of films and newspapers.
The internet has enabled super-fast transmission of digital data, but technology companies (YouTube, Google etc.) can evade responsibility for their business models and the previous market has been broken. These companies distribute others’ creations, sometimes wrapping them up slightly differently, but essentially the internet has facilitated piracy on a massive scale, damaging media companies and their artists.
Look at newspapers. They are no longer the main source of news. They pay journalists to create content and then watch as websites such as the Huffington Post steal and recycle their content. Pay walls don’t work; why would we buy something from one media owner we can get for free elsewhere? Specialists, such as the Economist, can charge successfully for their online content, but generalist titles can only dream of doing so.
Just because the internet has eliminated distribution costs, it doesn’t mean that content should be free; there is an ongoing debate about price, copyright, intellectual property and the morality of distribution. The consumer might like free content, but there will be problems with quality. Newspapers are cutting back on journalists, music companies can’t afford to invest in new talent and TV networks are increasingly relying on cheap reality formats.
The laws of copyright need to be updated to reflect the technological reality and the laws of the land need to be enforced; but the internet is chaotic and unstructured. Businesses do not have a blueprint for how to operate successfully in the new media landscape and the old order is being turned on its head. It is hard to feel pity for media giants, but if they can’t make money out of the internet, what hope have the rest of us got?