Old Media Struggles for Relevance

Old media took one to the nose this week when Movie Gallery – the parent company of Hollywood Video – announced that it would file for bankruptcy on February 3. The company announced plans to close 805 “poorly performing” stores out of 2,415. Hollywood’s brick and mortar business model is suffering from heavy competition from streaming/downloadable content and the convenience of competitor RedBox.

Meanwhile, The Columbian – a local print newspaper in my neck of the woods – emerged reorganized from bankruptcy this week. They’re planning to abandon their brand new posh downtown Vancouver facility (which it was able to occupy for just one year) to Bank of America, and made plans to repay $25 million in debts to creditors. The Columbian staff returned to their old office place and executives called it a “good fit” given their new size.

Burdened by debt and fixed expenses like leases, bank notes, and land, the immediate strategic landscape signals a dramatic elimination and consolidation for old media. I recently compiled some statistics for a class that I’m teaching on social media:

• Newspapers
  “The outlook for newspaper publishers is grim. Their business model is broken and advertisers are bailing. Newspaper advertising revenues in the US declined 16.4% in 2008 to $37.9 billion. By 2012, spending will slide to $28.4 billion.” (5)

• Television
  “The television industry in the US is expected to see lower-than-expected revenues of $15.6 billion in 2009 that will make for a 22.4% decline for the year.” (6)

• Magazines
  “U.S. magazine publishers posted an 18 percent decline in advertising revenue last year, more than twice as steep as a year earlier… Revenue from advertising sales at major magazines plunged to $19.5 billion last year from $23.7 billion, according to Publishers Information Bureau data. The drop in 2008 was 7.8 percent. Ad pages fell 26 percent to 169,218.” (7)

• Radio
  “U.S. advertising fell 15.5% in 2009… Last year, local radio tanked by 20.9%, according to Magna (via Radio Ink)… Local radio is expected to steepen its decline next year, falling another 10% in 2011.” (8)

What recent news on competitors like Movie Gallery and The Columbian – in addition to these statistics – should be telling us is that the immediate strategic future (perhaps 12-36 months) will be a catastrophic time for old media. Proud institutions will evaporate, small outlets will become more nimble and shrink their range of publication to meet their dwindling subscribers, the industry’s employment base will either bail, retire, or become part of the wave of unemployed.

Think about your business model or advertising model for a moment. Does your small business depend on these outlets to market your products and services? Does your small business depend on physical distribution and delivery of any kind? Does your small business depend on maintaining consumer attention in an era where consumers can edit-out your message? If traditional old media is gone or irrelevant, what does that mean to your brand and your message? If you physically distribute products and services, and have no current means of automating, delivering self-services via the web, or capturing the attention and the imagination of your customers through social media, you’re at risk. You’re just as much at risk for relevance as video stores, book stores, newspapers, radio stations, TV broadcasters.

What you should be asking now is, “How can I change my model?” How can you get closer to your customers and retain their interest and attention? How can you automate internally to reduce the influence of labor on your efficiency and productivity? How can you change your distribution and service model to electronic self-services found on the web? This isn’t an “evolve or die, gloom and doom” message: it’s an opportunity to proactively manage and reshape your business before market forces do it for you.

As a business, ignoring the risks leads right down to these examples with Hollywood Video and The Columbian. As an individual, it will lead you to a point of becoming a victim of market and technology transition. Businesses and individuals alike must be asking themselves a critical question: “What can I do, right now, to redefine how I operate, reduce expenses, and do more with less?” Doing so requires courage and bold action. Those who’ve already asked that question of themselves last year are taking advantage of their new economy of scale this year, and are positioning themselves for relevance in the years to come. Where will you be? Where do you want to be with your business?

R

5. No Author. No Title. Retrieved 2010.01.20. URL: http://www.emarketer.com/Reports/All/Emarketer_2000552.aspx

6. No Author. No Title. Retrieved 2010.01.20. URL: http://thepowerofinfluence.typepad.com/the_power_of_influence/2009/12/the-television-industry-in-the-us-is-expected-to-see-lower-than-expected-revenues-of-156-billion-in-2009-that-will-make-fo.html

7. No Author. No Title. Retrieved 2010.01.20. URL: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFMxCvePvNAQ

8. No Author. No Title. Retrieved 2010.01.20. URL: http://www.mediabuyerplanner.com/entry/48183/local-radio-to-slump-2.5-in-2010-followed-by-10-drop-next-year/

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