Risk, reward and rewind

Michael Hedges January 12, 2009

There’s little doubt 2009 will be a year of plenty, plenty of pain. Media, big and otherwise, mirrors their audience in risk aversion. For many, survival will be the reward.

A Swiss banker, congenitally opposed to having his name spoken or printed and absolutely risk averse, offered two concerns. “The credit crunch affects everything,” he said in a private conversation over the weekend. “Next will be unemployment.”

“La monnaie ne circule pas (Money isn’t moving),” he said, summing up. That money never stops moving has been the paramount law of free markets. We seem to have hit that wall and are now venturing into uncharted territory. Following the money, the first law of investigative journalism, is leading to a black hole where everything is sucked up and nothing, including media, escapes. Free market theory might be broken but don’t bet against physics.

Media’s future will be taking a holiday, most of 2009, if not all and if not more. A ‘new model’ for many giant newspapers, largely in North America and Western Europe, won’t be found, excepting the occasional bankruptcy. Free TV – public and private – will suffer similarly. Financing ongoing operations – including content creation – will challenge even those with guaranteed revenue (the public sector media) and those otherwise insulated from falling share prices and toxic debt. The big media news will be just how far traditional media rewinds.

Pure play Web sites offering news, opinion and entertainment continue to show strength and advantage. Increasing broadband internet availability correlates directly – and negatively – with falling newspaper circulation, free-to-air TV viewing and just about any other traditional media shrinkage. More free access pure play Web news sites on consumers’ media ‘shelf’ leads to more trial, adoption and acceptance. Web-based business-to-business portals seem to be recession-proof; business-to-business advertising, sponsorship and public relations expanding against the tide.

The other advantage for pure play Web content portals is purely financial. Costs are low. Born of the blogging culture if not the pirate radio culture these sites – including the well-known – aren’t spending a lot of money. The start-up of Slate’s French edition (if it can be called that) is reportedly less than €2 million. Many operate on much less, paying writers ‘bloggers rates’: little or nothing.  The greatest cost is technical; techies no longer work for pizza and beer.

One writer for a pure play news and comment Web portal in Switzerland – financed, notably, by a very big publisher – moaned about “decreasing quality of the staff” as the most qualified editors and writers found ‘real’ jobs and their replacements, when they appear, are “brain-dead.” It seems that once that initial investment is spent and gigantic returns aren’t immediate the accountants are quick to act. With that philosophy man would never have walked on the moon or, arguably, out of the caves.

Traditional media has pushed its ‘less is more’ argument for cutting its own content to the bone about as far as it can go. In the immortal words of one US radio executive, “The folks notice, dammit.” The Web added to the folks’ media ‘shelf space’ more content than they can assimilate, thus the perception of more, if not better content. With ‘the credit crunch’ hitting ‘the folks’ where they live – energy, housing, food costs more dear, employment a constant worry – the only media items moving off that ‘shelf’ are the free ones and those satisfying very specific interests.

Other aspects of the digital culture are turning negative. Calls to delay analogue TV switch-off in the US gained support last week from President-elect Barack Obama. While Europe’s mandated analogue TV switch-off is complete or nearly complete in several countries, consumer interest in digital radio is, at best, stalled. Don’t even get me started on mobile TV.

It’s notable that one of the few items raising attention at the otherwise moribund gizmo trend fest, the Las Vegas Consumer Electronics Show, was an internet radio receiver for automobiles. If, as the wizards of high finance believe, it will be a long year or more slog before consumer confidence ticks up next generation internet distribution – WiMax, LTE or something else – will be ready to go. With confidence in the air – if not prosperity – consumers will gladly embrace the new and exciting. Without that confidence, everything looks like risk.