The medium is increasingly more vital than the message
Feb 17, 2015
Mobile messaging apps and the hyper-valuation of tech companies are reshaping the media landscape and raising concerns over regulation and revenue generation.
The technology market is running a high fever - and has been for years. The prices of startups that emerge from nowhere explode, and their acquisitions enter the accounts as investments simply based on valuations made by 'creative accounting'. One of the most aggressive fevers is around messaging apps, which cause falls and rises in stocks simply because of articles signed in Wall Street or technology publications. Beneath this financial madness, the continents are definitely shifting, but the 'hype' is grotesquely larger than reality will ever allow.
Understanding the technology market is an exercise in patience and caution so large that in the end, what ends up counting is intuition. Any economist can sit with you for an hour or two and explain why such a company is worth so much through econometric calculations, formulas, indicators, and accounting projections. In the end, the values that reach the 'market' are distortions of a dimension difficult to explain. Stop to think about how the financial market was ungoverned and in a complete state of disarray before the 'crash' of 2008. Then, it continues like that, just dressed differently. There are several locomotives heading for a fabulous collision, but everyone prefers to imagine that something will happen to avoid the impact.
The escalation of the value of bets seems to be now on the messaging tools mentioned above. In any scenario, it now seems certain that telephone companies will have to change their focus from offering telephone lines to offering internet connections. The regulation of what the telcos can or cannot do from now on is the big debate that will follow the current one about web neutrality. Without regulation, the power in the hands of the telephone companies will be immense, including the ability to oust the owners of apps like WhatsApp. It was not for nothing that Zuckerberg had a dinner at his house in Barcelona for the main telephone executives right after his acquisition of WhatsApp.
Facebook's acquisition of WhatsApp was the first apparent symptom of this aggressive fever. $16 billion is not a value at odds with current valuation methods, but it shows how investors don't care about what the company is worth or not, but rather how much other investors might think it will be worth in the future. It's kind of a casino where you bet on what you think others will bet on. For Facebook, the bet was certainly not so insecure because of its unique position. In addition to a billion customers and its virtual omnipresence, Zuckerberg already had a good view of the communication niche thanks to Instagram. But in general, it is. The control of these communication apps is fundamental, but few players can exploit it.
Content producers - especially the digital born like Buzzfeed - began to make Snapchat and WhatsApp their new homepages and, in fact, they should. Communication apps will revolutionize the media much more than communication itself. Communication might seem the most affected here, but the fact is that the digital impact on the process has been slowly happening for at least a decade. The recent technological development of these apps, such as free management of video, images, and text, is making them the 'browsers' of mobile devices.
So where is the problem? Well, besides the ones already mentioned (hyper-valuation of businesses in the sector, lack of regulation), there are the issues of revenue generation and the production of relevant content, once called 'journalism'. The first basically puts all publishers in the hands of platform owners. Almost 20% of all publications' traffic comes from Facebook, which also holds about 20% of all site visits made by users in the U.S. In short, they depend on Facebook's goodwill not to collapse. Although Twitter is even more 'socially' relevant than FB, there is no comparison in the power of traffic generation between the two.
The second problem is already felt today. The owners of the platforms have complete control over where the money goes. It's no use generating traffic on these platforms. 'Likes' and reach are useless if the advertiser puts money on Facebook instead of your site. The same goes for all the messaging apps mentioned earlier. The environment is no longer the web, but a private property over which you - publisher - have no power. The editors' enthusiasm with their brilliant ideas to get millions of 'likes' is the equivalent of watching the three little pigs throwing a feast with the big bad wolf at the table. For now, the wolf is not bad, but he is still a wolf.
There is - at least not yet - a viable path for publications to get excited and depend only on themselves again. The rampant advancement of mobile devices, which have ceased to be the eternal promise - tends to worsen this collapse, because traffic is growing and not the opposite, which gives some optimism that mobile is the light at the end of the tunnel. From the editors' point of view, the problem is not being solved, but postponed and if there is no other technological shift, the much-promised collision lies just ahead. In a development of Marshall McLuhan, the medium is not only the message - it is more important than it.