You are shopping, but the product is actually you
Jul 11, 2016
The Shift from Content to Audience: How the Digital Era Transformed Media Economics
"The customer is always right". In practice, this is a lie most of the time. In all industries, the customer is rarely viewed without disdain. Part of the explanation is the industrial, impersonal, disconnected consumer society. The combination of digital consolidation with the economic meltdown in 2008 created a scenario where content not only lost its royalty - it turned into a lowly commodity. What was rare, became common and those who had no face, are now on stage. The audience took the place of content as currency and this axis shift is the core of all the turbulence in today's media.
For almost two decades, the media industry has been undergoing a process of geographic reconstruction. A series of earthquakes has been reshaping the sector's horizon. Companies that had real money-making machines saw (and still see) their revenues dwindle as they tried to adapt their print business to a digital format. Almost all the players who played this game lost the bet and, in many cases, in crushing defeats.
Here it is important to take a small step back to analyze the process. How did publications make their revenue until recently?
Publication revenues in history have almost always been based on inventory scarcity. If an advertiser wanted to reach a potential customer, they had a certain limited number of ways to do it. There were not infinite newspapers or magazines. Because of a technological issue, only a restricted number of companies could gather information in a certain medium (first in print and later electronically) to gain the attention of large quantities of people. Apparently, these companies lived off selling content, but it was just an impression (no pun intended). Their business was selling the medium.
The audience also had a limited range of options at their disposal. There was a restricted number (sometimes, very restricted) of publications/broadcasters where one could seek information/entertainment. The size of these audiences defined the potential revenues of those markets. Larger markets generated higher prices because they reached more people; smaller markets had correspondingly smaller operations. Everything made sense to the participants in the process.
The end of the scarcity of available inventory of "space" to be sold by advertisers was just the beginning of the reversal. With inventory trending towards infinity, the equilibrium unit price went almost to zero, making technology companies the big winners of the change, as only they can generate massive amounts of traffic with almost zero incremental cost. The hole went even deeper.
The transformation that occurred in the process was deeper than a cataclysm in the variation of the values commanded by each item. The scarcity moved from the product offered to the product's consumer. The user/reader/customer's attention became the scarce commodity. The attention that each person can devote to anything has a physical, biological limit, at least until neural chips and other science fiction ingredients add dimensions to mental capacity. The consumer's attention switched places with the content they consumed. It is the one on display, with its price to be determined by the movement of supply and demand curves.
On the other hand, content (a term that journalists still refuse to admit) began to tend towards infinity. The discussion about quality is almost philosophical. For the consumer, the acceptable quality is that of the best product offered at zero cost and not that of the best product itself. Everything above this is a dispensable surplus.
This cruel conclusion (for journalists and other creators) is easy to derive from the consumption patterns of the digital user. Crying doesn't help. Trying to mess up the game through outdated legislation (like Brazilian newspapers wanting foreign companies like BBC and El Pais to stop operating in the country because they don't follow the Mesozoic rule that prohibits foreigners from owning more than 30% of communication means) also doesn't. Even if publications and agencies sit down to redesign the industry, the chance of devastation continuing is great. But at least it opens a possibility. It's something beyond certain death.