MY BEP EXPERIENCE

Posts Tagged ‘distribution

Since summer I have been working on TV strategy at Antena3 in Madrid. It was a fascinating time for me and a decisive moment for the industry as well. Again, technology has a major impact on this business and starts to disrupt an established business model.

Probably my key learning was that broadcast TV is increasingly faced with new competitors. Content conversion has the effect that all kind of media products find their way to our TV screens, as those become connected devices.  This enables all content producers to embed video based advertising. This is a threat to broadcast TV’s dominance over the “spot”.

We are now up against the big newspapers (you can scrap the papers if you want), magazines, video-portals or even music streaming services. These are all brands you like and trust but never put them in relation with your TV? If you had the choice, would you rather stick with the news from your TV station or switch to your favourite newspaper that now also is available as VOD on your TV? I personally watch TV because I don’t have that many alternatives for the big screen and when it comes to news, I might even prefer a different brand over the established prime-time news offer from broadcast TV.

Just check out these videos from the New York Times R&D lab and their efforts to create a more audio-visual offer to their readers, if you have your doubts on what I just said.

In a world where distribution is no longer a key success factor for broadcast TV stations, content brands become more and more important.

As traditional TV stations are looking to monetize their content in a multi-media setting, the importance of self-produced content increases. Consumers are increasingly focused on on-demand offers and are less likely to follow linear programming patterns. This requires a radical mindset shift from the stations, but also from the advertising buyers. If linear TV becomes less attractive to the audience, it will be harder and harder to aggregate mass audiences at prime time. I think attention from one individual should not be worth less than the joint attention of millions. But this is all still in the making and quite frankly a bit fuzzy.

Check out this article from Advertising Age who covers a great deal of relevant topics around TV and advertising.

At Antena3 these trends are clearly recognized and many initiatives already in place. All self-produced content is available at Antena3videos also for mobiles. My argument about brands and production was also subject to a presentation I gave. Please find an abstract below.

Don’t get me wrong, I think there is a bright future for TV ahead of us. The content is still loved by a great number of people and stations have a great advantage in terms of branding. You cannot easily take away the 70-year-old legacy of motion picture distribution. This has a deep brand value. But it will probably take some time for stations to adapt to the new reality and dispose of its capital intensive asset based that was built to take advantage of distribution monopoly.

That’s all folks, until next time
Tobi

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Putting things into perspective:

When I first wrote “The publishers dilemma” my key concern was that publishers are doomed to manage the digital (ebook) business the same way as the traditional physical business. I developed two options that could help publishers to defend their core value proposition within the value chain. Since I published these ideas, news flow around ebooks and publishing increased and some interesting developments emerged. Even though I still support the core of my argument, I would like to revisit my arguments and offer a third option to solve the publishers dilemma.

The container does no longer matter: eBooks are nice but not the end of the story.

The revolution in the publishing industry is not that books become ebooks, but that reading itself becomes digital. This means that you can consume text on virtually any electronic device available, be it a mobile phone, game console, TV, Mac or e-ink reading device. Multi-use devices are increasingly popular and the race for dominance in the consumer electronics market has already begun. As virtually all these devices will have wireless access to the internet, the leading device or electronics manufacturers will develop direct download store-fronts. Without the ability to fill the devices with content, consumer electronics manufacturers will find it difficult to sell these products. From the publishers perspective, this is essentially a good thing, as exclusivity increases the value for content. Hence other than suggested in my initial post, I do believe today that investing into proprietary distribution might result counterproductive. The fact that Nintendo, Sony, Philipps, Apple, Samsung and many others might build content distribution platforms, creates a whole new ecosystem of competing platforms. Competition among these platforms will prevent the dominance of a single one and potentially strengthens the publishers bargaining power.

Here an example of how Nintendo enters the ebook market.

The opportunity of channel complexity: Publisher ought to adopt a service approach.

The new channel reality is far more complex than the old brick and mortar world most publishers were used to. Here however, lies the opportunity to defend the role of the publisher. In a complex world, disintermediation becomes more difficult. Technological know how and close relationships with the leading content platforms must be an asset that publishers have to add to their value proposition. Managing a complex channel, controlling different file formats or monitoring consumption behaviours, streaming or download patterns is an essential service, authors cannot sacrifice. The third option to solve the publishers dilemma is the transformation into a service business, with a strong bias towards technology and analytics.

Media, maybe more than any other sector, has to live with the paradigm of an information and knowledge economy. Our assets used to be printing press and physical distribution. These times have passed. In order to continue to add value to authors, retailers and consumers, publishing has to explore a service approach that takes the new market reality into account .

As always, feel free to comment.
Best, Tobias

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Last week, I was fortunate to attend the annual “Tools of Change for Publishing” conference in NY. In retrospect, there were many more questions asked than actually answered by the keynote speakers, but being there was still valuable for me and helped me to form an opinion on what is going on in publishing.

In general terms, I think it is ok to say that most participants agreed upon the fact that the digital revolution will not circumvent the publishing industry and that 2009 will be the year of the ebook. This of course, has a tremendous impact on our industry in the future. Publishing has to change in order to continue to strive in this new scenario.

For me, there are three crucial issues (among others) that have to be addressed pretty soon.

  • Pricing:  This is a fundamental question. Revenues are the product of price and volume. The general perspective is that volume is fixed or even slightly decreasing in the future. ( I don’t agree, but this will be a different post ). So far so good. From my b-school management accounting classes I remember the topic of cost accounting. The prevailing school of thought right now in the publishing industry seems to be a cost+ pricing approach. One ebook sold is expected to be one hard cover book not sold. Hence, in order to maintain the economics, the ebook has to be priced equivalently to the physical book. This is a fatal mistake! Amazon is currently pushing very hard to gain a first mover advantage and build a distribution hub for ebook downloads. In contrast to the publishing guys, amazon adopts what the management accountants call a target pricing approach. This consumer centric approach tries to detect what the perceived value of an ebook to the consumer is and then re-engineers the production value chain in order to achieve the targeted return. (The US automobile industry in the 70’s  did not believe that it was possible to manufacture cars for less until Toyota conquered the US market with very aggressive prices and proved them wrong). Amazon seems to know that $9.99 is the price at which ebooks sell, and believe it or not, publishers will soon feel the squeeze once amazon gained critical mass in digital distribution. Re-engineering the publishing value chain is possible. Especially in a increasingly digital worlds. The questions we have to ask is how many participants in that value chain are really necessary in order to inject value to a story? Are upfront payments to authors the only way or would authors also work on a salary basis with participation on sales. Do we still need agents to connect with authors? Is whole-selling still needed. Is DRM worth 5%? Rethinking along these lines will be necessary to position the publishing industry as a powerful player among whoever emerges as the leader in distribution. Allen Noren talked about this @TOC and suggested that about 20% can be taken out of the current value chain.
  • New competencies for publishers: A couple of weeks ago I wrote a post on core competencies of a publisher. Many smart people at the conference lectured about the need for publishers to extend their role into new areas. Peter Bradley called it literature as a web-service others call it reader engagement. What this actually means is that the need for curation is still there, but that the way these stories are consumed will change. Curators will have to be able to tell stories not only in the form of a book but also in form of a web-service, a social network, a video game, movie or TV-show. Publishers have to become experts in these activities as they are not easily replicated by others.
  • Distribution: This is a tricky one. There seem to be an open race among amazon, Apple, Google and others for the prime spot close to the consumer. This makes sense because all the mentioned players have actually business models in place, or are in the process of building them, that do not solely depend on the sale of digital content. Amazon tries to sell devices, so does Apple and Google is in the advertising business. Publishers content is like the gas for their engines. As long as none of them becomes to powerful and determines the terms and conditions to the publishing industry, this is something we can live with. (Remember the importance of pricing here). Still, I think it is valid to think out loud about a joint effort among the major publishers to build own distribution efforts too. In the digital world this is essentially a marketing effort. Building the infrastructure for that (such as a hulu.com)  should not be too much of a problem. Controlling the consumer interface might also be vital when it comes to entering new channels and implementing new competencies in consumer engagements. Unfortunately our industry has a poor track record in retail.

You might also find this perspective interesting.

As well as this one from the digitalist.


This morning I came across this great statement:

Publishing industry: The book isn’t the paper. It’s the content! Why don’t you understand your own product?

via Clueless book publishers miss huge opportunity – Computerworld Blogs.

The implications of this statement are huge.  As a publishing house, this means that I am no longer restricted to one single form of content distribution. It it is the story I am selling. Therefore I should not mind selling it as an ebook, audiobook, video game or even a play.

More choices might attract new customers and create a bigger market for the content.

A publisher who seems to subscribe to the mentioned scenario is Penguin. Their 2.0 what’s next initiative gives customers greater choice around the content.

I think that this could be an interesting path into the future and innovative pricing schemes could emerge from these ideas.