Fifteen years ago, the music industry went through some painful restructuring. The business had been disrupted by a website called Napster and a tidal wave of peer-to-peer sites that allowed consumers to get for free music they once paid for. Many believed the industry was finished.
What they failed to see was that the period was, in reality, a transition to a healthier future. Looking back, music was a vanguard for media businesses that would be disrupted by the digital revolution. But for one industry in particular—the news media—the upheaval and adaptation of the music industry serve as a uniquely instructive example.
The Sweeping Digital Tide
The news business is facing a struggle to survive remarkably similar to the one music faced. Like music, news developed its business model around packaged formats such as newspapers, magazines, television programs and radio shows. Lacking a way to get only the news they wanted, consumers were forced to purchase a basket of news curated by publishers for general consumption.
But when digital swept in, it washed away the need for old formats. If Napster gave consumers the ability to consume the songs they wanted, Facebook has done exactly the same thing with news. According to Pew Research, nearly 41 percent of American adults now get some of their news from Facebook – up from 30 percent two years ago. This number is twice as high for millennials. The publication has gone the way of the CD while the story, like the song, has taken center stage.
Leveraging the On-Demand Model
What salvaged the future of the music industry was a growing demand for an on-demand model that wouldn’t come at the cost of a quality experience. Though consumers had grown used to getting music when and how they wanted it, the industry began to understand the peer-to-peer experience made finding new music hard, delivered inconsistent sound quality, and was vulnerable to viruses, bad content and other byproducts of an unregulated content ecosystem.
While the per-unit economics have shifted dramatically from the $20 CD, the music business is on the road to recovery. Today, there’s more music being consumed than ever before and billion-dollar companies such as Pandora, Spotify and iTunes are driving the next generation of music experiences.
New Industry Quick Fixes Won’t Work
Facing a very similar crisis (albeit 15 years later), the news industry is busily trying out its share of quick fixes. We’ve seen the paywall, which essentially asks the consumer to abide by the old economics of subscriptions. We’ve got clickbait, which misleads the consumer or dumbs down news (or both) to pump ad revenues. We have steroidal advertising assaulting news consumers with a barrage of pop-ups and banners. And we have paid or “sponsored” news that demands news companies trade hard-won brand equity for ready cash.
None of these approaches will work over the long term. While not as overtly anti-consumer as the music industry’s ill-fated attempt to litigate its own customers, in one way or another these tactics pit the consumer against the news brands they need to trust.
Embracing a New Value Proposition
News consumers today know what they want and it’s pretty simple: high-quality news at very low cost delivered to where they are. Dealing successfully with these changing realities means creating strong brands backed by powerful story formats that can serve as standalone products delivering a consistent experience across multiple points of distribution.
Social platforms will be the primary place of consumption (and monetization), but they’ll be supplemented by differentiated, stand-alone services offering excellent curation.
Though this will drive down per-unit economics, in the next five to 10 years, 2 billion people will come online and they will all want news. Factor in the size of the news industry at $174 billion, by our estimate—eight times larger than the music industry—and the potential is boundless.
News can change—and already has. Social media is giving consumers a personalized news experience that’s right for them on a story-by-story basis. And though news companies have a ways to go to figure out how to take advantage of this transition, by looking at the lessons learned by the music industry, we’ll be able to get there faster.
Geoff Campbell is president of NewsBeat Social, a video-first news agency gathering coverage from around the world and delivering premium, objective one-minute news reports across social media. A media and music industry expert, he formerly worked in digital music for Sony at Sony Connect in Los Angeles.