Monday, 1 November 2010

Migration To The Digital Media

By Ibrahim Sheme

A tectonic shift is taking place right now in much of Europe’s mass media industry. The traditional media as they are known globally – print edition newspapers and magazines, as well as television and transistor radio – are transmuting into digital versions that reach out to audiences that were hitherto contemplated only in fairy tales and sci-fi. The reason for this is mainly due to the explosion of internet use and the coming of new media devices and the social networks, both of which have caused a sharp, life-threatening decline in the sale of printed copy news journals. This decline has brought a crisis among traditional media because a fall in revenue means only one thing: a reduction in staffers and eventual shrinking of departments, a feature which can only lead to closure of businesses. The war of survival began long before the arrival of the new electronic devices which brought a rosy side of the bad story.

But war and crisis are sometimes good for some businessmen. Consequently, eagle-eyed media entrepreneurs on the continent have since discovered the vision of exploiting the crisis faced by their newspapers by investing in the new media heralded by the amazing evolution of technology. Side by side with their ownership of traditional media systems, these entrepreneurs are building digital media companies that are making up for their huge losses in revenue and promising greater harvests. For those European innovators, the future is already here.

This much I discovered here in Istanbul, Turkey (from where I write), during a two-day conference this week, organised by the World Association of Newspapers and News Publishers (WAN-IFRA). I have heard from top managers how various media organisations are making a bold migration from traditional media to the emerging digital one. It’s like watching people rushing into Noah’s Ark while you are left standing alone on an island that’s being flooded. Speaker after speaker captured the event’s imagination with lurid tales of the humongous profits they are making from the vast market forged by the new technologies. And I wondered: God, where are we? I mean, those of us in developing nations where poverty, poor reading culture and lack of vision have combined to stunt our progress. In our countries, few media managers have woken up from the slumber of operating traditional media. The obsession is still with the printed copy tabloids, banner advertising, supplements and classifieds. The prospects offered by digital media are yet to be fully appreciated, and only a handful of operators are willing to step into the new genre. The imperfections of running a traditional media system is still tolerated as if it is a straight-jacket that cannot be changed or thrown off.

In Nigeria, however, there is a small stir among media organisations towards the new appreciation. Some companies, notably Leadership, The Punch, Next and the News Agency of Nigeria (NAN) have begun to break new grounds by introducing ‘‘news on the go’’ through cell phones. For a small price, you get headlines of the major news stories of the day. But for these companies, that small fee, translated into millions of subscribers, can simply mean huge revenue at comparatively lower cost of production. This small step exemplifies the immense potentialities embedded in digital media business.

In Europe, the new media groups are not satisfied with uploading news stories onto their websites as most Nigerian newspapers are doing or hurling one-liner news summaries at subscribers for a tiny monthly fee; they are selling not only content to their millions of subscribers but are also attracting advertising from business organisations. In doing this, they launch separate internet companies specifically for the purpose of promoting the new media business. All over the continent, internet traffic is exploding. New devices such as the iPod and smart phones like BlackBerry are presenting great opportunities that are ready to be exploited. These devices, which work like hand in glove with social networks such as Facebook (which has 5 million users worldwide and growing), Twitter and Myspace, can be fully exploited by the hard-nosed entrepreneur.

Moreover, the “new” media networks are not really new in the real sense of the word. They are only diversifying, using the knowledge they have garnered across the ages, and building separate operations that can work with the new trend. This means that traditional media groups in Nigeria and other developing nations can do the same. Already, the internet market is opening up ever more rapidly. Internet use is growing fast and the new devices are becoming increasingly available. Anyone familiar with internet use in Nigeria knows that the two trends have grown tremendously in the past two years or so. Facebook is a familiar playground for a great number of Nigerian youths.

One secret of success in the field is to be both proactive and different. As Hanzade Dogan, chairwoman of one of Turkey’s leading media groups, Dogan Gazetecilik A.S., said at the Istanbul conference, in order to make yourself attractive to the .com generation, you as a media organisation must be able to make your digital products different and ensure to find the best ways to make use of the new digital devices. Another secret is to start early. Many of the media companies enjoying the goodies of the new genre in Europe are those that took the all-important first step a long time ago when their competitors were prevaricating. Bela Papp, group business development director at Ringier AG, a leading digital media company in Switzerland, spoke of how the 170-year-old family-owned conglomerate made the successful transition to the digital business model early enough and is today reaping millions from its investment. Another secret told by Mr Papp is that the company keeps a tab on mobile phone development. “We move fast with innovation, knowing there are big players out there who are interested in the same ideas,” he said.

Another secret is that you do not have to be a newspaper owner or big operator of an existing media house to be able to go into the digital media business. You could begin by launching a web site for classifieds, for instance, selling advertising space to car dealers, restaurants or used goods, and then diversifying into attracting clientele from banks, insurance corporations, GSM providers, etc. The important thing is to prove that the site is accessible to users through computers and smart phones.

The greatest beneficiaries, however, would be those that have traditional media systems in place. Reliable media names also count. Existing groups can sell themselves through self-ads on their own media outlets and can show that subscribers can derive other benefits, such as exclusive news of politics, sports and entertainment, as well as analyses and commentary by respected columnists. The important thing for existing media companies is to monetise their internet content through exclusive offerings to their subscribers. To achieve this, Nigerian media companies may need to collaborate through associations such as NPAN. But as it happened elsewhere in Europe, some companies may not want to play along for one reason or the other (mostly selfish). If that happens, however, nothing stops even one company from making the plunge. With time, as proof shows in the developed information societies of the western hemisphere, others would join the trend in the future whether they like it or not. This is because this is a great idea whose time has come.

Published in LEADERSHIP WEEKEND, October 30, 2010



Digital Migration Hurts Traditional Media Revenues More than Expected
The ongoing migration to digital media is damaging traditional media categories more than expected, according to a new white paper from PriceWaterhouseCoopers.

Digital Migration Slams Publishing, Radio
The annual decline in 2009 revenues in several traditional media categories was more severe than originally forecast, according to PriceWaterhouseCoopers research. Most striking was the decline in out-of-home revenues, which fell approximately 13% in 2009, compared to a forecast of about 7%. In addition, radio revenues declined about 9%, compared to an approximately 7% forecast.

The other two media categories which had a 2009 revenue decline more severe than originally predicted by PriceWaterhouseCoopers were newspaper publishing (approximately 12% compared to a forecast of slightly more than 10%) and consumer magazine publishing (about 11% compared to a forecast of about 9%).

Most Digital Categories Grow Beyond Expectations
In contrast, most digital media categories which experienced annual revenue growth in 2009 increased more than originally forecast. Most significantly, internet advertising revenues, which were predicted to decline about 3% in 2009, rose about 4%.


In addition, revenue growth significantly outpaced expectations in categories such as internet access (about 8% compared to a forecast slightly more than 5%) and filmed entertainment (3% compared to about 1%).

The only exception was the revenue stream from video games, which only grew about 3%, compared to a forecast of about 8%. PriceWaterhouseCoopers analysis suggests this was primarily due to a number of high-profile developers delaying the release of new games originally scheduled for 2009.

Print Media Ad Spending Mostly Lags
Print media, on the whole, continued to lag the overall ad market in Q1 2010, according to recent data from Kantar Media. Consumer Magazine spending fell 3.9% from a year ago, while Local Newspapers dropped 5.6%. There was improvement in some narrow segments, as Sunday Magazine expenditures jumped 13.7% and National Newspapers increased 9.1%, primarily from gains at the Wall Street Journal, according to Kantar.


Digital broadcast migration in West Africa: What's the dividend?
African countries committed to migrating to digital broadcasting by June 2015. It will be a costly process for both for governments and citizens and right now it is not really clear what the benefits will be or where the resources needed to make the transition will come from. And the reality is that only a few African countries have started on the policy work needed to create the transition and most of the discussion is focused on technical questions.Arguably, the change over to digital TV is one of the most fundamental changes in African broadcasting for over a decade. People are starting to raise wider questions about the virtual non-existence of public interest broadcasting and the chance for interactive media with more citizen participation.

This 12-month project aims to work with civil society, broadcasters, policy-makers and regulators to produce the data and tools required to make informed decisions about the migration and the balance of costs and benefits they might choose.

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