Tag Archives: convergence placebo

Rupert Murdoch, the Convergence Placebo, and iPad Gellcaps

News Corp. Chairman Rupert Murdoch apparent announcement that his company will launch a new U.S. national newspaper to be distributed digitally (not printed) and exclusively as paid content for mobile phones tablet computers such as Apple Inc.’s iPad is not only a classic case of the Convergence Placebo but of how the iPad is making that placebo much easier to swallow for misguided executives of media companies.

According to the Las Angeles Times:

The initiative, which would directly compete with The New York Times, USA Today and other national publications, is the latest attempt by a major media organization to harness sexy new devices to reach readers who increasingly consume their news on the go. The development underscores how the iPad is transforming the reading habits of consumers much like the iPod changed how people listen to music.

“We’ll have young people reading newspapers,” the 79-year-old Murdoch said during the company’s Aug. 4 earnings call. “It’s a real game changer in the presentation of news.”

Two intertwined threads of thinking underlie the thinking of Murdoch and others who mistakenly believe that devices such as the Apple iPad will reverse the declines of daily newspapers in post-industrial countries:

  1. The belief that the reason why the circulations and readerships of daily newspapers in post-industrial countries have been declining for nearly 30 years and begun plunging during the past 5 is because people, particularly young people, want to read newspapers online rather that in print.
  2. The second thread is the belief that placing newspapers on tablet devices and on mobile phones will increase the numbers of people who read newspapers, simply because more people use mobile phones and might use tablet devices than now read printed newspapers.

That first thread is the thickest—by which I mean it is most favored by the thick-headed media executives who don’t understand why the circulations and readerships of daily newspapers in post-industrial countries have been declining for nearly 30 years. Readerships and circulations did not decline during the 1980s and 1990s because people were waiting to read daily newspapers on tablets devices or mobile phones. Circulations and readerships declined because those newspapers’ contents increasingly didn’t satisfy people.

‘It’s The Content, Stupid!’

To paraphrase political consultant James Carville‘s Democratic Party slogan during the 1992 U.S. presidential campaign, it’s the content, stupid! The reason why newspapers have declined is the content, not the device that content is on.

The newspapers’ contents increasingly didn’t satisfy people because people gained access to other media that could more articulately satisfy each newspaper reader’s individual needs and interests better than any traditionally produced daily newspaper could.

The fact is that the traditional daily newspaper is a common edition that is delivered to each of its readers; each reader gets the same edition that day.  The editor selects which stories all readers get, and because there space for only a limited number of stories in each day’s edition, the editor chooses those stories according to two broad criteria: the stories about which he thinks all readers should be informed and the stories that might have the greatest common interest to all readers.

The resulting selection of 30 to 100 stories per day (depending upon the circulation size of that newspaper) is therefore a limited choice that might satisfy a few of each reader’s individual interests but is highly unlikely to satisfy all of all readers’ interests. Surveys of newspaper readers half a century ago show that the average reader reads 6 to 8 of the 30 to 100 stories per day. Surveys of newspaper readers during the decades since show that the numbers of stories read have declined to approximately half that number.

During the 1980s and 1990s, as people gained access to cable television and satellite television, and offset lithography made publication of topical magazines economical, people began satisfying their individual interests by watching those new forms of television and reading those topical magazine more and more and reading daily newspapers less and less. Once people began to gain Internet access during the 1990s, and particularly when they got it on broadband during this past decade, they gained immediate access to a quarter billion websites, blogs, and social media networks that could satisfy their individual needs and interests incredibly better than any daily newspaper could. (Indeed, daily newspaper circulations in post-industrial countries began to plummet around 2004, approximately when the majority of the households in those countries acquired broadband Internet access.)

The Los Angeles Times story about Murdoch’s announcement notes, “The development underscores how the iPad is transforming the reading habits of consumers much like the iPod changed how people listen to music.” Yet if fails to note that the iPod changed music by letting people purchase the specific songs that fit a person’s specific interests rather than having to get an entire package (album) of other songs that might not.

So, if the reason why daily newspapers’ circulation and readership have plummeted is the newspaper’s generic package of content, why would putting that package of content on iPads, tablet devices, and mobile phones reverse those declines? It doesn’t makes sense.

Yet that generic package content of newspapers is that industry’s sacred cow. Despite lip service about change, there is huge denial that newspapers’ journalism, generic story selection practices, and delivery of a common edition to all is the problem. An industry whose idea of a major change is whether or not to permit an advertisement on page one, is unfit and unwilling to deal with fundamental changes.

‘It’s My Baby!

The newspaper industry instead desperately wants to find some way to continue its practices unchanged but online, or as they call it in ‘digital edition’ format. Flaws and all, the traditional newspaper is their baby and if they can find a way to parade it in the newest fashions, they feel hope that it will survive.

Behold their iPad edition! It looks like a newspaper, it contains the traditional newspaper’s content, but it’s digital and its from famously innovative Apple Inc. The 79 year-old Murdoch calls it a “game changer” that will “have young people reading newspapers.”

Which leads to the second thread upon which swallowers of the Convergence Placebo are hanging themselves: placing newspapers on tablet devices and on mobile phones will increase the numbers of people who read newspapers.

It will. It actually will. Some people who don’t read a newspaper edition on the Web might prefer reading one in the iPad format, in which a traditional newspaper looks like a traditional newspaper and not a webpage. It will because some people who prefer to read only when mobile (or only perhaps to kill time when stuck in transit) might do so on a mobile phone or tablet device.

However, the number of new readers who newspapers gain from iPad or mobile phone editions is very unlikely to compensate for the number of readers newspapers are losing in print. Nor would the revenues gained compensate for the much large revenues lost in print.

Like gellcap pills, iPad editions make the placebo of convergence easier to swallow, increasing an ill industry’s hope that it will survive, yet not bringing it the treatment it really needs for recovery.

The Placebo Called Convergence

Part One

Crosbie’s Manifesto – Part Two

It doesn’t matter whether executives, housewives, politicians, or plumbers. Most people’s ability to perceive change is inversely proportional to its scale. They hail superficial changes as transformative, dismiss moderate changes as inconsequential, and fail to perceive gargantuan changes.

Moreover, when they can’t see the forest for all the trees, people tend to use Occam’s Razor to analyze the bark. It is a commonly-held belief that the simplest solution, even the most simplistic, must be true. Physicists, physicians, economists, and foreign affairs experts have spent centuries realizing just how complex reality actually is, but most people still accept only simplistic notions. This is why marketers, propagandists, politicians, and pundits love simple catchphrases, sound bites, and fabrications.

Thus when faced with a colossal change, simplistic myopia becomes people’s panoptic perspective. Superficial characteristics are mistaken for substance. Purported pundits proffer simplistic notions as solutions. Any complexities and other realities that refute the oversimplifications are dismissed or ignored. The Earth is asserted to be flat. The sun is declared to revolve around the Earth. Many people nowadays still believe that human behavior derives from the individual’s astrological signs or the shape and protuberances of that person’s skull.

So it shouldn’t be surprising that the media industries are myopic about the greatest change ever to effect them. Or that their journalistic sectors – whose weakness has always been oversimplification of complex issues – are the most nearsighted. They mistake the characteristics and traits of the change as the change itself. They ignore or dismiss obvious and recurring data about online usage of media that don’t fit their Mass Media orthodoxies. Their internal pundits, who have little true clue what the change actually is, proffer simplistic explanations such as ‘Trust is the New Black,’ ‘Transparency is the New Objectivity,’ ‘Everything is Hyperlocal,’ ‘The Transformative iPad’, or else concoct phrenologies such as a new economy based upon hyperlinks.

Meanwhile, the media industries’ self-styled ‘visionary’ chief executives impatiently wait to be told what variation of their old business model is the new business model—as if adaptation to a remarkably complex, profound, and fundamental change can be simplified into a mere variation or simple course correction.

In post-industrial countries, these pundits’ and executives’ stunning conceptual myopia has been leading their media industries into catastrophe for more than a decade. This myopia likewise exists in developing countries, where, if not dispelled, it will lead their media industries into disaster by the end of this coming decade.

The simplistic notion underlying this misperception is the colossal change underway in media is simply that consumers are switching media consumption from analog to digital.  This misperception causes traditional media companies to believe that all they need to do to succeed in digital is transplant their analog (i.e., Mass Media) business models, analog content packaging, and analog content into digital albeit with some variations or tweaks such as adding hyperlinks, audio, and video, creating applications that distribute that content to mobile phones, e-books, or onto Social Media, having their editors or CEOs blog, focusing on ‘hyperlocal’ coverage, or all of those tweaks and variations at once.

Almost all traditional media companies erroneously believe that digital is a converged form of Mass Media. They believe digital is a new form of Mass Media in which media companies converge text, photos, graphics, audio, video, and animation to compete against one another, rather than newspapers and magazines using only text and photos, or television channels using only graphics and video, or radio channels using only audio. They believe that digital is a new form of Mass Media in which newspapers, magazines, radio stations and radio networks, and television stations and television networks converge to compete directly against each other, rather than newspapers competing only against other newspapers, magazines only against other magazines, etc.

Using digital to replicate Mass Media seems natural to traditional media companies, traditional media industries, and those industries’ internal pundits and academics. Almost all of them see digital as mainly a way to repurpose Mass Media’s traditional content, traditional products, traditional practices, and traditional business models. Most see digital as merely an electronic extension of Mass Media.  Indeed, some see digital as an evolutionary step in Mass Media. That there can be a way other than Mass Media for mass numbers of people in advanced societies to consume news, information, and entertainment is inconceivable to most traditional media companies’ executives, pundits, and professors. They almost axiomatically believe that the term media means Mass Media.

So the placebo of convergence has been willingly swallowed by most media companies and the media industries. It causes them to believe they are doing something about digital, that they are seizing the gargantuan opportunities of digital, and that they are solving the titanic problems that the greatest change in media history causes for them. Furthermore, because immense numbers of media companies have ingested the convergence placebo, peer pressure and stuporous groupthink discourage critical examination of the convergence strategy’s effectiveness. They are meanwhile appeased by superficial appearances that the strategy might be working—in the case of major media companies, more digital users than analog users nowadays. Appeased and lulled by the placebo of convergence, the companies and industries nonetheless cannot fathom are flummoxed why their Mass Media products, packages, practices, and business models that they’ve spent more than a decade transplanting into digital aren’t earning revenues anywhere nearly as lucrative as those same products, practices, packages, and business models earn from print or broadcast.

This is how the placebo of convergence caused media companies and media industries in the world’s most advanced post‑industrial countries to waste more than a decade of time vital to make the fundamental adaptation to the greatest change in media history.  Pursuing convergence all that while has caused those industries and companies to stray much farther away from the course they should have taken. They’ve now lost so many regular users, so much advertising revenue, and terminated so much staff that many of these companies and some of these industries are now beyond salvation. The soothing but soporific affect of the convergence strategy hastened their doom.

The greatest change underway in media isn’t that consumers are switching their consumption from analog to digital formats (in other words, convergence). The greatest change underway is that, within the span of a single human generation, people’s access to information has shifted from relative scarcity to surplus. The primary reason why people are switching their media consumption is because digital formats offer them an extraordinarily larger and incomparably more articulate selection of content to match their needs and interests than they can get from any Mass Medium vehicle (from any one newspaper, any one magazine, any one radio station or network, and any one television channel or station or network), even when those Mass Media packages are offered in digital format to them. They aren’t switching to digital primarily to read a newspaper or a magazine or via mobile devices. Nor are they switching to digital primarily to hear radio or television channels online or via mobile devices. Although digital can be used for Mass Media purposes, most of the 1.8 billion people worldwide who are use digital aren’t consuming it as Mass Media. They use and consume it in entirely new ways and new modalities that transcend and are superseding the Mass Media.

Look at the data. If it were true that most people use digital to consume Mass Media, why does the average user of almost any Mass Media company’s Web site use it far less frequently and far less thoroughly per day, per week, per month, or per year than does the average user of that same Mass Media company’s printed editions or broadcasts containing the same content? Even though many media companies’ Web sites nowadays have far more users than those companies’ printed or broadcast products do, the digital consumers on average use the sites far less frequently and far less thoroughly than consumers of the analog products do. The data from Nielsen or ComScore has shown that throughout the more than 18 years since the Web was opened for public use.

A sterling example is The New York Times. NYTimes.com has more than 17 times as many users as that newspapers’ printed edition has readers, yet the site’s average user visits only 4 to 5 times per month (in other words approximately once per week). Its average user looks at fewer than 32 NYTimes.com Web pages all month long (meaning less than 32 stories by The New York Times, because that newspaper spreads most stories over more than one Web page to maximize banner advertising). Their average user spends an aggregate of less than 25 minutes using the site during the entire month.

By contrast, the average reader of that newspaper’s printed edition reads it 20 to 25 times per month; sees several hundred pages during that time; and often spends more time reading it daily than the Web site’s user spends all month. The disparities between digital and analog usage are even greater for medium-sized and small newspapers. Similar disparities are the norm for broadcast media, too.

Yet digital users aren’t consuming less media than their analog brethren. For example, the average American online during December 2009 visited 83 Web sites, saw 2,614 Web pages, and spent more than 69 hours online, according to Nielsen. Although the average American consumed that many sites and pages online, he consumed far less of any single Mass Media companies’ package of content than he used to in printed or broadcast forms.  Instead of frequently and thoroughly consuming few locally available Mass Media companies’ packages of content, digital users are hunting and gathering from all Web sites and other forms of digital media whatever items of content best fit their own individual needs and interests. (It is why they use search engines so much).

As Peter Horrocks, director of World Services for the British Broadcasting Corporation, noted last year.

“The consequence of this change in users’ consumption has only dimly been understood by the majority of journalists. Most of the major news organisations had the assumption that their news product provided the complete set of news requirements for their users. But in an internet world, users see the total information set available on the web as their ‘news universe’. I might like BBC for video news, the Telegraph or Daily Mail for sports results and the New York Times for international news….

“The ability of audiences to pull together their preferred news is bringing the walls of the fortresses tumbling down. In effect, the users see a single unified news universe and uses technology (e.g.Google, Digg etc) to get that content to come together.”

Thus, if media companies simply transplant into digital their traditional packages of content – even with the converged additions of hyperlinks, multimedia, editors’ or CEO’s blogs, and ‘hyperlocal’ coverage –and offer these enhanced traditional packages content via Web sites, mobile phones, and e-book devices, the companies will fail. They haven’t adapted to people’s access to information becoming surplus rather than relatively scarce.

Moreover, those companies will fail quickly if they attempt to charge digital users for traditional packages of content.  If people are using these packages far less frequently and far less thoroughly in digital when offered for free, those people are highly unlikely to start paying to do so.  Most traditional media companies that have are trying or have tried to charge online for access to traditional packages of content woefully misunderstand people’s usage of digital. It’s a pyrrhic strategy, an overdose of the convergence placebo.

If media companies and media industries want to survive in the future, then they need to understand the reason for this change and its effects. The companies and industries must produce and distribute content and products that are rooted in the change and its effects. They need to stop relying on Mass Media practices and business models as their primary or even sole methods. They need to begin adapting to their methods, models, and infrastructures to great change underway.

Most of the companies that swallowed the convergence placebo thought they knew what the new media business really was. Many others think that model has yet to be discovered. Nearly two billion people worldwide use digital to hunt and gather content that best fit each of their own individual needs and interests. Providing each of them with that content but eliminating the need for each of them to hunt and gather is a gargantuan business opportunity that can be satisfied by media companies, but only if those companies and their industries adapt their operations and infrastructure to the effects of people’s access to information having changed from relative scarcity to surplus.

In the previous section of this essay, I explained in somewhat more detail the greatest change in media history, which is now underway. In the  section of this essay that I’ll begin posting Thursday, I’ll detail the effects of that change and use the Principle of Supply & Demand as a prism to see the entire spectrum of its effect.

Subsequent sections will outline specifically what media companies and the media industries must do.

Part Three