So, as I noted last week, our little media programme is back on air this Saturday morning, as Media3, 10.25am, TV3, with the assistance of NZ On Air. It appears that many fans of our old show still don't know this, so if you could alert family and friends, that would be much appreciated. If you'd like to join us for the recording, the details are below.
We'll kick off with some media analysis of the Olympics, with awesome sports boffin Tracey Nelson, and Charles Mabbett, who's been tracking the social media side of the games.
And then Martin Gillman and I will examine Mobility is reshaping the future, a new Pricewaterhouse Coopers paper forecasting the next five years for the local media sector. The report's bottom line -- a compound annual growth rate of 5% from 2012-2016 -- looks mildly positive, but a closer inspection reveals some rather less rosy realities.
The free-to-air TV-only share of the audience will slump from just over half to 42.6% by 2016. Sure, pay TV subscribers will still watch FTA channels, but that's a nearly a billion dollars annually in subscriptions being almost entirely pocketed by one company, Sky, by 2016. That's more than the predicted total revenue for all broadcast TV ($765 million) and online and mobile TV ($41 million) combined.
There will be new entrants in the pay TV market as the fibre lights up, but as the report notes:
The main challenge facing telco retailers and smaller broadcasters which consider entering the internet protocol TV market is access to premium content, including live sport, feature films, and first-run series. At present, the New Zealand wholesale market for content is unregulated. Sky, which holds most of the rights to popular sports, wholesales its programme packages with the Sky branding, but does not offer disaggregated content that would enable telco retailers to differentiate internet protocol TV service offerings. There have been repeated calls from telcos and broadcasters, including MediaWorks NZ, TelstraClear and Quickflix, to regulate the wholesale content market and lift restrictions in Sky’s content deals to improve competition.
Good luck with that.
It's worse for newspapers. The report assumes modest growth in print circulation revenues, but seems to assume that print content will remain compelling as the advertising money to fund its production diminishes. And boy, it is going to diminish: from last year's $603 million in newspaper advertising revenue (both print and digital) to $483 million in 2016.
The decline in print advertising will be offset by a 7.7% annual increase in digital advertising revenue, from $25 million to $37 million. Will digital circulation revenues also take up at least some of the slack? According to PWC, yes: they'll go from $1 million last year to $59 million in 2016. As heroic as that sounds, it's not going to be enough to maintain newspapers as we know them now.
And even those figures include some debatable assumptions: that advertising won't become even further disengaged from editorial content, and that advertising will become more pervasive and effective on new platforms, especially mobile ones.
The report predicts that both internet display advertising and classified advertising will grow by more than 15% annually over the period, with search advertising revenue growing at 8.8% a year. Well, they might -- but who'll get be doing the invoicing? With the exception of Trade Me, it'll mostly be very large offshore companies, like Google and Facebook. They have the scale.
The picture for small, independent publishers is mostly horrible. On this site, we've seen not only a sharp decline in advertising revenue in recent years, but a change in the nature of the advertising, towards cost-per-click performance-based advertising that really only works at scale. (And, I might add, is particularly ill-suited to audiences like you lot, who are too clever to click on ads.)
The magazine sector, which has by far the largest proportion of independent publishers, is looking at a slow, steady decline in both circulation and advertising revenue -- and that assumes that both digital circulation and advertising revenues come from pretty much nowhere to reasonably significant levels by 2016.
These trends are hardly a mystery to the industry. Perhaps publishers will be able to navigate the waters. Perhaps screen entertainment will unlock new revenues. Perhaps something that isn't even mentioned in the report -- crowdsourced funding -- will become more important than anyone expected. Maybe public broadcasting will be reborn. Maybe we'll see public publishing.
Anyway, Martin may have a rosier view than me -- but it seems that the next five years will be, at the least, interesting times for the New Zealand media sector.
In a related vein, while I do not at all begrudge expat New Zealander Victoria Ransom's success in selling her company, Wildfire, to Google for $US250 million, I find it hard to be too cheery about it. Wildfire is a "social media marketing company": meaning it hangs off Facebook et al, packaging and trading in the data the rest of us, wittingly or not, provide as we interact with each other.
This is, of course, increasingly where the advertising industry is heading: towards a giant, mechanical media-buying exchange, where 18-39 women in Auckland who go to the movies twice a month are bought and sold in their aggregated masses, like so many sacks of sugar.
Or, as Ransom put it in a recent column for AdAge, like cells in a sreadsheet:
Social-media marketing needs to move in a new direction that finally delivers on the promise of personalized interactions between brands and consumers. This will require new technologies that enable marketers to develop rich data profiles of the consumers they’re interacting with on social networks.
The model for this transformation will be the social data “system of record.” Just as an organization’s accounting system is its system of record for financial data and transactions, and its HR system is the system of record for personnel and employment data, social-data systems of record will become the central repository of all social data that is leveraged across other parts of the organization.
With a system of record for social data, brands would be continuously aggregating, organizing and updating consumer data from across multiple sources — everything from ad clicks and comments to public profile data on Facebook, LinkedIn and other networks. Based on these detailed profiles, marketers could then target content to consumers’ specific interests, resulting in increased conversion rates and deeper relationships.
If you are a sporting goods manufacturer, for example, you’d be able to know which of your fans are snowboarders vs. skiers, which are active advocates of your brand vs. passive consumers, etc. — so you can tailor and target your messages to those different consumers based on what you know about them.
Thus is a "real personal relationship" developed. Except it's not a "personal relationship" at all. It's specialist companies collecting and aggregrating data about humans -- from what ads they click to the words they use when they talk to each other -- to help advertisers target their spending in an accountable fashion.
This has several distinct effects. Firstly, it pushes creativity out of advertising in favour of mechanical accounting. Second, it is very bad for independent editorial publishers, because they are small and this is now a business all about scale. Third, it steadily disengages advertising revenue from the creation of content, and editorial content in particular. It's the reality, but it's not a very encouraging one for some of us.
This week's show will also feature a chat with Dr Sapna Samant, in the wake of the debacle that saw CNN and Fox News report the awful Sikh temple shooting with a string of weird and wrong-headed statements about Sikhs, Hindus and Muslims. Are things any better here?
If you'd like to join us for the recording on Thursday, we'll need you to come to our new venue, the ballroom at Villa Dalmacija, 10 New North Road, Auckland, by 5.30pm. We have all-new (and somewhat homebrewed) recording set-up, in keeping with our new, even-more-modest budget, to get rolling, but I'm really looking forward to it. It's been great working with the people at TV3 and we'd love to have you help us celebrate our new thing.