I read a great article this week from Digital Music News. They gave a quick overview of the key times that the music business experienced disruption in its business model. This went from printed sheet music (itself a product of Gutenberg’s great publishing disruption) to metal cylinders that were sold (expensively) to radio broadcast being dominant and accessible (resulting in reduced sales of cylinders) to vinyl records and cassettes to the modern day digital formats. Each advancement brought forth a disruption in the status quo. I also talked with a colleague who has a long history in the advertising business, and he detailed the changes in that business, and if you watch Mad Men this will be familiar in the characters of that show. In the 50s and 60s the print advertising people ruled the school, and looked down on the geeky, dweeby people in the upstart television part of the company. Later the TV studs sneered at the direct mail geeks, who later ascended and scoffed at the Internet / digital nerds.
So progress happens, big whoop, right? Right. Except that each disruption causes significant changes and challenges. How long do you stay with the established channels as a primary means of telling your story while nurturing new ideas? When do you kill a channel? Do you understand the challenges of the new?
I reflected on this last point again this week as I observed the shut down of one of the last online destinations that was bought by a media company I have worked with in the past. They had a pattern of gobbling up and making wealthy a number of digital pioneers in the early and mid ‘00s. It seemed incongruent with the company’s personality. It was as though they realized that they would need to adjust to a digital future but refused to learn that that would mean they would have to adjust their tone, their ways of measuring success, and their posture.
They are / were a large company, and thought that they could buy and bully their way through the digital emergence. What they missed almost entirely, despite many sensible voices inside their culture that they ignored, was that the new digital reality cared little for power or bullying or perceived influence. They were dealing with people who measured success and value in different ways. And so every time they made a power play, their rivals merely side stepped them and slapped them on the behind, like a Bugs Bunny toreador episode. Their backsides could apparently handle only so many slappings before they decided that they didn’t understand this new, disruptive paradigm.
Of course, by the time they made their realization they had destroyed the brand equity they’d purchased. And to add insult to injury, because they had lost so thoroughly at the digital game, they pridefully declared it all a sham and went back to their core, traditional media business, which was a shell of its former self.
My guess is that in a year they will, if they are able to, start the process again. If they are able to make a shift they might have a shot. If they are merely trying to maintain what was while hedging their bets on what they will be, I’d start the obit and dump the stock immediately (though I have no stock in the company).