Converge

Moderator: Patricia Aufderheide. Participants: Mark Cooper, Consumer Federation; Diane Mermigas, The Hollywood Reporter; Dan Nova, Highland Capital Partners.

Because of a minor issue (let’s call it Autosave), these notes are adapted from Jessica Duda’s excellent summary on the Beyond Broadcast blog. I summarize them here not to pass them off as my own but to have a record here of the sessions.

Diane Mermigas, The Hollywood Reporter

Both commercial and public media need to do the following:

• change their orientation and embrace interactivity
• understand how technology empowers the consumer
• redefine the concept of content
• deepen advertising and commerce
• reinvent business models
• view the process with an entrepreneurial spirit

Focus on the strength of public media – strong content

Public media needs an organized effort of producing content that is creative, independent, diverse, credible, and in-depth, with links to education and problem-solving. This will ensure public media’s survival and their ability to make money.

Media property rights are in flux. Currently, the web is a deliberate system with most online companies posting content through a filtering system and users consuming only what they specifically seek, which narrows their interests and creates an information vacuum. BBC, MTV are examples of the passive broadcast model of web delivery services; they could be more interactive – and more profitable.

The role of public media is thus to fill the void of the marketplace and monetize these ideas. Public media should learn from these models to create the services and interactivity:

• TiVo
• Ipod
• Open TV
• Visible World

Seek strategic partnerships

There are a variety of partnerships that public media should pursue. Serving as a content provider to other businesses can include providing local content, such as to Google. At the April 2006 National Association of Broadcasters conference, they discussed working with cable operators to obtain local advertisers as these operators have a local connection. Media companies with such partnerships have increased local advertising revenue growth by 30 percent in the past four years – as opposed to the usual three to four percent. Public media should do the same and align with consumer technology companies to expand digital delivery options.

There are also many unknowns, especially as old media financial targets and benchmarks are used to evaluate and set new media goals - without knowing how consumers will ultimately use the quickly-evolving technologies that will also affect new, unanticipated forms of expression, [such as Second Life.] Thus, making assumptions is challenging and focusing on the consumer is key. Overall, for every challenge, there are at least two opportunities.

Dan Nova, Highland Capital Partners

There is a problem of the “needle in a haystack” of online media companies/services. A new online firm is funded every day and they are all excited about the Web 2.0 world. Audience trends show that new outlets of public participatory media can grow exponentially as early as the first year, such as YouTube growing up to 6.5 million users and Technorati reaching 1.5 million users.

Low costs of participatory media and attractive business models

The old adage of “If you build it, they will come” has changed to “if they build it, they will come.” Participatory media presents many attractive low cost and high value content that in turn affect the criteria investors use to fund new participatory online sites.

Participatory media costs

• Low costs to attract participatory media
• Low customer acquisition costs
• Low customer retention costs
• Low marketing costs
• Low content development costs
• Low technology costs (open source)

Characteristics of quality content

• Easy to use
• Effective
• Entertaining
• Participatory

Acquisitions are increasing

Traditional media are being squeezed - being cash rich can be a liability. New media have had financial success, but the business models are moving quickly. Now, old media is competing with new media to buy new-new media.

How to evaluate participatory media websites through three main development stages

New opportunities

• Focus on the team
• Assess how the idea compares to the existing competition
• Review the development time and cost
• Don’t emphasize the business model specifics – it is premature
• Look at a valuation range of 0-5 million upfront

Mid-stage value drivers

The mid-stage of participatory media development is a tenuous time and is dangerous for investors as the valuation is based on the initial ‘buzz’ - not hard numbers of tried and true audiences.

Later stage companies

Assessing later stage companies, look for the same fundamentals as the new opportunities.

• Focus on the team
• Assess the revenue streams and sources
• Review the margins
• Confirm the financial sustainability
• Critically assess the business model - very important
• Assess where the biggest windows exist

Other characteristics of the successful later stage companies include: an “insane” customer focus, simple content presentation, huge market, active/missionary leaders, and constant improvement.

Mark Cooper, Consumer Federation

Business models discussed at this conference have largely been based on charity or advertising. In order to for them to be sustainable, public media must have a public purpose. The trends all show the revolution has arrived, especially as the two biggest commercial TV stations are putting their content on the web for free. Once measured by the household (radio, television), media consumption metrics are per the individual (internet, on demand); thus, changing the benchmarks and terms of media.

Changes in the public media audience – new creators

Public media should go to VOD on the internet as attention is the challenge - distribution is not the problem. Of course monetization is another problem for public media. Media cannot be a one-way company in a two-way world. The old media presented a push approach and treated the audience as mute. Now they can see the explosion of self-expression. The old media cannot ignore the public are creators, users, and speakers. The old media will try to make the public ‘feel’ as though we are interactive which may not be the case. A new way to assess media delivery is that old models are broadcast, cable TV, public TV and the new is “Independent Noncommercial TV” and the “networked individual.”

Much growth still needs to occur within the new media users as the current 40 million bloggers amount to less than one percent of the world population – public media need to reach the other 99 percent. At the same time, the internet, while useful, timely and convenient lacks public trust – to the extent local television ranks higher.

Recommendations for membership-based participatory media

One out of every two Americans are apart of member of a cooperative – namely credit unions which are a trust institutions. Information is also trust issue and we can use this concept of a membership-based, participatory organization to create our own credible content. The public should form and pay dues to media membership organizations to create their own local news so that the people can decide what is newsworthy. They should look for a base in civil society organizations and ask people to pay to join a group that allows them cooperatively provide their own content.

Ironically, civic society groups are pushing back on this idea - they believe the government should fund such public media. However, “you can’t speak to power on power’s nickel.” Professional journalists are also suspicious of citizen journalists and such membership organizations. Professionally-trained journalists should conduct the investigative work but media organizations should also have a space for citizen journalists to report other types of news and information.

Overall, the old media format is to report, edit, and control responses and have such [limiting] mottos as “All the news that is fit to print.” The media presented at this conference seek to break this top-down approach - from Google to Wikipedia. All of these models have different functions and are open and closed to varying degrees. If you give participants the chance to be a member and use more functions, the more they will be willing pay dues to have an impact influence beyond their community. We can have a chance to make that revolution.