The Challenge of Survival: Media and Retail Can Learn From Each Other but Silicon Valley Knows the Answer
Last week I spent two days at one of europe’s leading media events, the Guardian Changing Media Summit. It seems to me that this event has turned into an opportunity for leading media execs to try and convince a skeptical audience that everything in the garden is rosy. Well we all know that that’s not the case and the main thing that I learnt from many of media’s leading light was – they still didn’t really know how to define or measure engagement and no one has a clue how “native advertising” will affect their businesses but they are all super excited about it. Just as I was despairing at the lack of enlightenment up stepped Philip Clarke, the embattled boss of Tesco, the world’s number three retailer, Tesco and the delivered the wise words that survival was about four things in both media and retail – innovation, differentiation, content and putting the customer in control.
So either he was just reciting the “3 Day MBA” book’s chapter on strategy or he has a point. I think it’s the latter. He talked with passion about Tesco’s point of differentiation and entry into content with Blinkbox a film streaming service, their innovation and entry into the consumer electronics market with the Hudl tablet. In the area of content he talked about the £400m investment Tesco were investing in content or new product development – in his case food for changing customer demands. And his final remarks centred on the control the customer now has in his purchasing decision and how Tesco needed to adapt to serve countless niches.
Another speaker who impressed with a clarity of argument regarding the digital transition and ultimately survival was Nancy McKinstry, CEO of Media and Information provider Wolters Kluwer. Her key learnings were around investment, resources and teams. To bridge the digital divide over a 4 year period they have invested 8%-10% of revenues, in new digital product development. On the resources front they have exchanged 50% of the people in the organisation. They now have more software developers than editors. And as far as teams go they ensure every project has an editorial subject expert, a Technology and UX expert and a commercial expert. This has been the recipe for Woters Kluwers digital transition. She also confirmed about the opportunity to exploit the niche with new products highly targeted to specific customer groups.
So they were my two highlights of the Guardian Changing Media Summit which in all honesty was disappointing from an enlightenment perspective. Putting traditional media execs on stage with the great and the good of silicon valley is an interesting exercise but there were few mutual insights that could be gleaned.
However it is from the royalty of Silicon Valley that the best recent thinking on media survival has emerged. Marc Andreessen, co- founder of Andreasson Horrowitz and investor in too many success stories to mention has clearly outlined the future for media and his enthusiasm for this space which he is backing with significant investment dollars.
In his post – The Future of the News Business: A Monumental Twitter Stream All in One Place – Quite rightly Marc talks about the monopolistic control of distribution long enjoyed by major media houses being dead. On the positive side he talks about the demand for news rapidly increasing (x100) with the advent of digital and mobile and the equal challenge of price pressure (<10) on value. Exciting times if you get it right but a real mountain to climb if you are stuck with legacy business models and large fixed cost bases built for another age.
Most interesting is his analysis of the recipe for business model success in a new media news organisations which I wholeheartedly agree with. The future successful media businesses with use a combination of subscriptions, advertisings, premium content, cross media, conferences and events, micro payments, crowd funding and philanthropy to survive and thrive. Couldn’t agree more and in fact many of the conversations I had last week were centered on both crowd funding and philanthropy to keep quality journalism alive.
Anyway go read it yourself, if you are in the media business and want to survive it is a well spent 5 minutes and to those arranging next years Guardian Changing Media Summit, please lets have more Marc Andreessens and less media execs patting themselves on the back and telling the world business has never been better – we are all in the story telling business, but some stories are just a little too far fetched to be believed.