When the winner is the loser

Shelley Palmer asks if there’s room anymore for three network evening newscasts in a wonderful piece on Katie Couric. It’s a great question (the answer is no), but there is a real gem within the piece that I want to talk about a bit.

Usually the last organization to do something ends its life with virtually 100 percent market share. Buggy whips are the example most often used. (I don’t have any statistics on the last full-time factory dedicated to buggy whip manufacturer to go chapter 11, but I’m sure they were the “best practices,” most competitive, most popular manufacturer in their business.) However, the last evening newscast to be canceled will not have 100% share, not even close … it will go off the air the moment someone figures out a way to make more money or draw a bigger audience in that time slot. I wonder when that will be?

Great point. So the last one standing in such a scenario isn’t the winner at all, and I think this is truly the case with television and especially local television.

That’s because the winner in the current race will be one who seizes the top new media revenue position, and that could easily be the last-place station in any market. They have the least to lose by going all-out with innovation, whereas the tendency of the market leader will be to attach everything to their brand. This is a dangerous position, although I realize that statement is highly counterintuitive.

As Shelley rightly points out, if you’re going to play the television game, you’d better be able to put a lot of people together in one place and at one time. That’s the broadcasting model.

It is not, however, the model of the web. Google is the brand leader here, where aggregation and context are king. I would argue that, by default, Google is the brand leader at the local level as well, for no one differentiates between global and local online. This is why I say there is such an incredible opportunity at the local level to develop communities around local information. But those communities must represent the whole community, not just the brand of a local media company that lives in the mass audience world.

It would be smart business for the local media companies in any market to combine their resources in creating such a community, because if this doesn’t happen, outsiders will make it happen. The local companies developing the community could then duke it out for eyeballs within a known universe, which is exactly what they do in the traditional media “space.” But by combining resources, they can then put up a real defense against the enormous threat of outside pureplay companies.

We must never forget that local ad dollars is the prize here, not bragging rights about who’s number one. Those dollars are flowing in one direction, and most media companies are not in that path.

This is why we all need to watch what Adrian Holovaty does with his $1.1 million grant from the Knight foundation. He’s creating an aggregation and distribution system called “Every Block,” which he told Poynter is designed to bring together many databases of local information.

“The concept of aggregating local information is not new, but I think our particular implementation will be, because we’re focusing on a wide variety of information that doesn’t tend to be available in a one-stop-shop format.”

Holovaty has a great reputation as a local information creator. His first was ChicagoCrime.org, a mash-up of crime data from the Chicago police department and Google maps.

Assuming he accomplishes this, what will be our response? Will we all try to duplicate it and shout “Mine’s better than yours?” Google will just create a widget or buy Holovaty’s company to make the application available to their users and strengthen their position in the local advertising space.

“Network television is a zero-sum game,” writes Shelley. “You can’t win unless someone else loses.” He goes on to note, however, that second place isn’t really a loser in network TV, because they can still make tons of money. This is true, because television works in a world of scarcity, and even last place has value in such a world.

But the web is a world of abundance, not scarcity, which is why aggregation — not content — is the correct business position to occupy. The way to create scarcity is within niches, and unless and until local media companies view “local” as a single niche, we will hand the keys to our markets to those who already see it as such.

The zero-sum game for us online is global versus local. Like the Borg, Google moves forward assimilating everything in its path. Fight them, we must.

Trackbacks

  1. […] BUSINESS: When the winner is the loser. Terry Heaton with a thoughtfully deep essay in which he points out that in a no longer winner-takes-all broadcasting world, the answers are found in aggregation of abundance and community. […]

Speak Your Mind

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.