TV News in a Postmodern World

2007: The Battle For Local Supremacy

by Terry Heaton
2006 was a year that media historians will view as the tipping point for all media companies in the face of powerful disruptive innovations that are pulling the rug out from under both the theories and practices of mass media and mass marketing. From the music industry to television, everything is unbundled now, and a whole new form of media economics called "The Long Tail" is being developed.

Look at any crowd in any city, and it seems every other person has white wires dangling from their ears. Who ever heard of an iPod just five years ago? TiVo, youTube, Slingbox, and a hundred other new technologies are, as Jeff Jarvis says, "exploding TV."

The Personal Media Revolution — a phrase coined by J.D. Lasica in his book Darknet — flooded the internet with new forms of expression in 2006. On youTube alone, Funtwo's rocking rendition of Pachelbel's Canon in D has been viewed more than 12 million times, an obscure band, OkGo, found fame with geeky dance videos shot with one camera, and two guys in white lab coats turned us all on to what can be done with Mentos and Diet Coke. These videos reached "mass," but the real strength of youTube is the enormous social network built around all of the lesser-viewed personal videos.

The number of people blogging doubled and then doubled again in 2006. Bloggers added video clout, and now we have a new genre, vloggers. Rocketboom made news twice, first when they auctioned off advertising on eBay and then when Amanda Congden left for greener pastures. The hilarious, albeit obscene social commentator ZeFrank is the new darling of vloggers, and he's likely to end up in Hollywood.

And while all of this was going on, local media companies watched their stock prices plummet and scrambled to create plans to offset the audience erosion left in the wake of the very real business disruption caused by all these new innovations. When the networks began exploring different distribution vehicles for their content, it sent an unmistakable message to local media companies that their value would never again be what it was. And this has set the stage for what I believe will be the big media story of 2007 — a rediscovery of what is meant by the word "community," and especially as it relates to more than just geography. This story is one of three trends I see for the coming year, and it will unfold in a hundred different places. It might not get the publicity that network-level strategies and tactics get, but the salvation of local media lies in its ability to meet the information needs of the people it serves, and those people — the people formerly known as the audience, as Jay Rosen calls them — are increasingly an online community.

In his 1999 book Weaving the Web, Tim Berners-Lee — the man who invented the World Wide Web — stated that the web "is more a social creation than a technical one." This simple truth forms the core of Media 2.0, but it continues to baffle local media companies, because we tend to view the business disruption as purely technological — a way to extend our core competency. In so doing, we haven't been able to see that limiting ourselves to our "brand" online hands the keys to the local internet community over to smart outside players, who are doing a better job of meeting the information needs of the community than we will ever do trying to be a Media 1.0 company in a Media 2.0 world.

2007 will be THE turning point year in the struggle for local supremacy, and those who do not address it immediately will find themselves being nothing more than content creators feeding the same companies that have descended upon us to pull money from our local markets. Not everyone will survive a shift in media power from content companies to those who aggregate content, and while I suspect we might see attempts by mainstream media companies to fight it, the two need each other.

And make no mistake, this is all about money, serious money.

Nobody understands online ad spending like Gordon Borrell. His company is at the forefront of gathering and tracking data about who's spending what where. A lot of people look at his numbers with skepticism, because the dollars seem so high, but this is contempt prior to investigation and guarantees inaction. In recent years, Borrell has been pointing to a shift in online ad spending that will bring local more in line with national. In order for that to happen, local online spending will have to explode, and the reality is that local media companies just aren't equipped — from either a knowledge or technology standpoint — to compete with the Googles and Yahoos of the world for those ad dollars.

According to Borrell, the local-national split for all advertising in all media is 53% local, 47% national. Online, that split is 30% local and 70% national. Online parity will likely not come soon, but in some key online local advertising sectors, it's gone way past the 50-50 mark. Automotive, a key category for broadcasters, is one of them. Here's Borrell:

The Internet has provided dealers the ability to reach other markets efficiently. For instance, car dealers are realizing that buyers can expand their online search options to "100 miles from ZIP Code 12345" and find them, so they're willing to spend more on "local" online advertising programs like Cars.com that has the potential to reach car buyers well outside their traditional market boundaries. We've heard many stories of people driving hundreds of miles to buy the exact car they want at the best price they can find. By year-end 2006, the split for auto advertising in terms of online spending was 68-32 local vs. national.

This ability of local advertisers to reach customers outside their typical market is a significant factor that is completely overlooked by local media companies who are busy trying to do the same old thing with the internet that they do with their legacy platforms.

We know of a tiny company in North Carolina that made lightbulbs to supply regional businesses, suddenly picking up contracts for Las Vegas hotels (which have a boatload of lights!) via his Internet advertising, and a small diner in Virginia that has a small shop that sells peanuts and hams, suddenly picking up orders from Asia because of their online marketing (www.virginiadiner.com).

Borrell also sees a war erupting next year between local broadcasters and newspapers, because without political ad money, it's going to be a tough year.

Both face no-growth years for their core products but exciting growth prospects from online ad sales. TV wants a piece of classifieds, newspapers want a piece of TV advertising, especially automotive. Nearly one-third of newspaper sites feature streaming video, and many have begun selling preroll. I also expect a lot of raiding. The demand for online managers, especially in sales, will have TV stations raiding newspapers, a fertile ground of pre-trained and competitor savvy web workers.

The prize in the local online ad revenue war will go to the company that takes a Media 2.0 approach to information online. This company may or may not use their brand in the effort, for the internet is simply bigger than media companies think, and I agree with Gordon that there will be an enormous demand for people with new skills and new talents in the coming year, not only in sales, but also in production and technology. We simply cannot expect people from within the incumbency to drive our response to the disruption, and this is a fact for all businesses, not just local TV. More and more local media companies are beginning to realize that we can't plan our own way out of the conundrum.

And when we finally get serious about all this, we're going to be surprised at what we find — that a new community has grown up around us, one that Doc Searls and David Weinberger say resembles the old "commons" concept, a place owned by no one, where people could come and go as they pleased, play, gather, and do business. This is a word we never use in contemporary culture, because its roots are very old. The understanding, however, is key to our online future success, and the most important discovery is that this is a very real community.

It's hard for us in media to see this, because our view of the world is one of danger at every turn, a bad guy behind every bush, corruption in high places, death and destruction, and man's inhumanity to man. When we examine the web, we report only the dark side, because, well, that's our niche.

I've been writing for years about the postmodern concept of tribes, and how technology has enabled us to pick and choose our own tribes beyond geographic limitations. But human beings need to connect on a physical level, so the joining of people with similar interests — though these "connections" have been made in a world of seeming anonymity — is a very powerful thing. I've witnessed this in every place where I've been fortunate enough to be a part of first-time blogger meet-ups. People from all walks of life that "know" each other only by reputation or online interaction form immediate and lasting bonds when they actually meet in person.

This discovery (or rediscovery) of community is an eye-opening experience for local media executives, because we've grown to believe that the internet is technology used by people and not a place where a new kind of community has gathered. Once you have this revelation, you will not approach people online in the same way, and I believe we're going to see more and more of this in 2007 as media companies — driven by business economics — push further into the world of the commons.

The online community doesn't drive the "real-life" community, not yet anyway. But it is occurring here and there, and the phenomenon will continue to gather strength in 2007. We can sit by and let others create the platforms for this, or we can drive its growth ourselves.

A key to any local media company's online efforts is increasingly its ability to adapt and be flexible, and that brings me to the second major trend that I see coming in 2007 — internal and external pressures to bring creation, control and maintenance of a local media company's website into the operation of the local media company instead of farming out the responsibility to third-party providers.

Third-party television website companies — and the ad networks that come with them — have served the industry well. Ten years ago, it was cost-prohibitive and too complex for everybody to build and run their own high quality website, so we wouldn't be nearly as far along the internet content road as we are without the efforts of of these companies.

Yet, everywhere I go, I encounter a troubling issue with television stations: "They're unresponsive to our needs," is something I hear all the time, especially from the people actually doing the local online legwork. This may or may not be true, but the perception certainly exists, and it makes for a significant inertia barrier, because it can become a built-in excuse for news not to do news and sales not to do sales.

But third-party sites are also increasingly bad strategy in the same way that farming out the presentation and distribution of our on-air content would be. They work well when plans are static, but we're in a competitive world now that cannot abide static plans. As Rishad Tobaccowala says, we need to be "flexible, adaptive, fleet-of-foot, and open-minded." This requires control of our own destiny, and we just don't have that if somebody else is leading our efforts.

It's unfair to paint all third-party web providers with the same brush, because they are not all created equal. And I've found a great willingness on their part to explore flexibility with their clients. They have to do this, or they risk irrelevance themselves. However it happens, 2007 will be a year when television stations assume greater and greater control of their own online futures, and that will mean running their own websites to one extent or the other.

Finally, the most visible and obvious online media story of 2007 will be the shift of the internet's center away from text and towards video. The Web is extremely efficient at delivering text, so it will always be a core component. But it will increasingly be sharing the stage with video, and I think this will become even moreso in 2007. A lot of seemingly disparate events are coming together to provide genuine video convergence, and this will greatly impact local broadcasters. Again, we will have a choice: bury ourselves in the value of high definition or explore the reality that the quality play has limited potential.

YouTube is offering a new service now that allows people to upload directly from a web camera. This seems insignificant to those of us who value production and presentation, but the concept will be a new driver of the Personal Media Revolution. The company has to work out a lot of kinks in the system, but when they do (and they will), youTube's value as the conduit for unbundled video items will skyrocket. The applications for local news and information aggregation are staggering, and once again, we find an internet pure play company out-thinking and out-maneuvering the mainstream.

There are and will always be bandwidth issues when it comes to streaming audio or video, but those are technical limitations only. I've heard engineers dismiss new thinking based on the belief that the video compression of today will be the same tomorrow, and it keeps us from exploring possibilities. 2006 saw a dramatic rise in the use of Flash for video, and that will continue.

A more video-centric web ought to help us, because that's our medium. However, we need to shift our language on the web to that which is also video-centric. We don't make "pages;" we make channels. YouTube has figured this out. Why can't we?

2007 is likely to be a very bad year for local media companies financially, and this is most unfortunate, because it's a time when we really need to be investing, not cutting expenses. We'll see more bankruptcies next year, more efforts to take companies private, more lay-offs, and more churning in the rank and file. While nothing is certain, the one thing we can count on is change. We're in a season of change, and it's going to be that way for a very long time.

As executives and employees in the volatile world of local media, we can't control the events that are rocking our world, but we do have control over our reaction. We can knee-jerk what's happening, or we can rise above it and look to an absolutely amazing future in serving our communities in ways we never thought possible. Our success clearly lies in embracing the word "local" more than the word "media," for this is our lifeboat in the storm of change.

We must not give it up, regardless of the cost.