News Publishers Salivate Over new Strategy, Ignorant to Threats of growing Substitutes….

I wonder how many of you have caught the Op-Ed piece by NY Times in January of 2009 on turning Newspapers into non profit institutions.

and now, this ….

Excerpt –

Conde Nast, Hearst, Meredith, News Corp, and Time Inc. said they plan to jointly develop a common software standard that will be used as the basis for delivering highly interactive versions of their products to a range of digital devices, such as e-readers, smartphones and laptops.

They also plan to launch a digital storefront—Apple-style–from which consumers can purchase and download titles.

End Excerpt –

What’s stopping all the studios to take on the Internet – mainly to thwart Youtube and its clones? Why aren’t they creating similar platforms or devices? (In fact many studios from the likes of Disney have tried this route in the past – but failed)

What’s stopping all the record labels and music artists in banding together to create similar platforms and devices? (Is Vevo shaping to be one such effort?)

Are these the signs of Internet and WWW being devoid of any valuable content for free?

While I leave those three questions for my future blog, if established businesses choose to wall garden their valuable content, won’t substitutes crop up?

I can imagine in the early days of kings and royalty, if a musician or a magician or knight banned from offering their services in the royal palace, they would seek other kings or cities far away from the royal influence to continue their passion and skill. Similarly, since not everyone gets to attend the royal opera, rest of the country found ways of entertainment in street corner theaters and local talent.

Fast forward by 1000 years …..

Black tie Operas and Symphonies have made way for …… On Broadway …..that paved way for Off Broadway …..

Horse riding made way for mule riding …..

People didn’t choose Off Broadway or Mule riding by choice. When brands and institutions offer services and products that are not in line with a broad spectrum of customer base, substitutions pave the way for those unmet customers.

When something is in scarcity, substitutes always fill the needs of the larger demand ……

Critical question for publishing industry is – will their market return or grow from the abysmal state by this new approach … all depends on the intrinsic value of the content these premium publishers provide versus what’s available for free.

When a company denies an option to a potential customer – by creating pricing barriers, the customer has only two choices – cough up the dough or live without.

Substitutes – can provide a third choice!

If cheaper alternatives exist, customer will choose the substitute.

When Newspapers thrived, they thrived because of the exclusive content their editorial and reporting staff produced. In that era, only the reputed journalists are given first hand exclusive access to breaking news and the respective journals monetized their brand cache and exclusivity.

In the Twitter world, one premium journalist is competing with 1000 Twitter Users, 10,000 Tweets and 1,000,000 retweets!!!!

For Newspaper industry, Google is not the threat but the millions of Twitter users.

While this new strategy might certainly help the Newspaper industry to some extent, I am willing to bet that the cash cow left the barn!
No use trying to step into the same river twice as its not the same anymore …..

Opinions expressed are my own.

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