The time is now. Traditional media and entertainment players whose revenue patterns have been in free fall need to rethink their business models or try to thwart their digital rivals.
In an excellent analysis, the Los Angeles Times said that the prolonged Hollywood writers’ strike was a symbol of the malaise that has been festering within the media industry, where people simply can’t understand the value entertainment and media anymore.
The report said: “There's a simple answer, but it has nothing to do with what's going on -- or more accurately, not going on -- at the negotiating table. On the surface, the impasse revolves around how to divvy up future Internet media revenues. But the real problem is that nobody knows the value of anything anymore. Whether we're reading horror stories about the mortgage meltdown, watching the dollar plummet or gagging on the prices at our neighborhood gas station, we're all stumbling around with a nagging feeling that the value of things has become unmoored."
“It's this sense of growing unease that has hovered like a black cloud over the strike negotiations. No one in Hollywood can agree on the value of entertainment.”
"It's in the zeitgeist now -- we're at a moment in time where people don't how to value things," says Michael Lynton, chairman of Sony Pictures Entertainment. "Art and media are a reflection of society. And if you no longer have an internal sense of what the dollar or a tank of gas is worth, it's no surprise that you don't know what content on the Internet is worth either. It goes to the heart of why we're at an impasse with the Writers Guild. If no one has a clear understanding of what entertainment is worth, then no one really knows what they're negotiating about."
Already, in newspapers, this problem is evident. Should their online sites go free or with subscription? No one seems to be able to agree on this. WashingtonPost.com realized early that the paid-access NYTimes.com model would not work for its audience. The company only charges for archives. Craigslist, Monster and other classifieds sites are gnawing at print newspaper revenue, causing losses that even online revenues can't offset. Site visitors from outside the Washington metro region account for 90 percent of traffic, with locals heavily using the site's entertainment listings.
This problem is endemic in all other media. Television is moving online; in the recording industry, the consumer is free to download only the songs desired and collect all of them on one device, rather than being burdened by media such as CDs. Also, there’s no need for traditional marketing and distribution. The belief that media is infinite and supposed to be free presents a frustrating problem in their current business models.
It seems that many media organizations need to rely solely on advertising or syndication deals with other media organizations. Sharing will soon be a central feature within the different media firms. Such thinking defies the traditional wisdom and revenue models of the entertainment and communication industries, but, these new models will lead to more business opportunities. Whatever the case, the consumer has spoken.