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todddagres:

I had an interesting conversation last week about the media and entertainment landscape with a guy that advises people running the major media and new media companies. We discussed the state of the market and where things are headed. We talked about what’s happening with the traditional media companies i.e. the studios, the TV networks, the radio stations groups and such. The conversation turned to the rapid fragmentation and disintermediation underway in the Industry. This was not a revelation. We’ve known this for a while and we’re seeing the evidence every day. What did surface was the observation that a powerful trend toward real-time information is underway. We concluded that information has a shelf life and information about what’s happening “now” trades at a premium.

The real-time flow of information is enabled by digital distribution and is further fragmenting the media landscape. A kid with a cell phone video camera, for a brief moment, can produce information that’s more valuable than what is available on CNN or in the New York Times.

Of course the quality of the information is a determinant of value. An investigative article in the New York Times that breaks a major story is valuable information. However, the flow of real-time information over ubiquitous networks is increasingly stealing the thunder of the traditional publishers. The premium paid for “new” information is true with most content. A first run movie or new episode of a TV series are more valuable than the same exact content available later. Why are books published first in hard copy? So that publishers can charge more for the book when its new. Real-time stock quotes cost money but quotes delayed by 15 minutes are free. Few people care to read a day old newspaper, and so on.

There’s an old joke that highlights the value of timely information. It goes something like this-

A man visits the hospital for a check-up and receives a call from his doctor 1 week later. The doctor says ” I have bad news and worse news.” The man says “give me the bad news first.” The doctor says “you have 1 week to live.” The man says “what’s the worse news?” The doctor says ” I forgot to call you last week.”

Our society is becoming more and more real-time. We want to know what’s happening now. We also want content that is relevant and meaningful. That means local content that is contextually relevant and targeted is the most valuable information of all. Kids value information about what their friends are doing and thinking NOW more than anything else. Advertisers will pay a premium for an impression that is attached to real-time, relevant information because the viewer deems this content to be highly valuable.

So what does this trend toward real-time mean for the Industry. First of all, it means that advertising rates will move to match the value of the information. Real-time content will command higher CPM than older content. Search results that incorporate real-time search results should be more valuable than search results that are based on older information. Publishers will increasingly steal from their traditional pre-recorded, programmed, and on-demand content to feed the real-time beast.

Conclusion- advertising will increasingly flow to real-time information and content. Publishers will pursue real-time information and try to provide relevancy. This trend will further fragment the media industry because content will come from everywhere and go everywhere filtered by viewers’ preferences and tastes. Portals will become irrelevant. Newspapers, magazines, and local TV stations, will evolve to navigation and filtering platforms along with original content that is creative and original. Premium content will bifurcate between real-time information and original content. There will still be a market for professional content. The last hold-out for the TV and Radio networks will be live sporting events. Once again, the Live i.e. new content-based sporting events will carry the greatest value and the highest CPM. Great creative content will still be in demand. Great movies, TV series, and Creative content will continue to be monetized. However, anything that has anything to do with news or information will increasingly have to be real-time or find itself relegated to the archive crypt.

Real-time news and other forms of real-time data are a center point of a lot of things we are doing with the Relegence technology in love.com and elsewhere in AOL’s MediaGlow.