During every last week of January, the Swiss alpine village of Davos is transformed into the meeting point of the world’s rich and powerful. The skiing resort is transformed by the annual meeting of the World Economic Forum whose 2,400 participants set the global agenda for the coming 12 months.
Although business leaders and politicians grab the headlines, there are also many media luminaries among those dubbed Weffers by locals. As with all the industry sectors, the WEF includes a handful of media-focused breakaways on its programme of 244 sessions.
This year, three of the media sessions focused on the future of news and advertising. Outside those who have seen the internet light, the message from all three was dire. Fulfilling predictions made four years ago, the media establishment admits to being well and truly under attack. And it’s a war the traditionalists are losing – and have little idea of how to respond.
The metaphor is one of a technological tidal wave breaking around the establishment’s sand castles. But while European and North American executives are searching for alternatives, the WEF reinforced for me the time warp which prevails within the protected SA media industry.
Monopolies created by managerial collusion with power brokers of the Apartheid era – and skilful manipulation of naïve regulators since – have led to some significant aberrations here.
Tell any developed world media executive that a SA group (Naspers) is spending millions launching a new daily newspaper (Nova) and you’ll have them scratching their heads. Add that commercial radio stations in this country generate 50% profit margins and eyes mist over with memories of the good old days.
For traditional media in most of the world, a new reality of intense competition has dawned. Technology in general and the internet in particular are sweeping away barriers to entry – financial or legislative – which made big media the protected cash cow now only being milked in isolated locations like SA.
Newspapers worldwide are growing increasingly desperate. After losing one million in circulation each year during the past decade, many European newspapers now rely on giving away free DVDs once a week to keep circulation at levels where their advertising rates are defensible. Internet radio now has more listeners to mainly unregulated stations than through ‘boxes’.
Chairman and publisher of the New York Times Arthur Sulzberger said his company is being forced to re-invent itself after realising last year that it has many more internet readers than those who rely on its 154-year-old newspaper. He said the business which owns the world’s greatest newspaper is now as “a digital company that also has print.”
Sulzberger candidly admits he is unsure which business model will work in this new era, but reckons it’s now all about ‘building communities’. And journalists? The publisher of Spain’s largest media group spoke of the measurable nature of the internet causing journalists to be “being shorn of protection – they will no longer enjoy the commercial anonymity of being included in the newspaper package”.
Money is behind the growing panic. As readers have moved away from newspapers to the internet, advertisers have followed. During the first half of 2005, US online advertising jumped 26% to an annualised $12-billion, overtaking radio for the first time. Internet advertising surpassed outdoor some years back.
As chairman and chief executive of Interpublic Group Michael Roth explained in one of the WEF sessions: “There has to be an alignment between where consumers are spending their time and where ads are placed.” Interpublic is a US headquartered, world leading organisation of advertising agencies whose brands include McCann Erickson; Octagon; and Draft, Foote Cone and Belding Worldwide.
The splendid isolation still enjoyed by some members of SA’s establishment media has as much to do with misguided regulators as incompetent monopolies. Both are changing. But media owners will only realise it after advertisers have moved along. And then watch the panic start.
Alec Hogg is the founder and controlling shareholder of Moneyweb Holdings, an independent media company which publishes business and investment information through the internet, radio and print.