It has been well documented that online media is eating away at print and broadcast media revenue. This decline in print and broadcast media has been going on for years, and newspapers, magazines and TV stations have been working hard to make headway online. But no matter what these companies do, their profits from online advertising (although growing) haven’t been able to make up for the loss of print/broadcast revenue.
This is not a content problem. Publications like The New York Times, The Washington Post and The Wall Street Journal have award-winning content and excel at producing it in a multitude of Web-friendly formats. Nor is this an audience issue. According to Compete.com, the NYTimes.com, Washingtonpost.com, WSJ.com, CNN.com and NBC.com all have monthly visitors numbers in the millions and have increased their traffic from anywhere from 21.5% to 149.2% in the past year. (See chart.) Rather, these companies are suffering from the limitations of their business models.
There are four primary things that print companies and TV networks are doing wrong:
1. Focusing on print and broadcast revenue models and trying to make those models work online. Instead of plotting out Internet-focused business models that work with the characteristics and qualities of online audiences, print and TV outlets are taking their offline models and trying to make them work online. For example, Hulu, an online video site that shows clips and full episodes of TV shows and movies that was founded by NBC Universal and News Corp., is a well-executed and popular site. Hulu, however, still makes money based on advertising interrupting the middle of a show. Hulu is just transferring commercials to the Web instead of branching out and trying different video revenue models.
2. Ignoring the open and free nature of the Web. Print and broadcast business models are predicated on creating the best content and branding it. This involves both developing media personalities that have authority or star-power, or by using the most rigid editorial standards to produce quality content. These practices have resulted in the creation of content that these companies have fought rigorously to protect, copyright and keep private. Online, however, many of the most successful Web 2.0 companies boast a business model where content is open and free and everyone can use it, mash it around, and combine it in new ways. YouTube, for example, allows anyone to become a content creator, distributor or aggregator.
3. Overlooking the opportunity to dominate in local markets. While there are a number of ventures that are trying to figure out how to tackle local markets, no one has yet emerged as the dominant local leader. Traditionally, hometown newspapers and TV stations are the best at serving the local markets. Because these outlets have their fingers on the pulse of their communities and have ties to the local advertisers, there is a huge opportunity for print and broadcast media outlets to capitalize on serving the underserved local markets online. But they currently are not capitalizing on that opportunity.
What strong financial institutions have in common: the "Windward Rule"
Could predicting what makes a financial institution safe be as simple as knowing what attitude it takes toward reporting software?
Consider – 33 financial services companies, including Citigroup, Goldman Sachs, Royal Bank of Scotland, and Macquarie, all use the same reporting product. Not a single financial institution that has purchased Windward Reports has declared bankruptcy, been sold for pennies on the dollar, or been listed as in serious trouble. Not one.
On the flip side, every single financial firm that has failed (including Lehman Bros, Fannie Mae & Freddie Mac, Washington Mutual, Wachovia, Fortis) actively looked at Windward but did not buy.
Now, this correlation doesn't necessarily mean causality. But the correlation may be based on the mindset a financial institution takes toward understanding its data.
Employees investigate how Windward works and learn they can quickly and accurately get the reports they need.
Those who then install the system – the Citigroups of the world – get effective reports.
Those who don't are told "we already have a system and you will use it." This mindset, that employees don't need better information, is a good indicator of the company's overall attitude, and it shows up in its financial health.
If this link sounds absurd to you, consider another – and much more famous – correlation, known as the Golden Arches Theory of Conflict Prevention.
Thomas Friedman came up with this after realizing that no two countries with McDonald's had fought a war against each other since getting their McDonald's. The reasoning behind it was sound; the presence of a McDonald's correlated with a country's approach to the world.
And that's what we think is at play here. A company's approach to the business world is key in how it ultimately performs, and the approach is reflected in how the business looks at its data. If employees at a company investigate Windward because they need better information, but they're told they can't use it, well, we think this is an indication of a company's financial strength.
To be able to bank on a business, first take a look at how it approaches its data. If a company is smart enough to invest in solid reporting software, it will be smart enough with its investments to remain solid.
Dave Thielen
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