King Content

[SOURCE: The Economist]
[Commentary] Media conglomerates have seen their newspapers and magazines lose readers and advertising to the Internet; their music businesses suffer piracy and falling sales; and someone else's video games captivate new generations of consumers. Now come fears about film and TV, the bedrock of their business. Hollywood took 7% less at the box office in 2005 than in 2004 and growth in sales of DVDs has slowed. Internet video threatens the satellite and cable systems of companies such as News Corporation and Time Warner. Dozens of advertisers are shifting budgets from television to such places as the Internet and billboards. Brand-owners hate it that people are using digital video recorders to avoid their pitches. And if media firms move on to the Internet themselves, they risk losing their films and television programmes to pirates. How's a multinational corporation supposed to rule the world under these conditions? Don't worry, there's hope for you, Media Giant. The Internet and digital devices will eventually break your companies' grip on distribution. But you'll gain something else: a digital world in which what you supply matters far more than how you supply it. In satellite radio, for example, Sirius has crept up on XM Satellite Radio thanks chiefly to its content, in the controversial form of Howard Stern. And this world holds another promise, too: an abundance of virtually costless ways to supply consumers with what they want to watch, whenever they want it—things established media are ideally placed to provide. The Internet is still in the digital equivalent of the silent-film era. It has been formidable for text, still images and music, but is only now, with broadband access, entering an age of high-quality video. As it does so, Time Warner, News Corporation, Disney and other media companies will be able to cash in on their film and television archives. Selling video direct to consumers, without distribution getting in the way, lets media firms, and viewers, mine their vaults for old episodes of “The Outer Limits”, Johnny Carson, or whatever: minority tastes, to be sure, but taken together, a vast new market. Moreover, old media will command audiences for many years yet. New media understand this.
http://www.economist.com/opinion/displaystory.cfm?story_id=5411930