A perceptive analysis of the evolving media world comes from IBM, of all places. A 36-page report by IBM Global Business services that was recently posted on IBM’s site foresees the media market falling into four basic classifications (with compound annual growth rates through 2010):
Traditional media (5%) – The model most media companies use today.
Walled communities (10%) – A combination of professional- and user-generated content delivered to a limited number of subscribers who either pay a fee or part with information about themselves to gain access.
Content hyper-syndication (33%) – Proprietary content is delivered through many channels, often in exchange for a license fee.
New platform aggregation (16) – Collection and packaging of content that is primarily user-generated.
By 2010, traditional media will be a $340 billion, market, with walled communities reaching $240 billion, content hyper-syndication $25 billion and new platform aggregation $50 billion.
So market growth has clearly shifted toward sectors that combine user and professionally generated content. As the report notes, five of the 10 fastest-growing websites last year were CGM aggregators.
Other interesting sound bites: “Worldwide revenue from new media channels – such as Internet advertising, mobile music and online games – is expected to reach nearly US$55 billion in 2006. But that pales in comparison to the US$455 billion in revenue that traditional channels are expected to yield in 2006.”
“According to a recent [Forrester Research] study, if advertisers had an additional US$1 million for marketing, 50 percent of them said they’d spend it on Internet search, 42 percent chose other forms of Internet advertising, but only 19 percent mentioned television.”
The report concludes with 10 recommendations for media companies, such as bringing consumers more directly into the content development process and loosening up on ownership rules in order to gain share.
The forecast of 33% CAGR in content hyper-syndication surprised me, as did the predicted $240 billion size of that market just three years from now. It suggests that Viacom, Sony and other digital-rights management flag-wavers are shooting themselves in the foot when they try to rein in file-sharing services. The recording industry is learning a consumer education campaign is far more effective than lawsuits in turning music downloaders into informed, paying customers. Part of hyper-syndication is giving a little away in order to get new customers on the back end.
This report is well worth reading if you’re interested in the future of media.