The Spectrum Of Change When Media Shifts From Scarcity to Surplus

The Spectrum Of Change When Media Shifts From Scarcity to Surplus


Crosbie’s Manifesto – Part Three


The stunning misperception by most of the world’s media industries and media companies is that the great change underway is consumers are simply switching their media consumption from analog to digital. In other words, these industries and companies think that people want to consume the same media content as before, but to consume it now via the Internet or mobile phone instead of via printed periodicals or terrestrial, cable, or satellite broadcasts.


That misperception – not the Internet or any Search Engine or the free content which most media companies offer over the Internet – is why most media industries in the post-industrial countries have begun to lose readership, listenership, viewership, and advertisers during the past 30 years.


Consumers are shifting their media consumption habits from analog to digital, but that shift is merely a characteristic or trait of a far greater change underway.


The greatest change underway is that, within the span of a single human generation, people’s access to information has shifted from relative scarcity to surplus. Billions of people whose access a generation ago to daily changing information was, at most, one or two or three locally-distributed printed newspapers, one, two, three, four television channels, and one or two dozen radio stations, can now access virtually all of the world’s news and information instantly at home, office, or wherever they go. It is the greatest change in the history of media.


This gargantuan change has naturally had profound effects on people’s consumption and behavior towards media; on the definitions, types, and packages of media they consume; on media economics and business models; on the balance of power between media producers and consumers; and on the media’s effects on politics, laws, societies, and cultures.


In the next several parts of this essay, I will depict the affects of this spectrum and how it effects media, which is much wider and pervasive than most media executive– particularly those involved in journalism and informational media—realize. (Indeed, I’ll describe the spectrum for the points-of-view of journalists, for reasons I mention in the previous section of this essay.)


The media industries’ traditional business models and editorial practices, as well as traditional governmental regulations of media, were formulated when people had scarce access and scarce choices in media. While that era continues in most developing countries, it is over in most post-industrial countries and in many industrial countries.


Governments that don’t understand the affects of the colossal change from scarcity to surplus in media and its effects upon their populations and media industries are doomed to crises. Media industries and media companies that don’t fully understand its affects and the effects are doomed to failure. To continue the regulatory policies, most of the business models, and many of the editorial practices of the bygone era when consumers had scarce access and choices of media is counterproductive in this new era of surplus, even surfeit, choices and access.


Unfortunately, virtually all of today’s media company chief executives came of age during the final decades of the Industrial Era, when its form of media, Mass Media, was overwhelmingly dominant. In post-industrial and industrial countries, people’s access to news, entertainment, and information was only beginning to change from relatively scarcity to surplus (a change that in most developing countries is only now beginning). Moreover, because the change has happened over several decades, most senior media executives simply didn’t notice it (i.e., its pace was too slow to be seen by anyone obsessed with reaching each quarter’s targeted earnings.) And because these executives gained their positions mastering the business models of scarcity, they today are among the least likely people to accept that those models are now impractical, obsolete, or wrong. Not only do they have difficulty comprehending the change, but many equate the very word media with Mass Media and so find inconceivable that anything other than the business models and practices of Mass Media can exist. It is no wonder that these are the people who have led their industries into its current predicament and and are flummoxed about how to solve the problem. As Einstein reputedly said, “We cannot solve our problems with the same thinking we used when we created them.”


The reason why most traditional media companies’ readership, listenership, or viewership, and advertisers are declining in numbers, as well as why those companies don’t earn revenues nearly as lucrative from digital as they did from analog media, is primarily because their business models, editorial practices, packaging of content, and often even their types and nature of content are based upon formulas devised when people’s access to news, entertainment, and information was relatively scarce. The companies’ attempts either to continue or transplant those models, practices, packaging, and types of content – even with the additions of hyperlinks, audio, video, and animation (the so-called convergence strategy) – are on the wrong end of the Principle of Supply & Demand now that people’s choices and access to content has change from relative scarcity to surplus. The traditional models, practices, packaging, and types of content are no longer sound.


Publishers, broadcasters, and other producers of media content might wish they were exempt from the Principle of Supply & Demand. The irrefutable fact is they are not. It effects producers of news, entertainment, and information, not just producers of coal, gold, pork bellies, and paper clips. It effects every media company, no matter how august or humble, no matter how large or small. Furthermore, most media executives think that principle concerns only content pricing. They don’t understand the Principle of Supply & Demand’s macroeconomic affects which are now reshaping their industries, affects that concern business and editor practices, packaging, and media content itself.


Indeed, the Principle of Supply & Demand is the ideal prism with which to examine the full spectrum of change wrought by people’s access to media shifting from relative scarcity to surplus. Anyone who has used a souk, bazaar, or ‘flea market’ knows that when the supply of something changes from scarcity to surplus, more than just its price changes: other aspects of the transaction, such as control, packaging, scheduling, and definition of that something can change, as does can its consumers’ behavior and their consumption of it. Publishers, broadcasters, and other producers of media content need to know the entire spectrum of these effects.


Much as the optic spectrum can be divided into the primary colors red, green, and blue, the spectrum of effects when people’s supply of change from relative scarcity to surplus can be divided into three primary categories: transactional, definitional, and gravitational, which I’ll begin describing below.




The gravitational effects of the change from scarcity to surplus are having the greatest and most profound effects on media: creating a new mode of media that has begun to supersede Mass Media as that which people primarily consume. Every media chief executive, corporate officer, and department head must learn to understand the gravitational effects. The definitional effects aren’t as profound, but are imperative to understand by producers of media content. However, I am intentionally ‘burying the lede’ and starting with the lesser and ending with greater effects. I will first describe the transactional effects because understanding those provides the best path towards understanding the definitional and momentum towards understanding the gravitational effects. Once I’ve detailed the three categories of effects, I’ll explain why all three are accelerating.


Most of the examples I will use are from North American and Western European countries and Australia, Taiwan, and Japan. This is because all the effects of the change first began to manifest in the major post-industrial countries. I will explain why. My using post-industrial countries as examples might erroneously lead some of you to believe that these effects are culturally specific only to those countries and won’t effect other places (such as the developing countries). However, I will explain why by the end of this coming decade the media industry in every country in the world will be effected.
Transaction effects of media changing from scarcity to surplus


The transactional effects of people’s access and choice of media changing from relative scarcity to surplus are that the objective value of news, entertainment, and information markedly decreases, the traditional analog packaging of such contents spontaneously ‘unpackages’ when made digital, consumers’ attention spans rarify, and consumers successfully dictate that those contents be distributed when they want on multiple platforms and devices and in multimedia formats. These changes in value, packaging, attention spans, and distribution format, timing, and choice of platform should be obvious to every media executive. These directly effect the commercial transaction of content.


However, even the most noticeable changes sometimes require elucidation. The most noticeable transactional affect is on the objective value of news, entertainment, and information. Despite more than a decade of experience with online publishing, many newspaper publishers remain confused why consumers online won’t pay the same amounts to use the newspaper’s website that they in the past had paid to use a printed copy of the same newspaper. Some of those newspaper publishers claim the problem is that they themselves have been offering their contents for free online, that consumers have become habituated to receiving that content for free during the past 10 to 15 years, and that the consumers now must be remedially ‘educated’ to paying for that content. These are newspaper publishers ignorant of the Principle of Supply & Demand.


When decades ago the average American’s only access to daily changing information in text format was one (or perhaps two) locally distributed daily newspapers, most Americans were willing to pay the equivalent today of $0.50 to $1.00 to access that daily content. However, now that the average American has ready online access to not just the texts of every daily newspaper in the world but the texts of every news magazine website updated daily and to the texts and transcripts of every major daily broadcast news program or network, his choices aren’t relatively scarce but surplus.


Earlier this decade, consumers were asked that if they were forced to pay for access to daily newspaper websites, what amount they would be willing to pay. Virtually all answered that they were willing to pay no more than $1.00 (the median was approximately $0.50) per month. The 15- to 30-times difference in what they were willing to pay now versus what they had paid for printed editions wasn’t so much a gap as a chasm, and is a signal of how the shift from scarcity to surplus has changed the objective value of the traditional package of news known as a daily newspaper.


When the gap between the price the buyer asks and the price the selling is willing to pay is so great, no functioning market exists. Publishers were failed to get significant numbers of people to pay for online access to daily newspaper content (How traditionally packaged content unpackages online, a transactional effect which I’ll describe tomorrow, exacerbates.)


Even The New York Times, arguably the premier daily newspaper in the English language, failed to get a significant number of its online consumers to pay. Its TimesSelect offer asked consumers to pay for access to the newspaper’s columnists, opinion pages, and archives, all of which are arguably contents unique to that newspaper. However, after two years of trying, TimesSelect generated only 227,000 paying users, which was less than 2 percent of the newspaper’s then 13 million registered website users. The results from less prestigious daily newspaper attempts to charge were even worse. (I’ll describe in the gravitational effects section the results of The Wall Street Journal, a business publication, charging for access).


Moreover, how people’s access and choice of media shifted from relative scarcity to surplus and effected the objective value of news has had an even more striking effect on printed newspapers. As people’s supply of daily news markedly increased, fewer people became willing to continue paying the equivalent of $0.25 to $1.00 to access that content in printed format. The decline in American daily newspaper circulation began in the mid-1980s, more than half a decade before the public gained access to the Internet and nearly a decade before most daily newspapers even began publishing online.
Thus, people having free access to newspaper contents via the Internet didn’t create those declines. Once Americans began getting access to all-news television networks, when cable television systems became pervasive in the 1980s, those declines began because that began increasing American’s access and choice of news. Public access to the Internet, beginning in 1992, began to markedly increase that supply. Only when the majority of the public in post-industrial countries gain broadband access to the Internet, giving them ‘instant-on’ immediate access to all of the world’s news, did newspaper circulations in those countries begin to fall off a cliff. It was the supply of news, not newspapers offering it free online, that caused the plunge.


In Europe, some publishers reacted to the marked decrease in the objective value of news by offering free daily newspapers. More than one-third of all daily newspapers circulated in Western newspapers are now offered to consumers for free. However, almost all newspaper publishers in North America and most in Europe reacted blindly to consumers’ increased supply of news and the marked decrease in the objective value of news. Rather than decreasing the prices they asked for their copies of their publications, they gradually increased the prices throughout the 1990s and this past decade. You don’t need an economist to tell you what happens when someone increases the price of something whose supply is shifting from scarce to surplus—circulations declined even further.


[Because this posting is already 2234 words long, I'll tomorrow detail how people's access and choice of media changing from scarcity to surplus effects packaging, attention spans, and distribution format, timing, and choice of platform. I'll subsequently detail the definitional and gravitational effects of the change.]