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White Paper

Digitization and Changing Business Models in the Media Industry: Part 1


Since the advent of the internet in the 90s, media companies have fought to develop the capabilities to create, manage, sell and distribute digital content. However, even twenty years later, many media companies are still stuck in an analog approach. As the internet explosion continues to offer new networks and devices for distributing and consuming digital goods, companies who miss the chance to innovate with new business models for content will be left behind as others rush to fill the gaps.

Modern media companies must examine the business 'ecosystems' they serve and the business models they use to adapt and lead in this digital environment. Understanding the needs of customers, for content and for the means to purchase and distribute it, is a start.

However, to be digital leaders in media, companies must understand the entire 'ecosystem' they are serving. They must also identify all interactions between ecosystem participants to learn how their content and accompanying sales and distribution processes give customers value. Only then can the business models from the analog world be updated to anticipate the digital universe that is evolving every day.

This paper is divided into two parts:

This first section examines the concepts of business 'ecosystems' and looks at the business models media companies must develop in order to serve these ecosystems. Next, the paper looks at the effect of digitization on various segments within the media industry. Finally, it looks at three examples of companies that use new business models to serve these changing media ecosystems.

In Part 2 of this paper, we examine the impact of digital platforms on content as well as on sales, distribution and customer experience. It also calls on media organizations to adapt their business models, alongside their content creation and management processes, to this digital age.

Different Media, Different Models
Some media segments have yet to shake off their analog legacies to find new profit models (for example newspapers); others have abandoned the models based on their analog roots to create new revenue and profit models. The paper looks at how digitization has affected media, by sub-segment:

  • Newspapers and Magazines
  • Book Publishing
  • Broadcast and Cable TV
  • Flim
  • Advertising
  • Radio
  • Music and Music Services
  • Information Services
  • Gaming
  • New Entrants into Media

Business Models Must Change
In the first part of this paper, we seen how ecosystems and business models for media have changed with digitization. Some companies struggled with new digital business models; others saw the opportunity to develop content, sales and distribution capabilities that enable a truly digital experience. Companies such as Netflix, Elsevier and Waze succeeded by identifying a need within an ecosystem and developing capabilities (or, in Waze's case, restructuring the ecosystem itself) to drive sales and profits. In the next section of this white paper, we examine the challenges of creating and selling digital content. We look at issues that affect the business models in media and then examine how digital trends influence the creation and management of content itself.