The relentless pursuit of shrinking attention -- part 2

[Media's attention cycle; click for larger image]


In yesterday's post, I linked to Scott Karp's insightful analysis that just at a time that advertising revenues are shrinking, almost every major high-tech company is looking to advertising for growth. That may sound like a great land grab strategy in the seemingly-unlimited publishing space of the Internet. But advertising as a business made the most sense sense when content was scarce and attention was plentiful. But with the boom in content and the decline of attention because of millions of Internet pages, hundreds of TV channels, and countless electronic gadgets, the business has now changed.

It's perhaps easiest to understand this change in the context of history.

Fifty years of the media attention cycle

We start in the bottom right hand corner in the 1950s. In 1952, there were only about 10 million TVs in the US serving less than 10% of the population. TV content often consisted of pointing a camera at a radio show or a news broadcaster and transmitting the results. Content was scarce. But viewer attention was also scarce, since TV didn't reach the bulk of consumers.

But some companies saw opportunities to reach audiences through the creation of branded content. Some early experiments included Kraft Television Theater with its broadcasts of theatrical productions, Colgate Comedy Hour, and Coke Time. And as those experiments drew audiences and more TV sets, the shows became more elaborate and expensive, requiring more advertisers. At the same time, the advertisers looked to reach broader audiences. Attention was plentiful, and the business model changed to address that opportunity to capture attention. Advertising-supported networks grew to dominate the TV business in the 1960s and 1970s, and businesses threw dollars at TV to reach the growing attention pool of most consumers.

With billions of dollars being spent on TV advertising, new networks and technologies were born to capture those dollars. Cable TV flooded consumers with Advertising-driven custom content ranging from 24-hour news and weather to infomercials. Advertisers noted this new tyranny of too much advertising and starting using other techniques such as product placement to capture consumer attention. As we moved into the 1990s, that flood of content grew to a deluge as the Internet began to allow anyone to create and distribute content. Content was king -- but it was king to a shrinking attention span because of multiple competing media types. Consumer attention available to address any particular piece of content started to decline, and the business models starting moving to the top right-hand quadrant of our graph.

Now, our media world is dominated by branded guides to content such as TiVO for television, Google for the Internet, and social network guides such as Digg.com or Memeorandum.com. Yes, advertisers are spending money to reach consumers here, but they are spending less to do so. And with content plentiful and consumer attention scarce, there is little pressure to raise advertising prices. The advertising economy is now experiencing deflation as dollars move from TV to other media. And it won't be long before TV advertising dollars start to deflate also. After all, how much longer can TV networks continue to ask for more dollars to reach a ever-smaller audience?

What the end of the media cycle means

Where does this trend leave us? Scott Karp noted his conclusion by titling his article 2.0 Business Model Doomsday Scenario. He also notes a possible outcome in his subsequent article, What If No One Will Pay For Content?

What if the economics of media in the 21st century begin to look like the economics of poetry in the 20th century? — Lot’s of people do it for their own personal gratification, but nobody makes any money from it.

We have evidence of this happening already in the newspaper business as well as in magazine publishing. So Scott may have this right for older media types. As as noted above, this trend is overdue for TV as well.

But the end of the media cycle doesn't mean that all the companies close their doors and the medium disappears. With newspapers, major markets that used to have five major newspapers have shrunk to one or two, but few markets have no newspapers. At some point, the media cycle stabilizes again in a "scarce content/scarce attention" model, and branded content returns again in the environment of less competition.

Internet blog counts are now doubling every six months. But consumer attention isn't growing to match that new-media tyranny of too much. That means that for the vast majority of blogs, attention per blog is decreasing rapidly. Blogs may be the poetry of the 21st century -- lots of people do it for personal gratification, but few garner enough attention to thrive as advertising-supported enterprises.

I say few, not none. Just as with newspapers, the strongest and biggest brands will survive. Look at Google. Its revenue stream comes from a stage 2 advertising-supported network and stage 3 advertising-driven custom content. Further, it is the strongest stage 4 branded guide to content on the Internet, comprising the majority of Internet searches. And where does it put its investments? Into Google News, Earth, Google Notebook, Google Trends, Google Video, Google Calendar, and a host of other branded services. Google has positioned itself to be a dominant provider of branded content to start the next 50-year media cycle on the Internet.

So lets return to that list of companies Scott mentioned in his original post:

Microsoft’s growth strategy: ADVERTISING
Google’s growth strategy: ADVERTISING
Yahoo’s growth strategy: ADVERTISING
MySpace’s growth strategy: ADVERTISING
Nearly every Web 2.0 startup’s growth strategy: ADVERTISING

How many of these companies are investing their advertising-driven profits to create new branded content for the next media cycle? I count two: Google and Yahoo. Microsoft's Internet efforts aren't profitable, and it keeps rebranding its Internet presence every chance it gets (MSN? Windows Live? Office Live? Xbox Live?). Few of the other Internet companies are profitable either.

There's no question Google has changed the face of the Internet forever by introducing terrific search services supported by pay-by-click advertising. It also has created the first micro-payments advertising network for other sites to profit from its advertising revenue stream. But make no mistake. Google is a media company poised to dominate the next media cycle, because it provides a branded antidote to the tyranny of too much and it was willing to invest in branded content. That should -- and will -- get everyone's attention.

Technorati Tags: TV, Internet, Attention Economy, Google, Branding, Web, Web 2.0, Eyeballs, Publishing 2.0, Consumers, Ad networks, MySpace, Business, Advertising