Five Keys to Think Beyond Product & Win the Media Innovation Game

When I say “innovation”, people tend to think products: a new shinier phone, an app to replace the website or adding another new feature to your service. But when you take a look at the winners of the media innovation game, they usually do something different: even if your value proposition stays the same, doing radical changes in your management of customer relationships, finding new partners or altering your channels of distribution can be much more transformative for your business.

Let’s take five examples of media companies which have changed the media landscape by playing not only the product innovation game, but by changing the way we think about what it means to be a media company. As a tool we will use Alexander Osterwalder’s Business Model Canvas – it’s great for outlining wider changes to your business than just the introduction of a new product. It can also help in reverse engineering the thinking behind the transformations occurring in ecosystems. If you make sure your innovation impacts not just one box, but 3–5 boxes in the business model canvas, you can be sure you are creating something which I’m willing to rank as more than just product innovation.

First one: Apple. With the upcoming introduction of iOS9, the new operating system that we will all update out iPhones and iPads to run, Apple is making the most significant changes to their platform from the media owners’ perspective since the introduction of the App Store. Although at heart Apple is a hardware company, making most of their revenue from selling their devices and focusing on the value proposition of their hardware by providing the most magical user experience, they are also intent on locking down their ecosystem for content distribution. 

The triple whammy coming with iOS9 consists of enabling “content blocking”or in more common parlance, ad blocking: third-party systems that allow the end user to block banner and other content advertising in Mobile Safari. That means it’s even harder for publishers to monetize regular pageviews on the mobile web with transplanted web banners, but for the end users it brings faster load times and significantly less data consumption. With close to a third of web users on computers using ad blocking tools and the payoff for doing that on mobile being even higher, media owners should take note.

 Apple offers two solutions (if you are in the early rollout territories of US, UK and Australia): join the News ecosystem, where you can monetize via the Apple-controlled iAd network, or convince the end user to start using your application. Both moves bring the business closer to Apple’s control, from forcing publishers to adhere to Apple’s stricter privacy regulation to locking down on revenue share (either in iAd or for content payments in the Apps). 

How does Apple get away with this? By making sure every move improves the value proposition towards the consumer, while keeping publishers well aware that with close to half of pageviews in each market coming from iOS devices, ditching Apple support isn’t a viable option either. 

Second one: Netflix. An interesting company in it’s own right in how it managed to transition from mailing DVD discs to subscribers to becoming the leading OTT streaming media company, it’s also perplexed many observers by becoming less and less of a technology company, and instead is now relying on Amazon Web Services to provide all of it’s hosting. For the business of Netflix, success hinges on four things. One: keeping the internet “free” e.g. making sure net neutrality is enforced so that operators can’t prioritise their own content services over Netflix. Two: making sure Netflix is available on all possible devices, from games consoles to set top boxes to every tablet imaginable. Third: analysing their customer segments and providing the right type of [exclusive] content via either their own production power or licensing deals. Four: acquisition by looking for new target audiences, communicating to current clients about the content available to keep them paying, and managing the passive customer database to understand which underserved ex-customers could be won back. I would LOVE to get a close look at how Netflix does their segmentation model! 

With this clear understanding, Netflix can focus their key activities in a much clearer way. Making sure your business isn’t spread into too many areas, you can make sure operational excellence prevails in the parts you know are crucial for your success, and the rest you can outsource to key partners like Amazon. That also shows the “frenemy” status of most new school media companies: Amazon is busy rolling out it’s video offering for Prime members directly competing with Netflix, but their hosting services will make sure both parties run smoothly.

Third example: Buzzfeed. Much has been written about the rise of this company, and for good reason: no mainstream media publisher managed to quite capture the power of social media in content distribution, while Buzzfeed’s approach to sponsored content won them revenues now exceeding 100 million euros a year in a market where traditional display ad revenue is hard pressed. 

For Buzzfeed, the focus comes from a very simple game. Although they are extremely data savvy and understand the dynamics of content virality and how to drive that by things like multivariate testing their headlines and customising the hook for different audiences, Buzzfeed’s strength lies in content creation and making sure that that content marketing is seen by the intended audience instead of keeping it locked on corporate websites which no one visits.

That Buzzfeed's strength is in content creation and distribution is a statement that makes many old school media people angry, because it’s easy to dismiss them as peddling click-bait headlines and publishing another sponsored list of 7 reasons why cheap content devalues the web (you’ll be shocked by number five!). However, by building a network of staff reporters, harnessing user generated content and community, and managing a wide spread of contributors, Buzzfeed has started to cover everything from funny memes to newsworthy exposés around the planet. In similar vein as Vice TV, Buzzfeed has shown that it doesn’t take a documentary team of ten to make sense of the dire conflicts of our time like Syria or Yemen. Empowered by top notch technology and editorial tools, a journalist can tell a story better than ever before.

With most old school media companies shedding jobs, pushing career journalists to copying press releases to meet production quotas and upping the pressure on the newsroom to compete for clicks, it’s another example where it’s much difficult to transform by tearing down than by building up. Buzzfeed’s long-form journalism, quite similar to what Politico and even Business Insider are doing, goes to show that it’s not media and content creation that are in crisis, it’s the bloated media of old with it's collapsing, too expensive distribution channels.

Going on to our fourth example, Forbes, it’s a great example of how to leverage a brand that still resonates with most of us. While most of the business models employed by Forbes are very familiar to media, I’d like to highlight their ability to run the Forbes contributors as a way of generating both massive traffic and a great hook to maintain their customer relationship with.

Subscribing to Forbes’ email newsletter, you get a pick of not only their editorial content, but the things that their (unpaid) contributor network brings to the agenda. By maintaining a subscription relationship (even for zero euros), Forbes is maintaining a channel via which to upsell and keep the brand relevant.

It hasn’t been just once or twice that I’ve seen another publication cite a Forbes contributor by saying “Forbes writes”, “according to Forbes”, explaining the value proposition that Forbes can also extend to their contributors. By allowing for brand contagion to experts who want to use the platform, Forbes keeps alive a steady stream of quality content and maintains a very different type of relationship with both their writers and readers.

Finally, our fifth example is LinkedIn. While recruitment used to form a major element of classified advertising for media companies, we are seeing a “technology company” enter the arena with a very compelling structure for recruiters, recruitment companies, job seekers and professionals alike.

By becoming the de-facto “social network for business”, LinkedIn is bringing up a top end disruption by changing the way people think about their careers. For the career-minded individual, instead of going through the ebb and flow of looking for jobs and switching every some years, LinkedIn allows a constant layer of professional networking by tapping into existing relationships, broadcasting a personal brand and increasing their chances of being pushed (or in old parlance, getting headhunted for) jobs instead of only applying for them. It's also not one or two people who've decided to change jobs prompted by a "recommended job" by LinkedIn.

Creating a wider ecosystem around professional social networking to disrupt the classifieds market has been a consistent strategy of LinkedIn, who have in the past years acquired companies from Pulse (a Flipboard competitor that allows LinkedIn to distribute it’s influencer content much more effectively) to SlideShare (a channel for professionals use to spread ideas and build their personal brand by sharing presentations they've created).

Same goes for big corporations and their recruitment specialists, who can both have prospective candidates follow their updates, and build their employee value proposition by for example pushing their executives to share their thinking and expertise on the platform.

By taking something that for a long time was a staple of the media business model – recruitment classifieds – and turning that into a service that maintains two-way customer relationships and bring many more resources to both sides of the market (take the acquisition of Lynda.com as one more example, bringing training and allowing displaying of certificates on profiles as a real competitive advantage), LinkedIn has redefined a market, and shown that at least for certain target segments, even a local classifieds market can be turned into an international one.

I hope these five examples show how the innovation game is much more than just developing or tweaking a product. By changing the distribution channels, your value proposition can capture a surprising new audience, or revolutionise your cost structure. By bringing focus to your core activities and leaving the rest for partners, your ability to adapt increases. 

It’s also these examples that we will discuss deeper in our upcoming free webinar Beyond the Buzzwords: Creating Value in Digital Media on the 15th of September. We still have a few seats available, so sign up for the lunch session and receive a more thorough look into the five examples discussed in this post in PDF format: https://www.infuse.work/webinar-beyond-the-buzzwords-creating-value-in-digital-media/