#3 - Setting Up Shop In Another’s Marketplace

Originally published on The Times of India.

In 1927, the first feature-length “talkie,” The Jazz Singer, premiered. Audiences were mesmerized—movies suddenly had sound. It wasn’t just entertainment; it was a revolution. Filmmakers who embraced sound thrived, creating new genres. Those who didn’t? They were left behind.

This has always been the dance between media and technology. It was the same story with color TV in the 1950s, satellite broadcasting in the 1980s, and even 24-hour news channels that redefined how we consume information. Each leap in technology reshaped the stage, giving media companies a chance to evolve—or a reason to falter.

But not every player could keep up with the tempo. Think about RKO Pictures, Blockbuster, Tower Records, and Borders. They stood tall for decades, only to collapse when they failed to adapt. Kodak and Polaroid, once synonymous with photography, are now cautionary tales about the cost of standing still while technology races ahead.

This Tango Got Disrupted

In 1992, two college students invented the Mosaic browser. Suddenly, anyone with a computer could access the Internet. What seemed like a nerdy novelty became a tectonic shift. By the early 2000s, technology companies—Google, Apple, Facebook—weren’t just creating tools for media companies. They were building platforms that replaced them.

• Instead of producing movies, they created YouTube.?
• Instead of selling music, they built iTunes.?
• Instead of reporting the news, they became the News Feed.?

These platforms didn’t just deliver content; they controlled how audiences found it.

Media companies had a choice: invest heavily in research and development to keep pace or take the shortcut by renting ready-made tech solutions. It was cheaper. Easier. But here’s the thing about shortcuts: they come with a cost. For media, it was control and independence.

This reliance on technology created a power imbalance. Tech companies innovated rapidly, creating tools, platforms, and algorithms that dictated what content people saw and how they saw it. Media companies, once the storytellers of the world, now found themselves at the mercy of these tools.

Media Outsourced its Demand-side Business Function

Algorithmic marketplaces thrive on S-curve cycles. Picture this: A new marketplace emerges. It could be anything—Google Ads, Facebook Newsfeed, YouTube. At first, it’s a race. Tech companies pour in resources: grants, competitions, high ad rates. The goal? Adoption. To get users and media businesses hooked.

At this stage, it’s all shiny promises. Media companies rush in. Why wouldn’t they? The early gains look irresistible—more traffic, higher revenue. But here’s the twist: it’s a trap.

This cycle follows an S-curve. In the beginning, growth is explosive. Adoption skyrockets, and everyone wants in. Then, it slows. Marginal gains start to dwindle, and suddenly, the marketplace isn’t as lucrative for the media companies anymore.?

By then, the marketplace has matured into a cash cow. Then it is time for the company to launch a new marketplace and kickstart a new S-curve.

We’ve seen this before. Remember SEO in the 2010s? It was all about optimizing for search engines. Then came mobile apps in 2014, Accelerated Mobile Pages in 2017, video content in 2018, and so on. Each cycle brought a wave of excitement—and then, disappointment for media companies when the algorithms changed and the early gains evaporated.

Now, let’s talk about the prisoner's dilemma in all this. Imagine you’re running a media company. A new algorithmic marketplace pops up, and you’re faced with a choice: jump in and chase the promised traffic, or stay out and risk losing revenue.?

In theory, if all media companies stayed out, the tech platforms wouldn’t hold so much power. But here’s the kicker: tech companies know how to play the game. They offer irresistible incentives to a few, creating pressure for everyone else to follow.

So, you join in. Everyone does. And the result? The tech company wins—again. They now control the marketplace, leaving media companies with slim profits and no choice but to play along with the next cycle.?

It’s not like distributing movies to theaters, where there’s a partnership. In the digital world, the power is lopsided. Tech platforms don’t just distribute content; they dominate it.

Over time, this changes the role of media companies. Instead of reaching their audiences directly, they become content suppliers for platforms. Their connection to advertisers and readers weakens. And while they scramble to adapt, the platforms are already building the next S-curve.

Supply-Side Tax

Traditionally, media companies paid a cut to algorithmic marketplaces for content distribution. Then there were the ad networks, skimming off the top in exchange for monetization. It wasn’t perfect, but it was the cost of doing business.

Now, they face an additional "editorial tax" in the form of costs for AI services like ChatGPT or Google Gemini to write, summarize, or analyze content.?

Many supply-side trends in media, even before the advent of Generative AI, were influenced by broader technological advancements. Take the rise of data journalism. It’s everywhere now—stories powered by spreadsheets, interactive charts, and tools like Tableau. But this shift didn’t just happen. It came from media investing in business intelligence and data analysis.

Or think about misinformation. Social media didn’t just change how we consume news; it flooded the market with half-truths and outright lies. In response, media companies built fact-checking teams and verification units. Huge investments. But here’s the catch: audiences don’t always seem to care about fact-checking as much as we think they should. They crave stories, not corrections.

Missed Opportunities: Owning The Value Chain

Many media companies have been stuck in a traditional mindset: produce content, push it out, rinse, repeat. Meanwhile, technology companies have built empires by adding value around media, not necessarily creating it:

• Facebook and Google monetizing not just the content but the audience data.?
• Meltwater provides media monitoring services that turn news into actionable insights for businesses.?
• Feedly and Flipboard became giants by curating other people’s content.?
• Google’s Knowledge Graph, originally Metaweb, structured media content to make search smarter and faster.?

Not building value-added services was a lost opportunity.?

Conclusion

The media industry stands at a crossroads. Technology’s relentless march has shifted control to platforms, reducing media companies to mere content suppliers.

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