The mainstream media–or MSM as the bloggers call it–has a big problem. Innovative software is going to become an essential component for distributing media on the web, but the MSM has little software competence. I agree with Yahoo CEO Terry Semel, who said last week at the Web 2.0 Internet conference in San Francisco: "To be a media company tech is what you must excel at."
Media companies have to do more to make their products accessible and interactive on the web. But some of them lack the technological smarts to do so.
As the amount of information available on the Internet continues to proliferate, websites and services that help you navigate through all the dreck will be the ones that win your time and attention. Google, everyone’s favorite website, is after all just a navigational tool. But it’s stealing advertising right and left from conventional media companies.
In the future, our experience of news and entertainment will be mediated and managed by software filters, referring tools, pattern recognition algorithms, content-matching techniques, etc. Just as Amazon tells you that "customers who bought this also bought that," media companies will help you find other news stories, videos or music you wouldn’t have stumbled upon otherwise.
CNET’s News.com technology news site has recently begun experimenting with some innovations that illustrate what I mean. One example can be found at the very page where News.com reported what Semel said at the Web 2.0 conference. Ever since Halsey Minor founded the company 13 years ago, CNET has viewed itself as a hybrid media/tech company.
When you go to the story, you not only find the article, an ad, and a link to a video (http://news.com.com/1606-2-5890464.html) of Semel speaking at the conference, but also a large area to the lower right of the article, called "Did You Know?" You’re given the choice of several different tools to display in this space. One is called "What’s Hot." It’s a graphical representation of the stories currently on News.com in which each headline is presented in a box whose size is proportional to how many people have been reading that story.
That’s creative software. And so is an even sexier piece of technology entitled "The Big Picture." If you select this option, the software displays a map of News.com stories related to the one you’re reading, as well as related topics and companies. It’s obviously something News.com is still ironing out, but I find this graphical approach to finding related information quite useful.
One of the main reasons Yahoo itself has become such a "sticky" web media property with 400 million users is because it developed clever software. For example, the MyYahoo service, created way back in December 1996, was a major software innovation. It gave users customized pages with headlines from a variety of news sites, weather reports, music news, stock prices, and many other types of information. Today about 40 million people use it as their home page on the web, more than any comparable service. And the success of MyYahoo, in turn, is one of the reasons that Yahoo has become a top online news site. Software innovation yields tremendous fruits in online media.
I’m pessimistic that large old-guard media organizations will be able to compete effectively in such a software-driven world. The Yahoos, CNETs, Googles, and MSNs–coming as they do from their roots in software–are likely to have fundamental advantages. It will probably turn out to be considerably easier for tech companies to turn themselves into media companies than for media companies to become savvy about tech.
Of course, the old media can always buy or rent technologies that have been developed elsewhere. But those who develop their own will be the ones with a competitive advantage in a world of fickle consumers and constant change.
Ongoing expensive research and development will be critical, but the very concept is anathema to most media companies. Today’s big media companies try to differentiate themselves with the quality of the news, information, or entertainment that they deliver, not with how it is delivered. The problem is that now they need to do both.
Some old-guard media companies may still be well-positioned in such a world. For instance, Time Warner has a jewel in AOL, and the world seems to finally be noticing. Multiple bidders–including Google, Comcast and Microsoft–are reportedly seeking to buy a chunk of the online service. But Time Warner may want to keep all of it, for a variety of reasons. One is that the company’s ownership of AOL may give it a unique software advantage. AOL, at its roots, is a software company. So far, the rest of Time Warner (FORTUNE’S parent company) is not taking full advantage of the fact that its corporate sibling has unique and critical differentiating capabilities. It will be interesting to see if that attitude changes as AOL grows hotter.
Questions? Comments? E-mail them to me at dkirkpatrick@fortunemail.com.
