Here’s a disruption example from the grocery, packaged food goods business. Up until the late 1970’s, manufacturers dominated the relationship between themselves and the grocery retailers. Big brands ruled the day. Grocers designed stores to accommodate the number of brands and products, and consumers accepted that offering. As segmentation entered the picture, that is niche products and brands targeting narrow segments of consumers likes, it produced an abundance of goods and encountered a scarcity of shelf space. As consumers liked the segmented differentiation and demanded more, it exacerbated the tension between abundance (products/brands) and scarcity (shelf space). Within a few short years grocers were charging shelf slotting fees to manufacturers. It inverted the relationship.
Applied to the situation in media and advertising.
Media companies have controlled the production and distribution of content, and thus controlled the channel for advertisers and consumers. Content was often redundant and largely undifferentiated, and was geographically partitioned. The web inverted that. Now abundance of content meets abundance of production and distribution means. There is no scarcity, because there is no gatekeeper or filter to limit the flow. The web exposes the limitation of traditional media. The only scarcity that exists now is with the consumer’s attention. That’s why power has shifted to them.
So then what about more highly differentiated products like alternative weeklies, or magazines like Vanity Fair or GQ, or channels like ESPN or CNN? Or even geographically isolated areas where web-user statistics indicate lower acceptance?
Remember that consumers have more content selection via the web, which dilutes the value of differentiation that is based on the old definition. Their longstanding differentiation (more specialized traditional media content) may slow down the erosion of market share for a while, but with lower barriers to production and distribution, selection opportunities continue to multiply. What was highly differentiated in the old media becomes less so every day. Consumer attention is fragmented across the array of choices. Media companies that rely upon carrying advertising for income have a harder and harder time convincing consumers to devote attention to them and the same with advertisers to spend money with them.
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