Next in Media: Why Traditional Media Companies are Stuck Watching Creators Surge
Release Date: December 12, 2024
In this insightful episode of Next in Media, host Mike Shields engages in a thought-provoking conversation with Doug Shapiro, a media consultant and analyst from the Boston Consulting Group, renowned for his newsletter, The Mediator. The discussion delves into the escalating tension between traditional media institutions and the burgeoning creator economy, exploring whether established media giants are adequately prepared to navigate the seismic shifts in consumption habits and advertising economics driven by technology and data.
1. The Stagnant Growth of Traditional Media vs. the Explosive Rise of Creator Media
Doug Shapiro begins by contextualizing the current media landscape, highlighting a critical issue: the overall media business is not experiencing global growth when adjusted for inflation. He emphasizes that the media industry's core is monetizing attention and engagement, which paradoxically, isn't expanding.
"The total media business is not really growing on a global basis... the total pie is only growing 5%. So when you do the math on it, what you see is that creator media is roughly half of the growth, even though it's only about 10% of the total media pie."
[Doug Shapiro, 01:55]
Shapiro contrasts this with the creator economy, which he defines as encompassing everything outside corporate or institutional media. Creator media generated approximately $250 billion last year, growing at an impressive 25% annually over the prior four years, compared to traditional media's modest 5% growth. This surge means that creator media accounts for half of the total media growth, despite constituting only a tenth of the overall market.
2. The Volume Disparity: Creator Media Overwhelms Traditional Outputs
The conversation progresses to the sheer volume of content produced by creators versus traditional media entities. Shapiro provides striking statistics to illustrate this imbalance:
"Last year Hollywood put out about 15,000 hours of new TV and film, and there were 300 million hours uploaded to YouTube. That's 20,000 times as much."
[Doug Shapiro, 04:02]
This exponential increase in content volume naturally leads to a significant shift in consumption patterns. Approximately 25% of all video consumption now occurs on social platforms like YouTube and TikTok, siphoning attention and revenue away from conventional media outlets.
3. Institutional Media's Struggle to Adapt to the Creator Economy
Mike Shields probes whether traditional media companies have truly acknowledged the magnitude of the creator surge. Shapiro responds by identifying a cultural impasse within institutions like Hollywood. He argues that traditional media professionals often hold a cognitive dissonance regarding the value and appeal of creator-generated content.
"There's still this element of... there's a cultural impasse, right?... It's garbage. It's a huckster. They're self-promotional... Justine Bateman said recently... this isn't Hollywood. These are infomercial spokespeople."
[Doug Shapiro, 06:10]
Shapiro further explains that traditional media operates within a different market structure, with multiple revenue streams such as subscriptions and advertising, unlike the predominantly ad-supported creator economy. This structural divergence makes it challenging for conventional media to compete on the same terms, especially given the infinite competitive set that creators represent.
4. Evolving Consumer Definitions of Quality in Media Consumption
A pivotal segment of the discussion centers on how younger consumers perceive quality in media. Shapiro articulates that consumer preferences are shifting from traditional hallmarks of quality—like high production values and star-studded casts—to attributes such as authenticity, relatability, and digestibility.
"The definition of quality is changing... authenticity and relatability and digestibility and social currency and dopamine... You could ask is that demographic or is it generational? I think it's generational."
[Doug Shapiro, 11:46]
He draws parallels to the rise of Airbnb, illustrating how new entrants with different value propositions can redefine industry standards. Similarly, the advent of streaming platforms like Netflix altered consumer expectations around content delivery and binge-watching behavior.
5. Potential Strategies for Traditional Media to Harness the Creator Economy
When questioned about actionable strategies for traditional media companies, Shapiro expresses skepticism about the availability of straightforward solutions. However, he suggests that media conglomerates could:
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Enhance Talent Discovery: More effectively mine social platforms for emerging creators, akin to how the music industry scouts talent from venues and digital platforms.
"There could be a much more concerted effort to do that in video as well... more actively bundle if you're already selling."
[Doug Shapiro, 17:34] -
Embrace Equity Models: Revamp the Multi-Channel Network (MCN) model by owning equity in creators, thereby aligning incentives and fostering more meaningful partnerships.
"A revised MCN model where you actually own some of the equity... it's an opportunity."
[Doug Shapiro, 18:48] -
Integrate Social Distribution: Explore distributing content through social snippets or adopting Quibi-style short-form offerings to align more closely with current consumption trends.
"Could you ever start distributing content in snippets... short form drama networks."
[Doug Shapiro, 18:12]
Despite these suggestions, Shapiro reiterates the challenges posed by the fundamental differences between traditional and creator-driven media ecosystems.
6. The Dopamine Effect: Algorithmic Media vs. Traditional Long-Form Content
A significant part of the dialogue addresses the psychological impact of modern short-form content, particularly its ability to optimize dopamine responses compared to traditional media. Shapiro explains that algorithm-driven platforms like TikTok employ variable rewards and high signal liquidity, creating addictive consumption patterns that are difficult for long-form narratives to replicate.
"There's such a structural advantage that short form video has... it's really hard to compete with that when you're talking about any kind of long form narrative content."
[Doug Shapiro, 21:20]
This dynamic not only affects viewer engagement but also poses ethical questions about media companies potentially contributing to addictive behaviors, a concern traditionally relegated to industries like gambling and vaping.
7. The Art vs. Commerce Dichotomy in Traditional Media
Shapiro concludes by highlighting an intrinsic tension within traditional media: the balance between artistic integrity and commercial viability. He argues that Hollywood's entrenched belief in art as a primary value can hinder the acceptance and integration of overtly commercial creator content.
"There's always been in entertainment a tension between art and commerce... It's very hard for them to embrace this, such an explicitly commercial part of the Business."
[Doug Shapiro, 23:24]
This reluctance to fully embrace the commercial aspects of the creator economy prevents traditional media from effectively harnessing its potential, further exacerbating the struggle to remain relevant in an evolving digital landscape.
8. The Future Landscape: Blurring Lines and Emerging Opportunities
In the final moments of the conversation, Shapiro speculates on the future convergence between traditional media and creator-driven content. He anticipates a blurring of lines as creators increasingly professionalize, potentially evolving into legitimate media entities with their own production infrastructures.
"There's a very large middle space here of small production teams... there's tons of space for that."
[Doug Shapiro, 27:53]
Additionally, the rise of generative AI is poised to further empower both creators and traditional media talent, enabling greater creative control and equity ownership. This technological advancement could catalyze a more seamless integration between established media companies and the dynamic creator economy.
Conclusion
The episode of Next in Media featuring Doug Shapiro offers a comprehensive analysis of the challenges and opportunities facing traditional media in the wake of the creator economy's explosive growth. Shapiro underscores the necessity for traditional media companies to adapt strategically—through enhanced talent discovery, embracing equity models, and integrating more closely with social distribution channels—to remain competitive. As consumer preferences continue to evolve and technology advances, the lines between traditional media and creator-driven content are likely to become increasingly fluid, presenting both risks and avenues for innovation within the media landscape.
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