The Wrinkling and Sagging Face of Media

by takingpitches

The Economist has an interesting story on the greying audience of media firms as younger people stop buying CDs, switch the channel from traditional network television, and get their news from search engines.  One would think this would be a major cause of worry to media executives, but apparently they have come to peace using logic that sounds at times either savvy or delusional.  Read the article, but here are the key points:

1. Older folk are the last customers buying albums, watching network TV, and subscribing to newspapers.  So naturally it makes sense for media companies to target these customers.  It’s Susan Boyle vs. streaming services, Desperate Housewives versus Colbert, the New York Times versus Google News.

2. Older folk are also the ones with money the last few years during the meltdown, upending old rules such as only the 18-49 year demographic matters. Spending by older people has maintained itself while spending by folks under 34 has plunged, so advertisers have been willing to pay for these audiences despite traditionally worshiping on the altar of the young.  The article has stunning statistics as to what happened in 2007-2009 including that spending on cars by younger people has fallen by a third to a half while spending by seniors has stayed flat or even risen.  This logic can only work in the short-term because eventually these seniors will also switch to the digital options or cycle out and younger folks will regain spending power.

3. As subscription based models such as Netflix have seen success, media executives have convinced themselves that subscriptions are the answer for declining ad revenues in newspapers and television. Thus, for example, the New York Times paywall.  This part of the logic seems potentially delusional. While they may be able to milk older folks who have moved online and are willing to pay for what they have always paid for offline, the critical question is whether younger customers are going to pay for things which they associate with free or for which they can find substitutes or for which they can legally bypass paywalls?

So, savvy or delusional?  The ultimate question is whether focus on older customers is part of a plan to ride the business down as it free falls by squeezing out what is left or alternatively, it is a revenue bridge as the companies adjust to the new business realities and find a sustainable model that works for younger people.

There is an opportunity here for entry.

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