The worlds of traditional and new media are already clashing, and it’s a conflict that continues to expand. However, a second type of conflict is brewing – one that could cause major rifts among traditional partners.

For media companies, it’s time to pursue different and somewhat opposing business models…and navigate the media divide.

A new media world has arrived. Pioneered by teens and gadget-savvy professionals, it has quickly spread into virtually every consumer segment, and started to encroach on traditional media. The number of unique visitors to MySpace.com has now surpassed the 50 million mark – something akin to the number of U.S. households that tune into the Super Bowl.

Every day, consumers around the world watch about 100 million videos on YouTube – putting that number in context, the top 15 British primetime television shows combined attract about 100 million viewers, as do the top 4 U.S. shows.

Our findings highlight two trends as particularly disruptive to mainstream media: the rising popularity of user-created content and the move toward open distribution platforms. In fact, these two axes of change clearly delineate the old and new worlds of media. In the traditional world, content produced by professionals and distributed through proprietary platforms still dominates. But in the new world, content is often user-created and accessed through open platforms. These polarized tendencies mark the clear and present conflict between incumbents and new entrants.

But they also forebode another developing conflict that we call the media divide. This second conflict will emerge among existing players – between traditional content owners (such as studios, game publishers and music labels) and media distributors (television affiliates, retailers, motion picture exhibitors, cable and satellite providers and the like). It could pit partner against partner in a struggle for growth.

Our analysis suggests that four divergent business models will coexist at least through 2010:

Traditional media – This model relies on professionally made and branded content delivered through a “walled” conditional-access environment and with dedicated devices. This is where most content owners and distributors operate today.

Walled communities – This model is based on distribution of niche and user- and communitygenerated content within a conditional access environment through dedicated devices.

Typically, these are traditional businesses that have expanded their “walls” to include nontraditional features and experiences.

Content hyper-syndication – This model makes professionally produced content available in open and portable channels, without proprietary access “walls” or dedicated devices.

New platform aggregation – This model relies on user-generated content and open distribution platforms. It is arguably the most disruptive model, as neither incumbent content owners nor distributors have legacy advantages here.

Download Navigating the media divide: Innovating and enabling new business models

PDF format, 550KB, 36Pages.

By Saul J. Berman, Steven Abraham, Bill Battino, Louisa Shipnuck and Andreas Neus.
Copyright IBM Corporation 2007. IBM Global Services.

IBM Institute for Business Value

IBM Global Business Services, through the IBM Institute for Business Value, develops fact-based strategic insights for senior business executives around critical industry-specific and cross-industry issues. This executive brief is based on an in-depth study by the Institute’s research team. It is part of an ongoing commitment by IBM Global Business Services to provide analysis and viewpoints that help companies realize business value.

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