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Habits, Media and Business Models

Habits, Media and Business Models

I got my phone books last week, and for the fifth year in a row, they went straight to the recycling bin. I unsuccessfully tried to remember the last time I used a phone book. Today I received a solicitation from Fortune to renew my subscription (which has lapsed years ago). The $124 annual subscription was being discounted by $114—for $10 I could get Fortune magazine delivered to my door every month for a year. Plus, I would get the Fortune 500, Annual Investment Guide, 100 best companies to work for, America's Most Admired Companies, and America's Fastest Growing Companies, all at no extra cost. What a deal; I tossed the envelope with hardly a glance.

Business success comes from becoming your customer's habit. As a technology consultant and writer in the 1990s, I worked with numerous telecommunications companies and spent countless hours explaining why phone books would go the way of typewriters. The big bosses would always point out how much money they were making from print and how little money was being made by online directories. Google was nascent then, and they could not grasp the seismic shift that was coming. The implosion of print media has caught many in the industry by surprise, but the disruption caused by a shift in consumer habits has been as predictable as that of phone books. It's not that the deal offered by Fortune was not a great value, it's that the value is irrelevant to me because my media habits have changed. It's not just that I access most news on the web, it's that I follow links, read blogs and tweets, and email articles. Can't see myself cutting out an article from a magazine, scanning it, and then emailing that to a friend.

Habits are the way we unconsciously solve the thousands of little tasks that confront us every day. Make something a little easier, a little faster, a little cheaper, a little more convenient, and new habits might emerge. Compared to a phone book, the Internet is superior in almost every respect, but the phone book continues to be published because businesses still advertise there. Phone books are still profitable, even though no one pays for them to be delivered.

The business model for newspapers and magazines has long been that subscribers paid for the content, but advertisers subsidized the industry to make it profitable. As the source of critical ad revenues dried up (bad economy, shift to the web, Craig's List, etc.), media owners feel taken advantage of as their content is now freely accessed on the Web, but much of the resulting advertising revenue is going to ‘freeloading' websites. At a recent confab, the titans of media discussed the need to charge for online content. Let's look at this idea from a habit perspective. The Internet allows us to roam freely among millions of websites; sipping content in some areas, drinking deeply when we find a particularly interesting article or video. This is so powerfully habit forming that our consumption of media is almost continuous from listening to music and watching video on iPods to checking for email on our cell phones a hundred times a day. But what happens if users have to pay for content?

Instead of being able to roam the web unconsciously, reacting to whatever caught our interest, the conscious brain will routinely be engaged. It doesn't matter how well written or interesting, the consumer's habitual behavior will be disrupted. Every time you hit paid content, you will be shocked back into conscious surfing, deciding whether a particular article or video is worth the money. This is different than buying a song that will retain its value indefinitely. The old newspaper maxim—there is nothing older than yesterday's news—has never been so true.

One other factor dooming the paid content idea is that there is essentially an infinite amount of information on the web. If I start paying for some of it, even if only pennies, it will start to add up rapidly, like cell phone minutes. Just like I can't talk freely if the cell phone meter is running; I can't surf mindlessly if in the back of my head I feel like I'm running up charges.



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