Traditional Media Fights Back the Old Fashion Way

Given the explosive growth in digital distribution, online file sharing and other disruptive technologies, many pundits and consumers have written off the prospects of traditional content formats like the CD and magazine. There is plenty of evidence to back this up as sales of physical products and the channels that retail them are plummeting.  However, traditional media is not giving up without a fight, and for good reason.  For one thing, physical formats are still a big (albeit declining) business across all customer segments. Secondly, a significant number of consumers will purchase both digital and analog types of music and news, often for different reasons.  Thirdly, traditional media companies have (so far) been unable to develop their own digital distribution channels to compete with the likes iTunes. 

As reported in The Economist magazine, media companies are fighting back by enhancing the look and feel of the physical formats.  These changes include improved production values, more luxurious packaging, unique formats, and limited editions.   For example, Time Inc began printing Fortune magazine on thicker paper in March 2010. Hearst Corporation supersized Good Housekeeping earlier this year, and will do the same for Country Living in September.  Translating this improved product into higher unit pricing will be  key to maintaining magazine profitability.  Over the 2008-2009 period, the number of advertising pages in magazines dropped by 26% (according to the US Publishers Information Bureau).

In the battered music industry, it is not uncommon for a newly released album to be supported by multiple versions, from the basic CD-only package to a more elegantly designed “experience” edition with an accompanying DVD, online content and T-shirt.  Moving upscale and higher value is paying off for some music companies. Deluxe CDs for new and veteran acts accounted for 27% of Universal’s sales from its biggest new releases in 2009, up from 20% in the previous year. Universal believes that the proportion will keep growing.

This approach has precedence.  When faced with the onset of  the low-cost DVD and ubiquitous TV coverage, the live entertainment and sports industries responded with a more upscale and experiential offering as well as tiered pricing and merchandise cross-selling. More recently, two technology giants have recognized that refining their traditional physical products is critical to improving their corporate brands, customer experience and revenues. Apple is considered best practice with its elegant combination of packaging, store design and merchandising.  Microsoft, with their new company stores, is not far behind.  These firms may have discovered that a physical representation on a shelf or newsstand may be a gateway to a brand that exists profitably in many different digital and analog formats, driving awareness-building, trial and repurchase. After all, while consumers may be flocking to digital downloads they also have not lessened their interest in visiting stores.

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2 comments so far

  1. […] This post was mentioned on Twitter by Debbie Fulton. Debbie Fulton said: Traditional Media Fights Back the Old Fashion Way « Mitchell Osak …: Given the explosive growth in digital distr… […]

  2. […] brands and capabilities. Specifically, media companies are evolving from content producers to content custodians and facilitators. For example, leading publications like Bloomberg and The Economist have begun […]

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