Media trends 2010: Paywalls will see more corpses than successes

Ovum analysts believe 2010 will be another year of creative destruction for media as traditional sectors such as print and broadcast attempt to relocate, retain and monetise their audiences online. With advertising in developed markets unlikely to return to positive growth until 2011, this year will be characterised by continuing volatility. Ovum forecasts that the primary beneficiaries of attempts to move to paid-for content models will not be media conglomerates themselves, but service and technology vendors looking to monetise this opportunity and create new consumption platforms for rich news media.

Key trends for 2010

Global economic contraction in 2009 landed its predicted hammer blow on the media industry and 2010 is set to be another year of rapid change. Technological evolution and business model experimentation will be the new orthodoxy.

Ovum has identified the following key business trends for 2010:

• An increasing volume of premium content will be pushed behind paywalls as audiences are asked to pay through micropayment accounts, as well as their clicks and eyeballs.
  
• The slow global bounce back in advertising revenues will polarise structurally weakened traditional media and new media in developed markets. Print media will continue to haemorrhage circulation and advertising income.
  
• Traditional media groups will look to sustain operating margins in the face of continued advertising market volatility by cutting cost from production and distribution operations.
  
• Former competitors in traditional media sectors will look to collaboration strategies to support pricing for premium content and prevent audience channel switching. A wave of consolidation is likely as media ownership rules are relaxed in distressed markets.
  
• Emerging markets will see an influx of traditional media groups and technology vendors from developed markets, but are likely to be disappointed when they find home-grown media brands and technology vendors reluctant to relinquish market share.

Putting up the paywall: traditional media tries to solve its economic crisis...

2009 saw traditional media conglomerates swallowing the painful truth that the online advertising economy alone is insufficient to sustain their business models.

Sceptical

Traditional media must now attempt to reverse a decade of providing content for free, defy economic gravity, and ask the customer to pay. Ovum is sceptical about the chances of success.

Adrian Drury, principal media and broadcast analyst for Ovum, said: "The lessons from the web are simple; if content is not highly differentiated, or information premium and tradable, search technologies such as Google exist to provide an access channel to a zero cost source of identical or comparable content."

Swallowing the tablet - Apple's great white hope for news... Apple will play an interesting role in the development of the media landscape in 2010. It promises two gifts: iTunes as a micropayment platform and its promised Tablet device as a quasi-controlled consumption platform for premium digital news that can replace print.

In 2010 it is set to be the great white hope of a stricken industry looking for a miracle.

Drury added: "Apple has demonstrated for the music industry that the combination of strong media retail platform with a consistent user experience across multiple, integrated devices can draw consumers away from free, but less elegant consumption models.

"The news industry will be hoping that Apple can deliver a similar experience in 2010. If it fails to deliver, radical restructuring of the news media supply chain will be needed."

* The report, entitled 2010 Trends to Watch: Media & Broadcast Technology, outlines key business issues and technology enablers that are expected to affect the media and broadcast industry during 2010.

Source: Ovum is part of the Datamonitor Group