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The media value chain explained

Modern technology, blogging, digital cameras and the 21st century have had a profound effect on the media industry. However the basic business of media has essentially remained unchanged.
One of the biggest changes we have seen in media is who the content creators are. Shakespeare once said “All the world’s a stage and all the men and women merely players” and at no time is this more meaningful than now. Anyone who has a digital camera, microphone and access to the internet can easily and cheaply create content. This new force is competing with professional content creation facilities and organizations.
A conservative estimate on the number of blog posts and contributions to the Internet per day is 3 million per day, and is growing at an incredible rate. The traditional concept of content owner ship is changing. Content is increasingly becoming owned by individuals rather than companies or corporations.
Professional content producers are changing their habits too they are increasingly forced to collaborate with individual or informal organisations. However the tools and resources that they have access to are becoming very advanced and intelligent. Content aggregation companies are finding that the amount of content to select from is increasing exponentially however quality is dropping.
The distribution link in the media value chain has seen and is experiencing the most change. The technical architecture of the Internet has encouraged a separation of content production and aggregation from the provider of the distribution infrastructure.
New gadgets, better screens and the ubiquitous availability of the internet has seen an overall increase in media consumption. A notable consumption increase was the when the MP3 player allowed media companies to derive revenue from media consumption during travel time, which was previously a stage where print media was the only player.

The Content Creation link in the media value chain is where the content originates. The content creators are the musicians, artists, actors, web designers, games developers, coders, photographers, journalists, authors and critics.

As this group is so vast it is difficult to clearly identify the products and companies that they use however here is some of the key tools and services that are used by the more professional members.

Apple Mac
Apple have traditionally marketed their products at this group, hence the apple focus on highly visual user interface and easy to use design.

Adobe
The recent acquisition of Macromedia by Adobe consolidates their desktop media creation product suite.

Sony
The range of digital cameras has for a long time been the industry standard, however they are facing tough competition from new manufacturers who are providing high quality equipment at a lower cost.

Yamaha
This company provides a vast range of music focused content production equipment that range from beginner to expert.

There are also a number of new on line forum style services that provide tools and support for content creators. These are becoming increasingly more important.

Content ownership has not traditionally been in the hands of the content creator, and has normally been in the hands of a studio or commercial content organization. Modern technology has caused this step be come separated from both the content creator and the content publisher. The success of devices such as the “buffalo terra station” are testament to this

The content owner has a number of different needs, mainly licence and rights management and storage.

These have traditionally been handled by using a physical archive and product catalogue however there are new online products such as getty images and 3d02, that facilitate this.

It must be noted that the content owner and the content creator are increasingly the same person or company. This can be seen in the provision of products that facilitate both content creation and storage (sites such as eblogger).

The distribution and aggregation link in the value chain is the professional production of high quality content and the also the recycling, repackaging and re-branding of either user generated content or stock content.

This link is fulfilled by the studios, the web design and software companies, the TV production companies, games manufacturers, film companies and record labels.

Again on a world wide scale this is a vast group, with large notable organizations providing some exciting and high quality products. There are also millions of other smaller companies who perform the same role.

All of these organizations feed a whole ecosystem of different industries. Some examples of these are the professional production tool hire companies, event venues, filming locations and studios, moderators, event organisers, agencies, vehicle hire and recording studios.

Consumers will be most familiar with the brands that are within the distribution link in the value chain. These are brands such a UPC, Sky, the BBC or iTunes.

The providers of this link in the chain can roughly be divided into four groups

Internet Service Providers – These are the companies such as UPC, KPN and BT who sell bandwidth to consumers. Some of these organizations also have content delivery platforms.

Telecommunications companies – The traditional telephony provider is now behind a device that is capable of delivering high quality audio and normally also has a good screen. This has transformed this type of provider into a content delivery platform.

Broadcasters – These organizations acquire content, reassemble it into a linear stream and distribute it via radio frequency or satellite or cable. They sometimes make content and sometimes are also funded via the government. Some broadcasters provide devices that allow the consumer to view content and allow the broadcaster to derive revenue from the consumer.

Again this is a huge sector, that in turn feeds a whole ecosystem of providers, some of the companies that operate in this sector are so large that they can achieve a cost reduction by owning studios, networks, device manufacturers and infrastructure.

After deriving revenue directly from the consumer the players in this part of the value chain can also derive revenue from advertising sales. This gives rise to a whole raft of advertising companies, consumer behaviour monitoring and retailing companies.

Some of the type of companies that sell into this sector are
Satellite providers – Eutelsat, globcos
Call centre providers – Accenture, StarTek, NuComm
Network providers – UPC, Global crossing, BT, AT&T
Device manufacturers – Thompson, Pace, Apple, Nokia, Seimens, Samsung
Advertising platform providers – Google, Microsoft, Yahoo
Web technology and other high tech providers – Sun, Microsoft, Google
DRM and encryption providers – Microsoft, NDS, Nagra
Government

The media industry is all about you … the consumer. Every TV show, radio channel, book, magazine, computer game and web site has been market to you probably by a professional organization that derives revenue from you or from a provider within this delivery chain. It is also important to note that products you buy are also marketed to you via the same channels.

In addition to charges to the distribution companies that are a number of other companies who derive a revenue directly from the consumer. These are

Device manufacturers such as Nintendo, Apple, Nokia, Phillips, Sony. All of which provide an ever increasing range of products targeted at fulling your media consumption. Products that do this well and have effective DRM will normally hide the cost of the device in the media consumption however products that use open standards tend to be higher cost and place greater emphasis on style and usability.

Device accessories is also another lucrative source of revenue for many companies. As computing becomes ubiquitous and more and more mundane objects become intelligent you will see media consumption devices and fashion merging.

Payment brokerage is an important part of the consumer offering. Small content creators and content aggregators would prefer to derive revenue directly from the consumer without the cost of distribution. The payment brokerage (such as pay pal) offers the consumer protection, and offers the content producer a quick way to monetize their content.