Friday, 30 October 2009

The Three Categories of Media Companies

Old "monopolies" like omnibus newspapers are dying in the U.S., but new ones, like Google or Cisco, are rising. What is happening right now is not only convergence of technologies, but fusion and evolution of industries as well.
The problem is how to define key concepts in times of rapid change. For example, what is a media company.

According to Merriam Webster Online Dictionary, we have had ‘media’ since 1842. However, the meaning of mass media seems to have originated only later, 1923, and in the field of advertising. So, according to etymology, ads and media belong together.

Nowadays, Wikipedia says that in communication, “media (singular medium) are the storage and transmission channels or tools used to store and deliver information or data. It is often referred to as synonymous with mass media or news media.”

Interestingly, for example the Financial Times has not yet defined Google as a media company in its TOP 500 lists. In recently published 2009 list Google’s global rank was 36th, just behind Coca Cola.

Google gets most its revenue from the ads. No doubt about it, Google is a media company. Actually, Google is the world’s biggest media company. In FT’s list Disney (120.), Comcast (128.) and Time Warner (191) are following the Mountain View Giant.

Ex Financial Times journalist, and nowadays a Silicon Valley entrepreneur, and blogger, Tom Foremski realized a dramatic change already in 2005, when visiting Cisco Systems and getting to know news@cisco team. After that he started to even manifest that “every company is a media company”.

Indeed, at least all high-tech companies are media companies. I understand that this is not easy to acknowledge, especially by those working for traditional media companies.

But, maybe, we still need to develop our use of the concept, at least separate media companies according to their role of producing original content. The CEO of Google, Eric Schmidt, has argued many times that they are not in content business. Last time he repeated this was in an interview by Danny Sullivan (Search Engine Land, 3.10.2009). Schmidt is right. They are in advertising, innovation and content aggregating business. I would like to define Google as an “aggregating media company”.

Disney and Time Warner are somewhat different media companies, because they still create a lot of original content. I will call them “original content media companies”.

Of course, there are already many hybrids between these two models of media companies. Let’s just look at Huffington Post, which both aggregates and creates content. But because HuffPo aggregates much more links than it creates original content, I would like to categorize it also as an “aggregating media company”.

How about Cisco Systems and its news@cisco team? This is a trickier one. I would call Cisco and alike as an “emerging media company”. In this way, many high-tech companies, still testing especially new social media tools, and applications, belongs to this third category.

Finally, it seems that this third category, with its thousands of high-tech companies, still operating in “stealth mode” and in the innovative “Grey Area”, offers the most potential for the future.

So, the new question is, What Would Cisco And Alike Do Next?

Latest News

SFGate: Demand Media Will Be The First $1 Billion Tech IPO Since Google -- Here's Why (20.4.2010)

"Cisco was getting more traffic to news@Cisco than any of the top IT publications, such as ComputerWorld, InfoWorld, and many other huge computer trade publications! - - Every Company is a Media Company, or EC=MC - becomes the transformative equation for business in our times." Silicon Valley Watcher: Meeting Cisco's M&A Chief And Realizing Every Company Is A Media Company (7.4.2010)

"By not hiring journalists, but instead dominating the user-generated content business by buying companies such as Yelp, Google will become a massive media company (that, among other things, will kill off the city-and-regional magazine market, and what's left of local alternative newspapers)." Silicon Alley Insider: How Google is Becoming A Media Company (5.1.2010)

"We're now entering the full-blown creation and publishing phase. It's not just a relatively small group of early adopters that used and evangelized these tools and services, it has now moved mainstream. It is now involving millions, tens of millions, and soon hundreds of millions of people. We have all the elements in place for a media Tsunami. A giant wave of media of all types will wash over us. This Tsunami will wash away at the value of all media. By value I mean the monetary value."
Tom Foremski: 2010 Prediction: The Media Tsunami Is Coming...(4.1.2010)

DigiToday: Nokia Hires A Journalist Blogger to China (17.12.2009, in Finnish)

"On the social-networking side, Cisco has developed a YouTube-like service called Cisco Show and Share that allows users to create, edit, and share video content. It is also introducing the Cisco Enterprise Collaboration Platform, which creates a sort of Facebook for corporate users. The tool includes the ability offer blogging, wikis, team pages, and instant messaging on an internal social networking site." CNET: Cisco ruffles feathers with new collaboration tools (8.11.2009) Media for All: Solving convergence and ownership consolidation problems (3.11.2009)

MarketWatch: Cisco to buy Starent Networks in $2.9 billion deal (13.10.2009)


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