Media Companies Have Consistently Resisted Tech (to their peril)

As someone who has spent my entire career in the midst of the convergence of the tech and media industries, it’s always been a source of great frustration to witness big media companies resisting emerging technologies and evolving business models virtually always to their peril. Having been a major label exec at EMI Music and then switching to the other side and launching Apple’s earliest initiatives in music and entertainment – and working with a range of companies large and small in both worlds since as a strategic consultant – I’ve had a ring side seat to this phenomenon for decades. 

My observations have been that no matter what the ‘new thing’ is, the media companies are fairly consistently prone to have a reflexive reaction to innovation. They don’t seem interested in learning how the new technology works (often they hope the genie will go back in the bottle), and they’re often ignorant of how it could impact their business – often in a favorable way in terms of growing revenues.

There are many reasons for their resistant reactions including the following:

*Lack of vision and understanding about technology: this is not historically in their DNA; they don’t get it and they don’t care about it. Media companies have not typically been investors. They prefer to stick to the knitting of creating and distributing content which is what they know how to do – and have done for about 100 years. 

*Disruption to traditional business models: Emerging technologies often disrupt established business models and revenue streams. Big media companies have invested significant resources in their existing infrastructure and distribution channels, such as cable television or print publications. They may be reluctant to embrace new technologies that could undermine their existing revenue streams and that might require substantial investment and restructuring.

*Fear of piracy and copyright infringement: Emerging technologies can sometimes facilitate the unauthorized distribution and sharing of copyrighted content. Media companies have been concerned about piracy and copyright infringement, as it can significantly impact their revenues. They may resist embracing technologies that make it easier for users to access and share content without proper authorization or payment.

*Control and ownership of content: Big media companies have traditionally held significant control over the production, distribution, and monetization of content. Emerging technologies, such as social media and user-generated content platforms, have given more power to individual creators and users. This shift challenges the traditional gatekeeping role of media companies, and they may be resistant to ceding control and ownership to a more decentralized ecosystem.

*Uncertainty and risk: Adopting new technologies involves risks, including financial investments, operational changes, and potential failures. Big media companies are often risk-averse and prefer to stick with what has been proven to work. They may be reluctant to invest in emerging technologies without a clear understanding of their long-term viability and return on investment. And execs in media companies are often concerned about threats to their quarterly bonuses (or worse!) if they make a bad decision.

*Regulatory challenges: Emerging technologies often bring regulatory challenges. Media companies operate within a complex web of regulations and licensing agreements, and new technologies may require updated legal frameworks. Adapting to changing regulations can be time-consuming and costly, and companies may be hesitant to navigate these complexities.

*Resistance to change: Like any large organizations, media companies can be resistant to change due to inertia, entrenched interests, and cultural factors. Embracing emerging technologies requires a cultural shift, retraining employees, and adapting workflows, which can be met with resistance and skepticism.

Generally speaking, for all of these reasons and more, media companies have often failed to adopt and embrace new technologies when they first appear when they could otherwise could have gained a strategic advantage for having done so. 

A great example is when Viacom invested in Blockbuster around the same time HBO passed on the opportunity to acquire Netflix. Another would be when Napster offered the record labels a collective $1B to allow them to demonstrate how they could help grow industry revenues with 70M users who were hungry for a change to the established models of music distribution at that point. Instead the labels proceeded to sue Napster out of existence.

And film studios were completely unaware of live streaming until Amazon acquired Twitch for $1B. Viacom reportedly expressed interest in YouTube when it was a young fledgling start-up but instead it was acquired by another tech company in Google with more vision for its potential impact just 18 months after it launched for $1.6B in stock.

While big media companies have shown resistance, it's worth noting that as time has gone on some have also embraced emerging technologies to stay competitive and explore new opportunities. But historically it was the content creators themselves (artists, producers and directors) who have been first to adopt new technologies to achieve their objectives.

Perhaps some of the most innovative technologies, at least for film, have been in the realm of special effects where visionary directors like George Lucas, James Cameron and John Lasseter have had to create the technology solutions they needed in order to realize their creative visions. 

I did a brief stint at Silicon Graphics in the 90s. SGI’s powerful computer workstations of the day enabled Industrial Light and Magic (ILM) and other top tier effects houses like Digital Domain to create mind-boggling special effects for films such as Jurassic Park, Forrest Gump, The Mask, Terminator 2 and Death Becomes Her, among many others.

And of course record producers and artists have often embraced technologies to pioneer new sounds that didn’t exist before – like what George Martin did for the Beatles with songs like “Tomorrow Never Knows”, and what Todd Rundgren did for Meatloaf’s “Bat Out of Hell” (and both did so much more!). 

Everything we did with the Mac in the early days of Apple’s focus on music and film was to enable content creators to leverage technology to enhance what was possible and to open up new worlds. But still, these were the creators themselves – and not the media companies – who could see the potential.

In summary, the overall resistance can be attributed to the challenges and risks associated with disrupting established models and maintaining control over content and revenue streams. And this history of looking past tech trends puts media companies at a distinct disadvantage because the digital world has been re-configuring virtually all facets of the music and film-making processes as time has gone on (ditto for TV production and games). Tech isn’t going away – far from it – we now have generative AI which will play a major role in content creation from concept development through production and distribution. Those who have embraced tech have been able to enjoy richer consumer engagement and new revenue streams. It’s really Darwinism when you come down to it; evolve or die.

(NOTE: Please be sure to click on the link above to see the hi-res image of this important chart; SEE how small the media co's are vs the tech co.'s!!)