Synergy and Cross Media Ownership

Essay Discuss the importance of cross media convergence and synergy in production, distribution and marketing within a media industry which you have studied. Make detailed reference to examples from your case study.

I have studied the magazine industry, focusing on the NME, published by IPC media, as my main case study.

There is a high degree of concentration of ownership in the media world, and cross media convergence occurs when one conglomerate owns a range of different media companies. This leads to the possibility of various mutually beneficial arrangements between different media companies and texts. These might be financial arrangements or cross advertising opportunities, and they are termed synergies. Such arrangements have been important for the NME, as I will show in this essay.

The NME magazine has been in existence since 1952, but since its heyday in the 1970s, when its circulation reached a staggering 300,000, it has been in steady decline. Various factors have caused this, but this century two really stand out. The first is the digital convergence of media technologies and the rise of the internet. This caused a decline in circulation from 76,000 at the turn of the century to 68,000 in 2006, because music fans were becoming less reliant on print journalism to get information about their favourite bands and so on. Recognising this, the NME was an early adopter of the internet, creating NME.com in 1996, in a bid to keep its brand identity important amongst its target audience. However nobody could have predicted the catastrophic decline in sales from 2006 to the present day. In six short years the circulation has plummeted to 28,000. We have seen two hugely important developments in relation to the media in this time. Firstly the development of digitallyconverged multimedia devices and cheap hardware that has enabled consumers of media to become producers of it. Secondly the associated rise of user-generated content and helper applications on the internet, which has become known as “Web 2.0”. This has made many of us into “pro-sumers” creating and distributing our own media with the ability to distribute the media we produce, whether it be music we have created in our bedrooms and uploaded to Facebook or YouTube, or journalistic content about gigs we’ve been to which we have blogged or shared in online fan forums.

In this short period of time, the professional journalism of the NME has become increasingly less relevant. Why get your information mediated through paid journalists when you can get it directly from the band, or from the fans? And why buy a magazine when all this is free? And why buy a magazine anyway to read about music when you can simply download an mp3 to your phone and listen to it straight away? And again, with the rise of mobile reading devices such as tablets and iPads, it’s a lot easier if you do want a magazine to subscribe to the pdf version on a site like Zinio.com. The printed music magazine, like other aspects of the music industry, has been hit badly by this fundamental change. The bottom line is profit, and NME’s profits from the magazine’s two revenue streams (sales and advertising) have declined catastrophically. They are now £135,000 a month from the magazine, and £200,000 from the advertising (which incidentally shows that the real product IPC is selling could be considered to be the readers of the magazine, who are sold to the advertisers). And both these revenue streams continue to decline at an alarming rate.

It the face of this however the NME has not stood still. NME.com, which was initially created for crossadvertising synergy purposes, has, now that companies are beginning to work out how to make money from the internet, developed its own advertising revenue stream, which currently stands at £170,000 a month and rising. But because the NME is a good example of cross-media convergence its attempts to remain a well-known brand have not stopped there. IPC is owned by Time-Warner, the second-largest media conglomerate in the world, owning interests across many other media, such as Warner film production company, distribution company and cinema chains, Home Box Office or The Cartoon Network on TV, Time publishers, as well as IPC magazine publishers in the UK and MarketForce Magazine Distributors in the UK. This has meant that NME, back by such a huge

company, has had the investment to spread its brand identity into a wide range of other platforms, either directly owned by Warner or licenced by Warner to other companies. So as well as NME.com, we have NME TV on satellite and cable networks, NME Radio, NME tours, gigs and festivals, and more recently NME has been able to maintain a presence in the hugely important social networking market, on Twitter, Facebook, MySpace, YouTube, SoundCloud, Tumblr and so on. In addition to this NME is able to carry exclusive material from other parts of the Time Warner empire, such as interviews with directors of Warner films targeting the same audience.

But will all this be enough to enable the NME to continue to survive as a print magazine? When the advertising revenue from the internet becomes higher than that from the magazine, might not IPC simply decide to abandon the print magazine as the core product, and shift to online only? After all production costs are way low, and distribution costs more like zero, compared to the huge carbonfootprint of producing, storing, and physically distributing a printed product.

This of course is the million dollar question, and one to which no clear answer has yet emerged.

Some magazines have indeed shut up shop as physical entities. Smash Hits become internet only in 2006, the year that Web 2.0 began to take off. The online only Lonny, an interior design magazine, which looks like a real magazine in terms of graphics and layout, is creating a big buzz in the publishing world. It seems ideally suited to the iPads of trendy young ABC1 readers. It has developed a big income from top-end advertisers but is totally free online for readers, and has never existed as a print product. I Like Music is an online music magazine, again with free content, but exploiting the growth of pro-sumer journalism to get its content for free and making a living at the bottom end of the advertising market.

However there are some magazines which have continued to survive and grow in print form, even in this brave new world. After all print magazines have some qualities which are different to, and perhaps better than, online magazines. They have a tactile quality which many of us enjoy – when is the last time you printed something out from the internet and stuck it on your bedroom wall? They are collectable, sharable, portable, disposable. We enjoy the advertising, or at least find it less intrusive than internet advertising. So maybe even in the digital online age, where electronic paper will connect to our cloud and download the latest content overnight for us, the medium of print will survive for a few more years yet.

The music magazine with the largest circulation in the UK, a huge 100,000, took the most radical approach to addressing the decline in circulation. It reasoned that if the biggest problem was that consumers no longer saw the need to pay for a magazine if they could get the content online for free, then the only solution was to make the magazine free! And that is what it has done. It keeps its production costs to a minimum through its A5 size and low-grade paper, and is distributed free in urban centres in the UK. It makes a respectable income from advertisers. And another music magazine, Clash, has even found a way to make money from circulation. Taking its lead from the fact that we enjoy the tactile quality of a nice glossy magazine, it has made a virtue of its physical presence. It has a current circulation of 47,000 and targets very up-market young ABC1 readers with a product that is arty, beautifully designed, and expensive. It’s a text to be seen with in the fashionable quarters of London.

So to return to the question about the importance of synergy and cross media convergence, I would have to say that it certainly has been an important factor in maintaining brand identity for print products in the face of a changing digital world, but it won’t be enough for print magazines to survive on their own; and the future of the NME as a print product is far from guaranteed, even backed by one of the largest media conglomerates in the world.