COVID-19 proves that media’s value is growing – but we need to find better ways to measure it

Media is playing an important role in the COVID-19 response, even as it poses challenges to the industry; new research shows between 80% and 90% of people consume news and entertainment for an average of 24 hours a week, according to  Stefan Hall, Project Lead, Media, Entertainment & Culture, World Economic Forum.

Hall says: “The COVID-19 pandemic is disrupting every industry. For the media sector, coronavirus creates both opportunities and challenges.

“On the one hand, social distancing has led to a spike in at-home media consumption, and growing numbers are turning to news providers for timely and trusted information on the crisis.

“At the same time, some of the most valuable broadcast content – such as live sports – is being postponed or cancelled, leading to spending reallocations by advertisers and a subsequent drop in income for media companies.”

What is the World Economic Forum doing about the coronavirus outbreak?

The WEF report maintains that while the current disruption may be unprecedented, the media industry has been upended many times before. Since the turn of the century, digitisation of content, the rise of social media and acceleration in mobile consumption have all forced changes to the way media companies monetise content.

Today – thanks to the internet’s low distribution costs and the global audience it offers – every publisher or distributor is a legitimate competitor, each striving to capture a share of advertising spend and consumer attention.

Some have thrived: their addressable market is bigger, or they’ve scaled to stay competitive. New companies – new ways of reaching people – have been created.

Others struggle; local news in particular faces major challenges. A few have failed, and a few more may do so in the future.

“What has stayed constant is the indispensable role that media play in society. Media don’t just help us pass the time; they keep us informed,” says Hall, noting that increasingly, media create shared cultural moments and reflect who we are as people … and the industry needs financial models that work to be able to keep fulfilling these functions, which appear ever-more important during COVID-19.

Indeed, this is why a proper understanding of how content creators, consumers and advertisers value media is as important as ever.

“One of the most direct ways to gauge value is engagement, and on this front media is doing well. Between 80% and 90% of us read, watch or listen to news and entertainment for an average of almost 24 hours during a typical week.

“It’s no surprise that engagement with media is high, considering the variety of quality providers there are today.”

Another barometer for value is the number of paying consumers. Some argue this is the most important, because it is a critical component of financial sustainability in the industry.

“Here, there is room for improvement. On average, under half of consumers pay for media – 44% for entertainment and only 16% for news,” says Hall.

“But these benchmarks are static: they don’t demonstrate whether media’s value proposition to consumers is getting stronger.

“A more indicative measure may be future willingness to pay. This provides a dynamic reflection of value, because it implies that the right mix of product and price exists, it just needs to be matched to customer and context.

“The fact that the proportion of consumers willing to pay in future – 53% for news and 70% for entertainment – is higher than those who currently pay suggests that media companies are in a good position to prove value to greater numbers of people.”

This is brought into focus by the trend that paid subscriptions are higher among young people than older age groups. On average, over 60% of consumers aged 16-34 pay for entertainment, compared to 22% of those aged 55+.

The younger group is also more likely to pay for news. This generation grew up with the internet’s culture of free, so their greater desire to consume and pay is another indication of improving value.

These are reasons to be optimistic. Where action may be warranted is in three areas.

First is the immediate challenge posed to the industry by the coronavirus crisis. There’s evidence that self- or forced -solation as a result of COVID-19 has boosted media consumption, even as traditional drivers of media consumption like sports and live entertainment have slowed. And few can argue against the value of having newsrooms that provide timely information in such situations.

However, all media rely on the free movement of people to produce and consume content. At least in the short term, it will have to find ways to adapt.

“Connected to this is the massive role that advertising plays in funding content creation. Our research shows that low-income groups are far less likely to pay for news than people with higher incomes or social status.

“This suggests that concerns of emerging “information inequalities”, where wealthier consumers have access to more or higher-quality information, are very real.”

Some publishers offset the cost of producing content with advertising in order to ensure equality of access. In a scenario, still plausible at this stage, where disruption from the coronavirus takes longer to resolve, media companies will find themselves with an advertising revenue shortfall.

The financial burden of keeping people informed and entertained may start to shift away from advertisers and onto other stakeholders instead. In the long run this may require greater government intervention.

“This relates to the final area worthy of attention, which is the increasingly competitive nature of media today.

“A lot of attention has been focused on the ‘war’ between media companies for consumers’ eyes and wallets, potentially underestimating the impact of so-called “super competitors” now entering the industry.”

These companies, also termed “ecosystem media”, use content to drive value to other parts of their businesses. On the one hand, a portfolio of products and services may mitigate the risks of being media-only. However, the influence such companies exert on the overall media landscape is significant.

Hall observes: “We know we need better metrics for consumers’ perceptions of value in media. We now need better metrics for how these companies provide value for society.

“It’s said that media love a crisis. This may be the most important one yet for the industry!”

Question of the Week:

How best can broadcasters improve their important role in media and remain trusted sources of information while addressing concerns over “information inequalities” — where wealthier consumers have access to more or higher-quality information?

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