The carnage is starting.
We just went through a US Presidential election, something that should be the Super Bowl for news media.
The legacy media was suffering greatly. It really needed a strong election season to pull it out of the toilet. Unfortunately, based upon the rating, this did not happen.
Election Night coverage for the big 3 cable news networks were down from 2020. This mirrored what took place 4 years ago, as the ratings were lower than in 2016.
At the core of this is the move to online. People are jettisoning from broadcast television. We are seeing these corporate entities putting themselves in a major pickle.
CNN Layoffs Exemplify The Shift To Online
Reports are surfacing that the carnage is about to hit.
CNN, once the epitome of cable news, is going to lay off hundreds, including on air talent. This is a sign of what is going on in the industry.
It reflects the motto "we are now the media".
Chris Wallace, and his $9 million salary, "quit" after the election. He is going into podcasting.
On air talent such as Anderson Cooper, Erin Burnett and Kaitlan Collins could be on the block. Their salaries are $20 million, $6 million, and $3 million.
This is by no means an isolated incident.
Comcast is looking to sell its cable properties, which include MSNBC and CNBC. This is how bad things have gotten.
Unfortunately, things are about to get a great deal worse. With the new administration taking over, the revenues of these media companies could be crushed.
The top advertiser on cable news is Big Pharma. They account for more than 70% of the ad revenue. With Robert Kennedy Jr in the picture, there is no way advertising by these companies will be allowed.
Ironically, the United States is one of only two countries (the other being New Zealand) in the world that permits Big Pharma to advertise on television.
It is likely this is going away.
Shift To Podcasting
Legacy media is in a race to the bottom. corporations such as Comcast are going to bail while they can still salvage something. With these properties, it becomes a Greater Fool Theory.
One thing the election season reveled is the power of "alternative media". By this I am referring to those who operate solely on the Internet. Most of these are channels on YouTube or Rumble although it could include bigger players who have their own production companies. Some of these people were formerly in the mainstream, such as Tucker Carlson or Bill Maher. There are others, such as Valutainment, which is run by a guy who make a fortune in the insurance business.
Then we have the comic turned UFC announcer turned podcast King, Joe Rogan. He is quickly becoming the gold standard for this industry that is growing rapidly.
Web 3.0 Opportunity
As we can guess, the space is going to get crowded very quickly. If we look at YouTube, we can see how the number of channels is overwhelming. Naturally, not all deal with news but there is a lot of competition out there for eyeballs.
This is all part of the fragmentation of the media.
Thus, a new model is required. There is no way all these people will be able to garner the following to make it profitable.
For this reason, as discussed in the past, I think the digital platform business model is the key. We already see the success with it. The challenge is the beneficiaries, at least financially, are the investors in those platforms. The shareholders in Google and Meta are the ones who do well.
Here is where Web 3.0 enters. By shifting from a corporate based model, we move to one that is built upon stake. This means the content creators also have a vested financial interest in the growth of the platform. This means providing what is needed becomes the focus of everyone.
It is still a game of traffic. The more people on a platform, the better it is for everyone. YouTube has become the epitome of this. It is actually the foundation of network effects.
The only problem is where the money goes. Even with the sharing of advertising revenue, most on the platform do not enjoy them. This all changes with Web 3.0.
Will we see big names make the switch? Not anytime soon. These people have the ability to gain a following on the major platforms. If someone like Anderson Cooper decided to start his own channel, it would likely do well. He has enough name recognition that many would view his videos.
The same is not likely the case for someone who is on at 2 AM on one of the cable news outlets. This person has few options.
It is clear the legacy media is going to see contraction. The number of jobs are declining. Companies are going to consolidate, eliminating many people from the equation.
This is a major opportunity, not only for individuals but also platforms.
It is safe to say, the CNN layoffs will not be the last across the industry.