It's hard to say which prediction is more far reaching: that all content will be online in 10 years; that portions of the advertising business are shrinking; that for-fee and ad-supported content models have not worked well; or that nobody but Google seems able to make money from digital content.
But Microsoft CEO Steve Ballmer argues all are true. And all are related trends. If all content is online, and if much content is ad-funded, then less ad funding or lower rates means less available professionally-produced content.
If ad support does not support the online equivalent of offline channels, then new revenue models have to be created, or less content will be made available.
One might argue this is "just a traditional media" problem. But it's a problem for users who want online access to virtually all the offline content they now enjoy, for telecom service providers who must supply the additional bandwidth and for all the media-related industries that depend on advertising as a business model.
Of Ballmer's predictions, the least controversial is that a shift away from offline media and towards online formats is underway. The global advertising economy--at least the portion that has been allocated for traditional media--has been permanently "reset" at a lower level, Ballmer warns.
So traditional broadcast and print media will have to plan their business models around a smaller share of the advertising market, as revenues continue to move to digital outlets, Ballmer argues.
"I don't think we are in a recession, I think we have reset," he said. "A recession implies recovery [to pre-recession levels] and for planning purposes I don't think we will. We have reset and won't rebound and re-grow."
Few likely would contest the trend towards online content, or the fact that few companies aside from Google and the Wall Street Journal have managed to create interesting ad-supported or fee-supported online businesses.
Most would be comfortable with the notion that traditional content and social media are blending, in many cases. There might be some dispute over the mix, the amount or the timing, but the direction is clear enough.
The big problem for consumers and producers is the inability to create widespread online content business models based on fees or advertising. That's the biggest challenge.
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