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Consumers Now Spending More Than Advertisers on Media

As reported by Mediapost yesterday, http://www.mediapost.com/dtls_dsp_news.cfm?newsId=262413:

"In a milestone that signals a fundamental shift in the economics of the media industry, consumers now spend more money on media than advertisers do. The shift, which occurred during 2003, but is just now coming to light via a report released Monday by investment banker Veronis Suhler Stevenson (VSS), reflects that advertising no longer is the primary business model for most media content, consumers are. In 2003, U.S. consumers spent $178.4 billion buying or accessing media content, nearly three billion more than marketers spent advertising on media outlets to reach consumers, making consumer "end-user" spending the most significant contributor to communications industry revenues for the first time ever. "

Like the music industry, the advertising industry is also going through turmoil and grappling with existential questions. While I don't think advertising is going away anytime soon, it is surely going through some fundamental shifts as consumers, especially the younger generations, exert more control over their media. They are better able to tune advertising out both mentally and technically, and perhaps put a greater value on their time (meaning that they're less willing to 'pay' for content by viewing advertising).

I wonder what this portends for advertising and media...what do you think the media landscape will look like 10 years from now, and how will that impact digital music business models?

 
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Bloggers
Ray Beckerman, Ray Beckerman, P.C.
Steve Gordon, Steve Gordon Law
Rags Gupta, Brightcove
Chris Castle, Christian L. Castle, Attorneys
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