The Strategic Digital Media Entrepreneur

Penelope M. Abernathy, JoAnn Sciarrino

• Publisher: Wiley-Blackwell
• Year: 2018
• ISBN:
  9781119218067
• Edition: 1
• Topic: Social Sciences
• Subtopic: Media Studies
• Index: Social Sciences

A goldmine of strategic insights and practical business guidance covering all aspects of media entrepreneurship in the Digital Age

The media industry is facing epic upheaval. Revolutionary new technologies compel those in businesses as diverse as broadcasting to book publishing to radically recreate their business models or be left in history's wake. At the same time, those with the next big idea are eager to acquire the business know-how needed to make it in today's brave new world of media. Written by a uniquely well-qualified author team, this book addresses the concerns of both audiences.

Penelope Muse Abernathy and JoAnn Sciarrino provide timely lessons on everything from media financing to marketing, business strategy to leadership, innovation to business accounting. They use numerous case studies and real-world vignettes to reveal the success secrets of today's hottest media entrepreneurs, as well as the fatal flaws that leads many promising new ventures down the road to ruin. They begin with a primer on digital entrepreneurship basics, covering how to create a winning digital business model, obtain financing, do business accounting, identify strategic challenges, and more. From there they show you how to:

• Develop sustainable customer-focused strategies while overcoming the unique leadership challenges of the Digital Age
• Define your company's unique value proposition, prioritize investments in key assets, and form strategic partnerships and alliances
• Understand and prepare to exploit the vast potential inherent in the next generation of digital technologies, including artificial intelligence, virtual reality, and blockchain, among others

The two companion websites feature a wealth of supplemental material, including updates, instructional videos, essays by media leaders, as well as PowerPoint presentations and study guides for instructors.

Packed with practical insights and guidance on all aspects of the business of media in the Digital Age, The Strategic Digital Media Entrepreneur is a must-have resource for professionals and students alike in advertising, marketing, business strategy, entrepreneurship, finance, social media, and more.

Part I
Understanding the Basics of Digital Entrepreneurship

In fact, no one can tell whether a given innovation will end up a big business or a modest achievement. But even if the results are modest, the successful innovation aims from the beginning to become the standard setter, to determine the direction of a new technology or new industry, to create the business that is—and remains—ahead of the pack. If an innovation does not aim at leadership from the beginning, it is unlikely to be innovative enough.

(Peter Drucker, “The Discipline of Innovation,” Harvard Business Review, August 2002)

1
Gutenberg to Zuckerberg: Innovation and Entrepreneurship

It is 1450 in the medieval town of Mainz in Central Europe. A former blacksmith and engraver is seeking investors for a secret project he refers to simply as “the work of books.” Until now, Johannes Gutenberg, the youngest son of aristocrats, has led a rather peripatetic life shuttling among cities along the Rhine River as he seeks to make his own fortune. With money he inherited from his mother’s estate, he’s invested in a number of commercial ventures, including a plan to manufacture and sell handheld mirrors that are supposed to reflect a “holy light” on pilgrims visiting a 1439 exhibition of Emperor Charlemagne’s relics in Aachen. Unfortunately, floods delay the pilgrimage for more than a year. As with many of his ventures, the profit he envisioned never materializes. With his inheritance gone, he has returned to the city where he was born and sets up a workshop in a building owned by a distant cousin.

Far from being discouraged, Gutenberg, who is now in his early fifties, is once again dreaming of striking it rich. Over the past decade, he has acquired a grab bag of skills, including metallurgy, and has invented several new manufacturing processes that he hopes to use in this new venture of printing and selling Bibles. But first, he needs an investor to advance him the funds. A local banker by the name of Johann Fust steps forward, lending Gutenberg 1,600 guilders (which is several hundred thousand euros in today’s currency). Fust also introduces him to Peter Schoeffer, who signs on as an apprentice. Using the calligraphy skills he has developed working as a scribe in Paris, Schoeffer begins designing the typeface for the Bible while Gutenberg, the alchemist, attempts to bring all of his inventions together in a sequential printing process.

History recognizes Gutenberg as the inventor of the printing press. In fact, in his workshop, he invents, not one, but four separate products and processes. First, he develops a hand mold that he uses to cast individual letters of the alphabet. Once his moveable letters are cast in metal, they are fitted into a frame, and used to make multiple impressions of the same word onto a page. He then turns his attention to ink and paper, experimenting with formulas, adjusting the viscosity of the ink so that it bonds firmly with the paper, which also must be just the right thickness so it will not be shredded by the metal type. As a final step, he invents a new type of press—one with a screw that can be manually tightened using a wooden handle that compresses the type onto a flatbed surface onto which the image will be imprinted.

It takes several years of experimentation and adjustment to get the printing process just right. All the while, Gutenberg employs more than 20 people in his workshop because producing a quality reproduction of the Bible is a huge undertaking. Setting the 42 lines of type on each of the 1,282 pages requires at least a half day. Gutenberg attempts to cover his day‐to‐day payroll and operating expenses by printing a variety of other less prestigious materials, including indulgences, pamphlets, poems, and a Latin grammar book. By 1455, Gutenberg is finally ready to go to market, having produced almost 180 copies of his masterpiece. He tentatively decides to charge the princely sum of 40 guilders for each Bible.

Unfortunately, his investor has grown impatient. Fust sues Gutenberg for 2,000 guilders, claiming that over the past three years he has made no interest payments on the original loan of 1,600.

Gutenberg’s apprentice, Schoeffer, testifies for Fust, who prevails in court. In addition to receiving a financial settlement from Gutenberg, Fust is awarded possession of almost all of the Bibles that have been printed, as well as the equipment in the workshop. With proceeds from the sale of the Bibles and using the tools and processes that Gutenberg had invented, Fust and Schoeffer set up their own workshop. In 1457, they become the first printers in Europe to publish a book stamped with their own branded imprint. On his own after Fust’s death a decade later, Schoeffer becomes one of Europe’s most successful and famous early printers, publishing his own version of the Bible, as well as catalogues and dictionaries that are sold through a far‐flung network that stretches across the western half of the continent.

In contrast, Gutenberg’s finances are apparently in tatters. In the years after the lawsuit, Gutenberg continues doing some minor print work, maybe even furnishing type for another Bible produced in 1459. He dies around the age of 70 in 1468, unknown outside his small circle of friends and former associates, the significance of his innovations largely unrecognized. He is buried in a churchyard cemetery near Mainz that has since been destroyed, his gravesite lost to posterity.

Gutenberg was the original “disruptive innovator.” His inventions and improvements wrenched civilization from the age of the scribe whose works were available only to an elite few into a secular age of mass‐produced, widely circulated texts that spawned social, political, and economic revolutions. Today, there are statues of Gutenberg throughout Europe, a university named after him, and a museum dedicated to him and his inventions in his hometown, right across from the imposing, 1,000‐year‐old Mainz Cathedral, under the spires where he set up his now famous workshop. In 2000, at the dawn of the third millennium, both scholars and journalists for the popular press that his inventions fostered proclaimed Gutenberg as one of the most important figures in the history of mankind.

Yet it was not until 50 years after his death that Gutenberg was finally acknowledged in historical texts as the inventor of typography and modern printing processes. From the vantage point of the twenty‐first century, it is instructive to contemplate the supreme ironies of Gutenberg’s life and the lessons it holds for today’s digital innovators and entrepreneurs. Why were his innovations in printing processes and products—which revolutionized communication—unrecognized during his lifetime? Why did the world’s first media innovator fail to capitalize financially on his own transformative inventions and become a successful media entrepreneur?

In this chapter, we will explore the difference between successful innovators and successful entrepreneurs. Among the questions we’ll consider are:

• What is a media enterprise and what are the core competencies of economically successful media companies?
• What are the key transformative media innovations? How have business models for media enterprises changed over time in response to those innovations?
• What is the difference between a disruptive innovation and a sustaining innovation?
• What are the key mistakes that Gutenberg made? What are the lessons for today’s media entrepreneurs?

Defining a Media Enterprise

Prior to Gutenberg, publishing was a solitary artistic endeavor. A wealthy benefactor would commission a scribe, skilled in the art of calligraphy, to hand‐copy a text onto either parchment or paper. Most of the transcription occurred in the monasteries and most of the texts were of an exclusively religious nature. Transcribing a single book typically took at least a year, sometimes as much as two years, ...