The obvious way for Australia-based media companies to fight back against the trend to globalised advertising audiences giving advantage to globally active media companies, is to go global. Are there any services that might fit that bill? Second Life, the virtual world with well over 10 million users worldwide, is an economy that may serve this role. For now, a company such as Telstra benefits from the fact that  customers  will be attracted to its profitable Internet access services by the fact that the virtual world is unmetered for its access customers. Once a user has transferred to BigPond, there is a continuous incentive to upgrade to a faster broadband access plan because the quality of the experience is so noticeably better as broadband speed increases. This is called the access value escalator.  Once this builds momentum, the virtual world platform can be a launch pad for consumer and business services, gluing together areas such as social networking, user generated content and sharing, movie and music delivery and so forth.

This is a potentially important development because as the market becomes crowded with many devices that lack differentiation, it is in the nuances of interface that the competitive edge will be found. The Nokia N95/96 handset can arguably do more than the Apple iPhone, yet the latter flourishes because of its attention to the nuances of interface. The super-slender Toshiba Portege R500 probably does more than the Apple MacBook Air, yet the latter flourishes because of its attention to design and style. A key additional vector is frequency of new product releases – within reason, the more often, the better of course. These stalwarts of premium value are most accessible to overseas companies which have the scale to do the R&D and conspicuously innovate. Less well heeled companies may increasingly need to find their edge in lower-cost and “virtual” product corollaries – such as integration with virtual worlds and social networks. As a result, it may be folly for such companies to demand a direct revenue benefit from new areas such as social networking, per se. In contrast, it can be argued they should see the learnings they obtain for managing virtual communities effectively  as the most precious and vital spin off of involvement in such nascent areas today.

All these dynamics make it difficult for media companies to know which lines of business activity  to retire, and when such decisions to prune should be made. One of the key challenges is to spot how persevering with an initiative will provide a defence to a threat in some potentially adjacent business area. For example,  it might be argued that a mashup engine with built in content sharing and social networking components can generate only slender revenues in the short term. There may even be a question mark over how these might scale in future. But on the other hand, it is arguable that such a service is a way to shore up and sustain the appeal of more traditional communication services as the latter are increasingly virtualised and commoditised. A social networking application can catalyse uptake of such traditional comms services by putting them in the context of social currents and value associations that bring them alive. People mightn’t warm to mobile phone video calls day to day (who wants to be seen with “just out of bed” hair and, in the case of some women, no makeup), but when such calls can be made at the right time, perhaps in the service of a location-aware map geo-tagging service, then the user’s propensity to make such a call may be much higher. That bait, in turn, instates use of that tool as an acquired behavioural pattern, to be repeated more and more often, and a virtuous cycle of usage may thus be established.

No one knows how media comms companies will ultimately compete against such threats. But in some senses, the main thing they have to fear is fear itself. It is all too easy to lose confidence in the media comms vision and give up on innovative activity because it seems more gruffly sensible to sever projects that don’t deliver immediate benefits. But this is arguably a grievous mistake. What is important in a rapidly changing technological and commercial environment is to keep seeding the market place with initiatives that have the capacity to surge with inflective growth if a few trends and assumptions turn out to prevail.  This fortifies the marketplace’s perception of a company as being able to recognise the right trends, operationalise timely responses, deal with competitive threats and drive sustainable shareholder value. That is the true challenge of management teams in the 21st century: to back the right horses, then find the conviction and stamina to see out the race.