Demographic Shift

Like Fred Wil­son, I read a lot in an attempt to tri­an­gu­late my under­stand­ing of our world. How­ever, recent unre­lated events seem to tri­an­gu­late to a major shift that few seem to dis­cuss: The one from a world con­trolled by Baby Boomer to one where younger gen­er­a­tions are tak­ing the steer­ing wheel. This has major impli­ca­tions as it rep­re­sents the first seis­mic demo­graphic shift since the late 1960s.

Let’s first take a look at the data points from recent weeks:

1. Rock­Star Games releases “Grand Theft Auto 4″, pick­ing up US$500 mil­lion in its first week of release.
2. Barack Obama uses younger demo­graph­ics to win demo­c­ra­tic nom­i­na­tion.
3. Prime­time no longer so prime as younger view­ers shift time and place of shows.
4. Some VCs look to demo­graph­ics as an oppor­tu­nity space.

All those data points seem to high­light a major shift in the demo­graph­ics of influ­ence. For most of my life­time, the core influ­encers have been the baby boom gen­er­a­tion (aka. my par­ents’ gen­er­a­tion) and their hold on pol­i­tics and con­sumer behav­ior from the late 1960s on has been uncon­tested up until now.

But that may be changing.

Media

Up until recently, media con­sump­tion was divided between TV, radio, and print when it came to news and movie the­aters, recorded media (VCR in the 80s and DVD now), TV, and live per­for­mance (and I’m group­ing both live music and the­ater in that cat­e­gory) for entertainment.

In the 90s, we suc­cess­fully estab­lished the Inter­net as a source of deliv­ery for news but most efforts to do turn the net into an enter­tain­ment chan­nel failed due to net­work and CPU con­straints. Those con­straints dis­ap­peared since the turn of the cen­tury and the net started to take a stronger place as an enter­tain­ment chan­nel in the last few years.

While the net is slowly eat­ing up the tra­di­tional media bud­get, another mar­ket is started to eat into the pie and that is videogames: it first started within a small sub­set of the over­all pop­u­la­tion (males under 35) but is slowly start­ing to spread to a wider pop­u­la­tion as can be seen with the suc­cess of the Nin­tendo Wii and of cer­tain vir­tual worlds (like Club Pen­guin or WebKinz, aimed at kids).

Sim­i­larly, it appears that tra­di­tional media is suf­fer­ing from a slump in their own adver­tis­ing rev­enue as a result of not only decreas­ing audi­ence but also decreas­ing amounts of sup­port from adver­tis­ers due largely to the fact that most non-digital assets are not easy to track in terms of response rates (an issue I’ve addressed in the past in sev­eral dif­fer­ent posts.)

So the ques­tion now is where the value will reside mov­ing for­ward. Many of the smarter media com­pa­nies are now start­ing to under­stand that their prod­uct is not nec­es­sar­ily in the deliv­ery medium (for the longest time, print pub­lish­ers have assumed that their goal is to deliver paper-based prod­ucts; music pub­lish­ers were tied to what­ever for­mat, be it record, 8 tracks, tapes, or CD, they pack­aged their prod­uct in; TV pro­duc­ers have looked to their chan­nel as the cen­ter) but that the value they add is in the pack­ag­ing and financ­ing of inter­est­ing offer­ings in a cross-media fash­ion. This is the dri­ver behind efforts like the recent acqui­si­tion offer­ing of CNET by CBS and Ars Tech­nica by Conde Nast.

What we will see here is a pro­gres­sive move to any­time, any­place as far as any enter­tain­ment or news pack­age is con­cerned. Mass media is not really dead, it’s just made up of an aggre­gated model now. This is a model that some stars like Madonna under­stand and have adapted to, accord­ing to the New York Times (empha­sis mine):

Madonna’s show, to pro­mote her new album, “Hard Candy,” was also part of a tech­no­log­i­cally sophis­ti­cated, 21st-century prod­uct roll­out that involved mul­ti­ple media tie-ins. It was broad­cast live on the Inter­net by MSN and on cell phones world­wide by Ver­i­zon and Voda­fone. In addi­tion to the 750 spots given to fans on the line — that’s on a line, not online — about 1,000 were given to radio con­test win­ners, and 200 to mem­bers of Madonna’s fan club, which now has a social-networking component.

The secret here is to appeal to the audi­ence on its own terms and where it is. Some less savvy exec­u­tives may think this is a tem­po­rary blip but I sus­pect that, as far as media is con­cerned, it’s only the tip of the ice­berg. Talk to teenagers today and they have lit­tle under­stand­ing or patience for media that does not fit their needs.

This, how­ever, does not mean that every­thing needs to be free. Many new media advo­cates will claim that, in the new world, copy­right is dead and value from media can only be extracted indi­rectly. For exam­ple, they see rock con­certs as the way to extract value from music tracks that are dis­trib­uted for free. While those types of eco­nom­ics are fine, they seem to leave some money on the table. For exam­ple, it is true that teenagers look to the value of an MP3 track as low or even 0. How­ever, the same teenagers buy music from the itunes store or down­load and pay for ring­tones. And let’s not for­get last year’s exper­i­ment by Radion­head, which put all of its album online for free in a “pay what you wish” model: if peo­ple will always opt to go for the free option on a good, then Radiohead’s US$10 mil­lion first week sale for their CD doesn’t make sense. Once again, this goes back to the new fun­da­men­tal rule that, as long as you offer your goods across a wide array of media, you will max­i­mize your offerings.

Pol­i­tics

In the intro, I also talked about Barack Obama and how he appears to defy the prog­nos­ti­ca­tion made by many com­men­ta­tors. I would ven­ture to say that the rea­son for his con­tin­ued suc­cess in the face of any exist­ing model is also based on the real­iza­tion that he, as a can­di­date, can make him­self avail­able in any media form. A mea­sure of the online suc­cess in mul­ti­ple media shows the story (thanks to Tech­pres­i­dent, we can eas­ily see that data as it relates to MySpace, Face­book,  YouTube, Tech­no­rati, event­ful, meetup,  and traf­fic data accor­ing to Com­pete and Hit­wise.) When looked through the tra­di­tional lens of com­par­ing elec­tion cycles to ear­lier ones, as most TV com­men­ta­tors appear to do, the Obama cam­paign can’t sur­vive. But the prob­lem is that such lens does not include the data above.

For all my life­time, the sto­ry­line of Amer­i­can media con­sump­tion and of pol­i­tics has been largely formed around one sin­gle demo­graph­ics class: baby boomers. My gen­er­a­tion, Gen­er­a­tion X, was con­sid­ered a wasted one as Baby boomers looked at it as poit­i­cally apa­thetic, and gen­er­ally seen as a bunch of slack­ers with no inter­est in cor­po­rate lives. There might have been some ele­ment of truth to the story line as mem­bers of Gen­er­a­tion X came of age in a cyn­i­cal world where they were told that the cor­po­rate life was no longer a guar­an­tee of life­time employe­ment and where they were con­sis­tently reminded that social secu­rity would fail and they would pay for the sys­tem but not ben­e­fit from it. As a result, many turned away from tra­di­tional insti­tu­tions and started build­ing alternatives.

The most vis­i­ble alter­na­tive model is the rise of the Inter­net econ­omy which was largely built by 20 and 30 some­thing and funded by older peo­ple who under­stood some of the value being cre­ated. But along the line, many other things changed: first, the work-hard/play-hard ethic moved, as peo­ple got a bit older, to a need for a bet­ter work/life bal­ance. This was a byprod­uct of drop­ping the bound­aries between office and home. As the two merged, a new set of bound­aries needed to be created.

As more of those bound­aries changed, some social mores were also affected. In a way, one could argue that the boomer’s self-obsession cre­ated a counter effort that led to more col­lab­o­ra­tive and more society-centric views. Because they had been beaten down by their elders, GenX­ers tried to build a sys­tem that swung the pen­du­lum on the other side: one where age/culture/race/sex/etc… were de-emphasized through the elec­tron­i­cally medi­ated space of the Inter­net. This is not to say that all the prob­lems asso­ci­ated with those cat­e­gories went away but I sus­pect that a study of demo­graph­ics would show younger peo­ple to be more tol­er­ant and gen­er­ally more on the left side of the polit­i­cal spec­trum than older peo­ple (maybe a rep­re­sen­ta­tion of Churchill’s “Show me a young con­ser­v­a­tive and I’ll show you a man with­out a heart. Show me an old lib­eral and I’ll show you a man with­out a brain”)

Enters Obama, a can­di­date who, by most mea­sure can be con­sid­ered fur­ther to the left than Hillary Clin­ton. When he talks, he high­lights part­ner­ship, and gen­er­ally looks to a more “Euro­pean” approach to soci­ety. This seems to be a rebuke of much of the indi­vid­u­al­ist type of poli­cies high­lighted since the Repub­li­can era. And that’s where the pun­dits start hav­ing trou­ble. Is the 2008 pres­i­den­tial cycle like 2004? 2000? 1996? 1992?

The truth of the mat­ter is that the 2008 elec­tion cycle is unlike the other ones because of a sub­stan­tial demo­graphic change. Obama’s vot­ers tend to be peo­ple who have not pre­vi­ously been very involved in the polit­i­cal process. Some are from par­tic­u­lar racial back­ground but I sus­pect that a big­ger part of the story is the demo­graphic clash that’s com­ing our way.

The inter­est­ing thing is also the type of oppor­tu­nity this can present from a polit­i­cal mes­sag­ing stand­point and an issue stand­point. Some of the issues that were con­sid­ered as dan­ger­ous to approach in pre­vi­ous elec­tion might now be safer due to the dif­fer­ent out­look (for exam­ple, I have read some­where (and don’t remem­ber where, which is why I’m not link­ing to it) that younger Amer­i­cans tend to be more will­ing to pay higher taxes in exchange for a big­ger social net).

I sus­pect that the Obama cam­paign is cur­rently sur­pris­ing pun­dits for three main reasons:

1. It under­stands that media and pol­i­tics are inter­twined and works hard to run itself as a media organization.
2. The cam­paign under­stands that media is now par­tic­i­pa­tory, and ought to be con­sumed across mul­ti­ple chan­nels when the con­sumer wants to.
3. The cam­paign under­stands that it can find vot­ers where no other cam­paign has gone to get them. That means big­ger reg­is­tra­tion dri­ves and an increase in the num­ber of new peo­ple signed up on the voter’s rolls, some­thing that could have a very impor­tant impact not only in this elec­tion but in a lot of future ones too.

Con­clu­sion

I am sure that I’m only scratch­ing the sur­face of a pretty impor­tant phe­nom­e­non with this entry but I have to admit a fair amount of sur­prise as to why this doesn’t seem to be more noticed. I also won­der whether my assump­tion here are wrong and what the larger impact of such a demo­graphic shift could be. I’d appre­ci­ate com­ments from oth­ers as to what they think it ought to be.