I have been giving a lot of thought lately to what impact rising inflation might have on digital media. One strong possibility is that print will get crimped.
Consider this a rather simplistic theory for a Saturday morning. However, it's my view that - as if they didn’t have enough to worry about - newspaper and magazine publishers may see a perfect storm accelerate if gas prices continue to escalate. There are three factors at work here - some go beyond the current economic situation.
For starters, as gas prices go up, so will the distribution costs. This could have a significant impact on margins. However, there are larger societal factors at bay here too.
Second, there's a greater awareness among consumers of their environmental impact. At the Forbes Online Brand Summit earlier this year, Jeff Cole from USC Annenberg predicted that as this broadens, consumers will cut back on print in favor of digital media. I think he's right.
Last but not least we have the growing popularity of speedy 3G-enabled smart phones, including the new iPhone 3G. The devices are declining in price while offering a lot more sophisticated experience for reading news.
When you combine these three trends the future for print doesn't feel bright. The big media companies know this and they're looking for new models that can be as lucrative as what they have now. The question of course is whether or not there will be enough revenue to replace what they have coming in now, even as their costs decline.
