In the last 12 to 18 months, social media (blogging, podcasting, consumer generated media, YouTube, MySpace, Second Life etc) has exploded on the scene. The big question is whether this is just a passing fad, an evolution or a true revolution, as many – including the Economist – have claimed. The answer lies in looking at the impact of this new “stuff” on three areas: the media as we know it, consumer / citizen behaviour and the competitive environment for brands and businesses.

First – the model that underpins the traditional media is being dismantled as the economics of content production separate from the economics of content distribution. The old model fused these two together so that it could use controlled and restricted access to mass appeal content as a way of subsidising the high costs of distribution. However, the channels of social media have reduced the costs of distributing content to near zero. This has created a vast new media space, and tools have emerged that are helping people both populate it and also manage it in terms of pulling out of it the information they need and want. Not only will this destroy the old mass media model, it will forever change our concept of what media content actually is – it is not about mass perceptions of quality, it is about individual relevance.

Second – the whole basis of the terms of engagement between citizens / consumers, institutions, brands and business is being transformed. The tools of social media allow individuals to expose and interrogate institutions in a way never before possible. Transparency is becoming the ruling dynamic and trust – which used to be vested in institutions – is becoming vested in process. The rise of the process driven Wikipedia versus the institutional Britannica is a good example of this.

Finally – a new competitive environment is emerging which has two principal characteristics. First, small things can now challenge big things – either by stealing niche territories crystalised out of what were previously seen as mass markets, aggregating disparate niches into economically feasible units (the so-called Economics of the Long Tail) or because you don’t need expensive mass media to grab mass attention. Second, the changes in the terms of engagement highlighted in the paragraph above are creating new success criteria, based around factors such as transparency, responsiveness, access, engagement and personality. New or existing businesses, brands or institutions that that can respond to this will prosper and those that don’t will progressively loose their mandate or legitimacy.

The changes in all of these three areas represent profound structural shifts. Put them together and they do indeed suggest a revolution and like most revolutions, reactions to it in the short-term will probably be wrong – either as a result of over-estimation of its impact, denial or through failure to really understand its’ fundamentals. How institutions, brand and businesses (indeed governments) do indeed get to grips with this revolution is another question.

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