Replacing the Media

Dec 10th

Web Growth

President elect Obama is looking to push web growth hard:

It is unacceptable that the United States ranks 15th in the world in broadband adoption,” Mr. Obama said. “Here, in the country that invented the Internet, every child should have the chance to get online.

But many of the leading media companies may not be around to see that growth.

Bankruptcy

The Tribune Co. filed for bankruptcy and the New York Times is expecting that 2009 digital ad revenues might be below 2008 revenues.

Advertisers Becoming the Media

As the debt laden media companies die off, some advertisers are finding it cheaper to become the media rather than advertise on it and support its bloat:

one day cosmetics companies will perhaps start beefing up their own Web sites — with makeup videos and click-to-buy options — just as kraftfoods.com has done with its hugely trafficked recipe site and walmart.com has done with its popular blogs by mothers. When advertisers become content providers, magazines lose ads and finally drop off newsstands.

Advertisers are also investing in analyzing the potential for media to go viral. When they own their own distribution channels and build a large audience, the cost of real-time testing drops to zero.

Media Unbound

Some content creators are testing technologies that allow DVD watchers to chat with friends while watching the movie, perhaps creating yet another gathering spot for fans - like Buddy TV.

As Google brings archived magazine content online it seems the form of content containers is dying, and the media is becoming more aware of the link economy:

That currency is the hyperlink, a pointer to somewhere on the internet that holds some information that someone else might find useful. Like any currency, it can be debased, and lose its value. You've heard of the dollar/yen/pound/euro exchange rate, of course (and watched in amazement as they gyrate, and yet the price of American hardware and software never alters from a $1 = £1 translation). But in the link economy, when everyone's passing around links, every person is their own central bank, determining the value of their own currency.

The Blend

In an attempt to increase revenues some media sites (like CNN Money) are blending ads so aggressively that they look editorial. To me this ad looks more like editorial than an advertisement.

Many of the mainstream media sites will need to become much more like eHow.com, Mahalo.com, and About.com if they want to weather the storm...use the brand to attract readers, but have a lot of cheap backfill content monetized by affiliate ads and contextual ads to subsidize the editorial that builds the brand.

Recent Media Successes

Not all media based business models are in the hurt locker.

As many traditional media companies head toward bankruptcy they will have their staffs cut, making it easier to influence them through public relations.

uTest has built a functional business model out of crowd sourcing by selling pay for performance bug testing.

Andy Hagans explained how they grew Tip'd by hiring a well known star to run the brand, partnering with leading independent editorial sites, and pushing most of the value out to the editorially featured sites. As a result of those actions it looks like Kiplinger's might syndicate the Tip'd widget, which will offer Andy's site a lot of great brand exposure. Start small and keep building momentum...using each point of growth and each partnership as validation to reach the next level.

Published: December 10, 2008

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Comments

December 10, 2008 - 3:40pm

I've been trying to sell this to my corporate clients for so long now. The best way (and really, the cheapest), in my mind, for a business to increase their online sales is to create a community around quality content.

Still, so many think there's a magical "trick" to the web that they don't want to believe offering visitors something worthwhile is the only answer.

December 10, 2008 - 5:28pm

Yeah, but creating a community takes time, and time is rarely part of any budget. I like when Aaron states: "each point of growth and each partnership as validation to reach the next level." This is really the key - to do a series of small, good things that build trust and repeat business. In time, speed for results happens, but it is a tough sell in a corporate world - a world used to seeing something quick, like PPC - to be told they need to build something slowly and methodically. The ROI may be there in time, but the ability to hang in to reach it may not be. Quick fixes are short-lived, but a balance must be found or the suits will peel themselves away from something that takes "too long" to reach fruition.

renesisx
December 10, 2008 - 5:28pm

This is actually really profound: "advertisers are finding it cheaper to become the media".

This is what I'm doing, I've just never summed it up so nicely.

Previously I would have had to advertise. Now I create the content that the media previously made, and use that as the lure to get people to buy from me.

p.s. As someone recently exiting the UK for the USA, it is funny to note that advertising is spelled -ise instead of -ize even in the USA.

December 10, 2008 - 8:15pm

Constant questions or demands of this Web-enabled disintermediation era:

1) Defining, exactly, the "value" that is added. If you are an online business or start-up good luck defining the value. You can try but, try as you will, doesn't the unruly mob quickly define or redefine "the value"?

Which leads to . .

2) Is that asserted/assumed value actually valued/valuable, i.e. worth investing time/attention, money, etc? Again, the mob quickly rules these days . . but in a very sea of people there's room for islands. So, does the value scale . . to profitability?

And, on a related note . .

3) Is the "value" not readily sourced elsewhere or "else how", for example "crowd sourced"? Unique isn't synonymous with valuable, since unique can equate with crapola, but if the value isn't unique then what? The value of crowd sourced "media" depends, in large measure, on the crowd. So what's to draw in the crowd and sustain a crowd that generates value? We're finicky and can readily move about, remembering that's it's the WWW stupid. So you offer a platform (Facebook, Ning, whatever) but platforms suggest captive audiences and I'm not sure that's where the Webizens are headed. I, for one, don't want to "belong to your platform". That's not the promised land, yet for the past 3+/- years UGC (user generated content) has been the holy grail of business success online. Not sure how long that will last. What else ya got?

And, lastly (I'm sure there's more) but likely most importantly (If you want to pay the bills) . .

4) Can that value be effectively/efficiently captured - converted to money - via a charge or cost or is the (assumed) value "leaky"?

You, Aaron, like other savants in the knowledge/info business, are exemplary in "how to capture the value of value". You post info that illuminates the value of your intelligence (in all meanings of that word) and you place a certain amount of that value "behind the (paid) wall" - a wall that is mean to stem the leakage or to allow you to capture the value.

Interesting times.

December 10, 2008 - 10:22pm

I think it is hard to define how much value one can create and capture...the model changes over time...everything drives toward free, except everything drives toward being watered down noise. Very few sites aim to add value day in and day out.

This started off as an idea for an ebook, that used a blog to push it, that became a member community and online training program. And it may have future iterations as well. Currently it does not convert value into money as well as it could...still needs some work on that front.

To me it seems that public relations / hype / controversy are usually key to capturing enough attention to be able to monetize it. If you use something other than ad based monetization then word of mouth is key for converting "stuff" into cash.

If you are monetized by ads then I think the key is to become a market default and/or create a sustained unique data source and/or have a strong brand and/or use your market leverage to increase visitor value and build a distributed network. Doing many of those at the same time builds something far more powerful than doing just any one of them. :)

December 11, 2008 - 8:00am

"Doing many of those at the same time":

  • become a market default
  • create a sustained unique data source
  • have a strong brand
  • use your market leverage to increase visitor value and build a distributed network.

That's nothing if not ambitious, but it also has to be funded. Your media examples above (Tribune, Times) already achieved almost all of it...and are failing. They have too much unproductive overhead, because they are sustaining a system that is no longer viable, and failed to invest in what was next. You stay lean... and efficient... because you can. That won't always be true.

I have to be honest and admit that I, like the Times and Tribune, would have never accepted that the world would settle for the crap it now settles for, all in the name of stroking the individual egos of the consuming public. We'd rather have an expensive dysfunctional iphone than an excellent generic, and we'll even celebrate it.

I still don't accept that the "new" media will succeed in doing more than making Google rich and fostering ignorance on an unprecedented grand scale. We may be leaving behind "old media", but we're not(yet) doing so for a better alternative.

December 11, 2008 - 2:51pm

Your media examples above (Tribune, Times) already achieved almost all of it...and are failing.

But they used geography as their limits and built a business model around having a local monopoly...by the time the web started to challenge them they were too bulky to change. They were companies built in another era. I like to use companies like Amazon.com, BankRate, and Monster.com as examples of what I meant. Still light-weight enough to be able to handle a downturn, but aggressive in managing a series of valuable related markets.

To some degree people have always accepted crap, and with the web people want everything free...the market gives them what they want.

The success of the iPhone only shows how important and powerful branding is. And as a society designed to have individuals looking out for #1 we are happier to have something that is overpriced, expensive, and closed off (like the iPhone) so long as us owning it is a status symbol over those who can not afford one.

December 11, 2008 - 10:18pm

To some degree people have always accepted crap, and with the web people want everything free...the market gives them what they want.

I disagree. The web is not free, and is not perceived as free by mainstream users. They are paying upwards of $50/month for "access" (ISP) and $5/machine/month for "security" (antivirus) and then smaller here-and-there's for various ancillary things (including the MS operating system for many modern web users who don't otherwise need a computer). They pay substantial fees to UPS for almost every web purchase. The nickel and dimeing has advanced... survey the average user and the Internet is a necessary expense - but a definite expense.

The convergence of phone/TV/Internet is natural due to the technologies involved, but is also partly driven by the evolution of the extraction of value from "free" published content as revenue.

Now take a good look and figure out how Google and Comcast and the others came in the back door to monetize your "free" websites. And how they now have the cash flow, while the content generators (value-adding editors) do not.

December 11, 2008 - 10:40pm

Good point. I guess my wording was bad. ;)

What I meant to say was that beyond basic costs additional consumption of online information is not taxed...and the web (and biggest conduits of the web) largely promote whatever is free, or that which they have a direct business deal with.

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