Follow the Money

Until I heard that preacher fart, I was never much of a believer in user-generated media. I don’t mean garden variety user-generated content (UGC), which embraces blogs, a few digital photo postings, and the endless scrolls of reader comments. I’ve always believed that community interaction is a more important part of the online mix than most traditional publishers admit. I’m talking about the more ambitious amateur media making, that vox populi revolution the Internet was supposed to spark. I was here in 1998 to see the crash and burn of so many attempts to organize garage bands and personal Webcam shows into populist big media rivals. The eternal democratic fantasy was that accessible digital media and free distribution would at long last unleash the people’s (always, the people’s) creativity in personal media-making.

After so many lean years and post-bubble disgrace, it is hard to believe the gusher of ad dollars and profitability flowing to some segments online. A year ago I wrote about the industry’s need to wake up to the reality that the Web bounce back was for real. Now even I am a bit amazed at the sustained double-digit ad sales growth we are seeing. In fact, some sites are butting up against the limits of their own success with a problem most publishers would love to suffer—sold-out inventory

Sometime before the big Web bubble burst, a men’s media brand splashed itself online with an enormously ambitious content-rich portal. Prescient of the au courant mantra of “content, commerce, and community,” it innocently invited its beer-sodden, breast-gazing readership to participate in online forums. Well, within days all hell broke loose. The message base became a mosh pit as the readers extended the smirking, bawdy spirit of the host brand to misogynist extremes, making way-inappropriate comments about ex-girlfriends, models on the site, and women, generally. The site editors retreated quickly and simply shut the message boards down entirely within a few weeks.

Two words: video podcasting. Go ahead and snicker, because a couple of months ago I would have smirked right along with you. Then I got me a video iPod. From a revenue perspective, what is most interesting about portable video is that, unlike other trendy forms of recent years (audio podcasting, blogs, RSS feeds), it arrives with a built-in revenue model. The advertising is already here.

It is now a tradition in the annual EContent 100 issue that we climb way out on a limb and anticipate promising new sources of revenue for the coming year. Even as 2005 closes, it is already clear that boatloads of money are about to start racing online, especially from big media TV and radio brands desperately chasing audiences that are fragmenting into smaller niches of personalized, on-demand media consumption. In past years, advertising drove many of the trends online, but this coming year much of the energy will be coming from the media industry itself as it tries to retool for an on-demand future.

Back in the day (in Internet years, that’s 1998) the term “coopetition” became one of the keywords of the dotcom revolution. The uniqueness of the Web link, the sheer interdependence of one site with another to push and pull eyeballs around this vast new terrain, made it imperative that rival publishers of content partner share traffic and often ad revenues. All boats will rise, they said. Fallen out of favor in the post-bubble years, “coopetition” is exactly what I see evolving in the complex search/content economy.

Admit it, you’re jealous. The massive bounce-back in online ad revenues in the past two years has been driven—nay, commandeered—by search. For all of the talk about the branding value of the Web, the fact is that highly targeted, performance-oriented, direct marketing at Google and Overture/Yahoo! has been at the heart of the boom. To be sure, contextual ad partnerships with the major engines offer content providers a sip from this revenue gusher, but it’s not the same thing as drinking directly from the new fountain of high-priced cost-per-click advertising. Pay-per-click search ad pricing is so high because the major engines are so close to the consumer’s purchase decision. From what I am seeing in the online ad market lately, fear and envy breed creativity.

The people who underwrite content (a.k.a. media buyers) speak about audience and media “fragmentation” as if it were nuclear proliferation, an insidious third world plot that needs to be contained or outsmarted. As eyeballs scatter to on-demand sources (DVRs, VOD, RSS, podcasts) and user-generated niches (blogs, social networking) the big question becomes how to “re-aggregate” these audiences with things like blog\pod\RSS ad networks that blast the same old message into these dispersed archipelagos of interest. The answer is...

If you are old enough to recall the crashes and burns of TheDen and Pseudo.com, then you must join me in smirking at the current mania for Web video. A perfect storm has formed around the platform; media companies point to a “critical mass” in broadband penetration and anecdotes of massive video stream numbers, while advertisers desperately chase eyeballs as they flee primetime TV. But have we learned anything meaningful about Web video as a media platform or thought through the revenue models enough since that first disastrous run at Internet TV?

I have urged major publishers to consider distributing content to the emerging mobile phone platforms. For all of the hype surrounding wireless (my own included), however, 2004 was not exactly the breakthrough year some had expected for mobile content. The fact is that U.S. customers are just getting their feet wet in premium mobile content compared to the faster buy-in from Europe and Asia. Part of this is a technology problem; but carriers and publishers also need to cultivate users more effectively than they have. Mobile content needs a jump-start.

I have always admired online dieting company eDiets.com, in part because its success underscored important principles about how content makes money online. With 200,000 paid members at any one time (1.8 million total over its history), eDiets.com demonstrates that consumers will pay for sites that make content a service. By crafting genuine “plans” for dieting and backing them up with encouragement, 24/7 support, advisors, peer forums, and a ton of editorial, eDiets.com is more of a community than simply a site. The company hits all of the right e-revenue-generating notes. So I was taken aback when eDiets launched a series of online magazines.

Let’s take the most lucrative sector of Web content during the last five years—search engines—and flip things around. Instead of using a search engine to sift through years of old data to find the piece you want, what if the data you need was searching for you? The concept of pushing timely, relevant information to a user is not new, of course. CBS MarketWatch and others have developed some excellent systems for notifying subscribers of breaking news, mainly through email and increasingly via RSS feeds for a kind of personalized wire service. Nevertheless, until now, most of these alert mechanisms have been brand-specific, limited to one delivery mechanism, or delivered only unwieldy gushers of headlines.

I have been putting off writing this column for months, but I think it is time to come out and say it. Now is the time to ready your content for cell phone delivery. What seemed like a pipe dream of mobile telcos a year ago—getting people to draw down data and entertainment through their cell phones—is now close to the proverbial tipping point, and it is time for any recognizable content brand to stake a claim on the mobile phone frontier.

Content providers had better keep their eyes on this rapidly evolving sector. Search is becoming a lynchpin both of the Web economy and the way users navigate to your content.

I take pleasure in looking forward to the more promising new revenue streams (and trickles) of the coming year.

You may have heard me drone on that people will pay for content that facilitates connecting to others. Well that same principle is now being played out in another content area: online gaming.

There is no safe place left: Marketers chase our famously fragmented attention spans with whatever vehicle our eyes and ears might settle on, if only for a few moments; even the desktop is fair game.

New communication technologies interact with cultures in subtle ways. Publishing used to be a fairly top-down affair. But the Internet and email have permanently transformed that familiar relationship between readers and editors.

Just about every two years or so in the short, happy life of the Web we get word that the local online ad market is about to take off...no, really this time.

For some reason, everyone in the industry is loathe to admit what the numbers clearly demonstrate: Web content—or at least some important sectors of the digital content economy—has waged a quiet but remarkable comeback.

Yes, companies have begun to see that premium must-have content will sell. But increasingly, consumers are starting to pay up for compelling, well-packaged “wanna-have” content.

Early adopters of these behavioral tracking systems are discovering several ways in which the next evolution of ad technology gooses the bottom lin

Some lessons need to be repeated no matter how obvious they may appear. When it comes to online advertising effectiveness, the perennial lesson is that context is everything.

Psst! Wanna make some quick cash? Here, take these search engine text ads and run them next to some of your own relevant content.

The EContent 100 issue with the most important, influential, and successful companies in the content industry seems like a good spot from which to project forward a bit and “Follow the Money” into the content industry’s likeliest revenue streams in 2004.

It all sounds so familiar. If online users won’t buy content in the usual offline model of subscribing to individual titles, let’s try aggregating a number of top offline brands and sell ’em all for one low monthly price.

Online micropayment is an idea that just won’t die…nor will it quite come to life. While growing seven-fold in 2002, they still represent a mere 1% of online content revenues.

Gaming companies may have a thing or two to teach content companies about diversifying revenue streams and keeping paying customers satisfied.

The fact is that, especially in the U.S. market, wireless carriers are being extremely tight-lipped about how much even early adopters of next-gen cells are paying for premium content.

Now that household broadband penetration may be approaching 20% and much of at-work Web access already comes through fatter pipes, an old argument is being made anew: all media brands need to get a video component. Well, maybe.

Gathering market intelligence at a content site is one of those unkept promises of interactive publishing, a missing piece of the online business model that site owners like to speculate about but rarely pursue…until now.

We just might…just might, mind you…be turning the corner on the fee-based content model. Americans are starting to take to a fee-based online model, but not because Web publishers somehow succeeded in “retraining” users to “pay up.”

Along with online pet food sales and the paperless office, push technology was one of the Web’s early laughingstocks, but not so fast; the idea of feeding content to the desktop is worth another look.

While much of the content community continues to chase sponsor dollars by making ads bigger, louder, more animated, at least one provider understands the alternative Zen way: be there to deliver when the user needs you.

In what must be one of the best testaments to the enduring power of the much-maligned banner, Classmates.com purchases five to ten billion ad impressions a month…a strategy that works.

Audible has been prescient in understanding the inherent limitations of the Internet as a medium for consuming content.

Sarah Chubb has a unique "problem"...the sort more Web executives would like to have. She is running out of ad inventory. And the solution is simple, but few Web sites have been willing or able to realize it; the Internet allows publishers to sell advertising against users, not just against content.

The Web is transforming the traditional publishing paradigm in a number of ways. Chief among them is the idea that online content has to become more service-oriented.

As other revenue streams dwindle for content publishers, many are revisiting the idea of selling branded merchandise via their sites, but this time they are going beyond slapping logos on coffee mugs and hoping for a sale.

Publishers are beginning to experiment more aggressively and creatively with selling their wares by the pound.

Online personal ads may be the hero for the Internet media sites looking for a new revenue source.

In the new Web video model, you make the video cheaply–very cheaply. Then you stop hallucinating that advertisers will underwrite this anytime soon.

Unlike traditional publishing giants, especially in newspapers, who got rich partially by underpaying their scribes, the Internet overpaid, perhaps grossly.