With consumers in control, the digital content industry is thriving. Today, businesspeople integrate information into daily work seamlessly, salespeople see news about customers when they're ready to pick up the phone, and individuals control how they search and browse for content.
As an attendee at the terrific SIIA Summit, I already had firmly entrenched ideas about where we are as an industry. Content is even more important in 2005 than it was in the dot-com days of the late 1990s when pundits proclaimed, "content is king." The Summit attendee roster proved the point with Jeff Cutler, GM of the organization's Content Division, pointing out that executives in charge of content for Yahoo!, Google, and Amazon.com were participating in the event along with A-list publishers, venture firms, and content technology companies. But I wasn't prepared for the spirited debate about business models that occurred on the SIIA podium. Perhaps it was the brilliant choice of dour curmudgeon Michael Wolff as opening Keynote speaker. Wolff—bestselling author of Burn Rate, a 1999 memoir chronicling Wolff's Internet business failures—immediately got onto the tired "information wants to be free" horse and shot from the hip with dated criticisms of digital publishers such as, "You're dead, but you just don't know it." Cool. I couldn't wait for the industry to fire back.
It took only a few moments before members of the next panel got out their six-shooters. Gordon Crovitz, president of Electronic Publishing at Dow Jones (a company that's living well with electronic content sales of $381 million in 2004), observed, "People will pay for content, contrary to what Michael Wolff would say." He added, "True value is content in context." President of Hanley Wood e-Media Mitch Rouda said, "Wolff is entertaining and on target, yet his conclusions are stunningly wrong." Hanley Wood is another digital content success, building $22 million in its e-Media business with innovative offerings like construction industry portal ebuild. Rouda kicked off a conference theme: "If you build an audience, they [advertisers] will come."
Notables in the room also included financial types with venture money to invest. It is clear to me that 2005 will be the best environment in many years to start or grow a business with outside funding. Larry Kramer, chairman & CEO of MarketWatch, Inc. (which recently sold to Dow Jones for a whopping $528 million), observed, "Good business models are what gets funded."
At the conference, many discussed "advertising" business models in the generic sense. Big mistake. The dot-com boom was fueled by Internet advertising featuring non-targeted, in-your-face banner ads that tried to get people to click to unrelated sites. New models, including the billions of dollars now spent on search engine advertising, are entirely different. While the old model focused on interruption techniques designed to grab visitors' attention while they surfed, the search engine advertising and white paper syndication models of companies like TechTarget reach consumers precisely when they are most receptive—when they are searching for something. Regarding the new way of monetizing B2B advertising, Don Hawk, cofounder and president of TechTarget (a company that raised $85 million in VC money in 2004), suggested, "Don't sell cost per thousand; instead, sell value and success for customers."
In an event highlight, Halsey Minor, CEO of GrandCentral Communications (and, in 1992, founder of CNET Networks, which he built into a leading online media company), spoke about the future by commenting on old-style dot-com Internet advertising. "The problem isn't publishers; the problem is marketers," Minor said. In other words, many marketing people don't know how to make use of the new electronic media and its power to connect advertisers with people looking for products. I agree. Too many advertising agencies focus on interrupting people with TV-style branding advertisements.
In an interesting twist, it was observed that search engines are aggregators of users, not aggregators of content. Successful online business models build communities, delivering content at the time of need. Vice chairman of America Online, Inc. Ted Leonsis (who likens his job to that of a mayor) said, "Content doesn't deserve to be free; it deserves to create ancillary revenue streams." Which brings me back to Wolff: here's a guy telling people who collectively built billions of dollars worth of successful digital content businesses why they are dinosaurs, yet he's collecting loads of money for his own branded content through speaking and writing. Michael, I have one thing to say to you: conference keynote speakers want to be free.