This Mortal Coil


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Mortality usually hovers somewhere just outside our peripheral vision, though sometimes it rushes up into the crosshairs. Everyone has these times when the busy business of daily life loses its soporific effect and we have a moment of prescient clarity. Often, what we see isn't pretty: the end of life as we know it. Luckily, however, most of us experience this well before the proverbial moment of truth and have time to do something—something different or something that simply postpones the inevitable end.

I don't know if my art is a dying one, but I do know that the way I have done business is fading like a weathered signpost. No doubt a lot of old-school publishing pros are haunted by similar specters: blogging, community journalism, news-harvesting tools, templated software that will "do the writing for you." A multitude of new-world media methods are redirecting the flow of information, putting its navigation into hands other than our own.

For a brief spell post dot-bomb, media giants breathed a sigh of relief, seeing it as proof that all the old rules couldn't really be thrown out. But the respite was short-lived; the bastions of old-school publishing see the writing on the digital wall. This has been manifested in forms ranging from Web site facelifts to content re-spinning workouts and the bitter derision of new-media trophy wives. While most publishing companies actually have been pleased that, during the past year or two, earnings flattened out of their nose dive, Internet companies are seeing incredible gains: Google boasted a tenfold increase in profits from 2003 to 2004. While online ad spending still accounts for only about 3% of all advertising spending, it is on an astronomic trajectory—often at the expense of traditional media.

Deutsche Bank and MediaPost questioned 100 media execs about their clients' experiences with Internet advertising in 2004 and plans for 2005. Nearly a third said their clients would spend between 11% and 30% more in Q1 2005 than in Q4 2004. The largest proportion of media buys—34%—went to targeted content sites such as iVillage, MarketWatch, and CNET. A quarter of the budget went to the big three portals: Yahoo!, MSN, and AOL.

It's not just ad dollars that are slipping away from publishers, but also precious readers who generate revenue through subscriptions and by justifying ad rates. But even brands that are building relatively successful online counterparts restructure these models with alarming frequency in an effort to chase new dollars and not just redirect (or worse, stanch) existing revenue flow.

Another more fruitful approach for dealing with mortality is to procreate—pass on our genes to the next generation in the hopes they will surpass our accomplishments. That said, the media industry does not seem to be producing many viable seedlings. While WSJ.com is making money through subscriptions and highly targeted content-offerings that bring in equally targeted ad revenue, it ain't making Google money. So it looks like the media players are doing the next best thing: adopting (or, in business terms, acquiring) online businesses with models that work. The most recent manifestation of old media's attempt to regain its vigor was the purchase of a majority stake in Topix.net by Knight Ridder, Gannet, and Tribune. This follows two other similar moves—The New York Times Company's acquisition of About.com and Dow Jones' acquisition of MarketWatch.

Collectively, Gannett, Knight Ridder, and Tribune (which partnered in other joint ventures like CareerBuilder.com) operate more than 140 newspaper sites claiming nearly 30 million unique visitors monthly (about 200 thousand each). Topix.net reported 1.6 million uniques in January. It is one of the native Web-born content aggregators media companies both love, because headlines generate hits back to media sites, and hate, because media companies lose control over the context in which their content is accessed.

About.com is another Web native, with a different approach: The company pays hundreds of expert "guides" relatively modest fees to create original content for the site's channels. It has created a powerful network of individuals devoted to specific subjects providing targeted content that generates a potent ad sale proposition. MarketWatch, through its free, ad-supported sites MarketWatch.com and BigCharts.com, serves up timely market news and information to 8 million unique visitors per month.

About.com is another Web native, with a different approach: The company pays hundreds of expert "guides" relatively modest fees to create original content for the site's channels. It has created a powerful network of individuals devoted to specific subjects providing targeted content that generates a potent ad sale proposition. MarketWatch, through its free, ad-supported sites MarketWatch.com and BigCharts.com, serves up timely market news and information to 8 million unique visitors per month.

Without a doubt, each of these acquisitions brings a successful online business into the fold of traditional media companies that must balance the opportunities of the new media without jeopardizing the bottom line of the old—a problem Web-only upstarts don't have. This freedom did issue forth an inordinate amount of unviable products, but the seeds that took root are growing like weeds in old media's backyard. Through judicious acquisition, old media not only profits in the short term through strong revenue growth potential, but also has the opportunity to tap the innovative lifeblood of these thriving online content businesses. With an infusion of talent—Dow will be keeping on MarketWatch's editor and GM, and Topix.net and About.com are expected to continue successful business as usual—and Web-native thinking, these media companies put their surname on media's next generation. The trick will be to reincarnate themselves in the process.