Articles Index: Follow the Money
That pressure that you digital media managers are feeling in your right shoulder about now ... that is your publisher leaning hard on you to recover the revenue the company just lost everywhere else.
Lest we forget, it was just a couple of years ago that "free and ad-supported" was the refrain that drove the second digital go-go era after 2004. Apart from the recession, the big difference now is that the offline TV and print businesses that helped underwrite big media's digital pursuits are now under siege. The content-creation engines that built these brands seem to be threatened, and the digital platform is not really mature enough to support media-making as we have known it.
As we move into fall, the year-long revival of the paid content argument shows no sign of easing.
If memory serves, the digital revolution was offered up to us as a great new driver of efficiency. Even at the most basic level of owning a PC, we were told that these new machines would organize our records and even clarify our ways of thinking. Really? Has anyone looked behind my desk lately?
As I write this at the end of 1Q 2009, things look especially grim for business information on almost any platform. In print, across 200 B2B titles that ad auditing group IMS tracks, ad pages were down in January and February 28.3% from the same 2-month span in 2008.
I am now living through the third wave of arguments for fee-based digital content models in the decade and a half I have covered the internet publishing world. The inevitable response to the dual forces of recessionary ad decline and the more tectonic and irreversible shift to digital has been: "Make 'em pay." Almost everyone on the consumer side of the fence is talking about "hybrid" models and "pay areas." It is hard to listen to such a conversation without someone dropping "the iTunes precedent" as an argument that both micropayment mechanisms and consumer attitudes have turned the corner on this issue. People are ready to underwrite the costly content industry. They see the ugly alternative (bad or shallow content), and they are more willing to put a cash value on digital media now.
No, this is not another column instructing publishers to extend their brands to mobile. I think that case has been made already to almost all parties on the consumer side and to an increasing number of business information providers. At this early stage, everyone's degree of commitment varies, of course, because no one really knows what sort of revenue streams will evolve. Some publishers just repurpose their RSS feeds for mobile access; others have third-party providers cherry-pick website content to reshape it for the small screen. It feels like 1997 all over again.
There is no getting around it. This column's moniker begs for a snarky retort in these dark times, so I may as well beat you to the punch line. By the time you read this, I expect that more than a few startups that made a big splash last year will be running out of cash, fading away, and/or selling out cheap.
As the eyes of old print, radio, and TV media turn to the internet for a bridge to take them across the current media business abyss, one troubling fact is becoming abundantly clear: The "real money" isn't there yet. Top executives at TV networks, magazine companies, and even newspapers have known for a while that on-air minutes and print pages sell at much higher rates and produce more revenue in most cases than even the most ambitious digital models.
My column's moniker has a cruel irony to it this month as companies peer into the abyss of a business decline with no apparent bottom. Follow the Money only begs two questions nowadays: What money? Where do we follow it to? Like a fog-locked airport with a damaged radar dish, the emedia fleet feels grounded as we edge toward a wholly uncertain 2009.
Time once again to crawl out on that slippery limb encrusted with winter ice: the predictions branch. Above and beyond the expected recession woes, digital content is dangling over some sharp challenges in 2009, or at least it looks that way from my chilly perch. Look out below for falling commentators.
The digital privacy battles now brewing in the House of Representatives and at the Federal Trade Commission finally woke the industry up to its complacency over this issue, but I think many publishers and ad networks proceeded to get up on the wrong side of the bed. The principals in the behavioral targeting industry, which is attracting much of the scrutiny now, seem to recognize that they must better explain their policies to consumers and assure all of us that they indeed are not collecting personally identifiable information (PII) when they track our movements around the internet. Ultimately, though, I think they woke up to the wrong issue.
Sometimes we get ahead of ourselves in the digital dreams business. We fantasize so extravagantly about the future shape of a technology that we miss some of its more relevant and mundane uses here and now. Take virtual worlds. Environments such as Second Life promised online immersion where realistic avatars moved through 3D space and ultimately enhanced everything from the media viewing experience to shopping.
Another day, another vertical. Earlier this year the press release mill worked overtime announcing that every imaginable media brand and ad entrepreneur was launching some sort of vertical network—either of content, ads, or (usually) both.
Is anyone making money on web video?" The publisher of one of the most popular and long-running video shows online recently posed that question to one of his peers and me. The other publisher, who is responsible for hundreds of hours of video content on her suite of branded media sites, just shook her head. "And anyone who tells you he is making money on video is lying," she contended.
Cool gadgets alone do not change engrained media consumption habits. It took nearly 2 decades for PCs, broadband, and ease of use finally to converge to the point that Googling for the answer to anything became a reflex. Media change is a long, complex, and very unpredictable interplay of cultural, technological, and economic forces slowly transforming conventions over time. No single device is responsible for such shifts. They represent the accumulated energy of many confluent forces.
For the 15 years I have been writing about digital media, two media business models have been "about to break through any day now"
The Federal Trade Commission (FTC) gave the digital content industry a dubious present last Christmas. At the same time the FTC approved a merger of Google with ad network and services provider DoubleClick, it also lobbed the issue of privacy back over the net for the companies to solve. At issue for the first time in a very public way is a topic I have been writing about in these columns since 2002: behavioral targeting (aka BT).
I admit that I have been a longtime skeptical observer of the digital magazine format, although 6 or 7 years after its introduction the platform is getting some traction with readers and publishers. Generally designed as facsimiles of printed periodicals, the digi-mag always seemed to fill an unnecessary niche between old and new media, between physical magazines and websites. It has the interactivity and rich media potential of a digital product (hot links, embedded multimedia), but it retained the lush design sense of print. But was this a solution in search of a problem?
As most traditional publishers are painfully aware, digitization has a tendency to commodify everything in its reach. Just think how much of the content we paid for a decade ago—from newspapers to premium video and audio content—is available now at no cost online. From news to business information, phone calls to software applications, the new model is giving away the store in the hopes of making a profit in some other way. Most text and video content relies on advertising to pay its way now, while service-based products, like web applications and digital calling, put some limitations on the free offering in order to upsell a richer version.
Keeping with years of tradition, I always like to mark the EContent 100 issue with brash predictions about where publishers will start seeing some money or investment in the coming days. For 2007 my prognostications focused on the rising importance of content merchandising, the ad-supported mobile media model, increased emphasis on ad-targeting, and the possible (possible, mind you) revival of micro-payments. Boy, am I glad I hedged my bets.
Community is an organic phenomenon. You don't make it. You don't build it. At best, you cultivate it, and many publishers are finding it hard to break ground.
Vendors are coming out of the woodwork with all of these hosted and plug-in solutions that promise to build community on a site. Bosh. Community is not a commodity that can be manufactured, and it is not a technical issue in need of a solution.
The problem of video search has been waiting in the wings for a number of years now. True believers like Blinkx and Truveo (now part of AOL) were patiently experimenting with ways of indexing and tagging video assets long before the broadband penetration rates and usage curves supported it. During the last year, at YouTube, the dam has broken. People are starting to look for video in the same way they hunt for text.
Years ago, the CEO of a then-young video search firm insisted that some day soon everyone would need a query box to navigate the video records of their own lives. Video camera technology was becoming so cheap and light that many people would take to recording every moment and then dump it onto those equally cheap multi-terabyte hard drives at home. Facial recognition algorithms and speech-to-text operations would help you index everyday video so that you could query footage of grandma at your kid’s fourth birthday just as effectively as Googling a keyword to find articles.
You and I may conceive of the digi-verse as something we access but for my teenage daughter Sam, it is more of a presence. With her WiFi network and laptop, the IM window always open, her social network of scores of contacts are like constant companions. The creaking door sound effect on AIM tells her when people are coming and going. For her peers, being online or offline seems like a distinction that sounds too technical for what they experience. For them, you are either here or away.
Business in the virtual world got very serious, very quickly in 2006. There have been a lot of false starts over the years. The massively multi-player gaming worlds like EverQuest and the eight-million strong World of Warcraft were always fascinating phenomena for their niche audiences, but they only made money for Sony and Blizzard/Vivendi, respectively, not for anyone else. Several things changed last year, however.
Buying traffic is the easy part. Keeping those eyeballs is where things get dicey. However, in the past year, I watched several consumer and B2B content brands ratchet up their traffic by double digits on a monthly basis.
Behavioral targeting is the hot topic this year among publishers and advertisers, and for good reason. I have been covering this approach to online advertising since core providers like Revenue Science and Tacoda emerged several years ago. The dark art of behavioral ad targeting (“BT” in the trade) started out as a hard sell because it was the kind of web technology that was difficult for clients to see in action and it relied on following users with ads in a way that feels a little creepy. BT may actually represent the natural evolution of interactive marketing, because it takes information from a user (her recent browsing patterns) and feeds back to her ads that are more relevant to her immediate needs and interests.
Perilous as it may seem, I will once again mark the EC100 issue with a look ahead to next year’s emerging revenue models, which we may well be calling old hat this time next year.
Want to give yourself a rude wake-up call about the harsh reality of brand value on the modern web? Try this: Make a personalized web page at Google or MyYahoo! composed of all the major RSS feeds from your site along with the feeds from content brands you consider competition.
When Burger King was looking for an edgy way to promote itself among the coveted (nay, fetishized) young male demographic, it did the only thing a sensible old fart of a corporate entity can do when it struggles to be hip: it handed the camera to someone who really is, well, hip.
By the time you read this, Sprint Nextel customers will be getting their first taste of free mobile TV, and thus also tuning in to the real future of wireless content. The young male-oriented “Fast Lane” channel will have on-demand clips of tech reviews, poker tips, stand-up comedy, and all the other usual Spike TV/Maxim oafish male fare. It will also have ads, usually tucked as mid-roll breaks of 15 seconds or so. Yup, the free, ad-supported TV model is coming to mobile, and my guess is that it will proliferate quickly and accelerate the use of ad subsidies across all handset content.
All due respect to Wired editor Chris Sherman, but the currently hot topic of the internet’s “long tail” has been with us at least since I started writing about digital in 1995. To be sure, Sherman deserves the credit for bringing into focus for the post-bubble world the notion that the web makes viable niche markets and remnant inventories that could never find buyers in “real world” distribution and marketing systems, but this model has been part of the web equation since day one.
As our content divides, sub-divides, and disperses like so many amoeba into the new digital mediaverse, anxiety must be running high among media companies. Ad dollars visibly drained from network television and print this past year, and most media budgets are fully in play now. Advertising allegiances are fluid, as big-brand accounts flip daily from agency to agency, and chief marketing officers warn the whole ad business that they better start coming up with answers to this growing problem of how to focus the scattering eyeballs of a fragmented landscape and deliver measurable results. Many in the media and ad industries are predicting doom, gloom, or at least a long passage through chaos.
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.
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