http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/
Archive for the 'media' Category
Stick a (temporary) fork in this idea
September 11, 2009
I’ve been spending some time thinking about business ideas around local media in the Portland market. This is an area that I’m keenly interested in.
I would love to figure out a way to build a meaningful business around a network of hyper-local news sites (e.g., ThePortlander.com) and top Portland focused blogs (e.g., OurPDX.com). There is a lot of great work going on. Unfortunately, it’s difficult for me to figure out how to build a business around it. There just isn’t enough traffic.
Here is a simplified version of what I came up with. At this point, I think it’s a “pass.”
High level model assumptions:
- Top 20 Portland blogs and local news sites = 100,000 unique users. In reality, it’s probably less
- Each unique user generates 10 page views per month
- There are two ad positions on each page selling at an average rate of a $10 CPM
- 75% of the inventory is sold out
- Bloggers/journalists retain 70% of revenue
Based on these assumptions:
- Each of the 20 network participants would take home $525 per month
- The advertising network operator would generate $4,500 per month in gross revenue
I’ll will revisit these assumptions over time. For now, I’m sticking a fork in this idea.
By the way, the model looks very different in larger markets (e.g., NYC, LA, Chicago).
Thanks Rick Turoczy for your thoughts on this.
“New News” Business Models and Portland, Oregon
August 26, 2009
I highly recommend checking out the work being done on the New Business Models for News Project. The project examines what a paper-less news organization might look like in a top 25 market (The project assumes that daily print newspapers are gone). The effort is designed to look at the type of organization that might replace the traditional newspaper.
Jeff Jarvis, heading up the project, sees an ecosystem rather than a single entity emerging. He cites the fact that numerous hyper-local bloggers currently generate $100-200K in annual revenue. The theory is that such bloggers (many with formal journalism training) will band together with other service providers to create a lower cost, highly distributed news organization.
These “New News” organizations might generate $20MM in revenue in a top 25 market (versus $400-800MM that a traditional newspaper generated). Margins would remain in the 30% range. The news staff might be approximately the same as a traditional organization. Obviously, overall staff would be dramatically less. (Too bad the newspapers completely missed the boat on classified ads – the most profitable part of a traditional daily.)
The revenue streams for New News are predicted to be far more diverse. The model predicts that 57% of revenue will come from advertising. The rest will come from a wide variety of sources (e.g., event hosting, ticket sales, B2B online marketplace, consulting local businesses regarding online marketing).
In terms of advertising itself, online display advertising will ultimately be displaced by newer forms of advertising that behave more like ecommerce (e.g., coupons, deals). “Online ads want to be transactional.”
The project team published a very detailed financial model (great work!!!). The model is in Google Docs and can be copied and modified. I took a look at the model from the perspective of Portland, Oregon. In my opinion, many of the assumptions are a bit off (especially as applied to the Portland market).
* Most obvious is the assumed market size of 5,000,000 people. Portland is substantially smaller.
* Additionally, the traffic ramp is far too aggressive. The hypothetical New News org reaches 73% of “mature” potential in three years.
* Most fundamentally, the model doesn’t take into account competition. It assumes a single winning New News organization.
* Furthermore, I would toss out most of the “alternative” revenue streams as too speculative in my modeling.
* On the expense side, the Portland organization would be SUBSTANTIALLY smaller.
I do feel that there is an opportunity in Portland, Oregon to join forces to create a very interesting (and profitable) New News organization. Perhaps the initial organization wouldn’t directly compete with the Oregonian. A coordinated network including blog/niche news sites like BlueOregon, BikePortland, SiliconFlorist and the like would be very interesting.
In terms of the advertising products, some work is necessary. Perhaps the best way to launch is to simply focus on “traditional” online display ads. However, it makes sense to quickly move to more performance based advertising approaches. Portland’s ForkFly is a good example – applied to the restaurant category.
In terms of quality of the journalism itself, Jarvis optimistically believes that quality might actually increase as blogger/journalists are able to focus more and dive into more detail. In terms of the Portland market, there are plenty of high quality local websites.
I’m convinced that there is an opportunity along these lines in Portland (although on a smaller scale).
Finally, here is a link to Jeff Jarvis being interviewed on On The Media. Well worth a listen.
On “Free,” “Attention” and Other Digital Media Buzz Words
August 24, 2009
Lately, there has been a lot of discussion around Chris Anderson’s book “Free” (New Yorker review by Malcolm Gladwell.)
Lots of fancy language is flying around. Things like “radical price” and “economics of abundance” and “massive attention surplus.”
A lot of good points are being made (and I love talking about this stuff). However, the concepts are simpler (and more accessible) than they sound.
The buzz word free boil down:
1. It’s very cheap to distribute information because of the Internet.
2. Because distribution is cheap, there is not a lot more floating around.
3. Because there is so much information, people generally won’t pay for it. Information has become a commodity. It’s like air. It’s everywhere.
4. All of this information has created a problem: we are overwhelmed. There is too much.
5. Old line media companies that relied on the cost of distribution to support high advertising rates, need to DRAMATICALLY rethink things.
In my opinion, the winners will be those who most effectively:
1. Create unique information (which will likely appeal to niche audiences);
2. Provide ways for people to filter information [Current ways to filter information include: search, sharing via social networks like Facebook, technology based filters, and human editors]; and/or
3. Create advertising that is so targeted and relevant that it feels like content.
Entrepreneurs (as opposed to economists) should focus on these simple concepts. Quit talking about things like the attention economy.
The issues really aren’t as complicated as they sound. Making it work is a different story.
Good data from eMarketer regarding size of online music market
January 1, 2008Very relevant to what we are doing at SplashCast in the music category. The article link.
Also, here are some more predictions. In particular, the size of the social media advertising market section is interesting.
Paul Steigler on the Newspaper Industry
December 30, 2007This is a great article in today’s Wall Street Journal. Paul Steigler is leaving his position as Managing Editor of the Wall Street Journal. The reality is that the papers suffered from wanting to have the best of both worlds. This paragraph from the piece, in large part, sums it up.
A bigger problem was that newspapers often sought to copy fairly closely on the Web what they did in print, rather than offer new products taking full advantage of digitization. The most creative new products came mainly from enterprises with little connection to newspapers. And soon, if you named almost any bit of data you used to rely on papers for — sports scores, weather, stocks, movie times — there were Web sites offering more information faster, and free.
The article doesn’t directly address classified ads. This incredibly profitable business has withered even more rapidly than other categories. Stabs at shoring up this business by developing internal products never worked out. CraigsList, eBay, Monster, and the like, ran circles around the papers. Betting the legacy business was too difficult.
As a news junkie and newspaper fan, I wish that I could have experienced the newspaper industry heyday. By the time I worked at the LA Times in the late nineties, the more talented and ambitious employees were looking to learn and move to the more lucrative start-up world.
Impact of the Writers Guild Strike
December 28, 2007This is an interesting blog post. I think that the potential shift in terms of where and how people will view television content (not to mention what they watch) is somewhat overstated here. These shifts, however logical, always take longer to play out in reality. Also, I can’t see three minute YouTube videos replacing truly professionally developed and produced programming.
