The site might be a traffic powerhouse, but the internet is full of high-traffic sites which are worth very little. Traffic, in and of itself, is worth very little, and there’s no indication that readers are willing to pay for Mail Online, or that advertisers are willing to pay much for those readers. (The site’s revenue of $7.2 million is about 0.25% of DMGT’s $2.7 billion total revenue.)
Felix Salmon makes an important point about the web and the fallacy of high traffic – many of the internet’s high traffic sites are of little value.
In falling for this fallacy we’re making the mistake of thinking in old media terms where high newspaper circulation numbers or ratings winning TV programs translated directly into advertising dollars.
That model worked because of restricted inventory. There were a limited number of TV stations or newspapers in our cities and regions which most people relied on for the day’s news and entertainment.
In the internet age, inventory is not a problem. We live in an era awash with information and the old models of restricted supply no longer work.
To make money, we have to add value. We can no longer rely on broadcasting licenses or prominent mastheads supported by classified advertisements and real estate puff pieces.
Rewriting other peoples’ stuff in a way that grabs the attention of search engines is a way of getting fleeting readerships but it isn’t adding any value and, as revenues from online advertising continue to fall, it isn’t the way to make money either.
Whoever figures out how to make money out of online news and journalism will be the Randolph Hearst or Rupert Murdoch of the 21st Century. Right now it doesn’t appear The Daily Mail, or competitors like The Huffington Post, will be those champions.
How the V8 Supercar races use the internet and networks shows why businesses need reliable communications and the way organisations are using cloud computing.
My relationship with sports cars is similar to horses – I have a vague idea of which end water goes in and where not to stand.
So Microsoft’s invite to the Launceston V8 Supercars to showcase their Office 365 cloud service as the race’s official sponsor wasn’t expected but it was a good opportunity to see how a sports organisation uses modern technology.
Riding the cloud
At the opening media conference V8 Supercars CEO David Malone and Finance Director Peter Trimble described the IT problems the organisation had in the early days.
To properly meet their needs V8 Supercars would have needed a bank of servers, cumbersome remote access software and a full time team of several IT staff for their scattered workforce and constantly changing locations.
With cloud services, they eliminated many IT costs while simplifying their systems.
That staff can now access documents regardless of location is a very good case study of where the cloud works well and understandable that Microsoft wanted to show off what their services can do.
Networking the cars
When challenged about the point of car racing, enthusiasts cite how the sport is a test bed for the motor industry.
The motor industry is one sector leading the internet of machines with one car manufacturing executive recently describing the modern motor vehicle as being a “computer platforms” on wheels.
Pit crews monitoring in car systems
Eventually we’ll see our cars connected to the net and reporting everything from the engine’s servicing needs to the driver’s musical tastes.
That’s reality in today’s high performance racing, both the drivers and the cars are in constant contact with the crews as sensors report everything from engine performance to the foot pressure the driver is putting on the accelerator pedal.
As continuous data feeds from the cars is essential to the teams the event has its own trackside network with receivers located along the course that are used for both vehicle telemetry and the video feeds from both car mounted and fixed cameras.
Owning the rights
In what’s becoming the future of sports broadcasting, the V8 Supercars organisers run their own camera crews and provide the feed to their broadcast partners and media outlets.
This allows them to control all the rights across TV, cable and online channels.
Having full control of the pictures also gives the V8 Supercars more revenue through signage and sponsorship by guaranteeing advertising placements which wouldn’t be available if they didn’t manage the feed.
Connectivity matters
Spaghetti Junction as the various feeds come together
Getting the images out to the media and broadcast partners along with delivering the in car data to the racing teams is major challenge for organisers. The communications centres resemble a giant bowl of cable spaghetti as various groups plug into the network.
It’s no coincidence that part of the deals the V8 Supercar management strike with track owners and governments includes providing fiber and microwave links to the venue.
That single factor illustrates how vital communications links are to a modern sporting event.
Another important factor is that everything will be packed up and taken away. Following Launceston, the entire show is packed up and moved onto Auckland, New Zealand. This in itself is a major logistic challenge which would fail without good connectivity and reliable systems.
the fleet of trucks ready to move on
It’s easy to dismiss the V8 Supercars as a bunch of testosterone driven rev-heads, but the challenges in staging these complex events fifteen times a year shouldn’t be underestimated.
We also shouldn’t underestimate how important communication links are to any business. It’s why debates about the need for high speed internet services are last century’s discussion.
The Prime Minister’s courting of bloggers in the run up to the Australian Federal election later this year shows how credibility and relevance are most important assets for any media outlet.
The press gallery grumbled and wrote patronising articles about North Shore mummy bloggers but failed to recognise the real threat to the established media outlets – these writers are more relevant to people’s lives than the machinations of ‘anonymous political sources’, sports stars or Hollywood celebrities.
The press galleries’ problem though is relevance, which lies at the heart of any successful media outlet.
In 1831 when The Sydney Herald’s first edition was published, the front page was made up of advertisements and shipping notices as it was with all newspapers of the time.
That was relevant to the readers, they paid 7d – not an insubstantial amount in 1831 – to find out the latest in shipping movements, real estate sales and livestock prices which were essential to life and business in the colony.
It wasn’t until 1944 that the now Sydney Morning Herald moved news to the front page, the London Times held out until 1966. What was now relevant to readers were photos and wire stories from around the world.
Papers continued to do well despite the introduction of radio in the 1930s and TV in the 1950s because they were continued to be relevant to their readers. If you were looking a job, a house or where to take your mum for her 60th birthday then the local newspaper was the place to look.
The shift to sensationalism
In the 1980s all the media – newspapers, TV and radio stations – started a shift to sensationalism and infotainment and steadily all became less relevant to the populations they served.
At the time media outlets got away with it as there was no-where else for people to get news. If you didn’t like stories about Princess Di’s wedding dress then you had to curl up in the corner with a good book.
Then the web came along.
All of a sudden engaged readers could get relevant information from all over the world.
With social media and blogs, reporting Kim Kardishian’s latest wardrobe malfunction raised a ‘so what’ from an audience that learned about it two days ago on TMZ, the Huffington Post or Facebook.
Making matters much, much worse were the advertising rivers of gold moved to specialist websites and Google.
Newspaper executives found their revenues were evaporating and they worked their way deeper into the quicksand by cutting costs in the areas where their editorial strengths lay, making them even less relevant to the readerships they want to serve.
Relevant lifestyles
Today the mummy bloggers – along with the food bloggers, travel bloggers and political bloggers – are attracting audiences with relevant, useful content that the audience can engage with.
Last week’s embarrassing circus in Canberra was an example of how irrelevant the media, and much of politics, has become to the average Australian.
For politicians relevance is important too – political parties that pitch themselves to 19th Century class struggles or 1980s corporatist ideologies are as irrelevant to today’s society as the Soviet Communist Party.
It would serve the Prime Minister and her staff well to listen closely to what the mummy bloggers and their readers are saying.
While the losses aren’t trivial, they are not quite in the league of News Corporation $545 million loss on MySpace or Time Warner’s billion dollar adventure with AOL.
All three stories show how tough it is for ‘old media’ adapting to a new landscape.
So it’s not surprising that the BBC has decided to end its experiment and now the corporation’s management is dealing with the criticism of those losses.
While it’s easy to criticise the BBC for the deal, at least the broadcaster was attempting something different online, doing nothing is probably a poorer strategy than buying MySpace or Lonely Planet.
Over time, we’re going to see a lot more experiments and many will be public embarrassments like those the BBC and News Corporation have suffered, but there will be successes.
Someone will crack the code and they will be the Randolph Hearsts of this century. It could one of the Murdoch heirs, it could be the owners of NC2 Media or it could be some young, hot shot developer working in a Rio favela or the slums of Kolkata.
One way to illustrate a story is with charts. All too often though misleading graphs are used to make an incorrect point.
A Verge story on Groupon shows how to get graphs right – clear, simple and tells the story of how the group buying service’s valuation soared and then plunged while it has never really been profitable.
The vertical axis is the key to getting a graph right, cutting off most of the y-axis’ range is an easy way to mislead people with graphs. In this case you can see just the extent of Groupon’s valuation, profit and loss over the company’s short but troubled history.
Since its inception, The Verge has been showing other sites how to tell stories online, their Scamworld story exposing the world of affiliate internet marketing sets the bar.
Using graphs well is another area where The Verge is showing the rest of the media – including newspapers – how to do things well.
For Groupon, things don’t look so good. As The Verge story points out, the company’s income largely tracked its workforce which grew from 126 at the start of 2010 to over 5,000 by April of 2011. Which illustrates how the business was tied into sales teams generating turnover.
The spectacular growth of Groupon and other copycat businesses couldn’t last and hasn’t. The challenge for Groupon’s managers is to now build a sustainable business.
For investors, those graphs of Groupon’s growth were a compelling story. Which is another reason why we all need to take care with what we think the charts tell us.
