Paul Wallbank – Brilliant Communications

Tag: publishing

  • Counting the digital pennies

    Counting the digital pennies

    With media companies around the world struggling to make money, the publishing platforms on Facebook and Google promised to bring in much needed income streams. They appear not to have worked.

    Business Insider reports how US based premium publisher trade body Digital Content Next surveyed its members on their online platform income and discovered some disappointing answers.

    On average, premium publishing companies generated $773,567 in the first half of 2016 by distributing their content on YouTube. Content published to Facebook earned an average of $560,144 in the period, Twitter generated an average of $482,788, and Snapchat generated $192,819 for each publisher in the sample.

    To call these returns derisory is an understatement and it illustrates how the current media model is unsustainable as it’s impossible to sustain a basic newsroom, let alone produce investigative features with those sort of budgets.

    It isn’t just the media model that’s unsustainable, Business Insider cites the CEO of Digital Content Next, Jason Klint, who flagged in a blog post last year that all the growth in digital advertising is being accounted for by Facebook and Google – the rest of the industry is shrinking.

     

    Even Facebook and Google aren’t immune from the unsustainable model that’s currently in place, Klint points out that fraud and intermediaries further skew the model which undermines advertisers’ confidence in the platforms and online media in general.

    For the moment though, the intermediaries seem to be doing okay. Klint cites IAB research which claims AdTech companies are making 55% of the online advertising industry’s revenues while publishers are only getting half.

    That illustrates how the tail is currently wagging the dog with publishers and content creators losing out while middlemen who add little in the way of value get the bulk of the revenue. That too is not sustainable.

    We’re still in early days for online media and the models are still being worked out. While we wait for the 21st Century’s David Sarnoff many sectors are threatened including the advertising, marketing and PR industries. At least the publishers aren’t alone.

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  • Medium and the broken media model

    Medium and the broken media model

    How do you make money from online publishing? Medium’s Ev Williams shows he is as far away from the answer as the rest of us.

    In a blog post yesterday Ev announced his company is firing fifty staff as online advertising revenues fall short.

    Online advertising’s disappointing revenues are no surprise to pretty well anyone observing the online publishing industry for the past five years, it seems to have come as a revelation to Ev and the investors who’ve staked an estimated $140 million in the venture.

    That money, which most online publishers would gag for, seems to have gone on a bloated headcount given the company can afford to fire fifty people. It’s a shame the company’s investors didn’t appoint a board that checked management’s hiring practices.

    Something that should worry other publishers is the organisation’s Promoted Stories division is being shut down as part of the restructure. This underscores how branded content doesn’t scale the same way traditional advertising does and won’t represent a major revenue stream for online publications.

    It isn’t the first time Ev Williams has got it wrong, in founding Twitter he and his team turned their back on ordinary users and developers to focus on courting celebrities in the hope big brands would pay large amounts to be associated with them. It didn’t work.

    Contrasting Ev’s Twitter and Medium experiences with that of Buzzfeed founder Jonah Peretti is interesting. While Buzzfeed still hasn’t found the formula for profitability, Peretti and his team have gained a deep understanding of what works in online publishing.

    To be fair to Ev, we’re all trying to figure out the revenue model that will work for online media, his travails with Twitter and Medium show just how hard it is to find a way for publishers to make money from the web. What is clear though is burning a lot of cash on sales staff is not the answer.

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  • Jonah Peretti’s seven digital advantages

    Jonah Peretti’s seven digital advantages

    Buzzfeed founder Jonah Peretti laid out his vision of the changing media industry in his year end memo but he missed the one item most important – revenue.

    “Print revenue is decelerating at a rapid pace, cable subscriptions and TV ratings are starting to decrease even for live sports, and traditional media businesses are at various stages of a terrifying decline,” writes Peretti in accurately describes the challenges facing the industry.

    Buzzfeed’s success has largely relied on sharing across social media, particularly Facebook. In his memo Peretti lays out how he sees the modern social and personalised publishers as having seven digital advantages over the push model of the mass media days.

    1. Instant access to fresh content
    2. On-demand access to entire media libraries
    3. Nearly free distribution enabling many free ad-supported services
    4. Global distribution providing access to content from every market
    5. Data about audiences allowing personalization and customization of content experience
    6. A feedback loop between audiences and content creators making media production more dynamic and responsive
    7. Social experiences where people can use content to communicate and connect with the people who matter to them and weave media into their daily lives

    Peretti is absolutely right, those digital advantages put online platforms far ahead of print publishers and broadcasters although the advertisers haven’t quite figured out how to make these positives work for them.

    That advertisers can’t get their models to work on the digital platforms is also a problem for Peretti and Buzzfeed and the site had to half its 2016 revenue estimates earlier this year.

    In the search for new opportunities, Buzzfeed hired a new Vice President of Marketing earlier this month as it appears the branded content model is too labor intensive and video isn’t proving to be the river of gold most online publishers hoped.

    The advertising model appears to be just as broken for online publishers as it is for the traditional channels.

    As Peretti has pointed out in previous end of year memos, new media platforms always struggle in their early years.

    The difference in the modern media world is the internet destroyed the scarcity of publisher and broadcaster controlled advertising space, replacing it with an almost unlimited inventory supplied by Google, Facebook and other services that take most of the profit.

    A better comparison to today’s online advertising conundrum are the early days of radio where it took RCA’s David Sarnoff to figure out how to make broadcasting profitable.

    Like radio, online has great advantages over the older distribution methods but the revenue models that worked for those more traditional businesses don’t work on the newer medium.

    Peretti, like every online publisher, is trying to find that new model and it seems he’s as further away from discovering it as the rest of us.

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  • How the old advertising models fail on new media

    How the old advertising models fail on new media

    Understanding how a new technology will change industries is a challenge that has faced every generation in modern times.

    Two of the industries most challenged by the rise of the internet have been the publishing and advertising sectors which have seen their established and wildly profitable ways of doing business demolished.

    One of the mistakes almost every industry and business facing technological disruption makes is trying to apply their old models to the new methods which almost always produces poor results, the transition from live theatre to movies and then to television through is a good example of this.

    So it’s not surprising that the advertising industry is now admitting that display ads on web pages have never worked and from that follows the maxim that print dollars equate to digital dimes.

    For the online publishing industry, we’re still waiting for our modern day David Sarnoff to figure out how to make money online.

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  • Getting off the content hamster wheel

    Getting off the content hamster wheel

    We may have reached Peak Content suggests Kevin Anderson in The Media Briefing as media companies, social media services and sharing platforms flood the world with information, rendering a lot of what’s being produced by media companies effectively worthless.

    For publishers trying to make money from advertising this has been the reality for the last decade as the market has been spread thinner as thousands of new channels have developed and the established players have doubled down on their efforts to churn out content.

    To illustrate the content explosion Anderson cites Columbia Journalism Review’s 2010 feature The Hamster Wheel where Dean Starkman described the effect of media outlets’ focus on churning out content with a description of the Wall Street Journal’s output.

    “According to a CJR tally using the Factiva database owned by the paper’s parent, News Corp., the Journal’s staff a decade or so ago produced stories at a rate of about 22,000 a year, all while doing epic, and shareholder-value-creating, work, like bringing the tobacco industry to heel. This year, theJournal staff produced almost as many stories—21,000—in the first six months.”

    While that was bad enough new players were pumping even more content onto the interwebs as Anderson points out, in 2013 the Huffington Post put out 1,600 pieces a day from its 550 staffers and an uncounted army of unpaid bloggers.

    The vast bulk of what is being put out is trash, in Huffington Post’s case well web optimised garbage, that adds no value to readers and is only attracting fractions of a penny per article. The model, as both Anderson and Starkman point out, is broken and no-0ne is paying much attention any more.

    Fixing the broken attention model is what online travel site Skift are exploring as they rationalise their operations to focus on delivering more relevant content to their audience.

    Skift’s co-founder Rafat Ali described how the company refocused on its core purpose of informing travel industry professionals about their sector and stopped regurgitating syndicated stories and those of less value.

    We gave up chasing scale. We took out *all* goals on traffic on the site, for everyone. We could do this because we didn’t have tons of outside money pumping through our veins, and this was a useless pressure we created for ourselves in an effort to show the illusion of growth to investors. And since we weren’t chasing investors, we didn’t need to chase what they would consider scale. It was a vanity metric.

    We cut back on spending any money on getting users through Outbrain/Facebook/Twitter. We cut back on the number of stories we were doing on a daily basis, on chasing the tail on disposable news stories. We also cut back on syndicating our stories — in which we put in a lot of effort at the start, publishing on NBC News, CNN, Quartz, Fox News, Business Insider, Mashable and many others, to zero effect on our revenues — and also cut back on publishing useless filler syndicated stories we got from a third party syndication service.

    Chasing those ‘vanity metrics’ was killing Skift, just as it is for most of the publishing industry in the views of Starkman and Anderson.

    While we’re still some way off finding the model that works for online publishing, Skift’s stripping back to the basics seems to be an important step in finding what’s profitable.

    The biggest problem though facing the publishing industry is convincing consumers, or advertisers, of the value they are adding in a world of almost unlimited information. This is a challenge that many industries are going to face.

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