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.
- Instant access to fresh content
- On-demand access to entire media libraries
- Nearly free distribution enabling many free ad-supported services
- Global distribution providing access to content from every market
- Data about audiences allowing personalization and customization of content experience
- A feedback loop between audiences and content creators making media production more dynamic and responsive
- 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.