A few days back my friend Pip Coburn, who runs an investment advisory service, and his colleague Brynne Thompson asked me to discuss what I have learned about media after spending nearly 12 years on Gigaom, pretty much most of my working life in various aspects of media, and two decades on the internet. It turned out to be a fun conversation that was shared by Pip and Brynne with their carefully curated email list of friends and clients. After going over it, I thought, why not create an abbreviated version and share it online?
Media is not publishing alone
My definition of media? “Anything which owns attention.” This could be a game, or perhaps a platform. Ironically, the media tends to associate media with publishing — digital or otherwise — which in turn is too narrow a way to consider not only the media but also the reality of the competitive landscape and media-focused innovation.
Media continues to be under the influence of deflationary forces of the internet.
Whether it is through stock-market trading or the sale of hotel rooms, the internet has a way of bringing deflationary forces to all businesses that were hitherto inefficient and involved many middlemen. There are two major deflationary forces in digital media that are disrupting business models:
- The “ruthless efficiency” of advertising on the internet: highly targeted demand.
- The endless inventory available on the internet: overwhelming supply.
The “ruthless efficiency” includes the role of programmable ad exchange and the ability of brands to more accurately target an audience with newer and better tracking possibilities, including the increasing amount of social data we typically share with social web platforms such as Facebook, Instagram, Pinterest and Twitter. We are heading into a future where advertisers can buy traffic at much lower prices. Both forces are deflationary and will need a complete rethink of the business models of the more traditional media companies.
Traffic, writers & analytics
Some media companies that rely on advertising revenue are tying journalist compensation to the traffic their story generates. It doesn’t work because it de-prioritizes writing. Writing works when publications are writing and serving the best interest of their users; numbers are good yardstick but not a way to compensate a person.
Tools like Chartbeat are like mile-markers but they are not complete arbiters. The tendency to adapt behavior and business strategy to this data is becoming far more predominant within the industry, and that is a mistake. Tony Haile, CEO of Chartbeat, reminded me of this quote from Andrew Lang, a Scottish poet: “An unsophisticated forecaster uses statistics as a drunken man uses lampposts — for support rather than for illumination.”
Building a business over time with content that is less ephemeral than stalking celebrities requires more skill and the ability for the writers to generate insight and the publishers business’ to support what generating insight takes.
Fake traffic and bots rule
A few weeks ago, Haile wrote about the challenges facing internet publishing wherein he outlined that nearly 55 percent of people are spending less than 15 seconds on a page. (They analyzed 2 billion pageviews generated by 580,000 articles on 2,000 sites, according to Haile.)
I don’t think that is feasible. Other people in the business agree that a lot of the traffic on the web is bot traffic, so all this traffic people talk about is faux traffic. Is a page being auto-refreshed on an open tab in your browser really useful “attention?” I don’t think so. There are many more examples of this worthless traffic.
No one talks about it. No one really wants to dig in to find out what’s real and what’s not. Plausible deniability is a wonderful thing for politics and advertising. There’s always been a level of ambiguity in the advertising business and nothing really has changed.
What could be the next successful model?
Everyone is trying to figure out what the next model is, but it’s not here yet. There are glimpses of the future. For instance, Foursquare can provide the underpinning of the new version or future iteration of what Bon Appetit or Gourmet currently provide. Instagram and its 200 million monthly active users are participating in a new kind of transmission (like television). Twitter should be at the forefront of this, but there is lack of clarity on part of the company. I have some ideas and am trying to flesh them out.
In searching for the next sustainable business model or media company, the company needs to be great at “owning attention” and the company must be very clear about what it stands for. What are you doing and for whom? Most publishing companies in particular cannot say what they are and what purpose they serve.
When I started Gigaom (the company), I wanted to turn my blog into a service that helped make complex ideas simple. And that philosophy is reflected in our events and our decision to have a subscription-based research business, which in turn has led us to a business model that is less influenced by pure traffic figures.
Awesome post Om, as usual. Third to last paragraph should be “flesh out” I think, no?
Thanks for the catch, Mterenzio! We’ve fixed it.
Thanks for catching that @mterenzio and @bizcarson for fixing that
man made artifacts that have a value.
Thanks for sharing your wisdom with us Om. Talking of the need for clarity around “owning the attention”, I find myself wondering these days whether this has got to do with our skewed understanding of the relationship between content and context. While content always had the upper hand in traditional media business, it seems to me that we are carrying this baggage even in the digital age where content has become subservient to context. Defining their context (of existence) might help media companies answer what are they doing and for whom.
Great post. Sharing now!
We need better metrics to measure impact and awareness — both for media produced and advertising that goes with it. That may require going much deeper than simply clicks or what people look at on a page, but actually asking them later what they remember.
Burt
I don’t disagree and I was only talking about the very same thing with Tony Haile who is pretty clearheaded about how we can tackle the problem. I think the challenge in any of these metrics is going to be — find a common acceptable denominator and how to measure it, for the measurement values are going to be different based on content sources and content types. It is a lot more complicated, but still I do agree, we need to start having a conversation around it.
Thanks, as always, for sharing your thoughts and conversations, Om.
When you say “next sustainable business model” are you implying that we have at anytime found a sustainable business model? Seems to me our models are built on constantly shifting sands. That’s the reality of business models outside of retail shopping sites.
Cliff
The next sustainable business model — is the one that follows the traditional models that the Internet replaced — magazines, newspapers etc. Those models were built on inefficiency and they were well timed for the middle class boom and rise of consumption class. Now we are facing a very different reality both economically and demographically, so one has to be thinking different about what works and what is sustainable.
Sarah Lacy’s pando is a great example of a ‘media’ startup that gets long-term thinking. IIRC they don’t compensate writers by traffic (or even show it to them) because while traffic itself is an interesting metric it is a poor KPI to incentivise behaviour.
Anecdote: IBM used to measure productivity by lines of code. That turned out to be a very bad idea. (http://c2.com/cgi/wiki?BuildingTheWorldsHeaviestAirplane)
I like your first-principle definition of media = anything which owns attention.
Deriving from that we can focus on how to increase attention (quality & volume) as well as (more importantly) what it means to have earned intention (potential). Which is completely different & more open ended than looking at media from a top-down point of view.
Exciting times.
The next successful business model is Platforms! Well, they’re already 😉
“Anything that own attention” is a little incomplete. Passing gas in a crowded elevator owns attention. Howzabout, “Any reproduction that owns attention”
Great read Om. I never knew your brand strategy was: “A serivice that helps make complex ideas simple.” You have certainly hit that mark with your accessment of media and the web. A nice boil down. Many thanks. steve at whatstheidea
For all the deflationary / disintermediating solutions, and unlimited media/attention supply, why is it that advertising is still only getting more expensive?
It’s almost like the directness / targeting / ROI measurability is so much better that the competitive bidding for attention/clicks drives the prices UP despite the background of deflation.
Would love to hear counterpoints?
I like your definition of media as anything that owns attention. In this definition, you have very subtly captured the change from the bygone days where media was merely a conduit for the message (“publishing”) to the present times when the media, the message and the context are in one tight embrace or are becoming indistinguishable. That said, the classic media is still alive, though, one could argue that it is facing the biggest identity crisis ever. I’d like to point out that “new media” (all the media on internet / social / mobile ) faces huge challenges too. You do talk about traffic, but even beyond that, am sure there are several challenges facing the new media. Look forward to your insights on this.
Reblogged this on Communications & Legal Studies and commented:
Om writes, “My definition of media? ‘Anything which owns attention.'”
like in many industries Media has its dark side, aggressive growth hackers, shining stars and performers. There is no one right answer to what a good media is provided it captures the attention of some substantial and recurring audience. Those 2 terms are important. Substantial in size, quality and recurring, meaning becoming a destination where in bound traffic is not just an accidental results of smart SEO but multi organic source of traffic where users first think of the media as a reflex destination with variable frequency.
This leaves room for so many possibilities, But there is one thing that needs to be cut is the BS about vanity metrics and the famous MAU and page views which means totally nothing. specially with the raise of mobile where there is NO PAGE.
Awesome thoughts Om. as usual
Ouriel Ohayon
Love the post Om. But the “ambiguity” of advertising is NOT the same as it has ever been, and that is the real problem. We have gone from a known quotient of waste, to willful negligence and rampant fraud. Very similar to the subprime crisis.
The problem is not that publishers are chasing the wrong metrics (most are) but rather that advertisers, and VCs for that matter, are demanding them, so publishers concede (or find new business models, not easy).
You are right that human attention should be the core value. Funny to think about, but it is kind of like bitcoin, there is a finite, knowable (24hours – sleep x humans) amount created everyday. Publishers are in the business of “attention mining” and should be able to sell this rare precious commodity for a premium, but instead the proxies the industry uses deflate the price…intentionally.
nothing owns attention like a person’s ego, body, mind, self
the business model around that involves pure giving, zero taking
Excellent post as usual,
At the risk of being slightly heretical in/around the value of media/journalism and the battle around how you value and monetize (i.e. paying writers for the traffic they generate) – since we live in a time where primary engagement (page view) can be spoofed (bots) – maybe we start establishing some level of value around secondary amplification of an article/media. Since primary engagement can be faked – what about leveling some value around how much secondary amplification (which can be validated more easily) an article generates. So, “shares” to meaningful networks of followers, subscribers on various platforms and even “stored value” suggested by articles being posted into bookmarking/clipping services (Evernote, Pocket, Springpad). It would mean the Ad market would have to use more dynamic metrics for “value” and that advertisers would have to be willing to pay a more variable rate for media that reflects these characteristics.
Just a thought (and a start-up idea for somebody). So far – Ad technologies have over-optimized and raced to the bottom around meaningless metrics – so what the heck.
-MD
Excellent read, Om!
Belua’s take on the issue : turning human attention into a currency that people can invest in things they know and care about.
https://vimeo.com/belua/intro
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