Digital Quarters, a blog on Publishing 2.0, recently posted an analysis that showed that main stream media is losing online traffic share to new online entrants. The conclusion that Digital Quarters drew from this analysis is that “the great brands of old media aren’t proving out to be much of an asset online”. While the analysis is telling, this conclusion may not be accurate. In fact, it is very easy to demonstrate that, while main stream media brands may have lost share over the last year, they almost certainly would not have had that share in the first place without their brands. Further, as online media fragments with the infinite distribution available online, brands are more critical than ever to cut through the online clutter. This is because brands drive revenue as well as audience and that is the measuring stick that really matters.
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In my previous post, I argued that the iPad is a game changing technology for mainstream media businesses, especially magazines. Why am I so confident? The answer is the power of FREE.
Chris Anderson, in his excellent book Free: The Future of a Radical Price, points out that when consumers are asked to pay any price for a product – even a penny – they hesitate and evaluate their decision. But FREE eliminates the psychological inhibitions that cause them to hesitate and dramatically increases demand. In short, moving from a price of one penny to a price of FREE increases demand far more than reducing the price of a product from ten cents to nine cents (or any other comparable one penny decrease). Josh Kopelman of First Round Capital calls this phenomenon “The Penny Gap” and it is most definitely real. Chris Anderson further points out that FREE is almost inevitable in any market in which the incremental cost of delivering one additional product approaches zero. And that is what the iPad really unlocks for the publishing industry – the incremental fulfillment cost of each additional subscription approaches $0.00.
So let’s assume that most magazine publishers realize this and decide not to charge for their publications on the iPad. In this case, I believe real demand would be unlocked and the incremental revenues to the industry would be between $927 million and $1.8 billion. This would be meaningful for the magazine publishing industry, increasing revenues between 8% and 16% in the first two years of the life of the iPad. And if this device achieves penetration rates that even approach those of the iPod (and who wants to bet against Apple?), this revenue stream will increase dramatically. This is a game changer.
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On Saturday, Apple debuted the iPad – a device the company hopes will become the latest “must have” consumer gadget. I have already bought into the potential of the iPad and have placed an order for the 3G version, which is due out “at the end of April” (how nebulous is that?). But I’m a gadget guy, so placing an order did not provide enough satisfaction. As such, I made the trip to my local Apple store Saturday night to handle (okay, I admit it – fondle) the device myself. I came away impressed. The iPad is compact, fast and sufficiently versatile to make it a very interesting addition to my gadget arsenal. Given my interest in the media business, though, I found myself contemplating the future of mainstream media as I played with the iPad. Many have speculated on the potential of the iPad to “save” traditional media businesses, with opinions generally landing between maybe and definitely not. However, many publishers such as Conde Nast have embraced the new technology and have big plans to distribute their publications on the iPad. Hearst has even announced a similar tablet reader device of their own.
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My colleagues have been diligently reporting from SXSW this week on various topics, including mainstream media’s ongoing efforts to adapt to the new environment of the Web, including competing with content farms for prime positioning in search engines. In my last post, I noted that mainstream media (MSM) brands likely generate over 50 times the revenues of non-branded web properties. But the reporting from SXSW made me wonder about one important question – do mainstream media brands get their “fair” share of search traffic? Rather than build suspense, allow me to jump to the punchline. My research indicates that, despite their significant advantages, MSM brand sites are not effectively targeting search traffic and, as a result, content mills and other unbranded sites are winning a disproportionately large share of this market.
Content farms are Web properties that aggressively target search queries with very specific content that attempts to directly address the searcher’s intent in performing the query. Because they aggressively target specific queries, content farms have a distinct advantage over MSM in generating traffic from these queries. They have processes that ensure that their articles are loaded with search terms that match as closely as possible the searcher’s query. For instance, Answers.com (the fourth largest research site on the Web) has an article in their Wiki titled “What is the largest animal in the world?”. When a searcher is seeking to answer that question by performing a search at Google, Answers.com has a distinct advantage.
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seo,
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rupert murdoch,
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content farms,
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mainstreet media,
Many pundits denigrate major media companies as slow-moving entities that do not understand the web and have missed an opportunity to capitalize on their brands online. I disagree with this assertion. In fact, if you look at the web properties of major media brands, you can clearly see how incredibly valuable these brands are online. If my numbers are to be believed (and they always should be), then websites that start with an offline brand generate more than 50 times more revenue than websites that do not have this head start.
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27 June 2010 By Admin
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