UPDATED on September 23rd
To survive, newspapers must turn to their only other source of revenue: consumers. More importantly, building a relationship with consumers is essential for newspapers to compete against other online alternatives, just to maintain today's share of advertising revenues. As Langeveld points out: "while newspapers have always enjoyed a strong local ad share, they will lose this to online alternatives unless they, themselves, can connect local merchants with customers online."
This reality makes my discussion thread regarding Paul Graham's post "Post-Medium" Publishing even more relevant. In my opinion Graham's "no one will pay for content" point is a a negative place to start thinking about what the Future of Media looks like - whether you are developing technology, a new media start-up, a journalist or other content creator, or turning around a traditional media company. Although many share Paul's point of view. I suspect in Paul's words this is because they think anything but an advertising model for media is "wishful thinking." As I say below, I think precisely the opposite - relying on ad revenues is much more "wishful thinking":
Dear Paul Graham,
We can argue about
whose got better content all night long.
However, the value of
the content to the consumer is worth more than the words themselves. How does
the content improve their lives - look smarter at a cocktail party, transform
an otherwise mind-numbing train ride, decide what stock to buy, pick up a girl
at a bar, break the ice at the beginning of a cold call with a sales prospect.
What is all that worth?
Have publishers
charged enough? Has publisher marketing take advantage of this added value to
generate more subscriptions? How much more value can be added with the
interactivity and immediacy of new technologies and how publishers harvest and
use this information to convince consumers to pay more.
By the way, I wonder
how many people told Steve Jobs that no one would pay for I-Tunes? I'd bet it
was many.
[To: comradity From: netsp]
comradity,
I
think you are missing the point. The essay doesn't discuss the value of this
content but it's price. These are not the same. Price is somewhere between the
maximum the buyer is willing to pay, considering his other options & the
minimum the seller is willing to sell at, considering his opportunity cost.
In
a competitive market, the price usually creeps close to the latter because
consumers have more and better options to consider. In a monopolistic one, it
creeps closer to the latter for the opposite reason.
The
reason the price of content might be zero in the content industry is that A)
The opportunity cost for the seller is 0 & B) The market is more
competitive.
[To: netsp From: comradity]
I got the point exactly. You are assuming that the unit price and
number of units garnered by the publishing industry reflects consumer demand.
This is only true if the industry has used best practices in pricing and
marketing strategy. I disagree with that assumption.
As a former media planner, it appears that the publishing industry has
been focused on generating revenues from advertisers. Period. But more concrete
evidence of publishers' lack of marketing best practices is that publishers
keep talking about selling content. Tide does not sell laundry soap. They sell
superior clean. The value to the consumer can be very high or even priceless.
For example, the value of getting the red wine stain out of that expensive
tablecloth is very high, the value of being confident the kids look like their
mom cares is priceless.
Publishers need to stop taking marketing short cuts (giving away free
copies, relying 3rd parties to sell subscriptions, reacting to social
marketing, and buying into marketing gurus with silver bullet answers).
I have not made that assumption. Neither has the essay as I understand
it.
It is simply a statement about how they are priced.
Regarding your advice, that is somewhere between wishful thinking and
suction cups for the dead.
[To: netsp From: comradity]
So, we're both saying that publishers' pricing is driven by the latter
of "the maximum the buyer is willing to pay....& the minimum the
seller is willing to sell at..."
But we disagree as to why. You say the marketplace is too competitive
or monopolistic. I'd say it is because publishers are B2B (business to
business) and not B2C (business to consumer).
I am not referring to just existing publishers, so suction cups for the dead is not entirely accurate. The competitive opportunity for new entrants as well as to turnaround existing publishers is (now positively rephrased): Be a B2C business, market directly to consumers, immerse yourself in what your consumers think your product is worth and what they will pay for it.
For media, an investment in a B2C model starts to generate revenues sooner than the B2B model. Because, in the media B2B model, the audience has to be built before making dollar one from advertisers, distributors, merchandise licensees, etc. Therefore B2B is the more "wishful thinking" model of the two.
Specifically, I think the hurdle between today's struggling Media company and success and is to overcome their denial they are a B2C business and wishing they were just a B2B business (advertisers, distributor fees, merchandise licensing fees).
Before any publisher or programmer denies that they are in B2C business denial, just take a minute and ask yourself how you would fill in the blanks in this box from Chanpory Rith's Branding 101. How to write a positioning statement: (The article has lots of good thinking on how to think about positioning if you are stumped)
