Newspaper execs gathered in Chicago this week in a not-so-secret meeting to discuss their mutual problem — a collective southbound bottom line. Staci Kramer has an excellent summary including information from Steve Brill of Journalism Online, the group of former media executives trying to solve the “problem” of how to monetize online content. Brill’s group has a model that they’re trying to sell, and the newspaper people at the meeting were eager to hear all about it. According to The AP, the meeting was called “Models to lawfully monetize content.”
The problem, from my perspective is enormous, because the disruption that’s killing legacy media isn’t about content, it’s about advertising. The assumptions of any content play are that its value is so great that expensive, adjacent advertising will support it and that the mass attractive to advertisers can be created through scarcity. Neither of these assumptions is viable online, and the real problem is that both must be present for significant revenue to be realized.
Advertisers don’t need mass anymore, because the Web efficiently allows them to directly target potential customers in a variety of ways. Gordon Borrell has a great post today (Are We NUTS?) on why legacy media companies don’t believe the size of his revenue projections at the market level.
With the Internet, however, you can’t fathom the universe of companies and individuals selling things like email advertising or search advertising or banners. In a lot of cases, they aren’t even companies, but individuals who don’t have business licenses and thus cannot be tracked at all for their “ad revenue” receipts.
The amount advertisers are spending is truly stunning, and much larger than most people imagine. Those who understand the true breadth of opportunity are more likely (in my humble opinion) to get a larger share than those who underestimate it.
News content online is a ubiquitous and increasingly commodified community, and attempts to restrict access so as to create scarcity will only result in the isolation of those who need most to be a part of the discussion, professional journalists. If you think newspapers will be able to restrict ANY reference to articles they publish, I’ve got some oceanfront property in Arizona that I’d like to sell. And even if they could accomplish such a monumental task, the disruptions in advertising will continue make the model of ad-supported content increasingly problematic.
The newspaper industry is obsessed with an old model, and rather than trying to fit its square peg into the round hole of Media 2.0, it makes much more sense to focus our attention elsewhere. We should nurture our legacy products as best we can, but we simply must separate our ability to make money from our dependence on the content we create.
The key to that is in defining, understanding and developing the Local Web.