(2013-02-21) Salmon Content Economics

Felix Salmon is starting a series of posts on "ContentEconomics". (Business Models For Information)

The first piece is on Advertising. He contracts TV Brand Advertising with online Direct Marketing. As a result, just about every website in the world is in the business of delivering that digital Junk Mail to our computers and iPhones and iPads. And, as he notes, Google owns Search Engine ads and FaceBook owns niche-targeted ads, so it's hard for anyone else to do well. But I think he overstates the value from TV ads.

His second piece is on payment systems (PayWall, Tip Jar, etc.) He has good points about the fuzzy line between a "business-like" subscription transaction and a "supporting" transaction. KickStarter is no Tip Jar: make no mistake, it has a very large element of E Commerce to it as well.... The bigger lesson here is that when it comes to persuading your readers to pay you money, it actually helps to be small. There’s an exception for finance, of course, and also for the Ny Times, which is unique in many ways. But the lesson of AmandaPalmer’s talk is that while 25,000 supporters aren’t nearly enough to support a band on a record label, they’re more than enough to support a band on KickStarter — or, for that matter, to keep an iPad magazine going strong. What’s more, while consumers can be very loyal to brands and to publications, in many ways it’s easier to become loyal to an individual, especially when she has an idiosyncratic and unique voice.

His third is on Costs, talking about how expensive it is to create high-quality Journalism. He talks a lot about the Jeff Bezos purchase of the Washington Post.

His fourth is about the implications for scale (Critical Mass), triggered by Vox Media's purchase of the Curbed Network. The Vox-Curbed combination is the beginning of a phenomenon that Henry Blodget has been anticipating for a while. Last month, he talked about a “digital equivalent of TimeInc”, where various standalone publications would operate under a larger corporate umbrella... "I do think that over the next five years, what you’re going to see is a lot of consolidation. The fact is, there are way too many digital news and media organizations out there right now. There will be a lot of consolidation. As they come together, you will get huge economies of scale on the sales side, on the tech side, and on some of the other areas as well. And then you’re going to see these companies produce good profits... They will be much easier for advertisers to deal with, because advertisers don’t actually want to do deals with 75 tiny little sites: they’d actually much rather work with a big site with much more reach."... It’s almost impossible to overstate the importance of the CMS when it comes to the question of who’s going to win the online-publishing wars... And if you want to be able to scale up through dealmaking, you need to have a technology and sales platform which can support large-scale acquisitions... Which brings me to the company which has been executing the publisher-as-a-platform strategy more successfully than anybody else for longer than anybody else: Glam Media (Glam Network)... Glam started out as an Ad Network, basically.

• Mathew Ingram asks: "Do we really want or need a digital version of the old TimeInc.?" So massive scale is necessary because advertisers — especially those accustomed to TV — apparently require it (which is why Twitter has made the changes it has as well). In effect, we are rebuilding the mass media of the old days because advertisers can’t think of any other way to make money other than by accumulating billions of pageviews, and publishers are being dragged along for the ride. In order to play ball, and generate the kind of revenue their backers require, they apparently need to achieve global scale or die trying... Perhaps we will wind up with a bifurcated market, with giant predators who rely on massive pageviews at one end and tiny, nimble players who focus on a niche (Long Tail) at the other end. Which will turn out to be the dinosaur and which the mammal?
• Hamish Mc Kenzie sees the Vox model as a battle against the Portal model. Both Curbed and Vox are focused on big consumer categories, creating Web-native storytelling in a high-quality way, and building business models that address the needs of brand advertisers as oppose banners and direct response ads, Bankoff said... Vox, meanwhile still has a lot to prove, even with its Curbed-boosted media mix. It has now raised more than $57 million in venture capital, which is a lot of money to pay back.