GigaOm features an article by Joshua Auerbach “New Media Demands a News Media Company“. His conclusions mirror what we’ve been thinking:
1. Creative / experimental media development will become business drivers
Media is entering a stage where the new media development of media properties will differentiate successful companies. As media technologies and the social media inexorably evolve rapidly, it’s up to media companies to keep up. They need to tap the entrepreneurial base creating these new media – help them, invest in them and incorporate their content into their broader distribution platform. Knight Ridder is doing this with their Knight News Challenge: You Invent It, We Fund It.
The barriers to entry in media have fallen. That means successful media companies will start many more ventures than they have in the past. New opportunities arise all the time, and the capital requirements are typically minimal. Fortunately, the barriers to exit have fallen, too. Without sound stages, broadcasting facilities, or printing presses, a new media company can shut its doors with minimal asset losses.
2. Media companies controlling the vertical production process will become inefficient
Mass media production – TV and movies – are and have always been Hollywood fiefdoms that stacked the odds against outsider participation (at least, until they, usually gratefully, became insiders). Online media has lowered the hurdles for independents, and those producers may create their differential advantage by writing innovative code instead of movie scripts.
Why doesn’t the traditional model work online? In short, the web is too fragmented (millions of videos, millions of web sites), too loosely coupled (countless hyperlinks, embed codes, APIs), and too nascent (too few revenue models, too little clarity about the future) to fit comfortably into a media conglomerate as they exist today.
3. “Social Distribution” is the Art of Viral Marketing and will begin to take market share from SEO as the Science
Media likes the science of Nielsen rating and advertising CPMs that they can bank with their advertisers. Social distribution, the art of generating viral marketing opportunities and buzz via Facebook or Twitter, can’t be evaluated as well quantitatively, leaving media companies frustrated in developing business models based on ROIs. Yet, this new benchmark for assessing marketing campaigns will become key to corporate (and media) adoption of social media marketing.
Lately, yet another trend has left media strategists puzzled: “Social distribution” — most visible in the increasing roles of Twitter, Facebook, and other media as ways for users to share links and discover interesting content in real time — may well become more important than search as a driver of traffic. While social distribution won’t threaten Google’s revenue for some time, if ever, it complicates media companies’ efforts to build traffic through search-engine marketing and optimization techniques.
4. Smaller, cooperative and jointly owned media companies become easier to develop
The old media “Studio System” stranglehold on 100% control of its moving parts (operations, talent, infrastructure) will cede to more flexible arrangements because the new keys to success for a new media company – the programmers, the emerging talent, the new global opportunities – will lie outside the Hollywood fiefdom. The new media properties (and Twitter is one of them) will have open APIs, and foster cooperatively developed business models that reward its participants based on business merit, not Hollywood nepotism.
Traditional media conglomerates own 100 percent of their core businesses. They reward talent (actors, directors, producers, etc.) with contractually determined compensation. But that model fails when the talent are writing code. The best alternative is for the key talent to own equity in their venture. Perhaps this structure is an interim step toward a day when star engineers take home $10 million paychecks, or a “share of the gross.” In any event, the most valuable company in the near term is one that will own less than 100 percent of its constituent businesses.