Entries tagged with “scarcity” from Tools of Change for Publishing
The Realities of Big Web Traffic and Advertising
Mac Slocum
December 18, 2008
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Major news sites that rely on advertising as their primary revenue stream need to log hundreds of millions of page views per month to attract significant attention from advertisers, according to a new report from Lauren Rich Fine, research director of ContentNext.
From Advertising Age:
"Based on our research, the conversation [with advertisers] gets interesting at 200 million page views plus a month, but much more so around 800 million," Ms. Fine writes ...
... The report also looks at whether the [New York] Times could ever succeed as a web-only product, and concludes that it could -- once NYT.com starts generating 1.3 billion page views a month.
(Note: Advertising Age cites ComScore Media Metrix figures that put the Times' traffic at 173 million page views in October, but the Times communications department says this figure is very low).
Traffic estimates in the hundreds of millions and billions are a shock to the system, but they're nothing new. Jeremy Liew analyzed the online media industry in early 2007 (a time when Web advertising was still enjoying double-digit growth) and concluded:
At large scale, without a great deal of targeting possible, a startup's "run of site" or "run of network" advertising might be able to get to the $1 RPM range (Revenue per thousand impressions, including CPM, CPC, and CPA models). To get to $50m in revenue you would need 50 billion pageviews in a year, or just over 4 billion per month.
This type of analysis -- which is certainly on target -- is why it's important for publishers to acknowledge the reality of Web advertising by addressing two deeper questions:
1. Can I reach sustainability faster by aggregating advertising across sites or building a smaller organization? -- Limited choice shoehorns audiences into large groups, but the Web disrupts channel lock-in by allowing individual consumers to find material on their own terms. Big organizations are in trouble because the transition from limited channels to distributed channels means audiences are smaller (ie: 1 million vs. 10 million, 100,000 vs. 1 million, etc). There's still significant value in reaching 1 million people, or even 100,000 people, but smaller audiences attract less advertising revenue. So the challenge is to either scale businesses down so audience size, advertising dollars and sustainability even out, or, aggregate advertising revenue from a large number of targeted sites. Both options are arduous, but both are also realistic. Finding and maintaining billions of page views per month is not (the New York Times being the exception here).
2. Can I diversify beyond advertising? -- Ad-only Web models are inherently flimsy because the thing advertisers want is the thing most Web sites can't attract: huge crowds. A lot of lip service has been paid to the Web's targeting argument -- and in Google's case, that's proven effective and lucrative -- but the analysis from Fine and Liew shows that advertisers still can't shake that "big crowd" mentality. So if that's the reality, advertising needs to become one revenue stream among others.
Folks like Mike Masnick, Clay Shirky, Kevin Kelly and Chris Anderson have addressed these "other" revenue steams at length (all are recommended reading), but the abridged analysis of their work generally comes down to one word: scarcity. Digital content is not scarce. It's easy to find, distribute and copy (even if publishers lock it down). Because of this, audiences don't often equate "digital content" with "pay." Publishers can fight consumer expectation by creating artificial scarcity (DRM, pay walls for general content), but that same energy is better directed toward products that are naturally scarce: things that solve a problem (recommendations, education), offer an experience (readings, concerts, trips, conferences), grant access (consulting, POD for out of print titles), save time (curated information), and offer value on an individual basis (customization). All of these are outside publishers' comfort zones and none are guaranteed to catch on, but models that work in conjunction with the digital world offer a better shot at sustainability than those built on artificial limits and unrealistic audience sizes.
The Inevitability of Newspapers' Downturn
Mac Slocum
December 11, 2008
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In a post at Boing Boing, Clay Shirky takes issue with the newspaper industry's slow adaptation to digital and its propensity for playing the victim:
I'd only arrived on the net in '93, a complete newbie, and most of my opinions about newspapers came from talking with Gordy Thompson of the NY Times and Brad Templeton of Clarinet. Instead, what struck me, re-reading my younger self, was this: a dozen years ago, a kid who'd only just had his brains blown via TCP/IP nevertheless understood that the newspaper business was screwed, not because this was a sophisticated conclusion, but because it was obvious.
Google, eBay, craigslist, none of those things existed when I wrote that piece; I was extrapolating from Lycos and it was still apparent what was going to happen. It didn't take much vision to figure out that unlimited perfect copyability, with global reach and at zero marginal cost, was slowly transforming the printing press into a latter-day steam engine. [Emphasis included in original post.]
Redefining Professional Content and Accepting Digital's Limitations
Mac Slocum
November 18, 2008
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Scott Karp expands on claims that Hulu is nipping at YouTube's heels with 10 pointed observations about the future of media. Karp's full list is recommended reading, but the following points inspired a few thoughts of my own:
1 . Professional content still has A LOT more value than "user-generated content."
This bodes well for publishers, studios and other companies that have attained professional status, but there's another aspect that deserves mention: The concept of professional in the digital realm is transforming from exclusive to inclusive.
Under traditional models with limited channels, a professional was someone who achieved a certain title through luck, talent and output; the content produced by these people was deemed professional by default. But digital platforms allow consumers to choose material on their own terms, and with that comes a shift of the professional label from job association to consumer impression. If consumers deem a piece of "user-generated" content to be professional, then it is (to those particular consumers). And if enough consumers assign the same value to the same content, advertisers will eventually get on board. We're in the very early stages of this professional transition (and the ensuing debate), but I'm excited to see how a reimiagining that includes both traditional companies and upstart professionals plays out.
8. Most analogue media businesses, when fully transitioned to the web, will likely bear little resemblance to the original businesses.
Karp summarizes something that's been gnawing at me for months: the old models just don't hold up in the digital world. Distribution went from narrow and expensive to wide and cheap; audiences once limited to specific channels have dispersed across a broad landscape; Web advertising revenue will not replace traditional ad revenue; and, after 10-plus years of Web use, consumers now expect basic digital content to be free. Fighting against these changes delays the inevitable, but acceptance opens up enormous opportunity to build leaner businesses that use content, community and the Web's efficiences to sell scarce products (i.e. targeted research, consulting, education, events, experiences, and access).
What Cookbook Publishers Can Learn from the Music Industry
Mac Slocum
November 4, 2008
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The similarities between the music and book industries tend to diverge when you examine the smallest possible component of each format: unlike songs, book chapters aren't usually self contained.
But recipes are a different matter. A recent story in the New York Times looks at the upcoming Web site, Cookstr, which aims to catalog recipes from top chefs:
Cookstr, which will be supported by advertising revenues, will aggregate recipes from published cookbooks. All of the authors will have their own pages, with biographies, links to recipes and books, and in the case of restaurant chefs, links to their locations on Google maps.
Cookstr isn't blazing new trails here: All Recipes, Epicurious, Big Oven, FoodNetwork.com and other Web outlets have built their sites around aggregation of individual recipes. But there's still a silo-based mentality in play because recipes are only free to roam within the boundaries of each site. This is equivalent to a record company only making songs available through its own proprietary service. As we've seen with the success of iTunes, YouTube and most recently through Hulu, users flock to platforms that replace traditional boundaries with massive catalogues of material. Shoehorning content and users into a specific channel rarely works on the Web (iTunes is the exception), so the record labels eventually moved toward wide distribution across multiple platforms.
There are key differences between songs and recipes -- paid downloads vs. free text content most notable among them -- but a variation on the song model might work for recipes: sell advertising against publisher-owned recipe pages; allow standalone recipes to disperse with attached branding and pull-back opportunities; and use increased attention from wider distribution to deliver related products with built-in scarcity, such as traditional cookbooks, custom books, curated collections, cooking classes and events.
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