Wetpaint CEO Ben Elowitz on the Future of Digital Media
The biggest names in media are losing share rapidly while the rug gets pulled out from under them with collapsing prices. New opportunities are being created every day for those who get in front of the new model. And while the daily news is well reported by PaidContent and others, what we all really need is a beacon to see the bigger picture, call the most important themes, and light the way.
For the media companies that have been around for a while, the question is how quickly their business is going to erode. For the rest of us, it’s how many billions more can we make at their expense.
Why This Blog?
Because the media industry is in the midst of a painful journey to find a better way — but all too often, all we noticed is the foibles we step into along the way. Too many sources out there are calling out the cuts made by the machete from inside the jungle. This blog is a chance to light our journey through the jungle, to get a look at the path from above. We’ll look at where the path needs to go, and to view the turns that companies are making along the way: where they are falling off that path to profit — and where new companies are changing the shape of the path as we go.
Lord knows we can all use some help finding our way from the bleak landscape of media today to constructing a new, profitable media world.
And Just What Is The Path To The Money?
We are coming from an old model of publishing — a 1.0 model — that took literally centuries to develop. Over time, it developed the a system of journalism based on staff writers and editors, freelancers, high fixed costs for printing presses, sizeable marketing budgets. It was supported by one major point of leverage: the scarcity of ways for advertisers to reach an audience. That scarcity translated into premium revenues; and it was those premium revenues that funded the growth of massive TV networks, publishing empires, and even cable networks.
But that scarcity no longer applies. With the digital content explosion, attention has spread everywhere. The choke points of access have widened and dissolved, and access to audience is plentifully — and cheaply — available.
What we need is a new model for publishing, “Publishing 2.0”, with costs that are in line with ‘new normal’ revenue levels.
To do that, publishers are going to have to change how they think about their business:
Companies like wikiHow and Yelp are leaning on users to lower their costs; while sites like Hulu and Wonderwall are creating premium experiences to drive premium revenues; and the Wall Street Journal — with some of the highest premium ad rates around — has created a content collection to valuable that exclusivity is reason enough for it to earn a strong subscription business. And companies like Gawker and Demand Media have gone to new lengths to rethink their workforces, tapping low-priced freelancer markets in the U.S. and abroad for varying degrees of quality.
None of these examples has established itself as the single winner of the Publishing 2.0 battle. But media has never been a winner-take-all market. And if internet media has taught us one thing, it’s that consumers are looking for huge variety in the content and experiences they consume.
But to win a large share of that consumer interest, and to monetize it at a high margin, digital media companies will have to master these changes. The ones that do so the best will be the new “2.0″ media empires.