Wetpaint CEO Ben Elowitz on the Future of Digital Media
This article was published in Ben Elowitz’s Media Success newsletter and is republished here for Digital Quarters readers.
In the last few weeks, I’ve had three remarkably coincidental conversations with three different friends in this world of media, all around one theme:
What if, for a moment, we were freed from the urgent decisions of which platforms to support, what pay barriers to erect, and what features to include today – and, in a blissful pause, we could focus instead on the much bigger and harder question: What strategic moves should media companies make to be successful 20 years from now?
It’s a refreshing change in perspective – liberating, even – that comes from setting aside questions of this year’s performance, next year’s planning process, and even the 5-year strategy map. And, for most of us, it’s incredibly telling how rare and different that question is from what we work on every day.
We know that in a 20-year timeframe, digital will be here to stay – and most offline media will be farther down their own curve of attrition. And yet, it’s hard to know which (if any) of today’s vogue digital strategies is one for the long haul.
I’ve taken a pause to see what will endure in a time of overhaul, and here are the themes I see for the next two decades of success in media:
1. The premium created by SCARCITY
Ever since Gutenberg’s printing press broke up the monks’ illuminated manuscript racket, the world of media has been moving in one clearly irreversible direction: from scarcity to abundance. And over the last ten years, the pace of change has accelerated. The article, the photo, and even the video are undergoing a transformation: these pieces of content used to be highly valuable, but now many if not most are worth just the few pennies that monetize a view. Publishers who focus on low-cost, commodity content do fine at earning traffic. But they haven’t proven valuable, because they don’t have a product that builds a meaningful and sustainable business. Abundance is the number one threat to the long-term success of any media company. An enduring company needs a product that is scarce.
2. The impact of EXPERIENCES
Today, it takes more than words and pictures to delight an audience: it takes motion, sound, and, above all, an emotional connection. Content is a part of this emotional connection, sure, but so is the mood and the setting and the medium. Am I checking a phone on the go? Sitting back on the couch with an iPad? Taking a quick browsing break at the office? In a world of infinite content, brands that provide the best experience in every context are the ones we’ll keep coming back to. Richard Branson’s Virgin continually redefines experiences that others take for granted. Changing lighting, music, upholstery, and safety videos on a plane may not seem revolutionary – but in a sea of commodity experiences, it earns massive loyalty. Standout experiences lead to standout success.
3. The relationship of BRANDS
If you’ve ever had your brain imaged with an MRI exam, you know that there is no brain center dedicated to corporations. And yet there are zillions of nerves that light up for relationships: relationships with people, relationships with the familiar, and yes – relationships with brands. Brands occupy a surprising crossover space between companies and real people: we know they’re not people, but we respond to them as if they were. That’s why your brand is the most valuable, irreproducible asset you have. In 20 years, there will be hundreds of times more content out there, but our brains will only have room for about the same number of brands – and more than ever we’ll rely on trusted brands to break through the noise and tell us what’s important. Disney and the NFL command some of the most amazing premium pricing in the world, not to mention licensed revenue streams, because their brands mean so much to the consumer. They stand for a feeling, a lifestyle, an experience. What does your brand stand for?
4. The irreproducibility of TALENT
In the words of Steve Jobs, “technology is not enough.” As technology becomes less of a differentiator, the competition will increasingly be won (or lost) on talent. Billy Beane (of Moneyball fame) earned the Oakland A’s a record-breaking winning streak with a cutting edge analytical strategy. But what was the point of the strategy? To acquire better talent. Ed Catmull pioneered a golden age of animation using Pixar’s advanced computer graphics, but his flair for creative storytelling is what kept them ahead. Anna Wintour took a stagnating fashion publication and transformed it into the industry standard with her inimitable eye. Might Marissa Mayer do the same for Yahoo? I’m bullish: Extraordinary talent makes ordinary things stop happening – and makes visionary things happen instead.
5. The climax of LIVE EVENTS
Live events like the Super Bowl and the Oscars stand out in today’s media landscape – you can’t have them at your leisure, they take place at a single place and point in time, and if you want to fully be part of them, you need to be there in person (and pay a ticket price a hundred times greater than what you’d pay for a recording). With the value of content rapidly declining, brands and publishers ought to take a cue from the music industry and start thinking about how to go from Memorex to live. Pearl Jam used to play concerts to promote album sales – today they distribute songs to promote the tour. Media companies that understand the power of “now” and can convene real people in real places will unlock huge value.
6. The compounding power of CONTENT and DISTRIBUTION
Content companies need to become distribution companies. This idea is not a new one – Time Inc. and Meredith have been direct marketing powerhouses for years – but many content-creating companies still have their soul in editorial. Distribution has been massively transformed over the last 20 years, and the pace of change is only going to accelerate as consumers spend more and more of their time on social and mobile. Media companies have no choice but to become masters of distribution.
7. The criticality of INNOVATION
Not all changes are good for incumbents. But every change does, inarguably, create new opportunities. New opportunities are good for innovators, and startups aren’t the only ones who can play that game. The big companies that live to see the light 20 years from today will be the ones that never settled for the 5-year plan and instead fought hard and took risks to drive a wave of innovation. Failure is not an option: Any media company that doesn’t innovate will simply not be around to reflect on how it went.
8. The depreciation of ADVERTISING
Most existing modes of advertising will devalue over the next 20 years, as where there was once a scarcity of ways for advertisers to reach consumers, now there is abundance. Combine that with increasingly efficient ad spend made possible by Google’s PPC, the growth of retargeting, and increasing targetability and these trends all threaten the premium that top publishers and broadcasters have enjoyed for the last 50 years. What’s to be done? Create new modes of advertising that are worth more, not less. Take a cue from AOL’s Project Devil and create proprietary and native ad formats. And even more importantly, get ready for a new era of relationship marketing on the social networks.
9. The ability for CONSUMERS TO PAY
While new formats will bolster declining advertising revenues somewhat, consumer spend will step up to become the most important driver of revenue for content companies. In 20 years, consumer expectations dictate that content will be available anywhere, anytime, and at a bite-size price. And as the friction of payments gets reduced, payment frequency is guaranteed to increase. That’s why more than paywalls, in 20 years, it will all be about the velvet rope: people will pay for premium access and experiences from their favorite brands. Whether in bundles or per use, the consumer revenue stream will take on increased importance for most media companies.
10. There is nothing as unique as PERSONALITY
Back to that MRI, what makes the biggest impression on our psychology? Real people. No matter what else changes in media, the progression of incredibly valuable personalities will not. Over the last 20 years, we’ve seen Seinfeld, Tiger, Oprah, Ellen, Britney, Bieber, and Gaga capture the public imagination and rake in billions of dollars. The smartest media owners today are investing in the personalities that will garner huge audiences over the next 20 years. If an infusion of personality can make a pig cease to be a filthy animal (according to Samuel L), it can most certainly transform a media company.
11. The necessity of mastering ADAPTATION
If one thing is clear, it’s that over the next 20 years, the shortest distance from A to B is going to be anything but a straight line. To survive, much less to thrive, will require being both clever and smart. Clever means a willingness to try new things – be scrappy and make bold bets, even if they may not pay off. Smart means keeping your eyes on the year-2032 prize – be ready to cut off the experiments that aren’t working, and cultivate your willingness to let go of the legacy as the time comes.
Put it all together…
We are decidedly not all on a level playing field. Some top media executives have inherited a legacy and little beyond that; while others have an empire set to endure. Who has it best? The NFL runs one of the most robust media businesses in recent memory, one that deftly weathered even the economic storms of the last few decades that soaked the rest of us. The NFL media empire has flourished largely because they’ve been able to combine all of these elements: brands, talent, experiences, live events, scarcity, hefty consumer payments, and very big personalities (thank you, Ochocinco). If we can all take a page from their playbook, we can still be in the game 20 years from now.