Wetpaint CEO Ben Elowitz on the Future of Digital Media
Despite their coveted value, the great brands of old media aren’t proving out to be much of an asset online. And to the extent old media is relying on the value of their brands to ensure a digital future, they are headed in the wrong direction.
For this new analysis for Digital Quarters, we measured audience and visits (from comScore) for sites across the major media categories, comparing the metrics of sites operated under old media brands (e.g. ABC, Entertainment Weekly) in each category to those of new upstarts. Over the past year old media brands lost share of online audience to new media in nearly all of the traditional magazine categories (TV, entertainment, business, fashion, tech, and teens), while the offline brands in the News category grew share during that same period. Although total visits were up 5% for old media, new media visits grew far faster — 10% — from April 2009 to April 2010, leading to share loss for old media in six out of the eight categories that we tracked.
Overall visit growth was positive in all media categories other than TV, but despite this, old media brands experienced an absolute visit decline in Entertainment News and Teens which are rapidly shifting towards new media sources.
Conventional wisdom has held that building a brand is a momentous challenge in developed spaces such as media; and that disproportionate returns accrue to the most established brands. But my new analysis shows that legacy brands are on the defensive, far more threatened by new entrants than the other way around. The upshot appears to be that upstarts’ execution is earning new audiences (and building their new brands), drawing audience on average away from more established players.
The reason for this shift, and the dominance of new media in categories such as Tech News is simply that the old media magazine model is ill equipped to compete with more nimble online competitors. For the most part, weekly and monthly publications are struggling to keep up with the new pace of information exchange and social interaction demanded on the web. Understandably, the value to consumers of days, weeks, or months-old “news” on fashion trends, celebrity gossip, and technology is far lower in the presence of up-to-the-minute coverage from new sites.
However, the success of offline brands in the News category offers hope for other old media brands. Companies such as The New York Times, BBC, and ABCNews have grown their online presence and are clearly investing in digital as core to their business. They are actively experimenting with rich media, social marketing, and engaging their audience. But while news outlets have always operated on a fast pace, magazines are at a particular disadvantage in that they are not structured to turn information around quickly. For old media magazine brands to maintain or grow share, they’ll need to go further by transforming their organizations, incentives, and sources and embracing the new definitions of publishing quality to provide the experiences that consumers are now seeking online. With online share falling — in some cases dramatically — now is the time for offline legacy publishers to take action and get their brands working harder before it’s too late.
Source: comScore panel-only visit data for April 2009, July 2009, September 2009 (panel only was unavailable for October), January 2010, and April 2010, including only properties with more than 500,000 monthly unique users. Properties were manually categorized into old media if they originated offline, and new media if they are entirely online or originated online (e.g. TMZ and MSNBC are considered new media). comScore category names: Business News/Research (Bus News); Entertainment – News (Ent News); Beauty/Fashion/Style (Fashion); Lifestyles; News/Information (News); and Technology – News (Tech News); Teens; Entertainment TV (TV).
What’s the point of developing a great brand if you don’t take advantage of it? In the consumer products industry, the norm is to develop a great brand, then perform line extensions. Crest lends its name to Crest White Strips so consumers will trust them more. Disney’s trademarked princesses adorn adhesive bandages to spur kids to cover imaginary wounds; and Ralph Lauren finds his way into the paint aisle of Home Depot so I can be sure my new wall colors will be fashionable.
But these sorts of licensing and line extension deals have been more scarce in publishing. And it’s great to see that change.
According to reports from Russell Adams at The Wall Street Journal, bucking its historical resistance, Glamour has decided to seek more revenue by leveraging its brand into new product lines by partnering with IAC’s Match.com for the Glamour Matchmaker dating site, with IAC’s HSN on a new jewelry line, and with Like.com for an “Ask The Stylist“ app.
This is great news, and it bucks the recent countertrend in publishing of focusing on reducing costs. While others have been seduced by the allure of commodity content, Conde Nast is instead increasing its commitment to its premium brand. That’s the right move. For the leaders in digital media, their future success will be far better served by increasing the value of their premium brands and destinations — and by leveraging that value into new territory. Smart partnerships not only create more revenues, but also create broader reach for their brands and the opportunity to move beyond serving as just titles of published properties into more meaningful sector or lifestyle brands. And that means developing long-term deep relationships with consumers — which will be even more valuable in then feeding back into premium advertising rates based on increased reach and goodwill. It’s a formula that companies like Disney have mastered, with original content, experiences, and licensed products virtuously cycling to create more and more value.
For publishers like Conde Nast, now is a great time to set their brands free to do more. As a premium publisher, they invest in creating outstanding, differentiating content and experiences for their audiences. And they are doing a benefit to their consumers by extending their credentials to other categories.
My bet: Over the next 12 months, we’ll see other publishers following Conde Nast’s lead.
If old-media traditionalists can be relied on for one thing as the world digitizes, it’s to bemoan the loss of what they call “quality.” In fact, the quality of published content has never been better. So why does traditional media get it wrong here? Because they’re using a definition of quality that made sense for the world of Publishing 1.0, from Gutenberg until 1995. But for Publishing 2.0, it’s about as useful as the cubit is in modern architecture.
The traditional-media definition of quality is based on four key criteria – and all of them have fundamentally changed and become invalid. Here they are, along with an explanation of why they’re no longer useful. Next week, I’ll do a follow-up piece on how quality should be defined in the digital era. Read the rest of this entry »
Despite the significant economic pressure they are under, it’s all too rare to see a print magazine let go of tradition and embrace a new model. So I was delighted to find that at least one Time Inc. magazine is doing just that.
Stephanie Clifford’s article about People StyleWatch in the New York Times last week shows what happens when offline executives adopt a digital mindset. Clifford points to a number of things that Susan Kaufman, People StyleWatch’s editor, is doing well, and notes the results: 8.6% circulation growth in the second half of 2009 and 130% growth in ad pages in the first quarter, easily besting a shrinking industry.
Although I wouldn’t call it top-tier journalism (does “Find Your Perfect T-Shirt Bra!” really merit an exclamation point?), People StyleWatch replaces an elitist, artistic view of its subject with a pragmatic appreciation of what their audience likes. It’s a habit learned online and applied offline.
Here are five lessons from online media that the publication is successfully bringing to print:
This is more than just flexing editorial styles to meet the expectations of web-addicted younger readers. The magazine is embracing a new business model with lower costs and more attractive content for advertisers that allows it to grow in an otherwise contracting space. They are hitting on one of the key success factors for Publishing 2.0, namely an adaptive business model. Time Inc. CEO Ann Moore, who has led the People brand for more than a decade in various roles, no doubt is taking notice.
Regardless of your personal opinions of the content, the results – in both readership and profitability – are hard to dispute.
I had dinner recently with a friend at a big traditional magazine publishing house. We talked about the predicament of the majors: circulations in decline; ad rates falling; a reduction in the number of pages per issue. The traditional publishing model is hanging by a thread. And as we’ve all seen, blue-chip magazines are closing their doors as they can’t make ends meet in the new world of media.
My friend works in the online division, and has lots of exposure to senior company executives. And one thing he told me surprised me: When he talks with his higher-ups, they just plain don’t acknowledge that online is the future of their business. They’re too preoccupied trying to figure out how to save their bread and butter versus figuring out how it will morph to completely different model – an online one.
Now don’t get me wrong. I’m not saying that online is going to save the traditional magazine. It’s not. The economics of online publishing are arguably even worse than traditional publishing. But that doesn’t change the fact that consumption of content is moving rapidly and unstoppably from offline to the web and mobile web; and that means that the offline publishing business is in inevitable decline.
The options for an old-school publisher are simple: they can harvest their declining businesses; or begin the hard journey of building a new business to replace them. But what is very clear is that the two cannot be done at the same time. Inevitably, the companies that will succeed in the new digital economy are the ones that are willing to make sacrifices to their existing businesses.
My favorite example of a company that is committed to this sacrifice comes from the world of semiconductors. For years, Intel demonstrated the philosophy of obsolescing their own products by creating new ones – before their competitors did. Each generation of microprocessor they produced put the prior one – just a year or two old – out of business. This is a survival skill in a fast-changing industry like semiconductors.
But decades-old publishers, steeped in their own business heritage, act as though they their world is not changing; when in fact it is changing as fast as microprocessors themselves. Is it that they don’t know, or that they don’t care?
Time Warner has set one of the best examples of a media company willing to break with old habits in order to find a path to a better place: Not only have they initiated an industry joint venture, but they did it the right way.
Now, they’re showing some early fruits of those decisions to bust loose, in this demo video of the prototype they developed with Wonderfactory, the agency hired for product concepting and development of the tablet.
Let’s look at some of the things that Time Warner has done right. These can be something of a cheat sheet for other companies who are willing to take big risks.
And, most importantly:
Whether or not the device is successful itself, this will give Time Warner an organizational advantage: they are demonstrating not accepting the false constraints of maintaining old paradigms or riding the curve down. That DNA impact is enormous, as it creates the license for others at that company to take risks.
Ultimately, the publishing industry is facing the problem that their “content” is relatively undifferentiated. Time Warner has shown that they’re willing to take the risks to create a new experience that is worth noticing for consumers.
And Time Warner is further separating itself from the other media companies who are too frozen to do what it takes to try creating breakthrough consumer experiences. Those companies will ultimately suffer, since the best path to a thriving audience — and new revenue streams — is by winning consumers over.