Wetpaint CEO Ben Elowitz on the Future of Digital Media
This follows my recent post about how a new TV interface from Apple could decimate the television landscape.
Even though Steve Jobs never talked about changing the face of search with Siri, its natural language interface.
But doing so would certainly be a riveting Hollywood screenplay in which Jobs, the uber-innovative, uber-inventive CEO, ultimately gets revenge on a corporate rival he views as a “copy cat.”
In this fictional script, that rival would be Eric Schmidt, one of the top executives at search giant Google. It’s Google, after all, that’s breathing down Apple’s neck with its rapidly expanding Android phone platform – a platform that, according to Jobs and his lawyers, mimics Apple’s breakthrough iPhone technology.
Putting this Oscar dream aside, there’s intensifying competition heating up between Apple and Google, even though Jobs is –sadly – no longer on the scene.
Indeed, even though Google has had voice-enabled search for some time on iOS and Android devices, Schmidt has said it’s possible that Siri could be a real and radical game-changer.
Schmidt may be right. And if he is, then Google will be facing a serious threat as Apple reinvents Google’s home turf of search.
With a “personality” that displays a unique understanding of humanity, Siri’s digital chromosomes enrich the user’s experience. This sets it apart from Google’s more mechanical offerings, and shows why Apple’s consumer-obsessed culture is so different from Google’s corporate DNA, which is as robotic and algorithmic as the “Android” name suggests.
There is rich irony here, as Apple disintermediates the greatest disintermediator of all time. When Google’s superior search service started, it practically single-handedly reduced the brand-driven experience that consumers had thereto relied on with directories and a fully editorialized Web. Google replaced those channels and home pages with 10 blue links. And in the process, became users’ destination of first resort 13 times per day.
And Apple has always been a curator extraordinaire – developing collections and exercising famous (and occasionally notorious) judgment to determine who deserves to be in its directories of songs and apps.
In all fairness, Page and his team are now trying hard to enrich the user experience by aligning their YouTube brand with media companies like Disney, and doling out big dollars for proprietary programming. The hope here is that YouTube can create dozens of lucrative user-friendly / user-favorite Web channels featuring comedians, sports stars, musicians and other entertainers. The company is building stocks of its ‘own’ media weapons in preparation for the coming war.
But, as always, it will be hard for Google to win the hearts of consumers when it comes to content; and it will be especially daunting because Apple is already so completely connected to users.
Meanwhile, with its enviable consumer connection, Apple will undoubtedly extract a toll from media companies, who still want to bathe in the warm digital light that emanates from the inviting and engaging brand Jobs built. And, as it has in every other media category, Apple stands to capture an outsize share of profits for delivering content into a magical consumer experience.
Jealous much, Google?
I sent the following thoughts to Fred Allen at Forbes.com about how bloggers made The Huffington Post what it ultimately became, and profited all along the way. For Fred Allen, Lewis DVorkin, and all of Forbes’ leaders, they are taking on the challenge of merging world-class editorial and brand reputation with the new reality that one can’t pretend to serve one’s customers best by writing all the good stuff onself.
Just realizing that the formula needs to change though is only the beginning. It immediately leads straight to serious questions to conceptualize and implement: now they have to figure out how to combine two different philosophies – one of proprietary branded editorial, and one of curation.
It’s a live laboratory as we get to see them take on the challenge, even as AOL and Huffington Post have a similar challenge of bringing their own two approaches together.
My comments to Fred are reprinted below; and Fred’s thoughts are here at Forbes.com.
There has been a backlash against Huffington Post in light of its acquisition last week by AOL.
People who were willing to contribute to HuffPo for free are suddenly irritated that the AOL deal creates a payoff for shareholders but not for them. Since AOL is a publicly held corporate entity, these contributors’ expectations have changed, and now they want to get paid.
It’s a noisy revolt, but I think HuffPo’s dissident contributors are waving spatulas in the air, rather than guns.
Underlying these revisionist claims of exploitation, one thing has been clear from the get-go: The dominant motivation of the bloggers who have posted on Huffington Post has always been far more about narcissism than altruism.
The reason Arianna Huffington was able to attract such thoughtful and provocative bloggers in the first place was because her site is a promotion machine. With each new post and blogger added, Huffington’s creation became a more powerful destination. And that meant that the site was even more attractive to the next potential blogger. The choice for a new contributor was simple: Set up your own blog, and patiently hope you can build audience over a period of years, or join the club and get instant exposure. Like the AAA automobile club or AARP, the more members in the club, the greater the value became.
The benefits of joining Arianna’s legions were numerous: Posting at HuffPo offered instant reach, credentialing, and ego gratification. Make no mistake about it, these benefits were valued by contributors all along the way. (If they weren’t, then Huffington Post wouldn’t have any contributors in the first place.) In fact, these non-financial benefits have proved far more valuable to contributors than cash.
Looking back, then, it’s definitely been a win-win: Bloggers built their own value while creating value for HuffPo at the same time. And in the AOL transaction, absolutely nothing changes that value equation retrospectively—except jealousy.
Now, on a prospective basis, the only question is whether the value received by contributors going forward will be just as great.
In terms of traffic, there’s no doubt that it will be. But the real issue is whether the HuffPo brand under AOL’s auspices will be as valuable when it comes to providing the most important of all of Huffington Post’s assets—the halo of its brand prestige. From my perspective, this remains to be seen.
And, finally, consider this: If The New York Times had acquired HuffPo, would there be a blogger revolt at all? Absolutely not!
This highlights the greatest opportunity and the greatest risk for AOL and Arianna Huffington. If they can truly enhance the Huffington Post Media Group so that it’s an even stronger and more prestigious media destination, then their pipeline of great content will expand further, because the benefits of contributing will continue to grow. On the other hand, if the brand is diluted down to “old AOL” standards, then all will be lost.
Tim Armstrong was wise to put Arianna Huffington personally in charge of this, because the success of last week’s deal may very well hinge on her ability to promise, persuade, and deliver at a high bar. AOL will be relying on her strength of vision, her standards, and her personal brand to bolster not only the Huffington Post’s brand, but AOL’s as well.
So the real threat to Huffington Post’s contributors is not that they will be exploited; rather, it’s the potential loss of the media machine that has been promoting them for so long.
Tim Armstrong, AOL’s CEO, has rebooted AOL with a talk-track of branded destinations, A-level journalism and sizzling original content; and early Monday morning, a full week before Valentine’s Day, his romantic media vision was considerably enhanced, when Arianna Huffington announced that she was selling Huffington Post to AOL for $300 million in cash and $15 million in stock.
For the record, that’s quite a premium price – 10 x Huffington Post’s $31 million in revenues.
Despite the cost, however, Armstrong is a very lucky man, and he received a wonderful gift from Huffington, whose hugely successful and much-talked-about Web site is a perfect match that helps “complete” AOL.
Indeed, the relationship between Armstrong and Huffington comes not a minute too soon for AOL, which is finally bringing on real creative assets and talent – including Arianna Huffington, herself, as chief editorial taste-maker.
To be honest, the media industry has been wondering whether Armstrong could actually pull off a deal like this. (True Confession: I’ve been among the doubters.)
And there’s good reason for the skepticism.
The problem, in large part, has been strategic. Since he assumed the CEO’s post, Armstrong has talked with clarity about his vision for an AOL made up of destination media brands, the way Time Inc. and Conde Nast have built their portfolios. But to date, his build-out of this city on a hill has fallen short. Instead of buildings gilded with leading journalism that attracts fame and eyeballs, his properties have largely been constructed by plumbers and mechanics laying a foundation for search engine rankings.
That’s why AOL’s recently leaked master plan, “The AOL Way,” is heavily oriented toward users’ search queries. The playbook emphasizes volume of content, page-views per post, and production cost per-piece. And, while “The AOL Way” is punctuated by periodic reminders like “quality content at scale,” the reader of the plan is left with the distinct impression that quality is a guardrail, not a compass direction for the journey to ROI nirvana.
Indeed, without a voice or a purpose other than page-views, “The AOL Way” comes off as soulless. Instead of emphasizing audience interests, an editorial point of view, or premium differentiation, it’s a volume strategy: the plan calls for the number of stories to jump from 33,000 to 55,000 a month; with median performance to go from 1,512 page-views per article to 7,000 within the quarter; all while gross margins rocket from 35 percent to 50 percent.
This Google-ingratiating strategy, at least from my perspective, is wrong-headed and short-sighted. It doesn’t do anything to help build a unique and long-lasting brand that is meaningful for audiences. And, as a result, it does very little to encourage people to eagerly and voluntarily type “AOL.com” into their browser’s destination bar. With this playbook, consumers don’t go to AOL; they merely end up there.
There’s a solid lesson here for all of us.
AOL – like everybody else in the media business – is clearly jealous of Facebook’s gravity-defying results. But it takes time for a proper media brand to achieve such stratospheric numbers. The great brands – The New York Times, ESPN, CNN, Wall Street Journal – have shown us that you build audience loyalty one positive interaction, one ambitious story, and one rich consumer experience at a time. To be sure, Huffington Post has shown us that, building its audience to a reported 25 million uniques over a well-paced five years.
So, it doesn’t happen overnight, and it certainly doesn’t happen if you’re just playing for quick search engine results.
Looking forward, it will be interesting to see whether Huffington – a savvy and independent thought leader who has always leaned forward – chooses to embrace “The AOL Way.”
My sense is that she will continue to follow her well-honed consumer-focused instincts instead. She brings a strong point of view, a decidedly human nose for news, and a variety of social strategies for distribution – not to mention her considerable star power. And that’s a good thing for AOL.
It’s important to recognize Armstrong’s considerable achievements. He saw that AOL’s subscription model was a non-starter; he chose areas of core content concentration for AOL; and, unlike Yahoo!, for example, he pared AOL’s portfolio quite dramatically.
But the pre-Valentine’s Day courtship and consummation with Huffington will mean very little in the consumer marketplace if Armstrong doesn’t get rid of his seemingly unshakable Google obsession – and very soon.
Here’s hoping that Arianna can help nurture Tim’s AOL, and turn it into a true media destination.
Last month, I wrote a post titled “Associated Content is Yahoo’s First Big Media Move. Here’s What Should Come Next,” in which I pushed Yahoo to acquire premium content properties to overcome the commodity signal they sent by acquiring AC. I said at the time that Huffington Post’s curation model “crowdsources content but applies a strong point of view and features premier branded names, lifting it above the commodity fold.” For Yahoo, Huffington Post is the perfect combination of premium and economical.
Now, over this last weekend, Erick Schonfeld wrote at TechCrunch that deal discussions between these two publishers are underway for a content partnership or outright acquisition. Though Arianna Huffington denies it, other sources indicate that HuffPo has been on Yahoo’s short list, and I wouldn’t be surprised if conversations have been ongoing.
While Yahoo had previously announced intentions to compete in news by hiring brand-name reporters, that direction is fraught for the big portal: the news category is difficult to lead with a heavy demand on consistently breaking news — and it would take years for Yahoo to build the credibility in original reporting to become a true audience magnet. And the prize for winning even if they do? It could be losses, not profits, as has been born out by the experience of myriad old media outlets who are now making over their businesses.
What Huffington Post represents is a far better road for Yahoo to go from portal to destination in a realistic way. HuffPo can draw audiences not by competing with the news outlets on reporting but with great access and point of view – both of which are within Yahoo’s brand and execution reach. It would serve as an anchor property with true destination draw.
Indeed, Huffington Post may be unique among the news-oriented sites of the portals, curators, and aggregators in having earned true premium positioning. They did so by emphasizing a strong and reliable point of view along with affiliation with notable brands (such as regulars Arianna Huffington herself, Bill Maher, Harry Shearer, and Rosie O’Donnell, along with guest posts from a robust range of influentials). Along the way, the site has also earned an outstanding brand and destination audience of 22 million (comScore), consistently garnering visits from both search engine referrals (14% of traffic from Google according to compete.com) and social networks (16% from Facebook).
This destination draw is critical for Yahoo. At Yahoo’s home page, 73% of monthly viewers are there to get their mail – and that usage is shrinking at (2%) per year (comscore April 2010 vs. April 2009) vs. a US internet universe which grew at 10%. As Yahoo commits to a media-company destiny, its strategy must be to create high-end destination titles that will draw premium advertising – not just keep mail users on-network longer.
For those in charge of Yahoo’s media properties, David Ko and Jimmy Pitaro, they would get two other benefits to leverage: HuffPo gives Yahoo a premium curation model prototype for it to replicate; and a DNA transplant to bring in the talent and experience to scale that model.
As far as the first, Huffington Post has shown itself to be the best of the curators, establishing a strong point of view that draws a huge audience with near-zero cost for original content. And the model – the fame and traffic of Huffington Post beget contribution from interesting people, which drives more fame and traffic for Huffington Post’s brand – is replicable in other categories, as HuffPo has shown with its entertainment category rumored to already reach an audience of 10 million monthly, according to internal measurements. This is the sort of model that Yahoo should be banking on, as commodity content alone will never make Yahoo a premier media company.
Perhaps more importantly, there is nothing to catalyze the adoption of a new direction like bringing on a talented and effective crew. An acquisition of Huffington Post brings not just a branded destination, but a whole crew of operators with a scarce and effective set of skill, approach, and attitudes. Those genetic elements are exactly what Yahoo needs to quickly set a new approach to existing properties with large audiences, such as entertainment, shine, and omg!, as well as to each new title launched.
All in all, an acquisition of Huffington Post would form the perfect foundation for Yahoo’s new ambitions as a premier media destination – and would be well worth the several hundred million dollars it would surely cost to set a bold and profitable strategy for Yahoo to be a premier media company.
With yesterday’s announcement of the acquisition of Associated Content, Yahoo CEO Carol Bartz has sent a loud message: Yahoo is investing in becoming a new kind of digital media company for the new age of digital media. Cheers to Yahoo for recognizing that their “1.0” model needs an upgrade to be more effective in a 2.0 world. The only problem is that this move gets Yahoo just one step toward where it needs to go. It could be a powerful first step to add content and audience to their network, but will only be strategically valuable for Yahoo if it is layered with additional new investments to build true destination media sites with premium positioning.
Let’s explore what Yahoo gets from AC first, and then cover what Yahoo must do from here if it is serious about winning in media.
1. Yahoo gets commodity content at commodity cost. With Associated Content’s marketplace, first and foremost Yahoo can source commodity content – i.e. the kind of content that doesn’t need a particularly differentiated author, original reporting, or other hard-to-find talent – cost effectively.
2. Yahoo can improve time (and value) on network. In this age of deteriorating portal power, users come to portals primarily for one reason: mail. (According to data from comScore, 73% of Yahoo’s viewers of its most valuable real estate – the home page – are Yahoo Mail users.) Once they arrive, however, there is far more money to be made by vectoring them to networked media properties like Yahoo Finance, Sports, and Entertainment than by serving additional pages of poorly-monetizing email. So, by beefing up the available content in the network, Yahoo receives the benefit of extending visits at low cost.
3. Yahoo increases its audience by drawing traffic from Google. Yahoo’s made the strategic decision to move its focus out of the search game and onto media. And so rather than just feeding them from mail and search, Yahoo needs its content properties to draw audience on their own. The AC content marketplace can produce thousands of pages per day of content – each one baiting more search engine traffic, and all produced at modest cost. A recent EConsultancy interview with CEO Patrick Keane revealed that the bulk-buy strategy works: “80-90% of our audience is driven through natural search,” and according to comScore data, nearly 50% of the traffic that AC’s content sees each month is incremental to Yahoo’s core audience that comes for mail most days.
All three of these improvements have financial benefits to Yahoo – both in increasing revenues with greater reach and traffic; and in bringing down average cost of content. But they miss out on the strategic positioning that Yahoo absolutely must own if it wants to ensure a leader as a top digital media company:
Yahoo needs to be a premium destination; and the AC acquisition message undermines that positioning. Read the rest of this entry »
One of my favorite questions to ask recruiting candidates is: “What content sites have a unique and differentiated user experience?”
The usual answers are as tiresome as the state of web design: YouTube (yes, it is fun to keep clicking), Hulu (yes, they got the experience right for TV viewing), and lots of pauses and comments like “I don’t know, it’s kind of all the same.”
Let’s face it: publishers are formulaic herds. And the formulas are boring and tired for users. How bad the state of the art is when Huffington Post gets major props for going with a single full-screen hero shot on its home page – and that’s considered breakthrough!
So that’s why I’m incredibly impressed with what MSN’s Scott Moore and BermanBraun’s Lloyd Braun and Gail Berman have done with their newest creation, Glo. From logo to flow, the site’s design lets go of the old formulas, tries something new, and most importantly, takes risks. New layouts, new interactions, and new forms of content all create a feeling that this is not an ordinary website. Even more, they have defined their own style that is adventurously well-suited for their audience.
To start making money, publishers need to create consumer experiences that stand out. As MSN’s Scott Moore said in a post by Kara Swisher, “we see a lot of room to grow by offering something different and of higher quality.” These premium visceral experiences are exactly the path to profit in digital media: they will attract loyal audiences, premium advertising dollars, and over time create opportunities for upselling to consumers. And those premium experiences are, after all, the root reason why everyone is so excited about the iPad this week.
Apple doesn’t need to be the only one that can innovate. This kind of innovation is rare among publishers, and yet all too valuable.
For heaven’s sake, if MSN can do it, everyone can.