Wetpaint CEO Ben Elowitz on the Future of Digital Media
As you know, I’m obsessed with figuring out the future of digital media. And to do that, there’s nothing better than putting stakes in the ground – based on the best available information and sharpest analysis I can muster – and then checking back to see how they held up.
In the last couple of weeks, two of the calls I made have come true; and that offers us a great opportunity to re-visit them, and see what we can learn from them.
Hulu Plus: Great Experiences Worth Paying For
First, Hulu Plus, which is thriving with over 1 million consumer subscriptions.
A year ago, when success seemed far from likely, I went out on a limb and estimated that Hulu Plus would have huge traction with consumers, surpassing $100 million in revenue in 2011. As it turns out, Hulu’s growth with its subscription product has been even faster than I expected – albeit with lower revenue per customer, given to CEO Jason Kilar’s smartly aggressive pricing, and the resulting much higher consumer adoption. The result has been substantial corporate revenues that have helped make Hulu market itself, enticing suitors to break it free of its complicated parent-company structure.
Content licensing agreements may still represent the greatest complexity of Hulu’s business under any ownership scenario, but what’s been a fascinating expectation exceeder is that by delivering the most desirable content and consumer experience, Hulu has gotten consumers to open their wallets in droves. That’s something that we can all learn from.
PayPal Acquires Zong: Making Payments Easier
And second, EBay’s PayPal, which recently bought mobile payment company Zong for $240 million.
Back in June 2010, I strongly recommended this deal and pointed out its many advantages. Indeed, Zong’s payment system makes it easy for consumers to pay – leveraging the addictive relationships people have with their mobile phones.
As my newsletter readers know, I recently updated my formula for consumer spending on digital media.
The Consumer Media Spending Formula:
(Desire + Relationship + Ease) X Scarcity = Spend
Now both of these transactions are reinforcing it for me.
The Future of Consumer Paid Media
Beyond that, these two announcements also tell us something important about the rapidly approaching future of digital media: increasingly, the industry will be relying on consumers to contribute toward its profitability.
Now it’s up to us to create great content and meaningful experiences that are worthy.
A Bonus Prediction: Apple Versus Facebook in 2012
And that’s why I’ll take this opportunity to make a bonus prediction.
By this time next year, we will be in the early stages of what will later become an all-out war over who will be the master payment and currency provider for digital media. Even as Paypal has made significant upgrades with the Zong acquisition, they won’t be enough to ignite Paypal as the leader in the key venues: on the social networks and in mobile applications. Instead, this online conflagration will, I believe, be waged primarily between Apple and Facebook Credits.
What do you think? And what’s your favorite digital media prediction for 2012?
A couple of weeks ago, here in Seattle, I had the opportunity to participate in a discussion about the future of SEO (search engine optimization) and SMO (social media optimization), along with one of the top SEO experts in the world: Rand Fishkin. The conversation was a lively one, moderated and reported –by Curt Woodward, at Xconomy.
My view is that – particularly for media – we are at a tipping moment. The web is no longer a field of static documents navigated by a precise search engine. Instead it’s a living organic distribution machine from person to person, through the ether of “social operating systems” like Facebook and Twitter. And, as a result, I expect Google will be losing ground to Facebook.
It’s was a lively and fun dialogue.
I have a question for Jonathan Tasini, who is leading a $105 million lawsuit on behalf of thousands of uncompensated bloggers against The Huffington Post.
If you and your litigious colleagues are so good, so valuable, and so organized, why don’t you launch your own online media venture to out-compete HuffPo?
I’m sure you have your reasons – and, of course, initiating a lawsuit is so much easier than starting a digital publishing site from scratch.
But, let’s get real.
Blogging isn’t free-lancing, and it’s hard to imagine that any of the contributors who sent their material to HuffPo ever thought it was. As I wrote several weeks ago, every contributor knew the basis of the transaction: write what you have to say in exchange for being publicized. As always, the prime currency of blogging was fame – not fortune.
So who’s trying to cash in now?
On a broader, more global note: I feel sad for the desperate bloggers who are trying to shake down HuffPo; and I’m deeply sensitive to the fact that the media world is under pressure and steadily shrinking. But Tasini and his fellow litigants look like starving dogs scrapping for a shred of meat. It’s unseemly and unproductive.
Will Tasini respresent a class action suit against Endemol on behalf of all American Idol contestants, who were totally exploited as they sought super-stardom?
Or will he represent the tens of millions of users in a suit against Facebook, for advertising against their status and Farmville activities?
Both legal moves would make for entertaining blog posts, and I look forward to the juicy reading!
One of the supreme ironies in digital publishing today is that there’s infinite online space, and a desire to read rich and substantive content on mobile devices such as the iPhone or iPad; and yet, there’s still limited long-form multimedia journalism available on the Web.
That’s the subject of a fascinating feature in The New York Times by David Carr.
Always incisive, David focuses on The Atavist, which he describes as “a tiny curio of a business that looks for new ways to present long-form content for the digital age. All the richness of the Web — links to more information, videos, casts of characters — is right there in an app displaying an article, but with a swipe of the finger, the presentation reverts to clean text that can be scrolled by merely tilting the device.”
Since January, The Atavist has had over 40,000 downloads of its app; and it’s also begun conversations with publishers about the possibility of adding nonfiction books to the eclectic mix of stories it now presents.
This nascent success reinforces what I’ve been saying for a long time – give people an enhanced digital content experience, something that’s very special, and they’ll be willing to pay for it.
Good luck to The Atavist, which has the right business model, and the best of reading to all of us.
I’m not the Amazing Kreskin, and I hardly consider myself a visionary prophet. I’m just Ben. But I happen to live and breathe the digital publishing business because it’s my professional passion.
So, I was quietly surprised to read this week that Hulu’s subscription video service will surpass one million subscribers in 2011.
I was taken aback by Jason’s announcement – not because I doubted Hulu, but because I somehow managed to predict the Hulu Plus subscriber number exactly a year ago.
Indeed, a year ago, in April 2010, I said: “I expect that the service will reach or exceed a million subscribers by the end of 2011.” (See my April 23, 2010 prediction here.)
In life, like baseball, sometimes you win; sometimes you lose; and sometimes you’re rained out.
But the W’s always feel best.
Good job, Jason!
And for the record: I continue to be bullish on Hulu. As long as it can keep its content license agreements humming, it will have a killer collection of content, plus killer experience, to offer consumers; it also has killer context to offer advertisers. And that’s a formula for great success.