The Problem with Scaling

Alternative Business Models in Media

It seems the stand alone website is for the really big content players, the ones that can scale. The rest  of us should go to the big social media platforms and build an audience first: Twitter, FB, etc.  That was some of the advice from a Daily News Innovation Lab panel of media types representing  U.S. News & World Report, VC firm Lerer Hippeau, OpenX ad exchange and digital media trade group, Digital Content Next.  These folks are in the trenches and shared their wisdom for how new and established content companies can survive and thrive.

Scaling was a big topic, because that’s what you have to do to attract advertisers.  It’s a tough game, where everyone gloms onto the newest idea to attract an audience and make money. Video is that now but we know with more competition, eventually advertising rates will fall. Simple supply and demand economics.

Meanwhile, media companies pedal fast to create ‘the new.”So what do new media companies (or even established ones) do to usnews best hospitalsget around the grueling, vicious cycle of scaling for advertising, where only the new and expensive creation of always fresh content is valued? Chad Smolinski, SVP of U.S. News & World Report provided the wisdom of an 82-year-old brand better known to our grandparents. He said, “You don’t have to be a Buzzfeed. You don’t have to be huge. Find the people (audience) doing something hard.” In his company’s case, one example is creating hospital ratings and rankings.

If you need a hospital, this is invaluable information.  If you’re a hospital, U.S. News & World Report will license its research data, allow you to promote your ranking with their brand for a fee. They’re doing this in a variety of deep verticals: automobiles, colleges, etc. Smolinski says this strategy has made U.S. News & World Report profitable by using a metaphorical tourniquet to stop the flow of red ink from an advertising only strategy.

Some other stats from the panelists:

  • 70% of advertising is not going to content companies. It’s going to platforms like Google, Facebook and Twitter. Something to really ponder if you’re a content creator.
  • NowThisNews, which tells news stories with short-form video, tailored for the social and mobile user, earns advertising on only 20% of its content.
  • Ashish Patel of Lerer Hippeau says “if all else fails (with NowThisNews), they’re building a “proprietary technology for end to end distribution analysis”.  Sounds pretty much like they’re ready to call “uncle” on scaling and content creation.  They won’t be the first. Several publishing companies like Say Media switched from creating content to become publishing platforms.

Some other ideas:

  • Drive content to e-commerce and sell goods. In the late 90’s, they called this contextual e-commerce. Patel says Thrillist, a travel, food, entertainment and gadgets, is creating content and selling goods. You read about great restaurants and then go to the “Kitchen Shop, Bar Shop or Travel Shop” to buy.
  • There’s always the subscription model for engaged users: New York Times, WSJ.
  • Creating an event business. Digital media websites like Mashable and Re/Code have done this well.  Find a passionate group who wants to network and learn and bring them together with good speakers.
  • Success Television decided to focus on the BtoB space and sell leadership and management training videos to businesses and universities.

Helen WhelanHelen Whelan is a serial entrepreneur and consultant. She has 15+ years experience creating strategic partnerships and designing new business ventures. Her focus is in assisting start-ups and established companies innovate successfully through design-thinking and good leadership. Follow her blog at SuccessMedia or on Twitter @SuccessTV.

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