Scott Karp has a great post dissecting new media along the lines of the historical 3 pieces of the puzzle: Content Creation, Distribution and Aggregation.
He points out that creation can be done anywhere by almost anyone now online. True. Go We-Media! Go YOU!
Scott also points out that aggregation and distribution are very scalable businesses online which we are seeing in Youtube, Myspace, Facebook and Search. Agreed.
But, he doesn't delineate very well between distribution and aggregation. That's because we don't really have any great examples of pure online distribution companies. The only two examples I could think of are google adsense (and site search) and amazon's product affiliate system. (Google's new video ad distribution system is a new example.) But, these distribution platforms wouldn't work well unless the companies first won their respective aggregation platform games. There are more niche vertical companies like Zillow, Zvents, Simply Hired, Edgeio that are trying to aggregate enough to make a compelling case for distribution too. But, it's backwards.
Distribution should come before Aggregation. In old media, multiple distributors assembled media from different sources and distributed it to the aggregators. This created a balance of power between all 3 players in the chain. This doesn't exist in online media. Why? Because most distributors try to aggregate. And most aggregators try to distribute.
This is a BIG problem for the democratization of media. If distribution and aggregation are owned by the same entities, creators have little leverage in the value chain. And aggregators can create mono-culture. Think cable access companies owning cable channels (They do) or charging other channels for carriage (They do). Think newspapers owning the distribution points (They don't luckily for us.). Think radio stations programming for 50 cities from one headquarters (They do). Without separate distribution and aggregation, all of the content we-the-media create doesn't really get distributed properly.
Of course, you could say that there'll always be google's algorithm or Youtube's upload button or the ability to customize your myspace page. But, there's no guarantee that publishing your content to the web, Youtube or myspace will garner any attention because there is no sure fire way to get distribution. From the reader side, there's NetVibes and Bloglines and My Yahoo. I can customize these things til my heart's content to consume the information I want to consume. But, how will I find out about new things? Am I really discovering new things by susbcribing to some content creator's RSS feed in this way? No. I know... There's techmeme and my friend's bookmark's on del.icio.us who can filter for me. But, maybe I still want professionals to filter and aggregate my information. Or maybe I want techmeme's audience to filter the celebrity gossip I read. Or maybe I want more transparency into how information is aggregated for me. Maybe I want to aggregate stuff myself w/ my own algorithms.
RSS and blog search engines held some promise a year ago. But, google is taking over that game. Open schemas and open ping systems were getting a lot of attention a year ago. But, pubsub died. Progress is slow. Microformats and Marc Canter are the only ones still forging onward. Albeit pretty slowly: Marc bootstraps and people are talking Technorati's impending doom. From a funding perspective, it isn't obvious how these types of companies or efforts will make any money. These types of companies are judged in the eyes of google and the almighty PPC or myspace and the almighty network of musicians, horny boys and marketers. So, they have to position themselves as search companies or social networking companies. Not distribution or syndication companies. But, that's what they should be. They should be leveraging the multiple publishing platforms that publish in machine readable language and helping niche aggregators slice and dice and deliver the content their audiences want. They should be supplying feeds to aggregators. White labelling their solutions. They should be making it possible for a million aggregators to bloom by building on their strength to distribute, analyze and organize information.
And they should get paid by the aggregators. And they should, in turn, pay the content creators.
And that's how we'll create a healthy online media ecosystem.
NOT One that's NO better than the old one where only star content creators make a living and large aggregators fight for their exclusive rights to distribute. Like this. That's not what WE want.
From David Beisel:
I believe the key for these endeavors is to fit into an existing revenue model applied elsewhere, be applicable across many niche demographics, and of course scale.
Couldn't agree more. There are thousands and thousands of websites that are able to virally produce traffic. But, that doesn't make them fundable businesses. The websites owned by businesses that know how to apply some kind of proven monetization method to that traffic are the ones that should be funded. If it can be applied to many niche demographics (ala weblogsinc or the friendfindernetwork), than the business can be big. And as David mentions, the business has to scale: grow without a lot of additional resources.
David says earlier in his post, these revenue models don't need to be advertising:
And while the largest social networks like MySpace are indeed media properties (and therefore ad supported), I think that it’s likely we’ll see other valid revenue models emerge as well, whether it’s transactional based, facilitating commerce, etc.
And the most important point he makes: Social networking sites with high traffic should be tapping external companies for revenue possibilities. And it's not rocket science. Media businesses make money in a variety of ways: advertising/marketing services, market research, commerce (including affiliate commerce), subscriptions, experiences/events. If there's a social networking website out there that doesn't have a component of each of these, there leaving something on the table. But, the chances are small that many of these social networking startups have the in-house expertise and capabilities to exploit all of these revenue streams. So, look outside.
This might be the first time someone went to a WhizSpark powered event as a guest and posted photos on flickr. Although another photographer told the event organizer that they should ask them to take them down and/or get permission, I informed them that "that would be like asking someone who posted a free billboard for your event to take it down". That kinda made sense to them. They still wanted them to take down one of the photos of a pile of dirty plates. It goes to show that normal people just aren't ready for this whole "user generated" thing.
They probably wouldn't approve of this post, either, which is why I didn't mention any specifics.
I was talking to a CEO of a large(r) event registration company the other day. I asked him how much money he thought was made in event sponsorship and he didn't have an answer. I asked him if he thought that getting a piece of the event sponsorship business was bigger than getting a piece of the event registration business. He said it could be. He was either playing dumb or didn't know. Or didn't care.
Sponsorship is a Big Business. And it is a growth business.
Calacanis+TechCrunch started a new event called TechCrunch20 where sponsors make the event viable. It's for startups and it is the same concept as DEMO. But, at DEMO events, the presenters pay for the opportunity. We threw the idea around of doing webinars in this way; where startups pay to present. But, decided against it for a handful of reasons. We had some startups willing to pay. But, we weren't sure how it would scale or how to promote it effectively. Besides, as I explain better below, we'd rather secure a local sponsor and build a local event around that. Right now, that's our strength.
Most trade show organizers focus on their sponsors first. Registration dollars are icing on the cake. Of course, if you don't have people coming, you can't get sponsors. But, "getting attendance" is what throttles the money spent on "advertising events". Most people call it "promotion" because money isn't actually spent. Of course, big show organizers tell their exhibitors and sponsors that they are spending a lot on advertising the event. But, in reality, they are either 1) bartering the advertising where they trade naming rights, booth space for them or for their advertisers, free passes, etc to media outlets in exchange for free advertising or 2) the event producer also owns the media that reaches the right audience. Jupiter is a good example of #2. And the CalacArrington thing would fall under category #2 too. Events like this one and this one fall under #1.
So, most people looking at the event business from the outside see a high barrier to entry because they think they have to spend a lot on advertising or start their own publishing company. But, there isn't a high barrier if they have the right relationships with the media. In fact, if you can effectively advertise an event by partnering with media outlets, events are like printing cash. The first ATM to go to is the big sponsors, though. The second fountain is attendee registration cash. If you can get both, that's the key to really printing cash.
Take us for example... Two years ago, we had no support from the media because we didn't have a reputation to be able to promote an event effectively. By now, we've worked side by side with all the major radio stations and print media outlets in the area and have partnerships set up with a few. In the beginning, we didn't charge anything to come to events. We asked the people that came to the event to invite their contacts. This helped us build an audience of local businesss professionals that we could then reach by email to advertise other events. About 6 months into it, we started to get cash sponsors. We can now reach about 10,000 directly and another 60,000 through our partners. Now that we have a local audience, lining up cash sponsors is a lot easier. The way that our process works, our cash sponsors also promote the events they sponsor by inviting their contacts by email. So, the network grows at an increasing rate. At this point, it is a matter of selecting the right events to be involved with (that we don't have to plan). And bringing on more and more sponsors and media partners. Of course, if someone came along and said, "Here's 20 online publishers with great audiences, Pete. Go make $ from events with their reach." it would make us a national company a lot quicker than our current growth trajectory. And I could call BofA and get that ATM installed in my living room. And I could share a big chunk of that with the 20 publishers. In fact, a publisher with a national footprint, a large national sponsor or a large event production company would accelerate our expansion. With any one of those 3 things, we could make the other two happen pretty quickly.
But, our current growth trajectory based on booked business takes us from a Central MA company to a company with a New England footprint in 6 months.
The interesting thing that noone has really realized, though, is: the business that doesn't scale is the actual production and hosting of the event. Techcrunch should be finding events they can bring to their sponsors and their audience and take a cut of the action. Not planning and hosting the whole thing. That doesn't scale. Plenty of online registration companies have figured out that "registration as a service" scales. But, noone on a national scale has figured out that the "commission based advertising to attendees" and "sponsorship" processes scale too. And that's where the money is.
Twas talking to Stephen Paulin, auctioneer extraordinairre the other day. His company, Strategic REMarketing does some very fancy webcast-live auctions where people bid in real time at an estate or liquidation auction both at the location and through a web based interface.
He's also done charitable auctions. I had referred him to Joff to do this one. But, they decided to go with a famous sports announcer to emcee the Celebrity auction this year.
Stephen came up with the idea of doing a live celebrity auction through their webcast tools, where people could bid over the web and at the charitable event. He was thinking about people bidding on items. I said, why not just get celebrities to agree to do it and just do it over the interweb. Forget this real event thing. Just get Paris Hilton to agree to auction off a date for charity. There's no event cost in this way. Then, let anyone in the world bid on it in real time. Line up 10 guys and 10 girls that are on that level. We could even require that people register (through WhizSpark of course) to get access to the auction webcast. And pay blogs like Pink is the new blog to promote it, and track where all of the registrations come from.
Anyways, unfortunately, I won't be able to drag my male friends to this one this year to watch them bid on unattainable women who agree to auction themselves off to rich guys... err guys that save up for the chance. I'll be snowboarding that weekend.
Marketers can conduct self-serve polling campaigns by designing a poll, picking a demographic, and having it syndicated to relevant publishers’ sites, who get a kick-back for listing the poll by CPM varying by placement on the page. It’s like poll-based AdSense. Publishers can set a minimum CPM for the types of polls they’re willing to show in that poll zone.
Innaresting. A content-specific ad network. Is this a first?