The Ad Problem: Why Smart Media Companies Are Fine
May 29th, 2008 | by Brad King |
Image by germanium via Flickr
Newspapers are facing a serious problem. The more publishers are looking at their bottom lines the more they are seeing this: shrinking black on the print side and a large red on the web side.
But that’s not always going to be the case, I hear people say. At some point, this whole online thing is going to take off — reporters are magically going to get the Internet, publishers will figure out the sales side and readers will come flocking to local news sites. All will be good in the world.
That’s what I hear. But it smacks of wishful thinking.
The move towards digital content is going to be bloody. Many papers aren’t going to make it. Reporters are going to lose their jobs. And new businesses will spring up. The folks at American Journalism Review agree with me — at least about the bloody part.
They predict a 15-year cycle of declining revenues and sporadic jumps, while modern media companies continue to reap the benefits of being digital.
Who’s to blame? The newspapers:
As early as the mid-’90s, Groves published research warning the newspaper industry of the growing challenge to its monopoly on classified advertising. “Newspapers had time to take control of the digital world and be the owner of that franchise,” he says, “and we didn’t do it.”
Now, he thinks, “that opportunity has come and gone.”
And the AJR isn’t the only organization that believes that. The folks at PaidContent.org have a report discussing the decline of local advertising across all mediums, which will impact newspapers the most.
I’ve referred to newspapers decision to turn a blind eye towards media technology the most shameful act in the modern era.
Instead of embracing readers and using this technology, the industry maintained its “holier-than-thou” attitude about information and news gathering. Now, as blogs and social media spring up — run by modern media companies like Google and Microsoft — the news industry is scrambling to catch up as Craigslist,
While the newspaper industry faces dire financial predictions, companies such as Google continue to see growth in advertising revenue as the economy slows. Ebay, Amazon, the Yellow Pages and a host of other companies reach customers and generate revenues in a digitalworld.
Still, we continue to see warnings that Web 2.0 companies — those who are pioneering social media — will face a similar shakeout. The answer to that: of course there will be. That’s what happens in a high-risk, high-reward industry. Companies strike out with new ideas, fight for users and see who wins.
That’s the history of technology. Apple, Microsoft and IBM. Widows, MacOS and Linux. VHS and Betamax. Technology companies are always innovating. They have to. They know it. The lessons learned before are pitched aside as these companies look for the next, new thing.
In other words, newspapers don’t face dire straits because you can’t make money online. Newspapers face dire straits because they don’t know how to iterate — and innovate — in a digital world. There is money to be made online, but it’s not in banner advertising and search. At least, it’s not ONLY in banner advertising and search.
There are too many ways to monetize what newspapers do for them to struggle.
The smart companies will get that. They will hire technologists who understand how technology works and they will listen. They will hire programmers and designers and network engineers who can wrestle their data into the new world.
They will fire employees who cling to the old ways. They will retain those who have a passion for the news — and not a passion of newspapers. Those are two different things. We shouldn’t be sorry for losing people who cling to a medium. We should mourn those who are let go because of a steadfast belief that what is important about what we do is the PAPER and not the information.
Modern media companies will be fine. The news will be fine. New models will emerge around this. Talented journalists who love the news will find those places.
But traditional institutions that cling to a medium will be in trouble.
3 Responses to “The Ad Problem: Why Smart Media Companies Are Fine”
By kgreenbaum on May 30, 2008 | Reply
Good post. Thanks. It captures the point I was trying to make with my post: There’s worries about immediate revenue in social media. I fear those worries would paralyze the industry in much the way we were paralyzed by competing classified products. Yours was, of course, more explicit than mine and better said.
By Brad King on May 30, 2008 | Reply
Hey:
I think you made your point quite well. The plight of the writer is to believe someone said it better than you. I, however, will take the compliment while disagreeing with you :)
The culture of innovation is alive with technology companies — and not at newspapers. That is a much larger threat than anything else perceived or otherwise.
I really enjoy reading your stuff. I hope you’ll come back and maybe join our little social network (see up there at the top).
Discussions are great.