Open letter to the media companies of the world, however big or small.
To know if you rock(or if you suck) in the new media world, here are five things you should be thinking about.
What’s the new definition of ‘media life-cycle'?
In an earlier oligarchy, a movie went from being alive in theaters(@ 10 bucks + popcorn), to home video(@ $5 + groceries), to TV networks (@ $3.99 PPV minus Ads), to dying a death at your local Super Saver (@ 2 bucks + popcorn).
Obviously, the movie didn't become any less entertaining as it went along...it's just that the demand for a movie diminished as it moved through the cycle.(and let's keep in mind the demand from hyped premiere, opening nights, home video launches, etc.).
Now think about this for a second: on the Internet, a song on iTunes sells for $0.99 on day 1, and for $0.99 on day 730.
Two years into the supposed life-cycle of a song, and instead of slashing the price by 80%(and selling it for $0.20), Apple can keep the price exactly as it was the day the song was released.
What does that tell you?
Demand, in the new media world, is not what you see on Day 1 or Day 730.
You simply can't look at it from a temporal context any more.
You need to start thinking about life-cycle in a spatial context.
Because on the Internet, demand has nothing to do with time. It has everything to do with space(ahem..venue/location).
What are the different stages in this new lifespan progression of media, who’re the entities involved, and how do they all play together?
Let's say you've figured out the spaces, places, and faces that help you formulate your new media life-cycle....
Your next challenge is to figure out how you can help them interact with each other. How do you tie in your on-site video distribution platform with your iPhone application? How do you leverage the two to create a winning Facebook app. that finally makes sense for Joe Blow to use?
How do you move from "We hope you will enjoy the show", to "We know you will find enjoyable shows"?
The Internet is not about making an impact. It's about making content accessible. So you need to figure out your new value chain, how your content traverses through it, how value is created, and how big a role you can play in extracting+distributing value.
When do we make money?
Okay, first off, you need to forget about 'minimum guarantees'. No such thing on the web. No one can guarantee you zip. Nada. Zilch.
It makes sense for a content CREATOR to ask for a production fee + margin to fund his creations, but no content distributor/provider should expect to receive a minimum guarantee for distribution on the Internet.
Case in point: go to YouTube. They guarantee you a total audience of about 50 million users, but what minimum guarantee do you have for revenues from that audience? ZERO.
So how long before you make a lot of money?
No one has a good answer to this. You definitely will not gross millions in your first week.
The Internet has often been viewed as a place to make a quick buck, and to an extent, it’s lived up to its potential.
However, if you’re thinking profitability and ROI, then remember that the R is always proportional to the I. The ‘I’ is not necessarily money, because it's relatively cheap to publish on the Internet. You could probably spend a truck load of cash in advertising and marketing, but can you do that on a sustained basis?
I can even build you a case study of a certain company that spent more money than I've ever seen spent on marketing an online venture. Two years later, it's still a pathetic venture making little money.
Your investment is the time you put in to build up your business organically, drive traffic, scale, add services, build audiences, and achieve critical mass.
So understand your business, know your audience, grow efficiently, and distribute value.
Do you invest in content,or technology? Or services?
We recommend that you stick with content. Bluntly put, that’s what you do best, and at the rate the Internet is progressing, your investments on building technology will only bring you diminishing value.
Even we(and we’re technology people) have a tough time keeping up with technology. Not because we don’t understand parts of it, but because things are hyped up so much, that it’s a serious chore to chip away at the externalities and find the diamonds in the rough. A good part of my day goes away everyday in doing just that, and I’m not a fun person to be around afterward.
And, go for services. They're easy, they help you scale, they're cost-efficient, and they evolve(else they die).
Find services that help you mould business models and show you how to respond to your audiences very quickly.
Learn how to identify technology that drives. And equally important, learn how to identify technology that slows you down.
No, I’m not going to name names, but it’s no point anyway. Remember, it’s a big playing field and it’s up to you to choose how you want to play.//
How do you re-calibrate?
Answering the above should be a good start.
I didn’t cover business models here, and that’s intentionally so. Too much has been made out of successful business strategies in the Internet video world, and I really feel like it’s all just a little bit of history repeating.
Yes, the Internet is laden with opportunity to be harvested, but it’s equally important to know that this opportunity isn’t about to diminish. There can never be enough audiences to satiate.
So, to re-calibrate, start with a careful(and honest) examination of sustenance, objectivity, capability, competence, and longevity.