Helmsley Media

How many of you know who Gary Vaynerchuk is? If you’re following the development of online media and social media then there is probably a much better chance that you do, but most people don’t. Regardless, he is still doing very well. I follow Gary on Twitter, I read his blog, I watch his video entries on his blog and I watch his talks online from the different conferences he speaks at. I’m not alone either, tons of online entrepreneurs are following Gary.

I recently watched this video on Gary’s blog where he talks about his Z list celebrity status. The concept that he’s talking about here is that within long tail markets that are now available online there are so many more opportunities for people to make a killing, or “crush it”. With a global audience at your fingertips you can do well in almost any niche. Right now I’m building a car enthusiast blog for a Canadian audience, I certainly couldn’t do this with a magazine, at least not for a minimal budget. I’m also trying to build a website for badminton fanatics, which definitely wouldn’t work in traditional media. There are so many opportunities to make money in the long tail, especially with the media industry heading the way it is right now. Anyway, watch Gary’s video, he does a much more entertaining job of explaining.

TechDirt recently published an article title “YouTube Is Changing How We Think About Video” that talks about how online videos can’t really be directly compared to movies or television programming, they’re something different, something new.

So if internet videos are different from movies and television, and we see different artists within those mediums, could we see different artists starting to take hold of online video? Director J.J. Abrams is enormously successful as a television producer with hits like Felicity, Alias and of course lost, but he has also produced films, and directed the Mission Impossible 3 movie, so cross-over success is common, but certain people really excel in a particular medium.

Online video is growing very quickly, and I think we can expect to see it gain ground on other mediums in terms of profitability. This could be a great time to start establishing oneself as an online video artist, whether that is as a director, producer, or even a performer. So, who will end up being the first Spielberg of online video?

I have read a lot of bloggers talking about how important video is going to be in the future of online media, and I doubt that anyone would disagree, but there has yet to be a very effective way to make money from video online. Even beyond online video, we need to start looking at new methods of distribution and monetization for video based media in general as viewers’ habits are being shaped by digital video recorders that allow them to watch content on-demand, so it isn’t just YouTube and BitTorrent that’s changing the game.

So what’s the trouble with video right now? DVRs are cutting down the value of ad space on television programming. Viewers can now skip the ads altogether and couple that with more people going online, the broadcasters are starting to feel the pressure. For more information on the numbers check out this report from the Association of Canadian Advertisers from October 2007. Broadcasters are no doubt suffering from piracy as well.

While online video sites like YouTube have managed to generate massive traffic, but I have yet to hear anything about substantial ad revenues yet. A huge problem with online video is the culture, or the expectation, of internet users that once you have paid for your internet you expect pretty much everything to be free from that point on. People want BitTorrent, they want YouTube viral videos, they want FREE STUFF. So how do we deal with this issue? Easy, a tax!

I came across a Maclean’s article where the author advocates a tariff or royalty model where the ISPs be taxed for the “free” content that their subscribers are getting access to. Not only do I not agree with the logic of this argument, I do not see it as being workable in the least bit. Internet media is an international medium, how does a Canadian publication get compensated by an American ISP that helps it’s customer get access to the Canadian content for free? No, this will not work.

I really do not know what models will evolve over the course of the next few years, but I am confident that they will. To say that nobody is making money online with media and that they won’t is in my mind a fairly alarmist and uncreative way to think. Now this is of course easy for me to say, I do not work for a newspaper or television broadcaster, I work for a cable company/ISP! Still, I think that the media industry needs to be willing to adapt, if not the establishment will be replaced.

I was thinking about the tech pioneer days of the 1980s when guys like Steve Jobs and Bill Gates were starting their businesses. These guys were extremely successful at a very young age, and few people older than them were catching this wave. I recently read Malcom Gladwell’s book “Outliers” and he actually pointed out that most of these tech guys were born within a year or two of each other:

Steve Jobs – February 24, 1955
Bill Gates – October 28, 1955
Eric Schmidt – April 27, 1955

Why does this matter? Timing. These guys were at just the right age, and had just the right amount of experience in their respective fields to prosper, and being young they were much more open to how things could be, instead of how they were. As a result they hit the jackpot. Remember, luck is when opportunity meets preparation.

So where am I going with all of this? How does this apply to new media? Well if we look at what is happening with media right now, and how new media is encroaching into traditional media’s business, we see some serious disruption. I’m sure that companies like IBM looked down at Apple and even Microsoft at first. Why else would they suggest licensing DOS instead of buying it? Big mistake of course. So the traditional media companies looked down on the new media companies, or even ignored them all together because they viewed them as being more tech than media. But I hardly expect that Viacom is ignoring Google now. Suddenly the media industry is on it’s heels.

This is a particularly interesting time for people involved with media, and I think it’s going to follow a similar path as we saw with tech. The barriers to entry are incredibly low, and in fact in some ways they are lower for the younger generations as they actually have far more experience with new media. I’m doubtful you’re going to see many new companies within new media that have people over 40 years old running them (unless they’re from the tech industry). I’m willing to bet we’re still going to see a few more interesting new media companies sprouting up over the next few years, and the big guys are not going to be the ones launching them, but they may start acquiring them.