Mark Cuban thinks this is a genius move on Murdoch’s part. The game changer in his opinion is Twitter, Facebook and similar social media sharing tools because they allow a more organic dissemination of news content than search. I agree, that for real time news content receiving something from your friends via Twitter or Facebook is more likely to pull your interest towards reading that content. However, I don’t think Twitter and Facebook are going to be of much value when the site has a paywall. You are less likely to share content that is behind a paywall, and your friends/contacts are less likely to view it once they realize they have to pay for it. Their first instinct is going to be “is this an affiliate link?” and with all the Twitter and Facebook spam that’s getting passed around now I wouldn’t blame them.

More and more I’m starting to think that online media is starting to merge media with direct response marketing concepts. Advertising revenue is hardly enough if you can only generate a CPM of $2-3! There has to be other ways of monetizing, and paid content could be worth looking at. I think paid content is better suited to niche audiences, but it could be done for a larger audience, especially something like the Wall Street Journal which is targeting a more affluent, business oriented audience who need this information quickly. The challenge is protecting that content. What is to stop a blogger or other publication from paraphrasing your content? You can’t copyright news or ideas, just the specific words that you wrote. I know GigaOM for example recently launched GigaOM Pro with an annual price of $79 for access to their content

GigaOM Pro is a revolutionary approach to market research, created to give expert insights and analysis – minus the high price tag.

All too often, insider analyst research and commentary is costly and inaccessible for the innovators who need it most. We’re changing that.

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Google doesn’t have to be everything online. Of course they are the dominant company for the time being, but keep in mind they are barely 11 years old and things change very rapidly online. I often think about the internet marketing community and how they manage to thrive oftentimes paying for all of their traffic, and not depending on search traffic at all. If you know your conversion rates and other metrics, buying visitors is a valid option if your customer acquisition costs are lower than your prices. There are all sorts of ways to build your own lists of prospects, and all sorts of ways to make money of of them. The idea of not depending so heavily on Google is potentially a good move on Murdoch’s part, and an even better move if he can get other major media companies to follow suit. It is also of course a very risky move, but as they say fortune favours the bold.

“The National Post Company has never generated a profit and it continues to suffer significant operating losses,” Canwest, which is in bankruptcy protection, said in a court filing. Canwest plans to seek a judge’s permission to transfer the paper to Canwest Ltd. Partnership, which holds Canwest’s other newspaper businesses and isn’t in bankruptcy.

I know that a lot of people talk about the death of the newspaper industry and how much trouble their in etc etc, but let’s be honest here, the business model is not sustainable anymore. It isn’t necessary for news to be communicated through ink and paper, the news industry isn’t dying, just the newsPAPER industry. To complain about it would be like complaining about the demise of the buggy whip industry when the automobile became widely affordable. The business models aren’t quite so clear yet, but that doesn’t mean that the world is going to fall into never ending anarchy. Companies like Canwest rested on their laurels for a long time, content with their position and their fat profits for years. The current times require innovation and adaptation to survive, so get with the times or die.

It’s tough with news content because it’s incredibly easy to paraphrase news content, so protecting your work is more or less impossible, but that shows them they have to differentiate elsewhere. Yes, you need good reporting and storytelling, but you need to focus on community and building a following more than ever. With tools like Twitter available news travels at the speed of thought now. Someone sees something significant happen and as quickly as they can update their Twitter on their iPhone everyone following them knows what they witnessed. The established media (I won’t call them traditional for the time being) need to tap into the power of the zeitgeist, what’s happening now on the minds of their audience, and they need to harness that information. I think provided editorial, and fact checking layers to that stream of consciousness from the masses is valuable for sure, and there will always be a place for that too, but don’t think you can just talk at your audience anymore.

Google is a fantastic tool for organizing the world’s information, and Twitter is a fantastic tool for extracting what is on the minds of the masses. I could definitely see some synergies there, especially from a news perspective since news is all about relevance and timeliness. Twitter could help Google to speed up the pace at which they gather information from the zeitgeist. Anyway, that’s something another post on another day.

Facebook currently generates advertising not by targeting people searching for a particular keyword, but rather based on their demographics and interests. This is a great tool to target people within the Facebook network. At 300 million strong as of September 2009, Facebook can get you exposure to the demographics you want. There has been questions surrounding the effectiveness of ads on social networks, but I can tell from my experience that I have had more success with Facebook ads than Google. That may have more to do with the niche I was promoting, and my skills in developing ad campaigns on Google, but nevertheless Facebook ads have been effective for me.

So how do I propose Facebook is going to dominate Google? Well the company has started providing search results from outside the network, that isn’t likely to hurt Google anytime soon, but it’s definitely a good move. When you use their search feature now they also provide web results, powered by Bing. That could provide some interesting things in the future, but the real killer application I see coming from Facebook is Facebook Connect, and if/when they all online publishers to paste a Google Adsense like advertisement on their website, integrated with Facebook Connect, and therefore serving ads from the Facebook platform. Suddenly Facebook would have the ability to serve ads to billions upon billions more pages, using their demographic data, and they could also integrate contextual ads as well to target the ads even further. I could target viewers within certain demographics, regions, interests and on pages with certain keywords.

Google has their service Orkut, which is apparently still widely popular in places like India and Brazil, but it’s unlikely to be able to unseat Facebook as the North American champion. Although, some would have said the same about MySpace a couple years ago. Google has their Friend Connect which enables publishers to provide some social networking type tools to their users, but it doesn’t currently have the same punch that Facebook Connect can provide. This type of demographic targeting is the type of thing that the traditional media companies would kill for, but would never have the sense to create services that empower their users, instead they restrict them.

While not necessary for all video online, there is a definite lacking of good live video content. For things like sports, or live events, having streaming video is important to a lot of viewers who won’t really care to watch after they know the outcome of the event. Livestream is an excellent service for hosting, and for mixing live video. Imagine being able to run your own cable tv channel without spending a quarter of a billion dollars! Your video can be made available on their website, or you can make it privately available only on your website where you could hide it behind a pay wall if you decided to do so. This means niche markets that were previously unservable do to their small size, can now be served profitably.

Within the video Leo Laporte talks about his experience in the traditional broadcast media world, working as a tv host for a number of different canceled shows, and channels. The point he makes that is the most important for all of this is the ability to target your audience so precisely with the tools available to us now. Previously you were paying $50CPM when only a small majority of that audience was who you really wanted to target, but now he charges a $70CPM and provides his advertisers with an absolutely laser targeted audience. Just imagine the number of different niche markets this could be applied to. I will admit that yes, creating a show that caters to tech enthusiasts is going to do very well online, but this could be repeated for several under served markets, just don’t expect to get $70CPM!

Twit.tv however does not use Livestream’s service, they use something called BitGravity, which from the looks of it provides a similar service, but does not give as much information on their website regarding how they work exactly. Livestream seems like it is geared towards a broader market with their free service, whereas BitGravity from what I can make of it, seems geared towards the higher end producers.

The next step necessary for online media is to start providing more high quality content. Of course silly YouTube videos are fun, and they get a lot of views, they don’t have the same power over users like high quality content about stuff their interested in does. If you are a badminton fan, like I am, you know that there is very little available for us. No cable channel, limited broadcast coverage (none if you live in the Americas), and not much online either. If someone were to produce half decent quality video content online for badminton fans, they would dominate the market. They would be able to aggregate all of the world’s badminton fans to their website, and not the people who just kinda like it, but the hardcore fans who will buy the stuff you try to sell them. Tools like Livestream has provided will make this so much easier for us content producers to start providing higher quality live and on-demand video.

There are of course some issues I’ve seen with Livestream. The most obvious is the quality of some of the streams. I was excited to see a tennis channel, but was immediately disappointed by both the streaming quality, and the production quality. These are issues that will be sorted out over time as bandwidth improves and as the producers learn how to create better quality productions, however something that really concerns me is the idea of relying so heavily in a start up company. If a company like Amazon, or Akamai was running this service, I wouldn’t be quite as hesitant to sign on, but with a new company like this the concern is that they won’t be around as long as you are, and then what are you going to do when you have built a business that relies on this service.

In spite of the aforementioned concerns, I would bet money on this service, and I probably will. The possibilities that are being presented to us with new services like this are very exciting. The clutter of new media is starting to take us in a direction that seems to be making some sense, and should make traditional media companies more and more nervous. Check out the video below, Leo Laporte is definitely something of a trailblazer in this new media world.

Taking a look at the Facebook home screen (I’ve removed personal information pertaining to my friends) you’ll notice that they actually do nothing that immediately makes them any money here. No advertisements whatsoever. Everything on this page is about making your connections within the site deeper. They want your online social life as it were, to be dominated by your Facebook interactions. The whole page is designed to get you clicking on links pertaining to your friends’ activities, the pictures and videos they post, and their status updates.

Advertising Placements

Further into the site we start seeing ads on the right hand side of the content. The same ad placement applies across most of the site, whether it is on profile pages, or photos/videos that you or your friends have posted on the site. You’ll notice in the image below that some of the ads are not in English, this is because I am currently in Denmark, and as a result I am being targeted as though I were living in Denmark.

Advertising Targeting

Advertising in a newspaper, or on a billboard we can get broad exposure, which is great for branding purposes (I suppose), but it’s not very effective at driving sales immediately. With Facebook and other social networking sites we have the ability to do some very specific targeting that traditional forms of media cannot. Let’s say for example that we ran an ecommerce store selling camping equipment and we wanted to drive more sales to our website. Using Facebook we can target people based on their geographic location, age, gender, and many more characteristics. In the picture below we have made a sample advertisement targeting people living in the United States, over the age of 21, who have listed “camping” as one of their interests. The result of this targeting is a pool of 1,725,280 Facebook users for us to target.

Advertising Pricing

After targeting our prospective customers, and receiving numbers as to how many there are on the network, we can get some approximate price quotes from Facebook. This is automated, and only an approximate. You will never pay more than your max bid, or max daily budget, but if people are clicking on your add more often then your per click cost will go down. You can also target based on number of exposures which is apparently a great way to keep your costs down if you know how to get your click thru rates up.

This model is quite similar to Google’s Adwords advertising service, but instead of targeting based on people’s search terms, you are targeting based on very specific demographics (including interests). In fact if you read up on Google’s development and their history it is strikingly similar to Facebook’s. They took quite some time to build up their Adwords service, and to get to the point where they are now. They are making money through long tail economics. Because it is so simple for them to make money on the narrowest of niche’s at essentially no extra cost, they can become a viable advertising tool for almost any business regardless of scale. What makes Google and Facebook so valuable is that they make other businesses lots of money, even though they don’t directly charge 99.99% of people who use their website and services. Give your users increasingly more reasons to stay on your site, and interact with the different elements within it, and you increase the lifetime value of each visitor/user/customer.

Wordpress MU (Multi User)

If you want to run your own blog network, then Wordpress MU is the tool for you. Allow users to set up and run their own blog, on your network. This is a great way to empower your community, your fans, your customers.

Ever dream of running hundreds of thousands of blogs with a single install of WordPress?

WordPress MU, or multi-user, is designed to do exactly that. It is most famously used for WordPress.com where it serves tens of millions of hits on millions of blogs each day.

Buddy Press

Turn your blog, or blog network, into a social network. Buddy Press is an excellent way to make your site more “sticky” by giving your users more reasons to stick around and interact with other users. Anyone who’s read the tipping point knows that “stickyness” is one of the necessary characteristics for something to go viral.

BuddyPress is a suite of WordPress plugins and themes, each adding a distinct new feature. BuddyPress contains all the features you’d expect from WordPress but aims to let members socially interact.

bbPress

The most popular forum/bulletin board software that I know of is VBulletin. VBulletin requires you to purchase a license, whereas bbPress is free and open source. It’s hardly revolutionary in it’s functionality, but a good forum software supported by the Wordpress development community is very reassuring.

bbPress is forum software with a twist from the creators of WordPress.

Have you ever been frustrated with forum or bulletin board software that was slow, bloated and always got your server hacked?

bbPress is focused on web standards, ease of use, ease of integration, and speed. We’re keeping things as small and light as possible while still allowing for great add on features through our extensive plugin system.

The beauty of these solutions is that they are easily extendable, and with the Wordpress development community you know that over time their will be a huge number of plugins to make that easier. Plus you can expect support for years to come as Wordpress is not going anywhere anytime soon.

Previously you would have had to build your websites, and online communities from scratch, but now with all of the open source tools you can get up and going for nothing. Customizing Wordpress, and these Wordpress based solutions is a breeze compared to developing from scratch, even really big players are using these tools now. Guy Kawasaki famously built his website Truemors on a customized Wordpress installation, imagine the possibilities with these new tools.

In order to build a real business online you need to find more ways to build you user base, subscribers, viewers, whatever you want to call them you need as many of them as possible. To do this you need to give them a reason to stick around, you need to provide them with value, and you need to give them a way to connect with you. These tools are all excellent ways of doing this. The media industry and technology industries have converged a lot in the last few years, and with a culture of innovation the technology industry are more prepared to adapt than the media industry.

The inevitable cannot be stopped, and by fighting the changes that are happening within the industry all they are doing is falling further behind the new mavericks within this rapidly evolving industry. Previously the way to make money in media was appealing to the lowest common denominator, selling films to the largest possible audience. This still works, but it’s not where the growth is. The advantage with the internet, and new media, is the ability to focus in on the tiniest of niche markets. Either you can focus on a narrow interest with a global market place, or a broader interest in a local market place. The ability to segment your audience with the tools available today is fantastic. On Facebook I can advertise to women between the ages of 30-45 who are interested in yoga and live in my hometown, for mere cents per click. This ability to geo target very narrow markets allows Facebook to provide a much more qualified lead to their advertisers. What the new media companies like Facebook have begun to realize, is that content is no longer king, it’s the medium that matters. Convenience is king, and now how we experience our media is the ultimate deciding factor for users.

I do not have a television, and yet I watch a lot of television programming. I choose the programs that I want to watch, I download them, and I watch them at my leisure. I do not hold myself hostage to television schedules, except for the fact that my favourite show is available after Sundays when it airs. I cannot watch this show on the TV channel’s website, and if I wanted to buy it from iTunes I can only get last season’s episodes. Some of the programs I watch are available on Hulu, but I’m from Canada, and I am currently working in Denmark, so Hulu is not available for me. Here is what I propose for the TV networks:

Turn your websites into social networking websites, or do something where you are collecting user registration information in return for free access to your programs. Finally you will have absolutely detailed demographics of your viewers, who likes what types of programs, and so much more about your viewers. Don’t just broadcast your shows with ads, but rather captivate your audience with a more interactive experience, and by interactive I do not mean they pick the ending, I mean offer more than just a program for them to watch. Offer live chat for people to comment on the shows if they like, or feedback forums where they can comment about what already happened. Your websites should be like the numerous fan sites that are created already. Engage with your viewers like never before.

Of course there are people who will prefer to sit on the couch, and not at a desk, to watch their programs. For these people we’ll have some device to be able to interface the same way they always have, or at least similarly. The issue is media companies need to open up the options and make it convenient for users to consume their product, more convenient than their competitors are, instead of limiting their options. Once you start limiting your users (notice how I say user, not viewer), then they start turning to grey market, or black market offerings like The Pirate Bay (which was recently shut down after losing a legal battle with the MPAA) or other bit torrent websites. They need to start learning how to profit from adding these new options, because whether they are profiting or not, people will start using these options elsewhere regardless. At least if you are offering it in house you can track it and benefit from it.

Part of the problem is that with results based advertising options like affiliate advertising (CPA), and pay per click advertising (PPC), traditional media companies are afraid to be held to the same level of accountability. They are afraid that if they start integrating more mixed media type offerings that their advertisers will start seeing that they have been overcharged for a very long time. The same goes for the motion picture industry, and recording industry, they are worried that people will suddenly begin to undervalue their product if they don’t hold the reigns so tightly. The product should not be the focal point anymore, but rather the relationship with your user, your consumer, that is where the money will be made in the future.

In some ways I get the feeling that the traditional media industry fails to appreciate the long term value of a customer relationship. How did George Lucas to Lucas Arts into the success that it is today? Was it by aggressive litigation against his fans for producing tributes? No, he embraced the relationship with his fans, and gave them more of what the wanted. Sure his movies made a tremendous amount of money, but he extended it so much further than that. Fans became obsessed with the movie, so they bought the toys, the video games, the posters, and of course as they became available they bought the DVDs. If you make it convenient for people to become your fan, to consume your media and to buy your related products, then you are going to start profiting.

I will admit that I have not fully wrapped my head around how movie studios can benefit from their movies being available online for free without totally pimping them out with product placements, or ruining the story telling, but I do believe it could be achieved for musicians. For music it’s a lot easier to convince someone to pay because they are supporting an artist, or at least they think they are in spite of the fact that record companies make so much more. With musicians you can build a community of fans around them very easily, and with a sense of community fans are much more likely to contribute financially. They can buy t-shirts, concert tickets, and even though they could probably find them elsewhere for free, many will still pay for music if it’s available for immediate download from the website. Here in Copenhagen there are a couple of guys who play music the main square almost everyday, and they are amazing. Every time I walk past them I have to stop for at least 2-3 songs, if not more, and I always drop in some money for them. I’m not alone either, these guys do well for buskers. I’m not saying that all musicians should be relegated to busking, but it’s a similar concept. You’re in a square, and you are surrounded by other people who are obviously appreciating these guys’ talents a lot. One person drops in a bit of money, then another, and another. There is a sense of connection there, a community in a way. Now if we apply that type of thing to a website, where you can have fans from around the world simultaneously enjoying your music, the effect can be magnified exponentially. Someone downloads a song, or an album, and it shows up on a newsfeed like feature, just like Facebook. A counter shows people buying the artist’s music in real time while they are performing a live song, streaming through UStream.tv or something similar. Online busking I suppose. Allow fans to connect with you, and you will prosper. It’s about the relationship. If you want to be aloof, fine wear sunglasses on UStream.

The world isn’t ending for media, but certainly it’s evolving much more rapidly than some would like. The one’s who hold to the comfortable, the staid, will be surpassed by the new, and the old who accept the inevitable. Change is here in the media industry, and honestly I don’t know if you can exactly call it the media industry anymore since it’s bringing in so many aspects of technology and communications. Either way, adapt or die.

Gary Vaynerchuk @ Big Omaha 2009 from Big Omaha on Vimeo.

Today there are fantastic opportunities for businesses willing to get their businesses online, and to push themselves to a new limit.  That’s what we’re doing here at Helmsley Media, no more old school business rules.

The part that I thought summed it all up perfectly was this:

Many publishers now struggling with steep newsstand declines have no one to blame but themselves, said Samir Husni, a professor at the University of Mississippi and a close observer of magazine circulation. Mr. Husni says the biggest culprits are cut-rate subscriptions that discourage casual readers from picking up a copy on the newsstand. As counterexamples, he cited the Economist, People magazine and The Week, all of which charge a premium for subscriptions and have enjoyed circulation growth.

“Magazines that are giving their subscriptions away are committing mass suicide,” Mr. Husni said.

The article also suggests that magazine publishers really need to re-evaluate their entire business model. I’m not sure that print is really the way to go. I do see a lot of new local, daily newspapers popping up, but I can’t imagine this is a time to start a magazine. I listened to a podcast interview recently (sorry I can’t find it again!) with magazine publisher Felix Dennis (publishes Maxim, ever heard of it?) talking about how print is dead, and that the future is online. I couldn’t agree more. While there are certain areas that it will always manage to find it’s place, as a generalization I would agree with that statement.

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.