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legacy media brands

Yahoo! & AOL get compared to Google, but should probably fear Facebook

by drm on May 3, 2010

Yahoo! chief Carol Bartz made an interesting point about Google in an interview with the BBC today:

“Google is going to have a problem because Google is only known for search,” said Ms Bartz. “It is only half our business; it’s 99.9% of their business. They’ve got to find other things to do.  Google has to grow a company the size of Yahoo every year to be interesting.”

yahoo_logo.jpgPeople are going to focus on the bravado and positioning — after all Bartz needs to clearly define Yahoo’s value proposition in a market where the company is unfavorably compared with Google on an ongoing basis.

Search isn’t an infinitely expanding business opportunity. In fact, several dynamics at work suggest that the growth of search revenue will slow, limiting Google’s overall opportunity for growth. First, penetration of potential advertisers is higher today than it was two years ago for Google. And second, the shift of internet usage into social networks has incrementally changed the search behavior of web users.

Google’s media proposition is built on the back of search. That means that the audience that Google aggregates to the benefit of marketers — a basic definition of ad-supported media — relies to an outsized degree on search traffic.

Yahoo! has a more diverse media proposition. That’s the “half of our business” that Bart is referring to.

In this regard, Yahoo! is more like AOL than Google. Not surprisingly, AOL is facing its own challenges in terms of definition, value and opportunity.

The big issue here is that the largest diversified web media brands aren’t demonstrating the ability to grow revenues and hold on to consumers that suggest the franchises deserve premium growth valuations.

Yahoo! and AOL are predominantly content-driven media platforms that have created applications in order to enhance user engagement. That business model is an interactive evolution of the traditional media business model. new AOL logoIn this regard, the companies are very different, and have very different challenges, from Google.

The primary challenge remains how to effectively keep content and applications fresh while managing a huge consumer audience, and how to make that base of content accessible and valuable to advertisers. The problem solving is discrete, because one approach doesn’t necessarily fit to every different content platform and user experience. (In this respect, the companies suffer in comparison to Google, which is incredibly simple to explain.)  An underlying question is whether focused media brands are more viable than diversified media brands.

When thinking about the strategic challenge of Yahoo! and AOL, I’d suggest that the most salient question is how these two platforms retain consumer interest and loyalty in an environment where Facebook is becoming a de facto operating internet operating system.

One of the Google searches that drives traffic to this site regularly is “Is Facebook the new AOL.”

The query could just as easily be, Is Facebook the new interactive media model? As an interactive media platform, Facebook is organizing and directing shared content, providing content publishing tools, generating scale audience with a high definition of individual interests and producing content within its own operating system seamlessly.

Facebook allows users to dictate what content is important and interesting.  That model is fundamentally different from the Yahoo!/AOL model.

Facebook can be an incredibly valuable tool for anyone trying to generate a business from content, and it could ultimately be a profound disintermediator for Yahoo! and AOL, which today look like legacy media brands on the web.

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Why activating News Corp.’s content teams on social media is Murdoch’s only hope

by drm on December 8, 2009

Rupert Murdoch has been the poster boy for the frustration legacy content creators have with the current way that content moves around on the web. What Murdoch is missing is that the answer lies not in setting up more barriers, but in getting control of his distribution through more aggressive deployment of social media techniques. And that will only happen when his entire content creation teams are mobilized.

Here’s a real-life example of the confusion that is driving Murdoch, and other heads of content companies, batty. On Dec. 6 at 7:49PM, the Wall Street Journal posted a story that used analysis from the advisory firm NYYPEX to estimate enterprise values and revenue for Facebook and LinkedIn.

When I was writing my last post on the lessons Facebook can learn from AOL, I recalled seeing a $700 million revenue figure for Facebook bandied about on the social web yesterday and went to Google to find a citation. Here are the results to the query, “What is Facebook revenue”[Illustration 1].

what is facebook revenue - Google Search 2.jpg

These results didn’t give me recent enough news, so I used Google options to select content that was published in the last 24 hours.[Illustration 2]

what is facebook revenue - Google Search.jpg

I clicked onto the second page and found an information source that I regularly use, Mashable, and clicked through to the article.  [Illustration 3]

Screen shot 2009-12-08 at 12.01.41 PM.jpg

Here was the content I was looking for. And, it has been widely distributed, with more than 700 Tweets recorded by TweetMeMe and 40 instances of Facebook sharing from the article page.

It’s not the originating instance of the story, however. See, Mashable built their article off of an original report in the Wall Street Journal, based on NYYPEX data. Here’s the original article, with a teaser hidden behind the WSJ pay wall. [Illustration 4]

Screen shot 2009-12-08 at 12.01.25 PM.jpg

Curious about how the story has disseminated across the web, I went to Twitter Search and typed in “Facebook revenue.” Here are the results as of 12:15EST on December 8. [Illustration 5]

facebook revenue - Twitter Search.jpg

Of note: the majority of these tweets link to Mashable or TheNextWeb, both of which built their stories completely off the Wall Street Journal story.

In the old days, this would be described as stealing a scoop. But, according to the rules of the web, each of the content sources that cited the Wall Street Journal were within the boundaries of “fair use.” (These uses of the articles read to me like they are right on the edge of violating copyright, but that’s semantics.) In citing the Wall Street Journal articles, however, there is no intent to drive traffic to the Wall Street Journal and the original article. The intent is to keep the traffic on the citing web site, generating economic benefit for the content aggregator, not the content originator.

I see this on some of the articles that I post on my blog. I’ll take a chart from another story that I find particularly illuminating and then try to add my perspective on the data as it relates to my experience and my audience. My hope is that the people looking at the piece will then go on to review the original data. Only a small part of my audience clicks through to the original source of content, however. So, I’ve tried to reduce the frequency that I point to other content, and I’ve tried to increase the frequency that I use Twitter to direct people to original sources of information.

For the editors of the Wall Street Journal, and for Murdoch as well as anyone else carrying a high level of content costs, the frustration is profound. What is the right way to craft and share information without losing your audience to a multitude of third-party aggregators?

What is the economic cost? Let’s conservatively assume that the Mashable and NextWeb stories got around 10,000 views each, costing the Wall Street Journal about 15,000 page views. With a $75 cost per thousand (CPM) for video ads and a $15 CPM on display ads, the WSJ would lose roughly $1500 of video revenue and $300 of display revenue on those pages. That doesn’t seem like a lot, and certainly doesn’t outweigh the benefit the Journal gets from the promotion of its story, right?

Start multiplying that effect by 100 stories a day, every day, and you quickly reach an estimate of about $5 million a month of lost revenue opportunities because of redistribution by third-party aggregators.

Murdoch may be focusing on the issues of Google’s search engine, but a profound economic disruption is found ion the broad redistribution of his content. That’s a problem that has no easy solution.

The logical first step is to take the fight to the streets. Use social media tools to distribute your content more broadly and more aggressively through your own social media brands, as well as the personal brands of your staffers. That’s what Business Week has done so well, and, for the most part, Business Week appears to get more traffic to their “scoops” than most other legacy media brands.

The new skill is going to be about wading into the fray, not keeping the fray away by erecting false barriers.

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