Worth reading the following from a new blog from Jorge Espinel, former M&A guy at AOL, currently at Velocity Interactive Group, Jon Miller and Ross Levinsohn’s fund:
So, if content is still king, are the traditional owners of content likely to be the main beneficiaries of the digital revolution? The answer is that they are certainly well positioned to be. However, since the media world is rapidly moving away from royal kingdoms and becoming much more of a democracy, it is important that the leading producers of content embrace change and adjust their businesses to this new reality.
Content production to-date has been built around mass-audiences and mass-marketing. As audiences fragment and brands seek greater reach efficiency, content producers will need to adjust their businesses.
(…)
Here is a list of some of capabilities that will be increasingly critical for content producers to have in a post-digital revolution environment:
- Producing content for micro-audiences
- Building micro-brands
- Developing low-cost content production models
- Leveraging Web to develop new “green-light” processes
- Building/Finding audiences on the Web through SEO, SEM, and social media
- Packaging and programming in new distribution outlests (e.g., Video Aggregators, Content Networks, Social Networks, etc.)
- Expand ancillary business infrastructure to take advantage of hits
- Develop innovative and much more tailored advertising solutions for brand/premium advertisers
Obviously new media content producers like ourselves already do a lot of these things, but I’m not sure if traditional media firms will, too. Once you go big, you really don’t want to scale back. Small is beautiful, no doubt, but Hollywood is all about big, very big.
Frankly, while total web spending will surpass television ad spending for sure (we pegged this to happen in 2021, others say it will be sooner), I don’t see online video advertising revenue surpassing TV advertising revenue any time soon, maybe not ever. In the US alone, TV ad revenues are $60-75B). I know what you’re thinking: you’d think an online video entrepreneur like myself to say otherwise, but the purpose of this blog isn’t for me to lie to you, now is it?
I just don’t see that happening. What the Web will do, however, is bring more efficiency to an otherwise fat, bloated and ineffective advertising world and over time shrink advertising. That’s a scary thought - to traditional media, to new companies like ourselves (dare we use the disruptor label), it’s a great thing because for us, it’s all incremental in this brave new world.
But for traditional media companies, they understand what’s at stake: the sooner the build up programming for the Web, the faster audiences will migrate there (what they might not realize, recognize or want to admit, mind you, is that audiences are moving there regardless), which in turn will get marketing budgets online, too. However, because of the greater efficiency of the Web, technically, there is a chance that total marketing dollars spent on advertising becomes leaner, too.
That, my friends, is what is keeping traditional media companies (and media buyers) away, far away. They have a disincentive to adopt and embrace the Web. It’s all about economic determinism, people.
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August 16th, 2008 at 10:44 am
[…] want to risk a single thing when it comes to online video, and the underlying reason is simple: it threatens their traditional, offline business. This works fine by me, while many of these companies sit on the sidelines, it allows […]