Tag Archives: media

December 17, 2015 · 10:54 am

Charging Facebook

I’m a believer in things repeating themselves in business, even if they take slightly altered forms or use up to date technology.  It’s an offshoot of my mantra about not confusing the business with the tools, I guess.  In any event, I got to thinking about a tidbit I picked up while going through my news feeds the other day.  It turns out according to SimpleReach, a distribution analytics company, referral traffic to the top 30 Facebook publishers  plunged 32 percent from January to October. Among the top 10, the drop was 42.7 percent.  The drop was confirmed by other analytics sources as well.  This, of course, got me thinking about cable operators and television networks.

Facebook logo Español: Logotipo de Facebook Fr...

(Photo credit: Wikipedia)

Like a cable system, a social network is a big, empty pipe.  It creates a method for distribution and little else.  All of the innovation at a social network is focused on improving that distribution and not on the content.  Back when the web started, publishers plugged right into the web and promoted like crazy to get “viewership.”  What Facebook and other social networks (read that as gatekeepers) have done is to take over much of the traffic creation.  This is exactly what happened when the world shifted from over the air broadcasting to cable, but there as a big difference.

In two words: affiliate fees.  This is compensation paid by the operators to the program providers.  It can run from pennies per home to $7+.  That’s per home, per month.  It’s a pretty strong reason why most “TV” content is only available with the blessing of a cable carrier (TV Everywhere).  Why would the publishers (content providers, a.k.a. TV nets) want to disrupt that business model, especially when the can supplement those dollars with ad revenues?

Back to Facebook.  Publishers spent several years building content islands on Facebook, only to have Facebook revamp their algorithm and sent less traffic.  The problem is this:

With social media driving over 30 percent of all traffic to publisher websites and Facebook delivering 75 percent of that social traffic, no publisher, from BuzzFeed to The New York Times Company, can afford to skip using Facebook as a means to promote its content.That gives increasing leverage to Facebook, which is able to greatly influence the prominence and visibility of publishers’ articles in the News Feed of its users.

So here is a prediction, one that might not happen for a couple of years, but one that I think, based on the history of cable TV, will occur eventually.  Content providers are going to charge Facebook.  I’m not talking about sharing ad revenues; I mean the digital equivalent of affiliate fees.  Someone will bite the bullet – a big guy like the Times or HuffPo or maybe BuzzFeed – and tell Facebook to pay up.  Maybe they will take technical measures to prevent their content from being shared there but they won’t publish it themselves.  One publisher gone is not a big deal.  Many publishers gone means an empty pipe, and that means fewer users and fewer ads sold for Facebook.

What do you think?

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December 1, 2015 · 12:22 pm

Unlimited Thinking

I’m not a fan of limited thinking. I much prefer the intellectual exercise of accepting the challenge of a difficult supposition and then figuring out a way to expand the set of answers. I often think of President Kennedy‘s challenge to put a man on the moon in 10 years when manned spaceflight had not really happened yet. Had everyone just said “no way” rather than “ok, so IF we were going to do that, how would we?”, we’d never have made it (nor had great films like Apollo 13!).

The Thinking Man sculpture at Musée Rodin in Paris

(Photo credit: Wikipedia)

I thought of that this morning when I read the quote below. It’s from a piece about the need for advertising to support content and a rant on how ad blockers are killing off content:

And so it really is a simple math problem. If there isn’t any money to pay the people who create content or buy and maintain the servers that host that content, there will not be any content. No one’s really coming at the story from that angle. And those who have lived almost their entire lives consuming content for free might need a good slap upside the head. In fact, everyone could use that slap. Because there are only two choices: ad-supported content or subscription-based content. And we all know most will take free if they can get it.

So there is our difficult challenge.  I disagree that there are only two choices, however.  I’ve also come to realize that it’s really only a problem for a select group of content providers.  First, the “two choice” thinking.  What about a freemium model?  Some very large publishers have successfully adopted it, and if the quality of what you produce is there, people will want more and pay.  What about a donation model?  PBS has used it successfully for years.  So does Wikipedia.  I know of several digital entities – podcasts and otherwise – that use Patreon to fund their content production.  It’s possible to use the appeal of great content to support an affiliate sales model too – buying products from links on a review site, for example.  Frankly, it’s not hard to argue that the ad-supported model is one of the worst options. Besides requiring a large audience to make it work, I think it encourages publishers to grab and abuse consumer data or to inflate page counts (and ad counts) with endless slide shows, etc.  Limited thinking means limited choices.

The realization is this.  Most “publishers” link to a limited set of high-quality content producers.  How many stories that you read, even on big sites, link back to the original work done in the NY Times or Wall St. Journal?  It might be a fun exercise to see how many of the people complaining about no money to support content creation are actually creating content or adding value to someone else’s content. Maybe another business model is a little pass-through of payments to the real content creators from those who are using that work to generate revenue?  There was such thinking back in the early days of the web.  What happened?

As I said upfront, I don’t like limited thinking.  Hopefully today you understand why that is.  Was I clear?

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October 21, 2015 · 9:02 am

Never Never Land

I paid my cable TV bill the other day.  It’s a lot of money each month but the fact that the amount also covers my high-speed internet access and office phone mitigates the expenditure, I guess.  I know my kids don’t see it the same way, and from a lot of the numbers that researchers are reporting, neither do their peers. 

Consumers are shutting off their cable and satellite TV connections in droves.  Nearly half a million subscribers did so in the second quarter, according to the folks at  Leichtman Research Group Inc.  The cable guys will tell you that it’s really a drop in the bucket and they’re right.  49 million folks still have those cable connections and another 34 million have satellite dishes.  So what’s the big to-do?  Those drops have the potential to run into a flood if you look inside the numbers and at how people are watching as well.

Take a look at some information put forward by the Forrester folks in their recent study of cord-nevers.  As explained by this piece in Digital Trends:

Based on a recent survey of 32,000 adults conducted by data analysis firm Forrester Research, roughly 18 percent of Americans have never actually subscribed to premium TV service through a cable or satellite company. While the majority of those respondents were at least age 32 and over, about seven percent of ‘cord-never’ Americans are between the ages of 18 and 31; a prime marketing demographic for advertisers.

Furthermore, the growth rate of cord-nevers suggests that roughly 50 percent of Americans under the age of 32 will have never subscribed to a premium TV service by the time we reach 2025. That’s a massive segment of the population that will be turning to digital delivery services rather than calling up their local cable company for a stack of set-top boxes and a hefty monthly bill.

I’ve stated before that I believe the TV distributors we have will trade the program pipes they have today for internet pipes tomorrow.  Rather than spending money paying fees to the program distributors, they’d be far better served spending the money to upgrade their pipes and building better connections to move video to their subscribers.  While today’s college kids (and tomorrow’s consumers) don’t know a world without high-speed internet access, as cord-nevers they won’t miss the cable subscription.  They might also just be the customers today’s marketers think have gone missing unless they rethink their use of traditional TV.

Cable and satellite subscriptions aren’t going away any time soon, but the one size fits all bundle of program services is.  It will have to in order to retain the consumers who now program their own viewing.  With a minority of viewing to entertainment programs happening live, the operative word will be choice and control.  Consumers expect that along with their monthly bill, and it will be interesting to see if the cable and satellite guys are listening.

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