Leveraging Consumer Magazine Brands in the Digital Age

John Battelle Founder & Chairman Federated Media Publishing

John Battelle Federated Media Publishing MPA December 2005 SEARCH, WEB 2.0, BLOGS, AND ALL THAT: THE ROLE OF MAGAZINES IN AN INTENT-DRIVEN WORLD

WHO IS THIS GUY?

Agenda….
What is a publication, really?
Where are we now, how did we get here?
Web 1.0: What we did right, what we did wrong
Web 2.0: The opportunity, the threat
The Magazine Assets: Well Positioned to Thrive
The Role of Search
Why The Magazine is the model

What Defines a Publication?
A conversation between three parties: Author, Audience, and Advertiser; facilitated by a fourth: the Publisher
Each has different roles, but the best pubs foster and nurture a conversation on a subject for which all parties share a passion
The best have marketers as participants, they are readers and advertisers, endemic
The best are driven by great voices and point of view, and are leaders/arbiters in their field
Author Marketer Audience Publisher

What Does NOT Define a Publication?
The medium in which it is delivered
Magazines should not be equated with print
Magazines are bigger than one medium
Until the Web 2.0, we just didn’t have a better medium
Now we do….

What’s Different Now?
Web 1.0 (1994-2001)
Was about “getting on the web”
A lot of shovelware - literally and figuratively
No real business model traction, advertising failed to reach critical mass
Web 2.0 (2002 on….)
Building web native magazines
Focusing on the true mission of your publication
Real business models and vastly different economic realities….

A Brief Web 2.0 Primer
Version 1.0 of the Internet: Long on vision, short on execution, shorter on profits; market & tech immature
Version 2.0: Long on execution, long on profits, even longer on vision; platform is maturing

THE RISE OF WEB 2.0
Mid-Late 90s - we thought it was a battle for the window into computing : Netscape v. MSFT.
Instead, it became about the content and services , not the window
Web itself became a robust development platform
Sites also became platforms: Amazon, Google, Yahoo!, eBay, etc
And entrepreneurs began to build on the platforms, creating new approaches to established markets - like media….

Web 2.0 Principles: THE WEB IS A PLATFORM
Building on the lessons of the 1990s
Open source, cheap processing/storage/bandwidth opens new economic realities
Ten years in: Net hit critical mass of usage
Platform sites embrace the open: data, access, portability
Best sites are search driven
Join the “Point to Economy”

Web 2.0 Principles: THE ARCHITECTURE OF PARTICIPATION
Leverage user-generated content & the force of many to create advantage and build network effects
The remix culture: the best sites are mixes of other sites’ APIs, data feeds: Prosumer rising
Linux

Web 2.0 Principles: INNOVATION IN ASSEMBLY
Aggregate, manage, analyze complexity
The essence of the “content business”
Dell, Spikesource, SimplestShop.com, Topix, MyYahoo, Technorati/Feedster

Web 2.0 Principles: LIGHTWEIGHT BUSINESS MODELS
The Web as Platform plus AoP = new generation of “lightweight” competitors
Google/Yahoo News & Craigslist/Blogs v. Newspapers
Tivo/NetFlix/VideoIP v. Comcast/cable
Federated Media v. Primedia

Web 2.0 Principles: THE POWER OF THE TAIL
The force of many: 1 million sites with 1000 readers is far larger than 100 sites with a million readers
Adsense/AdCenter/YPN
100,000 bands selling 5000 albums, not 50 bands selling 1 million albums
Blogging is this dis/re aggregation phenom for web publishing

Web 2.0 Principles: SEARCH RULES
The driver of Web 2.0 businesses
Search heralds a new “Web OS”
Our culture’s point of inquiry, the spade with which we turn the web’s soil, the artifact of a new culture
A new reality for all forms of traditional business
Barely begun to realize its impact…

HERE’S WHY SEARCH RULES Piper Jaffray

THE PAID SEARCH MARKET
Piper: 5x growth in 5 years
59% of money is coming from other media budgets
On average 12-15% of all clicks are paid clicks
Average CPC on Google: 54 cents, avg rev/query = 9 cents
Latency: 25% of those who click on paid CE search, buy, but 92% of them buy offline

Gap Between Net Ad Spend and Usage Morgan Stanley

NEW MEDIA WAS NOT THAT NEW
MSM model: Publisher hires content creators, attaches advertising to content, subscription follows
(First) new media model: Publisher hires content creators, attaches advertising to content, hopes subscription follows
MSM model: Create a “thing” (magazine, newspaper, TV show), fight tooth and nail to build and defend an audience. Spend millions.
(First) new media model:Create a “thing” (“website”), fight tooth and nail to build and defend an audience. Spend millions.
Is this “site-based”/packaged goods model really new?
Search gave us the answer…

MARKETING IN POST SEARCH WORLD: INTENT BEFORE CONTENT
Before Search: Content as proxy for audience
After Search: Audience declares intent, then content finds audience
In the Web 2.0 publishing world, intent drives content…
…and content disaggregates
As intent became a proxy for audience, paid search took off…

DISRUPTING FORCES
… and Publishers freaked out
Ad models shifting to intent
Marketing becomes a sales channel
Google et al seem to be dis-intermediating traditional media models
Search, RSS, and Blogging are redefining content models
The rise of the “point to” economy
If you are not in the conversation, you’re not in the Index…
Is this going too far? What about branding?
“ Corporate marketing represents the last bastion of unaccountable spending in corporate America.” - Google CEO Eric Schmidt

Save our old model!
Search undermines content-attached models
Ad can be sold at point of intent, my content is threatened
Regard search companies with suspicion
The Internet is stealing my content
Forbid deep linking, raise the registration drawbridge…
Keep your content in safe containers…
And if that doesn’t work…sue your customers!
REACTION OF MAINSTREAM MEDIA BUSINESS
“ Google is a brand killer…if you must sleep with the enemy, make sure you use protection and make sure you get paid".
- Publisher of Economist.com.

Authoritative content, deep archives
Talented authors and editors
Community driven conversations in focused areas
Strong advertiser relationships
All perfect for search!
So join the point to economy and trust your content will drive value to your door online…
And branding it NOT dead, it’s just forced to justify its target more precisely…
… which is precisely what great online publications can do
BUT MAGAZINES ARE PERFECT FOR A SEARCH DRIVEN WORLD!

Print ain’t dead, but online is forcing justification of its economic model
For some print based models, it’s all over save the yelling
Many Local papers, much of the B2B market
For others, it means shifting the print product
National papers, service based magazines, context specific pubs
For still others, print remains the best medium
Fashion, shelter, travel
Here’s a medium term problem to solve: The insanely wasteful magazine manufacturing and distribution infrastructure…
Long term: It may not matter. When paper-quality readers hit the sub $100 price point….
It’s all magazines, baby. But now with online goodness!
( hey …is he saying print is dead?)

CONTENT DRIVEN, NOT DISTRIBUTION DRIVEN
We must evolve old models while embracing new realities
Media pre web:
Huge capital and customer acquisition/retention costs
Huge advertising revenues
Moderate content creation costs
Distribution lock out driven
Huge profits
Media post web:
Limited capital and customer acquisition/retention costs
Moderate advertising revenues
Moderate content creation costs
No distribution lock out: Content driven
Healthy but distributed profits…

WEB 2.0 PUBLISHING MODELS (it really is different online…)
The Disaggregation of Publisher role
Ad Networks erode sales relationships
Professional Weblogs advance author role
A web blog is a Web 2 publication: Lightweight model, innovates in assembly, lives down tail
Good blogger is a good editor/filter, conversational, leader in community, influencer
Hybrid Magazines rethink traditional approaches
How might you start a national magazine when you don’t have $5-10 million in risk capital?
When your audience is mostly online?
In Web 1.0, the publisher played the dominant role….

…And the Author Was Held Apart
Publisher retains authors to gather Audience (content-driven)
Marketer goes through Publisher to reach Audience
Ideally, Audience then begins conversation with Marketer
But, the conversation is limited and the author is marginalized
And leads to publishers being driven more by the marketer, and less by the audience
Publisher Marketer Audience Authors

The Web 2.0 Publishing Model
…But in Web 2.0, the publisher plays a facilitator’s role
And the author is a more equal conversant
(and often, the author and the audience are one and the same….)
Author Marketer Audience Publisher

Example: Make
Idea: Popular Mechanics for the Digital Life
Problem: Publisher was not a magazine house
Solution: Leverage Book channel/contacts, viral marketing/blogs, “Makers,” Amazon
Results: 70,000 circ. In first year with no DM, at a $50 price point - 7x expectations
Profitable in year one
500K/mo online readers
Extremely efficient cost structure

Example: FM
Blogs are difficult to buy at scale
Bundle an ecology of sites together - 10-20 per category, each site vetted for quality
Aggregate audience in the millions, views in the tens of millions
Focus on appropriate advertising, messaging for each site
Reporting and analysis for both Marketer and Author, meta-site/feed for Audience and BD
Authors federate under FM, yet each owns/operates their site: FM is like label or book imprint
Marketers gain efficient and appropriate access to robust, passionate conversations
The model scales from sector to sector without traditional publisher constraints
Authors Audience Marketer

So What’s Your Advice, BlogMan?
Train your editors/writers/authors to be web native, and hire natives - focus your talent and investment on the web
Online, media is driven more by conversation, less by packages/interruption/show
Content should invite conversation, not demand attention
Employ your customers in creating new products, content
Criticism is OK, in fact, how you respond to it can build your brand
Media is no longer ruled by distributors, it’s ruled by attention. However, there are now distributors of attention, so…
Search rules, but not just paid search: Search is how content - and audience - is found.
Join the point to economy.
Your brand is your editors/authors/audience, not the print product.
Online, media is performance art, not packaged goods

So What’s Your Advice, BlogMan?
A magazine is not a form factor, it is a conversation
Join it via the web!
If you have the means…invest in properties that have critical mass, or build them
Find the best authors/audiences online, and cultivate them…
Magazines are not dead - they’re moving into a great new phase!

THANK YOU! [email_address] John Battelle Federated Media Publishing MPA December 2005 SEARCH, WEB 2.0, BLOGS, AND ALL THAT: THE ROLE OF MAGAZINES IN AN INTENT-DRIVEN WORLD

Leveraging Consumer Magazine Brands in the Digital Age

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