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Jason Abbruzzese: Don’t panic, yet

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Jason Abbruzzese is the business section editor at Mashable. He also covers the media and telecom industries with a particular focus on how the internet is changing these markets and impacting consumers. Prior to working at Mashable, he served as markets reporter and web producer at the Financial Times. Abbruzzese holds a bachelor's in journalism from Boston University and a master's in international affairs from Australian National University.

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Jason Abbruzzese: Don’t panic, yet

  1. 1. Don’t panic… yet A slightly depressing but cautiously optimistic exploration of whether all those eyeballs will ever result in $$$
  2. 2. Lede/hypothesis - It is going to become basically impossible to be a major media company based off just a website. As such, new media companies will need to hope and pray for two main things in a distributed market: -- Enough consumer demand/interest for this content that platforms see value in paying for it -- A healthy market of competition between platforms for high- quality content
  3. 3. The power struggle What leverage do media companies have over the platforms they are on? Are media companies making a Faustian bargain that will come back to bite them?
  4. 4. Not great
  5. 5. Of course a website’s fortunes can change overnight. That these fortunes are tied to the whims of a very small group of very large companies, whose interests are only somewhat aligned with those of publishers, however, is sort of new. The publishing opportunity may be bigger today than it’s ever been but the publisher’s role is less glamorous: When did the best sites on the internet, giant and small alike, become anonymous subcontractors to tech companies that operate on entirely different scales? This is new psychological territory, working for publishers within publishers within publishers. The ones at the top barely know you exist! Anyway, internet people, remember this day in five years: It could happen to you, whether you asked for it or not. John Herrman on May 19, 2014 for The Awl writing about the downfall of Metafilter in relation to Google:
  6. 6. March 16, 2015
  7. 7. Credit: Tony Haile
  8. 8. Credit: Tony Haile
  9. 9. Credit: Tony Haile ...and Google, Snapchat, Instagram, YouTube, Twitter, Roku, Verizon, Comcast, Spotify, Apple, Amazon
  10. 10. Meanwhile, back on the web…. “Upon further reflection, it’s clear that the broken system is ad-driven media on the internet. It simply doesn’t serve people. In fact, it’s not designed to. The vast majority of articles, videos, and other “content” we all consume on a daily basis is paid for—directly or indirectly—by corporations who are funding it in order to advance their goals. And it is measured, amplified, and rewarded based on its ability to do that. Period. As a result, we get…well, what we get. And it’s getting worse.” -- Ev Williams Takeaway: There is growing skepticism about online advertising, particularly when it’s not on Google or Facebook.
  11. 11. Partnerships with Facebook, Snapchat, Twitter, Google and YouTube brought in about $7.7 million in the first half of 2016 for the 17 news organizations surveyed by the trade group Digital Content Next. -- Poynter There’s a little money here already… but not much
  12. 12. So what do these platforms want?
  13. 13. So, are digital media companies just going to become video production studios? ● The platforms need brands that will resonate with consumers and attract advertisers. ● Vice is easily the best example of where this is headed.
  14. 14. Credit: TrackMaven Print content (Ad $) (but also data, we’ll get to that) Short-form video (Ad $ and also data) Longer-form video (Ad $/licensing mix) High-end, big-budget video, subscriptions The New Media Funnel
  15. 15. The data question “Buyers also share the publisher frustration that the platforms such as Facebook, with its fast- loading mobile Instant Articles, is that they’re stingy about giving them data on who’s reading their articles on those platforms, how much they’re sharing it and what else they’re doing there. ‘Facebook is a pretty tight walled garden, and publishers are operating in these same walled gardens,’ Kiernan said.” -- Lucia Moses at Digiday, April 25, 2016 Takeaway: There’s growing fear that giving up on user data will leave media companies even less capable of holding their own against the major platforms.
  16. 16. So…. where IS the money? -- Brand advertising dollars going to TV (that platforms desperately want, cough, Snapchat, cough) -- Subscription through platforms (Google, Verizon, Comcast, Spotify, etc. etc.) -- The banana stand
  17. 17. The optimist case (aka the case you’ll hear from me after a couple drinks) -- As major companies/platforms go to battle, high-quality work (particularly video) from media outlets is in high demand. Facebook vs. Apple vs. Google/YouTube vs. Snapchat vs. Twitter vs. Amazon vs. Netflix vs. Spotify vs. Comcast vs. Verizon vs. AT&T vs…….. -- Platforms can start pulling in that TV brand money as well as subscription money in addition to whatever digital advertising remains. -- Super-optimist case: Digital companies become the new version of cable TV brands.
  18. 18. Worst case scenario: Complete and utter destruction (aka the case you’d hear from me after a few more drinks) -- Advertisers aren’t convinced that online advertising works, even next to high- end content -- Platforms find it’s a better business to make their own content. -- Media companies have no leverage to negotiate better terms with the few platforms that dominate the market -- Robots take our jobs (probably happening either way)
  19. 19. ● My personal take: I’m more optimistic now than I was a year ago. ○ It seemed like there was a flood of content and really one platform (Facebook) ○ Now, there seems to be a bunch of platforms and not enough places making the kind of high-end stuff they want. ○ That being said, it’s not easy. Not at all. ○ What about writers? ● I’m still pretty skeptical in the short term ○ This is still going to take time. Most companies are just learning to play this game. ○ The money has yet to show up, it may never, or it could show up then disappear. ○ I don’t think it’s ever going to be really that good of a business to monetize distributed print aka Instant Articles, Google AMP etc. ○ If you are a journalism student, start learning to shoot and edit video right now, like immediately.
  20. 20. So in conclusion... New media companies will need to hope and pray for two main things: -- Enough consumer demand/interest for this content that platforms see value in paying for it (people watching on phones, in home, etc. etc.) -- A healthy market of competition between platforms for high- quality content
  21. 21. -- If you know the answer to this, please tell me so that I can go start a media company. My email is Jason@mashable.com. Get at me, we’ll be rich. So, can platform distribution be a viable business and, if so, when?

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