In the competition between digital natives – Gen Y, which has grown up with online technology and digital immigrants – those of us who can remember typewriters and phones with cords attached – for primacy online, it seems that the digital natives have gained the upper hand.
Think Mark Zuckerberg (Facebook, and a billion dollar online empire by the time he reached his mid-20s) vs. Rupert Murdoch (MySpace, phone hacking scandals, declining dead tree media empire). Or Natalie Tran (24-year old Australian vlogger with 156,000 Twitter followers, more than 400 million YouTube views and a cozy career in the making) against say, Tony Abbott (50-something Australian politician with 56,000 Twitter followers but no YouTube channel).
If you read the media reports on what’s hot on the web, there appears to be a strong relationship between a lack of history and Internet success.
But it’s not that simple.
It can be useful to have a long-term view of the online world, which only a seasoned digital immigrant can have. If you can combine that with knowledge of traditional, pre-Internet business principles, you can look past current fads and build a business model that’s sustainable.
For example, the current obsession with whatever is the latest online application exploding in the public consciousness ignores the fragile nature of web success.
With all the current talk of community-building and developing personal relationships, you’d think the concept was invented by Facebook. Digital natives may be too young to remember, but digital immigrants will recall that when MySpace burst on the scene, it was seen as the long-term future of social media. That is, until Facebook came along.
Early digital immigrants can go back even further and remember GeoCities, an online community where people could create personal pages and create a following of fans, which was all the buzz way back in the 20th century.
And consider the power and ubiquity of the Google empire. It may be hard for digital natives to fathom a time pre-Google, but digital immigrants can remember when Yahoo! was seen as the impregnable leader in search (As an aside, it used its cash reserves to buy GeoCities back in 1999), a crown it took from the equally-invulnerable Alta Vista.
A professor of the Wharton Business School in Pennsylvania has set off an incendiary bomb within the advertising industry by writing a treatise on why the Internet will spell the death of advertising. I won’t comment on this, I just encourage you to go and read his article, scroll down to read the comments, and see some of the other responses that have been published. Gotta love the Internet, blogs and Twitter for quickly whipping up passionate opinions about business and social topics!
Like a Molotov cocktail hurled into a crowd, Publishing 2.0 blogger Scott Karp has ignited the already heated debate about the future of journalism and publishing with his most recent post, entitled “The market and the internet don’t care if you make money”.
He’s pinched the title from Seth Godin, the marketing pundit who is peddling his latest book Tribes, but Karp takes the idea and runs with it in a long screed about how the Internet has broken the newspaper industry’s business model, a topic about which plenty of people including myself have written about ad nauseum. But Karp offers a detailed and particularly articulate discussion of this issue, writing that “Nobody has the right to a business model - Ask not what the market can do for you, but what you can do for the market.”
As usual with this sort of thing, the comments are as entertaining and thought-provoking as the blog post, and as a former journalist I can relate to the responses from people in the traditional media. The words of Thomas Jefferson, author of the American Declaration of Independence, still echo in my ears as one of the main reasons I got into the media business: “Given a choice between a government without newspapers and newspapers without government, I would not hesitate to choose the latter.” The media have an important role in informing society and keeping governments honest. But while Jefferson specifically mentioned newspapers, if he was here today I think he would understand and approve of the Internet and blogging. It is the same principle he was talking about back in the 18th century - free speech. Whether it’s Rupert Murdoch or Ariana Huffington or Joe Bloggs exercising that right doesn’t matter.
At the end of the day, say what we will, the market doesn’t care about ‘quality’ journalism and comprehensive local news coverage. We collectively need to find a model that works in this new and changing environment. I agree with Karp that a future business model lies in the power of networks, not the power of monopolies.
There has been a lot of debate in journalistic circles of late about the state of denial most journalists and media academics are in regarding new media.
A recent blog on Poynter.org recounted an exchange between digital media entrepreneur Elizabeth Overholser and journalism students at the University of Southern California’s Annenberg School of Journalism. Osder refuted one student’s lament that online news business models aren’t working. Then she advised the students that to figure out which online business models can work, ”Start with the impact you want to have. Figure out what audience you need to assemble to have that impact. And what kind of content is needed to do that. Then price it out: How much money do you need to do it?”
According to Overholser, a J-student groaned in reply, “If I wanted to do that, I’d have gone to Marshall (USC’s business school).”
Osder countered that while that response was understandable, thinking through the business side of journalism “forces you to be relevant and useful versus arrogant and entitled.”
I say: hear, hear! Journalists need to get their head out of the sand and embrace the Internet, because, like it or not, it is changing the face of journalism. Being a good writer isn’t enough in the 21st century; you need to be able to write web copy, operate a blog, do your research and link out to your sources, even use a video camera.
Like others who have been writing on this topic, I blame the university programs, who are still churning out journalists who are too “good” to do anything other than report and write.
Much as it pains me to say this, as someone who grew up and started their career believing in the purity and hyperspecialisation of journalism, the Internet, new ways of communicating stories, and citizen journalism are all a fact of life today, and journalists who won’t admit this and who won’t widen their perspective and their activities will end up bitter and unemployed.
A study commissioned by social networking marketer Cone has revealed that 85% of social media users thought companies should interact with their consumers through social media, at least when needed.
The survey, reported by eMarketer, also found that nearly 60% of Americans who use social media interact with companies when they’re on social media websites.
“Americans are eager to deepen their brand relationships through social media,” said Mike Hollywood, director of new media at Cone. “It isn’t an intrusion into their lives, but rather a welcome channel for discussion.”
Those recent predictions about the growth of the market for online advertising and marketing which said digital would continue double-digit growth despite recent financial turmoil have now gone the way of most US investment banks after the carnage of the past week.
Yahoo’s share price is tanking and earnings for all major digital companies have been revised downward.
As reported on Clickz, UBS bank slashed Google’s 2009 anticipated revenue by 4%, Yahoo’s by 9.1%, and ValueClick’s by a “stunning” 19.3 percent. Estimates for Q4 2008 were also lowered, though not as much.
Reuters, meanwhile, reports that another investment bank, Wachovia (which if I recall correctly was just taken over the other day to save it from going to the wall) is now predicting that Web ad spending will grow by 10% next year rather than the previously estimated 15 percent. As well, Lehman/Barclays shaved a full $3 billion from its 2008 U.S. online ad estimate, pegging growth for the year at 16.9% rather than 23.4 percent.
But at least they are predicting some growth. The one thing all news analyses agree on is that the overall advertising market is going to contract next year.
UBS analyst Ben Schachter said that “We see no business model based on advertising or consumer spending that will be immune to a downturn…As corporate profit forecasts come down, we expect planned advertising spending will be delayed and/or cut.”
The Los Angeles Times reports that venture capital firm Sequoia called their clients into an emergency meeting and when they came into the conference room they were confronted with a large tombstone which said “RIP, Good Times” on it. They were then subjected to a lecture about how bad things were likely to get and what they needed to do to retain Sequoia’s investment.
An executive who attended the meeting was quoted as saying it was not a “doom and gloom” message, but a serious one. “They basically said: ‘This is a business. This is not an excuse for you and a bunch of your friends to have a pool table and goof around with something you think is neat.’ I didn’t come away thinking that the sky is falling or that I have to move to Canada, just that these guys are taking this seriously.”
That’s a good takeaway - the sky is not falling, but it’s time to get sharp. And that can’t be a bad thing.
Rebecca Lieb, writing on the ClickZ website, rightly observes that it’s high past time that the advertising and media industries fully embrace digital solutions. She writes, “It’s not just old-timers on the traditional agency side of the equation who are stubbornly resisting the shift to digital. It’s an issue across the media landscape. Their reluctance was perhaps somewhat understandable in the go-go ’90s and in the sober, austere, bleak era around 2002. But now?
“Still, I’m seeing traditional publishers cut back on digital endeavors (and digital staff) in a desperate and futile effort to sustain their flagging, dead-tree legacy brands. I’m seeing digital executives going to senior management with requests for back-end tools, such as content management systems and social media software, only to learn their corporate overlords have no idea what all that stuff is, much less what it’s actually used for or how it can benefit the business.
“And I’m seeing some of those print publications flatline. Friends who have been print journalists for decades are panicking in the face of cutbacks, early retirement, consolidation, and plain old extinction.
“But they’re not learning digital skills. A critic friend stays up nights over the fact his paper is due to shutter at month’s end. When I inquired about his online skills, he replied that even the most fundamental elements of a story, such as hyperlinks, were determined and executed by the online editor. He doesn’t know how to do any of that stuff.”
I’m happy to report that not everyone in the advertising and media industries in Australia over the age of 30 is a techno-Luddite. But a lot more needs to be done to encourage them to embrace digital formats and produce new ways of communicating ideas that capitalise on these new formats, rather than continuing to produce digital creations that are still rooted in traditional thinking.
Gen Y is not reading newspapers anymore. They’re watching TV without ads, via DVD or DVD recorders, They’re staying away from websites that throw pop-up ads at them. Those of us who grew up with traditional forms of communication are still in the majority - but we won’t be for that much longer. As Lieb says in the headline of her article, “Digital or die”.
I have found a new favourite technology writer - Robert X Cringely at Infoworld. His recent article “Is Sarah Palin more popular than porn? Search me“, is a hoot. He cites a new book by Hitwise general manager Bill Tancer, which shows that searching for social media is now more popular than searching for porn online. As Cringely (yes, that’s his real name, not a pseudonym) writes, “‘As social networking traffic has increased, visits to porn sites have decreased,’ said Tancer, [who] indicated that the 18-24 year old age group particularly was searching less for porn.
“I’m guessing Tancer has not visited many social networks, or that all his Facebook friends are old farts. Because when you’re age 18 to 24, social networks ARE pornography. In fact, they’re better. Have you seen some of those profiles? Two words: humena humena.”
I never knew how ‘humena humena’ was spelled before - you learn something new every day!
He goes on to write about something (or someone) else who has gone on to become more popular than porn on the Internet: Republican vice-presidential candidate Sarah Palin.
“Hitwise also measures the most popular searches for political terms. You can guess which lipstick-wearing pitbull of a hockey mom tops the charts there. Per the Washington Post: ‘… in her first two days in the national spotlight, US Internet searches on all things Palin outnumbered any other politician in the past three years…. In many cases, her name was searched alongside the word ‘hot.’ I’m guessing that also includes searches for Palin’s head photo-shopped onto various nude or bikini clad models.
“Does that qualify as porn? If so, I think Tancer needs to revisit his conclusions about social nets.”
A geek with a sharp sense of humour - got to love it.
From the B and Tnewsletter:
“Fairfax Media is diversifying its advertising opportunities through the development of new types of short-form video content on its websites, and has commissioned several new online shows.
“The new internet TV shows include several ‘infotainment’ broadcasts and branded content shows including Land Rover’s Best Breaks, a 12-part series looking at short breaks from Sydney and Melbourne.
“An increased demand, particularly around lunch time, from viewers has led to a new ‘primetime’ audience for advertisers to tap into, said Pippa Leary, managing director of media for Fairfax Digital.
“’Short-form videos offer more freedom to viewers- because it’s on demand and easy to share with others,’ she said.
“….Fairfax is closely monitoring what is happening in the US and the UK in the branded content area, said Leary. ‘As audiences get more sophisticated the advertisers have to get more sophisticated, too.’
She said one of the major trends Fairfax have noticed is advertising agencies creating both TV ads and online ads when doing a shoot: ‘The ads for online are a lot shorter and also incorporate more interactivity.’
“The media company’s latest show was a comedy sketch called 51st State by performer and writer Dan Ilic, which covered the Democratic Convention in the US. ‘Because it was topical at the time, the series blurred the lines between news and entertainment. It appeals to a broad audience and also advertisers trying to reach a diverse audience,’ said Leary.”