Keep an Eye on These Trends

I’ve been talking to a number of companies recently, and have gotten an interesting overview of some trends that are attracting interest and investment in the online media space. The hottest business ideas often involve cross-pollination of buzzwords. But in the end it’s all about execution. Time will tell which of these concepts fall by the wayside and which are truly great innovations. Without violating any NDAs, I’ll share a few notes:

• So far we’ve barely scratched the surface of the potential of community—the power of the colossal global online audience to create and distribute content, share experiences, provide advice and information, connect and network, and otherwise engage in activities that can be corralled into an environment that’s monetized with ads. The blindingly simple insight that the stuff of online media is collaborative, distributed, and democratic—not hierarchical and funneled into a unified voice—will be a rich mine of innovation for some time to come. First, you can’t ignore the tremendous economic advantage of the community model. A fixed platform investment scales with uptake. You don’t have to pay for additional content in order to drive additional traffic. Second, the audience manifests its interests, values, and priorities directly, through the content it creates, rather than indirectly through the content it consumes. This behavior has the potential to make them even more valuable to advertisers. And third, an audience that’s actively creating content is demonstrably more passionate and engaged than one that’s merely consuming content passively. That translates into all kinds of benefits, including more time on the site, more content created, more viral publicity, and the opportunity to gain deeper insight into the audience’s character. The takeaway: Facebook isn’t the end game of community by a long shot. Stay tuned for this strategy’s second wind and beyond. Emerging companies are looking across the spectrum of human interactions to identify opportunities to leverage the power of community to enhance the experience and improve outcomes.
  
  
• While no one has yet come up with the killer app of mobile, aside from phones and SMS, with so many smart people sinking their teeth into this opportunity a breakthrough can’t be too far away. With a tantalizing huge user base, the mobile platform is ripe for one or more big ideas to emerge suddenly and really catch on fast. The trick will be to intersect some of mobile’s unique properties—for example, portability, location, or voice—with other popular activities that are normally constrained in these areas. Device innovations will also be a factor. The iPhone and upcoming Google mobile platform are pointing the way toward a future with far richer capabilities. Expect some big, “how did we live without this?” mobile solutions to appear on the horizon in the 2008-2009 timeframe. But strictly speaking, these innovations may or may not be under the media (ad-supported) umbrella. Mobile advertising itself is in its infancy (think back to the little blinking boxes that constituted most online advertising 10 years ago). My advice here: don’t get tangled up in a long-term cellphone contract: change is coming.
  
  
• Speaking of online advertising, most of what’s available today still has a strong legacy in traditional media. Think back to how TV advertising in the 1950s mainly involved dramatizing what were formerly radio ads. It took another 20 years or so for TV ads to move into their own. Online advertising today is similar to those old ads, but it won’t evolve nearly so slowly. Awareness-oriented advertising is going to move in the direction of engagement and interactivity. Conversion-oriented ads will increasingly resemble lead gen. Transparency and data will be the keys required to unlock advertising spend. All sorts of companies, from agencies to online media properties to third parties, are working on pieces of the new generation of advertising. A dozen years from now we’ll look back and marvel that advertisers were willing to pay so much for the murky value propositions that surround the advertising business today. Advertising innovations have lagged behind the general pace of online media advances. Now they’re poised to start catching up.
  
  
• Finally, something that had almost dropped off my radar, but a few companies have brought it up, and that’s local information. The web does a great job of globalizing its audience, but paradoxically, the hyperlocal has remained a challenge. There are lots of products out there, but they all have room for improvement. The internet hasn’t been able to drive a stake in the heart of the venerable Yellow Pages; in fact, many local directory products haven’t changed much in the last 10 years, and often still license a Yellow Pages database for content. While most Silicon Valley innovators are focused on tough technical challenges, some entrepreneurs are revisiting more fundamental content challenges. The local advertising market is worth billions and is one of the few media areas where online hasn’t made a big dent. That could change.

October 22, 2007: Network Media: Intriguing But Controversial

What do you think of "network media," an intriguing strategy built around the recognition that online media works best when it can tap into the internet's contradictory potential for both scale and targeting? One network media business getting a lot attention now is Glam. In a relatively short time and with a relatively small kernel of proprietary content, Glam has become one of the most trafficked women's destinations on the web...if you count the traffic to the network of affiliated sites across which Glam serves ads. A few weeks ago, in a post called "Is Glam a Sham?", TechCrunch wrote about the pros and cons of Glam's business model.

The big picture opportunities for network media involve four issues: the difficulty navigating highly vertical content that resides in pockets all over the web; the difficulty monetizing this content; the scale benefits of selling online advertisers as large an audience as possible; and the fact that the more targeted the ad inventory, the higher the CPMs. It's very early in the life of network media, but so far I don't think anyone has cracked the entire nut.

Glam may be farthest along. One reason I'm familiar with them is that they've hired several of my former Yahoo! colleagues to build the proprietary ad platform that is envisioned as the core of Glam's business. Building your own ad platform from scratch is time-consuming and expensive. There's no doubt that when Glam completes this project it will leverage the ad platform into other verticals, probably far afield from its current women's niche.

Another company, Name Media, is tackling the network media challenge from the perspective of what they call "digital real estate." They buy thousands of domains--photography.com is a flagship--that people might enter into a browser, fill them with content of varying quality, and monetize with ads from the Name Media network. They'll also monetize unused, or "parked," domains owned by people who join the network as affiliates. An issue with the Name Media approach is that the acquisition of so-called digital real estate isn't very scalable.

Federated Media is another player in this space.

For me, a big piece that's missing from the network model is deep audience insight. If you attract an audience to an environment you host and control, you can observe their behavior in minute detail. If your audience is spread across a plethora of affiliates or network partners, you must resort to proxies for inferring behavior and demographics (for example, clickthrough rates). I believe advertisers of the future will want to know more about the audiences they're buying, so the network strategy may need to evolve further.

Time will tell, but the network media business model is definitely a hot topic these days. Network media is part rival, part complement to social media. It would be interesting to see a company emerge that can do both really well.

August 26, 2007: Thinking about Leadership

A recent leadership change has me thinking about key leadership issues. If you have two businesses with similar resources and opportunities, what causes one to succeed and the other to fail? To take an example from my own employment history, why has Yahoo repeatedly stumbled in recent years, while Google has surged ahead? So often, if you boil down the excuses, the fundamental difference between business success or failure is a matter of leadership. Therefore, I think it's worthwhile to spend some time reflecting on how to be a better leader.

If you're leading an organization, it's critical to develop a strategic agenda that you communicate down to the managers who are responsible for implementing your vision. That sounds like common sense, but it never ceases to surprise me how many businesses overlook the obvious. Without clear priorities and philosophies articulated from the top, the organization becomes mired in reactive, tactical thinking. Growth in revenue and profits--everyone's end goal in a business scenario--isn't a strategy in itself, it's the outcome of a strategic process the leader sets in motion.

Leading isn't managing, but many people come into leadership roles via management positions. Some are better than others at shifting gears from a tactical management orientation to a strategic leadership focus. One thing a leader must do well is select and empower good managers. This frees the leader from concerns about implementation--the "how"--so he or she can concentrate on communicating a vision--the "what." Even if you were a fantastic manager, when you become a leader you must let go of the desire to control and implement tactical details. Not doing so quickly results in a dysfunctional organization where people are frustrated because they can't fulfill their natural team roles. I saw a lot of this at Yahoo, where many leaders who were previously talented managers were reluctant to let go of the hands-on behavior that served them well while they were climbing the ladder. It's an example of the type of leadership blunder that can be filed under "solving the wrong problem."

When I arrived almost two years ago, my initial challenge was to reverse more than two years of decline in key metrics. Influenced by the online media strategies I had observed during almost four years at Yahoo, I distilled the mission of my online team into building out the site in three key areas: community, multimedia, and interactivity. Having this big-picture structure allowed us to allocate scarce resources to projects that mapped well to one or more of the cornerstones--and gave us a rationale for relegating ideas that didn't fit into the framework to the back burner. That helped us set priorities and quickly begin making noticeable changes to the site.

Leadership is a complicated, constantly changing challenge that can't be distilled into a few pithy bits of advice. Still, in the business arena, it's important to recognize it's a skill that can mean the difference between huge profits or embarrassing failure.

August 10, 2007: Online Media in the Nanny State

For all the glittering new prosperity and head-spinning social progress, sadly, China continues to be governed by a totalitarian regime that doesn't trust people to think for themselves. The "nanny state" attitude is especially obvious in the realm of media.

Before you even enter the country, you notice a special sensitivity toward the media profession. On the visa application, only seven occupations are called out, including "member of Parliament," "teacher," "government official," "clergy," and "staff of media." At first I was flattered that they cared. Then I thought twice and checked the next most relevant choice, "businessman."

The Chinese government tightly controls the internet, preventing those within the country from accessing sites that don't conform to official policies and viewpoints, particularly on sensitive topics such as Taiwan and the democracy movement. Therefore, when you try to view, for example, the University of California Berkeley's China Digital Times, your browser returns a "site not found" error. Interestingly, though, it seems the gatekeepers either overlooked or can't block RSS feeds. I was able to see headlines and summaries of banned content via my feed reader, but couldn't click through to the full text. Tip to travelers: spend some time configuring your RSS reader before you leave home!

I didn't test extensively, but was able to connect to deep pages in the New York Times. As far as local media sites here in the Bay Area, some worked but others didn't. There wasn't a lot of logic behind what did and didn't penetrate the government filters.

Web search is also constrained in China. When you enter www.google.com or www.yahoo.com you don't go to the familiar US site, but to a Chinese look-alike, in English, where the search engine's index doesn't include web pages the government doesn't like. You know you're on these special China-only portals because the main search box offers the options of searching "the web" (minus banned content, of course) or "China only" (just sites based in China--even safer!). Major search engines accept this constraint as a price of doing business in China.

The print world is easier to control than the web. Every morning, my hotel delivered an outwardly upbeat and inwardly sinister piece of propaganda, China Daily, to my door. Conveniently published in English, this newspaper contains everything the Chinese government wants foreigners to know about the country…and nothing more. Many years ago, in our final conversation, a cheating boyfriend protested, "I never lied to you, I just omitted some things!" China Daily operates with the same ethos. Not surprising for a propaganda rag, the editors seem blithely oblivious to hypocrisy. One day the banner headline trumpeted a top government official's assertion that "China isn't a threat to anyone." Directly under that story, below the fold, a top military official was saber-rattling at Taiwan, warning that any thought of Taiwanese independence is "completely unacceptable." Hmmm.

I had a fantastic trip to China but soon missed the freedom of information we take for granted here in the US. It's good to be back in a country where I can visit any web page my favorite search engine's unfettered web crawler can find. Until online media in China is completely free, open, and transparent, the country can't fulfill its ambition to be a respected top-tier world leader.

August 6, 2007: Beijing 2007

Just back from Beijing, which may be the city with the greatest transformative energy and forward momentum on the planet this summer. It's a hectic, optimistic, electrifying environment--and one with great potential for online businesses.

I had the pleasure of getting together with several folks from our company's China operations. I spent one morning talking about the transition from a print to an online focus. They're facing many of the same challenges we've had, and it was good to be able to share specific strategies, products, and tactics that have (and haven't) worked for us in the US.

I also had breakfast one day with Allen Wang, a former Yahoo colleague who later served as chief marketing officer for Google China. Now he's left Google and started a business in Beijing that includes a strong online community component aimed at parents of young children. Allen said that since launching in March they've already gained over 60,000 registered users who are staying on the site for an average of over 30 minutes per visit: very exciting stats for the early going. Allen's experience verifies that in China, as in the US, community as a media platform has a very promising future.

I also asked Allen, as someone who experienced both Yahoo and Google, what he felt set Google apart. Why has it succeeded while Yahoo continues to fail to realize its potential? He said if he had to name one thing that distinguishes Google it's understanding and maintaining the unique Google culture. The recruiting and interviewing processes, particularly for anyone with management responsibilities, is truly exhaustive, Allen told me, with a heavy focus on determining whether candidates will fit in, thrive in, and perpetuate the Google culture.

Meanwhile, in my experience, Yahoo started losing its way when it failed to integrate acquired companies that had different values and priorities. Many of these companies were acquired precisely because their business models failed, leading to a bargain basement price. In my opinion, Yahoo didn't fully appreciate why it succeeded in the past, and therefore didn't work hard enough to maintain those success vectors. It sounds like Google won't be making the same blunder. All of us who are involved in the hiring process can learn from this tale of two search engines. It's incredibly valuable to understand how culture contributes to success, and take steps to preserve the most positive cultural attributes. This is one of Google's highest corporate priorities. Who are we to disagree?

June 21, 2007: Quality Video on a Shoestring

It sounds like one of those too-good-to-be-true teasers. "Everybody knows" video is an expensive content platform. But that hasn't been our experience. Multimedia has been a strategic cornerstone for us since we began turning around the web business in 2006. At first we focused on low-hurdle podcasts to begin broadening content beyond text. Then last summer, we put our toe in the water with video. When that went well, we decided to hire a multimedia producer, someone with specialized audio, video, and online production skills who could work with the editors to ramp up multimedia, and particularly video, content substantially.

Beyond the investment in talent, costs have been low. We equipped our producer with the necessary cameras, lights, microphones, desktop computer, and software for around $10,000. Instead of expensive studio space we use a well appointed office. The takeaway: the internet experience in 2007 isn't limited to text. Even a text-centric business can make rapid strides into Web 2.0 territory by bringing in one or two talented people and spending a few thousand dollars on infrastructure. You're closer than you think!

April 12, 2007: As the Medium Evolves, So Do the Metrics

You may have noticed the recent news item in Mediaweek that people are starting to worry that newer web functionality, such as AJAX, will undercut traditional web site performance metrics, particularly pageviews. AJAX provides a faster, sleeker, more interactive user experience that bypasses page reloads for many common interactions. For example, it plays a key role in the application-like interfaces of such services as Yahoo mail and Google maps.

Now it appears that, as AJAX inevitably evolves from cutting edge to commonplace, the media industry is awakening to the pageview issue and pondering options. As the Mediaweek article notes, one possibility is increased attention to the metric of total time spent on the site--the product of total visits and average time per visit.
We've been watching this number for awhile. It's been growing as we've made the site more interactive, diverse, and engaging. In fact, although we received more pageviews in January of this year than in March, in terms of audience time on the site the reverse was true: total minutes edged up by about 1.5%, to a new record. March minutes on the site in 2007 were 117% higher than the same month last year. We like the total time metric not only because it's AJAX-neutral, but also because it gives a fair accounting for audience activities such as consuming audio, video, slide shows, and community activities.

By the way, you can configure AJAX functions to refresh the ads when the user takes action, meaning that while we may lose pageviews, we don't lose ad impressions.

This isn't the first time a key online business metric has been eclipsed. Remember the dark ages, 10 years ago, when site performance was all about "hits?" Usually that meant server calls. In the old days, many web pages were so simple that the entire page would load in a single call. As pages became more complex, with a myriad of calls, the "hit" metric was diluted until it was meaningless and the pageview came into favor. Today, a few more years down the pike, the pageview is approaching obsolescence.

The changing landscape of key performance indicators (KPIs) is part of the experience of building a new industry from the ground up. Even the most fundamental definitions of success are in flux. While some may find the uncertainty unsettling, we're excited by the opportunity to take an active role in helping to shape the new benchmarks.

March 10, 2007: Gambling and Online Media: Closer Than You Think?

We're always thinking about audience engagement. How can we get people to come to the site more frequently and stay longer? That train of thought led to today's oddball idea. Can the informal nature of the web help condition audiences to visit your site more often?

The idea of partial reinforcement is a key concept in psychology. The gist, if you were napping during Psychology 101, is that rewarding behavior at unpredictable intervals provides the strongest reinforcement for that behavior; in other words, maximizes the likelihood of frequent repetition. A common example is the random payouts of a slot machine. Many psychologists believe that gambling's unpredictable outcome is part of why it's so addictive. Wikipedia has a rather academic discussion of reinforcement, if you want to understand the phenomenon in more detail.

Which brings us to online media. Back in the old days (pre-21st century) media typically strove for a high degree of predictability. Newspapers, magazines, and broadcasts were made available on a schedule that was usually tightly tied to the clock and/or calendar. Those in charge took pride in setting and meeting time-sensitive deadlines--and a deadline-centric attitude still prevails in offline media today.

As in so many other areas, things are different online. The 24/7 nature of the web makes deadlines obsolete; content can and should go live as soon as it's created. So what does that mean for the audience? Sometimes they come to your site and not much has changed from their last visit a couple of hours ago. Five minutes later, you post a blockbuster news article. Sometimes their behavior of visiting your site is rewarded, or reinforced; but not always. To continue receiving rewards, they must continue to visit despite the uncertainty. Your web site becomes a content slot machine. Often there's no payout; sometimes there's a small payout; and occasionally there's a big one. Unpredictability is a key driver of repeat visits.

Many types of online content support this model. For example, online, the vehicle of choice for opinion is a blog. A key difference between blogs and their offline cousins, columns, is the posting schedule. Columns appear on a regular print agenda, but blog posts are at the random whim of the author. With discussion groups and much other user-generated content, the random frequency with which people visit the site amplifies the volatility of their random decisions to contribute content.

I'm not a psychologist and shouldn't try to play one on the web, but the analogy is intriguing. Perhaps a deeper dive into web analytics will shed some light on how strongly the partial reinforcement principle is affecting audiences online.

February 12, 2007: Life in the Fast Lane: An Industry in Hyper Change

This sentence caught my eye this weekend when I was catching up on some reading I couldn't squeeze into the Monday-Friday timeframe: "The nation's leading advertising executives believe we are in a period of hyper accelerated change for the media and advertising world and that things are likely to speed up even more."

Aha, no wonder we're all so busy! Our industry is in "hyper change" mode. What are the implications for our operations, business models, sales, products...really, everything we do? Online technologies and options are turbocharging the evolutionary process, with community media and audience empowerment clearly in the vanguard. As the article points out, a lot of ad executives are still struggling to keep up with the media consumption and creation preferences of the audiences they're chasing.

While I certainly don't have all the answers, there are some clear implications for those of us running a media business in the hyper change environment. First, with change happening so quickly, we must operate without the long-term visibility we were used to in the old days. Mid-term is the new long-term. Second, with greater risk, we should hedge by trying more things. Hyper change is exactly the wrong time to get overly cautious. Don't be frivolous, but make some educated guesses and put a number of irons in the fire instead of betting the farm on one big one. An upside to hyper change is that missteps will quickly recede into the past, especially if they're not too large. Hyper change means you don't have to be 100% right...just make sure you're not 100% wrong.

Recognize that with change comes an educational responsibility. You may find that the burden of communicating and explaining your initiatives increases. This isn't necessarily a sign that the people asking questions lack confidence in what you're doing; maybe they're just not up to date. Be prepared with extra documentation and analysis.

When you're hiring, especially look for and value the ability to learn and grow. There's no way the people you hire today will have all the skills you'll need two years down the road. Find people who are willing to "hyper change" their own lives and careers so they can grow with your business.

Otherwise, fasten your seatbelt. If the observers quoted above are right, the pace isn't likely to slow down any time soon.

December 18, 2006: Home Page or Pied-a-Terre?

Traditionally we've called it the home page, but as traffic to this destination dwindles into a single-digit percent of the site total, it's starting to look more like a pied-a-terre. What does that mean for an online media business?

The old-school concept of a home page--a splashy front door to the entire site--is yet another fundamental assumption that harks back to our roots in print and, eventually, needs to be re-examined. Now less than 10% of our pageviews are to the home page; on some days it's below 8%. A year ago, the figure was nearly 15%, almost 50% higher.

This change is actually a good thing. It means people are finding the site through search or other referrals; bookmarking specific pages or content areas they want to visit frequently; clicking through from newsletters and emails; and subscribing to RSS feeds. However, as people change their entry points, we must adapt the way we expose them to additional information. Once, we could showcase a spectrum of important content areas on the home page and link out to individual pieces of content that more or less lived on their own. Now, virtually every page needs to give a clear picture of both site content and architecture. A robust site search feature is also critical.

That's not to say that the home page is going away. Even if the only people who use it are your grandmother and potential advertisers, it's a great opportunity to make a brand statement. It's an important demo tool for the sales team, providing a quick and easy map to who you are, what you cover, how you cover it, and what audience you're targeting. And because it's likely the single page most closely associated with your brand, advertisers are often willing to pay a premium for home page placements.

We're still thinking through the implications of the home page's drop in popularity. For example, as it gets less traffic yet continues to maintain high brand identification, it may make sense to reduce the number of ad units and simply make the page look as good as possible. There are implications are for the home page itself, but also for all the new entry points the audience is using. How do we, in essence, turn every page on the site into a mini-home page?

December 10, 2006: Six Takeaways for Building a Successful Online Media Business Model

For my session at a recent corporate management meeting I summarized six key points to bear in mind when you're developing the ideal model to support your online media business as you transition away from a print focus:

• Understand the online medium on its own terms and be open to new perspectives. Don't just stay in a comfort zone because it worked in the past. Online is a different universe where new rules apply.
  
  
• Strive to understand and build your strategy around the unique intersection of the special strengths of online (such as low unit and distribution costs) and the special strengths and market position of your business.
  
  
• Anticipate the need to reallocate resources and retool skillsets. Especially when you're transitioning from print to online, assume that your assets won't be deployed in the most efficient manner possible for the new medium. You will need to invest and disinvest accordingly. The sooner you start tackling this challenge the better. Similarly, assume that many core skills, such as production and marketing, will need to be retooled. Be proactive about reconfiguring your team as needed.
  
  
• Leverage the data available in the online medium to learn, grow faster, and optimize financial performance. One of the biggest changes and benefits of placing a media business on an online platform is the amount of data that's available on user behavior. Your web site is like a living focus group. Recognize that up front and move quickly to reorient your business to be data-focused. Consider hiring a data analyst to help crunch the numbers and derive actionable business insights.
  
  
• Put your audience to work for you. The online medium is ideal for managing content costs by promoting user-generated content. With a community strategy your audience will create content, monetize it through extra pageviews, and assist in audience development by inviting their friends. Don't be stuck in the one-way, push-content mentality of print. Get creative about deepening audience engagement and harvesting the potential benefits.
  
  
• Finally, don't forget to enjoy the once-in-a-career excitement of participating in creating the new industry of online media! All of us working in this field today are pioneers, developing platforms and strategies that will influence the way people give and receive information for generations. Don't lose sight of the fun and excitement of living on the cutting edge.

December 1, 2006: Economics of Paid Content Online

A lot of folks still have questions about the viablity of a paid content model online. Here's why I believe the online medium is best suited to monetization through advertising, not reader payments. It boils down to basic economics.

Harking back to economics 101, picture the fundamental economic graph, where the vertical axis is price, the horizontal axis is quantity, and the downward-sloping demand curve illustrates how, at a high price, the quantity demanded is small, but as the price approaches zero, demand grows to near infinity. Therefore, at any given price point there's a corresponding quantity and you can easily calculate total revenue by multiplying price and demand. Subtract costs and you have total profit.

But what if there was a way to monetize the nearly infinite quantity of demand for free content? That would be a gold mine and it represents the potential of the web. First, you multiply price by an almost infinite number, yielding almost unlimited revenue potential. Second, there are virtually no costs involved in distributing additional content on the web, so the incremental revenue is pure profit. This is a true media business model, where revenue comes from attracting an audience and monetizing it through advertising. It's been around for decades in broadcast and has been represented in print with controlled circulation. Now the global reach and low production and distribution costs of the internet have opened up tremendous opportunities for applying the media concept to many new types of content. In fact, the only situations online where paid content still makes sense are if (1) demand for the content is limited, but it's still quite valuable to the people who want it; or (2) demand for the content outstrips advertisers' willingness to support its audience.

As a rule of thumb online, explore the option of free content monetized through advertising first. That's almost always the lowest-cost--and very often the highest profit--alternative. Invest in audience, not an e-commerce platform and support system. Do the analysis and embrace the scale opportunities of the web. It's a new medium with a new economic landscape compared to its predecessors.

November 7, 2006: Focus on Technology...And Resource Allocation

This month--and probably for most of the rest of the year--there's a big focus on technology infrastructure. We're replacing our web analytics vendor. It's time to start considering options for renewing the contract with the company that powers our community. And we want to create a master user database in-house, moving away from the current reliance on a third party. Increasingly, our five-person technology team is a bottleneck constraining growth plans for the web business. This isn't the CTO's fault; it's because print and online media have vastly different requirements for resource allocation, risk structure, and profitability.

Look at the big, fully online media companies--Google and Yahoo, for example--and you'll see what I mean. They have huge technology teams with hundreds of developers. By far the biggest slice of the resource pie is allocated to creating proprietary software and infrastructure. Compare that to a typical print media business, where content creation is king. One of the core differences between print and online media is that print has high variable costs but low fixed costs. Online, on the other hand, requires a significant fixed investment in technology, but variable costs for distribution are negligible. Therefore the print business model favors finding high-value opportunities to market to a select and limited audience, whereas online is all about openness and scale that spreads the fixed costs across the largest audience base possible.

The risk structure is different as well. With print you can take a series of small risks, but online you have to roll the dice for a bigger stake. Spend all your capital building the wrong software platform and you're out of business. The alternative is what we do currently--rely on outside technology partners. However, in that model technology isn't the competitive differentiator you need to come out on top. Just as the New York Times doesn't rely on AP or Reuters for news coverage, so an online media business can't fully break out of the pack without a proprietary technology platform that confers unique advantages and functionality on its audience.

Part of the challenge of transitioning an existing media business from print to online is biting the bullet to make these enormous resource shifts. Another hurdle is staffing up the new structure with people who have the right skillset and risk orientation to help you move forward quickly. In some cases existing staff can be repurposed; in others you have to bring in new people and create an environment that attracts the best. Status quo is not an option!

September 23, 2006: Understanding Value in Online Media

Audience behavior is much more transparent online than in any previous medium. The implications are still being worked out from the business perspective, as we reconfigure our understanding of core metrics, circulation, ad performance, content performance, pricing, and other parameters to incorporate all the data that are now available.

Here we're actively aiming to evolve our online media business into an "ROI engine" where we fully understand the cost of every type of content and the value of every type of advertiser exposure and can therefore program the site to optimize ROI. I believe the entire media industry will operate in this fashion in just a few years, but there are some steps required to get there from where we are today. For one, the content management, web analytics, content selection, and ad serving systems need to operate from a common taxonomy and all talk to one another.

An ROI focus suggests many other interesting possibilities, such as compensating content creators based on the value they deliver to the business, potentially including pageviews, core readership demographics, or contributions to other business areas, such as events and lead gen. If we mine the data sufficiently we could calculate an ROI on every piece of content on the site.

In order to structure the business as a value equation two disciplines are key: economics, which uncovers the supply and demand dynamics driving our ability to match advertisers with audience, and finance, which explores the interaction between risk and value. Here are a couple of examples of how economics and finance provide insights into day-to-day operating challenges. As any media business is all about audience, so online media is built around pageviews. Ad impressions sold represent demand for pageviews, while audience browsing provides supply. But site managers quickly learn that providing raw pageviews isn't enough. To truly deliver value the views must come at the right time on the right pages. Breaking traffic records in a month with low ad demand doesn't deliver more value. Optimizing traffic means building many demand curves, not just one.

At the same time, finance teaches us that predictable traffic is more valuable than unpredictable, because of the discount that must be applied in uncertain (risky) situations. Take an example of two editors whose articles each deliver a million pageviews over the course of year. Editor A consistently draws about 80,000 views a month while Editor B typically produces just 50,000 pageviews a month, but sporadically writes "blockbusters" that can bring in 200,000 views in a month. Clearly Editor A is more valuable to the business. The same reasoning explains why the so-called "content annuity" of archived material actually has little value. It's possible old content will find a new audience but the uncertainty around timing and traffic volume requires a high discount factor to be applied to the value of those pageviews.

Succeeding in a new media business requires additional skills beyond what sufficed in traditional media, particularly on the analytical side. An industry where intuition and persuasion were powerful is evolving toward a more transparent, numbers-driven basis. To be a leader rather than a follower in the transition, brush up on economics and finance and make sure your Excel skills are top-notch.

September 16, 2006: Leadership Without Easy Answers

One of the most interesting and thought-provoking books I read in business school a few years back was Leadership Without Easy Answers, by Ronald Heifetz at the Kennedy School. A key point is that for many complex problems, the most effective leaders aren't those who step in with an ego-gratifying Big Answer, but rather those who succeed in bringing together key stakeholders and motivating them to work out a solution for themselves. I've been thinking about this concept as we evolve our community strategy.
I believe one reason community is such a key element of 21st century media businesses is that it embraces this alternative model of leadership. If you build a community correctly it will attract key stakeholders and they will surface and begin discussing the issues that are most important to them. Ideally, they will also recognize and value the community's role in improving their situation, building your brand equity.

We're already seeing this behavior in our fledgling community. In just a few months members have created 60 discussion groups. Instead of the old media model where we try to tell our audience what's important (via cover stories, special reports, and the like), now they're telling us.

Some media traditionalists are uncomfortable with community because it doesn't necessarily converge on one or a few "best" answers, leaders, or even decision-making processes. The spotlight is on the members of the orchestra, not the conductor. Those who are accustomed to tightly controlled environments may feel a more collaborative, less directive approach to content is "unled," and therefore less satisfying or successful than the 20th century model where a few anointed (or self-appointed) experts set the agenda for everyone else. That's where I think Leadership Without Easy Answers is a valuable antidote to conventional wisdom. Ronald Heifetz's book provides a framework for understanding community not as a lack of leadership, but as a different vision for leading in ways can be more powerful than the old paradigms that they replace.

August 27, 2006: Keeping It Global

Another way I think media companies of the (near) future will be different from what we see today is a much more global perspective. Especially given how many non-US, and particularly Asian, citizens have leadership roles at online companies here in the US, it seems inevitable that a US-centric concept of the universe of possibilities for online media will soon prove to be far too limited. I always cringe a bit when I hear media people start a list of "best" online media sites with the usual American print-based giants--Wall Street Journal, New York Times, Washington Post, etc. These sites are great and it's important to recognize that from the monetization perspective they're truly world leaders. However, they lean heavily on their tremendous print brand equity. I'm not sure it's smart for us to stay within a narrow comfort zone and simply copy their conservative approach to content, back-end technologies, and user experience.

Therefore, when I'm looking for inspiration, I like to keep an eye on news sites from around the world; below are a few mostly English-language versions you might find interesting. As we're reinventing media, we can all learn from the creativity and different cultural perspectives of our fellow employees.

• China Central Television
• China Radio International
• Danwei (English-language blog about media in China)
• NHK Online (Japan Broadcasting Corp.)
• ITAR-TASS (Russia)
• Al Jazeera
• BBC
• Globo (Brazil, in Portuguese)
• Korea News Service (North Korea

Prologue

I started the original Reinventing Media Blog on the intranet of my previous employer, a global publishing company in both the B2B and B2C space; I ran the web business for one of their B2B brands. Although the intranet location greatly restricted the blog's audience, it allowed me to discuss operational specifics of the web business I managed, including company-confidential details, that were helpful to our other brands and business units navigating the tricky path from a print focus to Web 2.0. The original blog ran from August 2006 through October 2007.

Now that I've moved on, I'm making the blog public-facing. I'll have a larger audience (I hope), but won't be able to talk quite so frankly. Or more likely, I'll just discuss different things--fewer details, more ideas.

Not all of the posts from the past were confidential, so before I get (re)started I'm posting excerpts here to represent what came before and set the tone for where I'm aiming to take this discussion. All of us working in online media today are on the cutting edge of reinventing a critical channel for human communication. It's exciting, historic, and frequently perplexing. Often we're so enmeshed in day-to-day problem-solving that we lose sight of the adventuresome, pioneer nature of our endeavors. Today's seemingly random decisions become tomorrow's precedents and benchmarks. With that in mind, it's worth taking a pause from time to time to assess progress and strategize about next steps.

That's my mission in the Reinventing Media Blog: to give thoughtful consideration to this process that's now barreling along, of reinventing traditional media for the digital age. I hope you'll chime in to tell me what I'm missing and where I'm off track. Web 2.0 and beyond are all about conversations, not monologues. With luck this blog will mirror the philosophies it's contemplating.