I’m not a regular reader of Reuters’ media commentary, but the few times I’ve headed that direction to read what they have to say, it’s been entertaining. Today was no exception.
The meat of the post comes towards the middle where Rasmus criticizes the crop of startups for not innovating on business models, while still trying to compete for advertiser dollars.
“Launching a site that would be, in effect, “the Huffington Post of country X” may have seemed like a promising idea in the spring of 2011. But by the spring of 2012, a certain Arianna Huffington had had the same idea and had announced the launch of HuffPo-branded sites in Canada, the UK, France, Italy and Germany. What is the distinct value of the local imitator then?”
“What they can do, however, is put an end to the irrational imitation and develop strategies designed to build more diverse business models, ones focused on producing relevant and distinct editorial products that set them apart from their existing competitors. Advertising-supported online news production did not work for Netzeitung in Germany (which in 2009 shut down its newsroom after nine years of consecutive losses), did not work for Rue89 in France (impressive and innovative as it was, the site never broke even and was bought by the weekly newsmagazine Le Nouvel Observateur in 2011), and is not working for Il Post (widely considered one of the most promising startups in Italy, the site generated revenues of just 35,000 euros in its first year of operation, resulting in an operating loss of more than 150,000 euros out of a total budget of little more than 200,000 euros). Why should we expect it to work for other startups when all these widely praised ventures, and many more besides, failed to pull it off?”
It’s interesting advice coming from Reuters, a company that makes a great deal of money selling content to companies that are hundreds of years old (with business models just as old). Where are the calls to those organizations to update their models? Where are the exhortations to companies like the New York Times to stop laying off staff and start firing sales strategists who can’t produce the numbers?
SiliconANGLE sells data; that’s how we chose to buck the system. It’s worked for us for several years now, and has allowed us to expand faster than the companies all the current employees left to join us for (including the Financial Times, Mashable, ReadWriteWeb).
In many ways, the last separator in terms of New Media and Heritage Media is simply the business model supporting it. Rasmus isn’t wrong: this is where startups need to innovate, but startups aren’t the only ones. Heritage Media constantly complains about “trading analog dollars for digital pennies.”
Media democratization has been evenly distributed, and your competition for the endpoint is every person on the planet now, so guess what, media of all ages: your distribution channels are dying, and most of you have figured out how to utilize new channels via digital means. Unless you can devise new monetization schemes that don’t rely on lock-in, inflated numbers, and traditional advertising, you will not survive.