A New Business Model For A New Era
I think Mitch Joel is one of the brightest minds in social media. But today, I’ve gotta take issue.
Mitch recently responded to a new Pew Research Center poll showing that television has been overtaken by the internet as a primary news source. I highly encourage you to read Mitch’s thoughts here: Breaking News On The Internet. His concern is that new media (blogs, Twitter, etc.) has overtaken traditional media too quickly for a replacement advertising model to be accepted. After all, who is going to pay for all of the content online?
Now, I almost always think Mitch is right on target. But his recent post harbors some assumptions that I’ve been hearing more and more often from a lot of sources, but which I think are detrimental to social media marketing in its current incarnation.
In other words, it’s not just Mitch – we all need to be careful about how we consider social media and how it relates to a business model.
Here are 4 assumptions I hear in the marketing community that need a good debunking:
- Traditional media and new media are selling the same thing: It’s simply not true, so let’s not talk about the two systems as though they were. TV and radio were made to sell ads; the internet is advice and expertise. Rick at eyecube said it well: “Television isn’t a medium for telling stories and disseminating information, it’s a medium for selling ads. As such, the goal is not to produce quality programming, the goal is to produce programming that will attract the most eyeballs.” He goes on to make salient points about the quality that results as such, but my point is to take caution when comparing apples to oranges.
- The old business models were correct: Sure, advertising worked, but that didn’t mean it was good. As long as a terrible product brought eyeballs or cash with them, do you really think the fat cats cared? In the old business model, marketers were shills. But now, good products tend to succeed and bad products tend to fail (and at a faster rate too). The old model sold people Ford Pintos. Now, we recommend Amazon.com to our friends. Who would want to return to the old model?
- Advertising is the only business model: The most surprising aspect of Mitch’s post is that advertising is the only business model mentioned. There’s no talk of a donation model (open source software), a merchandise model (Toothpaste For Dinner), a gimmick model (woot.com), a subscription model (The Bitterest Pill podcast), a community outreach model (Lululemon), a recommendation model (Zappos), or any other type of business model. None of these companies engages in advertising on a large scale (if at all), yet they are all very healthy businesses.
- The lack of a business model is a bad thing: Why? Unlike TV and radio, the content is already great. Mitch kind of admits this in both the Pew post and one from a few days earlier, named Bad TV, respectively:
“Any idea how long it took channels like newspapers, radio and television to optimize their product to make it so appealing to advertisers? Most advertising professionals would argue that all of these channels are still working at it.”
“[T]here is so much good content on the Internet that it is overwhelming. Where both [a DVR and an online news reader] enable you to avoid a lot of the noise, the Internet just has way too much relevant and good content – no matter what your varying interests may be.”
In other words, the hard part has been done: good content is everywhere! That’s great! People find new ways to make a buck everyday online, so don’t worry about it – the hard part is creating good content and cultivating an interested community.
Mitch says the internet is growing too fast – for whom exactly? Obviously not the viewing public, especially the young, if you read the Pew survey results. Obviously not us social media early adopters. So who? The suits? The record labels and the movie studios? Everyone else who tries to make a buck off of the content producer? Hey, screw ‘em.
Out Of Whose Wallet?
Despite the assumptions I drew from Mitch’s post, his main point is this: Who is going to pay for all of the content we consume online?
It’s a valid question. Of course, good content has a price tag. But I think we’ve gotten too used to advertising paying for everything and it’s turned advertisers into editors. That mentality won’t work in this new era.
And Mitch and others get this, I think. In a post on Christmas Day, he wrote about a potential journalistic endeavor: “Hustling for banner ads is not going to generate the revenue that you were hoping for, and by focusing on this – instead of the quality and relevance of the content – it is only going to cause you to be distracted.”
So let’s not get distracted because of the business model. Tell business owners and old-school marketers this for now: Provide content, then build trust, then rake in new business. It’s uber-simplified, but that’s how you provide content at a profit.
This Isn’t Personal
I count 10 blog posts in the last year alone where I had nothing but glowing things to say about Mitch. He and other new media folks are providing a light in the darkness to millions.
My concern is only that we keep moving. Sure, let’s talk about business models and figure out how we can all provide the most use for our clients and make an honest buck doing it. But let’s do it in a spirit that fits the new era, one where we don’t get tripped up comparing things to how they were in the past.
Why? Because we’re in a freakin’ awesome point in time! Social media marketing is creating more honesty, value, and conversation – and I suspect that both Mitch and I would agree that’s a wonderful thing.
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(Image courtesy of Y-J via Flickr)
Tags: Advertising, Business, Business Models, Mitch Joel, Six Pixels of Separation, Social Media, Web 2.0
I agree with you about the myths that need debunking. As marketers. we need to consider the vast differences between traditional andnew media and really rethink ideas about advertising, and past business models.
I did read Mitch Joel’s article though, and really to me it seemed more of a call to action as your post is. Recognizing that the Internet is growing and changing faster than marketers can get their footing. It’s a time to recognize these changes and think seriously about our adaptation to them – and, ultimately, how the consumer fits into all of this in terms of expectations, usage, etc.
We are in a “freakin’ awesome” point in time! It’s also a time to really think about what and how we are adapting as media changes with us and around us.
I couldn’t agree more – excellent points.
As a marketer my job used to be all about great marketing copy, design, channels, frequency, leads generation, etc. While all that still exists, over the past 10 years my job has become primarily defined by continuously creating value for my customers and prospects. Sure, a good part of that value is in the products and services we sell, but much of it is also in the form of content (market research, webinars, live events, podcasts, etc.) we give away, and content we enable everybody in the industry we serve to create and share through a community platform we built (and gave to the industry).
The results are undeniable – creating great value through content and the community platform have done more to position us as an industry leader and trusted partner than any amount of advertising, direct marketing or PR ever could.
Nice linkbait.
Julie is spot on. I was pointing to the research in hopes of informing Marketers and the media properities to start thinking really seriously about what this means in the context of media and advertising as it presently is being bought and sold online.
I also don’t see the corelation to Social Media and traditional online advertising in terms of your post. Traditional online advertising is the only model mentioned because it is the only model being used by these online media companies that this research report is about.
It was, indeed, a call-to-action to be aware, stay sharp and enjoy the amazing ride we’re all on. I’m sorry that you took it to mean something different. I’m happy Julie got it and pointed it out here (thanks Julie).
It is very hard for these companies to do the digital investment without some kind of revenue model. They are falling back on what they know and what they think might work (traditional online advertising) instead of supplementing it with some of the models you Blogged about here. If anything, I’d say we were in violent agreement… especially if you have read these older Blog posts of mine:
Trading Analog Dollars for Digital Pennies: http://www.twistimage.com/blog/archives/trading-analog-dollars-for-digital-pennies/
New Business Models: http://www.twistimage.com/blog/archives/new-business-models/
You’re welcome Joel! : )
-Julie
http://twitter.com/jwight
Sorry — honestly don’t follow your thinking.
Point 1: there is both good quality and bad quality content on TV, although certainly the latter now outpaces the former. But let’s not talk about TV. I read the New Yorker Magazine. It still has extremely high quality content that is funded primarily by advertising. The New Yorker doesn’t exist to sell advertising. It provides content that is funded by advertising.
Point 2: I agree that we need new models. But if advertising worked, i.e. sold, it WAS good. That is the purpose of advertising (at least in most cases). Are you implying that in the past advertising drove sales of products even if they were bad products? Advertising that sells may get someone to try a product once, but if it doesn’t deliver on what it promises, they don’t buy it again. Agree that bad products may fail faster thanks to social media, but they failed before social media too. (Or are there do you see many Ford Pinto’s still on the road?)
Point 3: Don’t understand what these examples have to do with models that provide funding for good content.
Point 4: “Unlike TV and radio the content is already great”? Don’t agree, there’s plenty garbage online just as there is on TV and radio. And quality content too.
I’ll admit – when I first read Mitch’s post it did not read as a call to arms to me. As I read it now, I can see how Julie and others would think that. I apologize for whatever bug was up my a** at the time of my first reading.
However, understanding that Mitch cannot encapsulate his worldview in this one post (as evidenced by the other posts he mentions), I do stand by the sense that marketers are severely limiting themselves by only relying solely on advertising. I understand that the report only mentioned advertising – I should have acknowledged that. But I’m sure others can share my frustration about the lack of imagination re: business models.
As early adopters, we are guiding the way, right? And it’s our job to be aware of all of the new things coming down the pike. But if business owners are so overwhelmed by the options and can’t get a footing in the new business arena, I know for a fact that there are many, many early adopters ready to help them out for a relatively inexpensive price.
The simple fact is that not every business *should* use all of these different business models nor should they use every shiny new object. Folks like us can help them decide which is best. But I don’t think it’s too much to expect them to have broadened their mind in at least the last DECADE of online business. I’m willing to help anyone who wants help. I guess I just have a tough time understanding any sympathy for someone with their head stuck in the sand. How can you be a serious, responsible CEO and not notice the changes around you?
Whew! Well, that was certainly more cathartic than writing the original post.
So yes, I think Mitch and I are violently in agreement, which makes a lot of sense. It’s the reason I find myself nodding in agreement whenever I’m at the gym listening to him, John Wall & Chris Penn, C.C. Chapman, and Joseph Jaffe. You should see me – I look like a damn sippy bird (http://en.wikipedia.org/wiki/Drinking_bird), nodding along
However, I still disagree with the points Stephen makes above.
#1-2: We may be getting into semantics with a back and forth about advertising and content. But I still contend that content was largely wrapped around ads to provide eyeballs. Which do you think businesspeople cared more about: the content or their revenue stream? You bring up the NYer – I used to work for a similar publication in the political world and let me tell you, we were struggling for ad dollars like everyone else in the sphere. The advertising could easily exist without our content, but our content could not exist without the advertisers. I’m sure the NYer is in the same position.
Plus, to equate good advertising with selling is simply wrong, in my opinion. That is the “used car salesman radio pitch” model – you know, where some guy screams at you for 30 seconds. Sure, it works. But did that make it good? Is that something we want to emulate now?
#3: The business models I mentioned allow me to access good content. If I buy a t-shirt from Toothpaste for Dinner, I am contributing to their ability to stay home and draw me comics. If I subscribe to The Bitterest Pill, Dan has the funding needed to produce those podcasts (me and a few thousand other people, that is). I don’t know how else to explain it.
#4: Sure there’s a lot of garbage online, but I sure don’t see it. RSS feeds bring me customized news feeds. Twitter provides the “finger on the pulse” I crave. With TV and radio, I spend half the time flipping channels. Online I have everything delivered to me. All I was saying was that once you have good content and an audience, the business model part should be fairly easy.
What do you think? I’d love to hear your thoughts below.
Very well written and thought out post. I think these are the new tools that can prove to be every effective if used and applied in a proper channelized direction.
We really need to overhaul our myths and getting going with the new media resources.
[...] been on the receiving end of this topic before, I expected a refinement that was missing [...]
[...] been on the receiving end of this topic before, I expected a refinement that was missing [...]