Tuesday, December 8, 2009

Sorry but in Media, Size Does Matter

Some mavens of new media see a nirvana of social networks and small media entrepreneurs replacing big bad old media. The visions get romantic, with the media equivalent of microbrewers toppling the giants.

In reality, we could soon see massive consolidation of new media into new giants. It’s impossible to predict the timing of such a consolidation, but the implications for B2B are huge.

New media has remarkable numbers and new heros. Noam Cohen reported in the New York Times recently that Bill Simmons, a once an obscure local online commentator, is getting 1.4 million page views a month, as the Sports Guy on ESPN.com. His podcasts have been downloaded 21 million times this year and his new 700 –page book The Book of Basketball, reached No. 1 on The New York Times nonfiction best-seller list.

The pace and possibilities are intoxicating. Just as in craft brewing, there’s plenty of excitement, growth, and potential for fat margins in the new media. But it’s it is sobering to see that according to the Brewers Association, craft brews amount to only 4% of the US market today.

The essential power of media is the power of one-to-many. The bigger the audience that reads the article, hears the song, or sees the image, the more powerful—and profitable that media creation can become.

It’s true that old media are getting maimed by competition. Ease of entry, facilitated by new technology, has spawned hyper-competition for eyeballs, time, attention, and in the case of events, warm bodies. In both B2C and B2B, old media are scrambling to get back in front of their audiences on the Web and make money in the process.

But big still wins. Google is getting huge on the frenzy. Comcast has agreed to pony-up 30 BILLION for NBC. In the information industry, unlike in many other sectors, there is almost infinite positive return to scale. The bigger a story gets, the more profitable it becomes. Big media can make people into stars and transform products, including other media products, into blockbuster hits and best sellers.

The good news: events win in all scenarios. Big is about total audience size not media format. Niche new media companies are recognizing that event platforms are a solid way to “monetize” the trust of their high value audiences. Not every big event will survive but big events will still make big money. With new technologies for promotion and production we can produce value and profit in lots of small events, in lots of places, for big brands. New technologies also enhance the experience and value of big events. Virtual participation expands the audience of any event.

Fear is your friend in this environment but you have fantastic opportunities. If you are interested in how events fit into the unfolding drama of the media business, introduce yourself digitally with a comment or a private message. Maybe we’ll have an opportunity to meet face-to-face at a conference soon, over a cup of coffee, or a good craft ale!

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Anonymous Anne Holland said...

I respectfully disagree. Firstly, if you want to be a big media company, you can do a roll-up of lots of small titles. For example, Phillips Business Information did this with dozens of b2b print newsletters in the 90s until they were over $100 mill a year in total. Secondly, what's so bad about being a small publisher? For some of us, it's a lifestyle choice. I worked at Phillips back when we had 1,300 employees, then I launched a company that ended up with a couple of dozen employees, and now I've launched my next company and am quite happy with just a small handful of staff. The smaller, the better for me personally!

December 16, 2009 at 10:32 AM  
Blogger Roger Wilson said...

Anne: Thanks for your input! I am not saying there are not opportunities for small publishers or that big is better qualitatively, I am saying that big wins in the media business because big media is more effective at making millions of people think and feel the same way at the same time.

There will always be opportunities for small purveyors of specialized information and there will be opportunities for niche products to be rolled up or extended out on the Phillips model. It is in the more general information arena where I think there is a romantic view in some quarters (see Newsinnovation.com) that we will see the small players collectively dominating the media market.

I personally love small editorially driven media companies and entrepreneurial businesses generally. My former colleague at Inc. Magazine, Bo Burlingham, wrote a book Small Giants (http://www.smallgiantsbook.com/)which posits that companies don’t have to grow to be great and that small, closely held companies can reflect the full range of interests of their owners including “Goals like being great at what they do, creating a great place to work, providing great customer service, making great contributions to their communities, and finding great ways to lead their lives.” My only problem with Bo’s thesis is that he focused on companies that are actually quite large. I would content that many small businesses are “small giants” in their realms of influence.

I’ve been in the entrepreneurial end of the publishing world my entire career. My first “commercial” effort at publishing was a neighborhood newsletter which I sold door to door for 25 cents! I got I.F. Stones Weekly (see http://www.ifstone.org/), one of the early newsletters, when I was still in high school and I was thrilled by the idea that one guy hammering out a newsletter every week could move so many minds. So I believe “small is beautiful.” I just don’t think the future structure of the media market will be a network of little players.

December 16, 2009 at 11:41 AM  
Anonymous Bo Burlingham said...

Very interesting, Roger, and thanks for the mention of Small Giants. The book has led to some interesting discussions since it was published in 2006. Size was an issue I had to deal with in writing it. I decided to choose a range. The smallest is a two-person business. The largest is a 2,000 person business. My question was: how small can you be and still have mojo, and how large can you be and still be "human-scale." Didn't have a definitive answer, but hopefully shed some light on the questions. As for the future, my main concern would be that United States becomes an inhospitable environment for entrepreneurs, as France largely is at the moment. Both big and small companies have important roles to play. Both groups are in trouble without the other. As for who "wins," that depends on how you define winning, doesn't it? Hope you are well and that our paths cross again before long.

December 16, 2009 at 3:37 PM  
Blogger Roger Wilson said...

See Erik Sass on the implications of 25.1 million users on the small screens of mobile devices in January 2010 for Facebook http://bit.ly/aegks0. He's worried about what advertising model adapts to small screen. But I am impressed with more huge numbers for Facebook. Think of the multiplier of 25.1 users X the people who care what the users think, post etc.

March 9, 2010 at 4:33 PM  
Blogger Roger Wilson said...

See a Paid Content story about AOL planning to give up on Bebo after buying it for $859 million "it is clear that social networking is a space with heavy competition, and where scale defines success" http://bit.ly/arXyEl

April 7, 2010 at 3:57 PM  
Blogger Roger Wilson said...

Thanks to David Cutler for bringing this Wired article to my attention http://www.wired.com/magazine/2010/08/ff_webrip/#comments. The main article by Chris Anderson is a bit of a stretch (see comments) but the sidebar by Michael Wolff speaks to the union of old and new media and the power of size and consolidation.

August 17, 2010 at 3:01 PM  
Blogger Roger Wilson said...

Greg Satell outlines how the death of big media has been overstated:
Is Traditional Media Being “Googled?” - While Google has truly become a force to contend with, its eff... http://ow.ly/1alWWy

December 15, 2010 at 9:26 AM  

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