@ EconSports: Note To Startups: Diversify Revenue Streams

imageIn the opening panel at ContentNext Media’s EconSports conference, moderator Will Leitch, founder of Gawker-owned sports news blog Deadspin, remembered the reaction among sports executives when they first saw his approach to covering sports. “They were surprised at how quickly we posted and the interaction with readers.” Now, he added, “leagues can’t be stupid [about social media] anymore.”

But sports executives are still searching for ways to make money from social media, and that creates opportunities for startups, said Brenda Spoonemore, CEO of Atomic Moguls (above). She also announced that Atomic Moguls has struck a deal with Fox Sports to collaborate on a social-networking joint venture; the arrangement includes Fox Interactive’s MySpace. As for what that will mean for the Atomic Moguls’s ability to structure deals with the various professional sports organizations, Spoonemore said: “We naturally believe we can bring value to both. When it comes to taking to the different leagues, it’s like Goldilocks: Every partner takes a different approach.” More from the panel, Sports Media Companies vs. the Leagues vs. the Startups, after the jump.

Diversification is key: Asked about the darkening economic clouds, the panelists all said it’s becoming imperative to have more than one revenue stream, such as advertising. Even within particular revenue models, branching out is a must. David Birnbaum, CEO of Takkle: “It’s a scary time, that’s the truth. The sites that have the advantage are the ones that have diversified revenue streams.” The high-school sports social net is launching a recruitment function soon. Stephen Hansen, CEO of WePlay, added: “Having partners like MLB helps as well. While they’re thinking about distribution, we’re thinking about customer acquisition. It’s those kinds of moves that allow us to make one plus one equal 3.”

Mass vs. niche: “If you’re using retail as analogy, ESPN (NYSE: DIS) is like a supermarket,” said Chris Bevilacqua, CEO of CAA Sports Media Venture. “The leagues are setting up specialty store concepts. How you leverage the relationships with the mass retail ESPN offers and the smaller, niche focus from the leagues is what matters.”

On rights management: This is the trickiest part of the relationship for many online content companies. Spoonemore: “We’re certainly careful with logos. We’ve learned that.” Birnbaum added that helping the leagues understand the value of getting their content out is the essential role of digital media companies: “If you compare the leagues with startups, the leagues don’t have a direct relationship with their users. That’s where we come in, in terms of offering data that will enable the leagues to know their fanbase better. A lot of the leagues and teams are uneasy about letting go of their content. Some leagues are comfortable with getting their videos on YouTube. Using those social media tools is necessary at this stage in terms of making the most of their content. That’s something they’re going to have to deal with.”

Ad networks can’t compete: The panelists tended to take a dim view of the role remnant ad nets can play in the sports business space. Spoonemore: “Ad networks don’t know how to sell the brands. We rely on our arrangement with Fox Sports on ad sales and that provides a lot more intelligence to the marketing than handing it over to an ad network.” Bevilaqua: “We feel the same way. We went to companies like Coca-Cola and made a direct sale. There will always be a place for third parties. But we think it’s important to be in the lead in ad sales on the sites. Our stance is, no one can sell the brand like we can.”

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