Blog Post

What Many Media Companies Don’t Get About Building An Audience

Ty Ahmad-Taylor is the founder and CEO of FanFeedr, a real-time personalized sports feed. Previously, he was SVP of Strategy and Product Development at Viacom (NYSE: VIA) and, before that, Comcast.

I worked at two large cable television networks, and both believed — and continue to believe — that they are in the television business.

That seems logical enough

32 Responses to “What Many Media Companies Don’t Get About Building An Audience”

  1. So where does the content come from that gets delivered to this audience waiting for it? Do you pay for it or are you simply a middle man who delivers it?

    Walmart succeeds because it can distribute goods at a low price and make a profit. What is your plan?

  2. Rahim Rajan

    I think if we step back and analyze where this is all going, more outlets and places to access content, less net revenue being generated by each stream of content, and consumers will have a more difficult time authenticating and discerning content they like and want more of from just a mass of content that is out there. Ty, in the comments, you make an excellent comparison to what has happened in the music business. Unfortunately, I’m not sure consumers today are better informed of what music is out there, or whether artists are better supported to continue creating new music. It seems that the general response by many music companies is less willingness to take risks on creativity. In the news media industry, we see a general move away from reporters on the ground doing investigative reporting and foreign reporting. It seems that the web has shifted the center of gravity from the center (content creation and production) to the periphery (the audience and consumers) without having really created a sustainable revenue model to cover ongoing costs. I think Itunes is a relevant example though because the genius of Itunes was charging 99 cents for a nugget of content (a song). So perhaps newspapers and media need to start thinking creatively about costs and trying to spread costs to a larger audience (via a smaller per unit price).

  3. “If you make television shows, films or music, your business is actually the audience business. The same goes for books, magazines and newspapers.”

    With all the comments provided, not one person address this statement. I waited to see what others will say…is media really an mass audience business or demand fulfilment business in the 21st century?

  4. The general gist of this article is correct, but the devil is in the details.
    The railroads had problems after the turn of the century because they thought they were in the railroad business, not the freight/passenger hauling business. As a result, they lost out to alternative modes of transport over time.

    The same can be said of TV, but to a far lesser extent. Most networks were wise enough to enter the cable fray when that became meaningful, and all got involved in the internet in some way (though one could argue about how successful their approaches are/were).

    That said, I have no problem with the Times putting themselves behind a pay wall. To begin with, we have paid for newspapers for years – so the concept that “information is free on the internet” isn’t really true. It just HAPPENED to be true for a brief period of time when the internet began. In the long run, tried and true methods of subscription will win out. Just because something WAS free doesn’t mean it always will or should be.
    Secondly, news is a difficult item. It costs money to collect and present. In addition, the commercial model for news – one driven entirely by advertising – is very limited. It can barely cover the costs in many cases. Add to that the editorial separation required between the commercial and reporting side – and you’ve got a recipe for disaster in the news business. Advertisers are seeking “integration” and other “contextual” placements to get their message across. News presentation cannot provide this without having a question about the editorial partisanship of the publisher.
    It is far better to cover costs partially with subscription. This will add value to the overall published content. Not only does it cover costs, but it creates a “qualified audience”. That is, one which wants the product so badly they are willing to pay for it – it is an engaged audience. This makes the advertising on the site that much more valuable.

    If it remains free – anyone can get it and it’s essentially devalued. It will have a huge audience, but that audience will be too broad and general to be of any clear value. And while a huge audience may be good for a cable company, it’s not always good for a content provider.

    One of the anomalies of the internet, which I suspect is coming to a close soon, is that advertisers will pay a CPM premium for “broad reach”. Oddly, broad reach is never achieved on the net, and in addition, broad reach should be a discounted item. We always pay discounts for volume in other businesses. We haven’t in media because of the bizarre nature of the method of purchase. But these times are changing.

  5. tom_streeter

    Maybe I missed it, but where is it written in stone that media conglomerates are endowed by their creators with the inalienable right to make as much money as they did 30 years ago? In another lifetime I was part of the academic world when “uses and gratifications” research was all the rage. Study after study after study said the same thing: people use media when they don’t have something better to do. One colleague quipped that we should change the discipline’s name to “Frivolity Studies.” In that context it makes perfect sense that a series of videos of cats playing the piano on YouTube replaces a multimillion-dollar sitcom in the minds of people who are just looking to kill time.

    Good luck with those profit margins.

  6. George Busa

    After listening to everyone’s thoughts on media – I am convinced media in the future will not be dominated by very large media Companies. The media landscape will be dominated by very many, small nimble media providers, specialists in a given subject, specifically complementing what folks people do in search today and supported accordingly.

    One of the largest of media Companies in the US has 1,1200 journalists in their news room but only 100-150 see their work published every day! Why it that? Is it possible that written works are overly scrutinized and edited to death, that they are watered down by the time the public reads it? So by the very same reasoning, consumers want a quality product that is real, lively and meaty and will return again and again for more. If big media describes it’s product as premium, what does that really mean? Does it mean new media cannot provide distinguished works to consumers? I don’t believe that for one minute!

    A few years ago a major media Co closed their “pay for premium editorial” site, it did not last long. Not too many folks desired to pay to read so called “Rock star journalist’s opinions” Let “old media” put their work behind pay walls, let see how long consumers stay at the party this time! In the interim I discover new, exciting writers and sites daily, all for free.

  7. Great piece. I couldn’t agree more. The CW’s experience is great proof of concept, and similarly I think the small online media outlets will prosper in the coming months because they can embrace such an idea. It’s an exciting time to be in the media biz.

  8. Mark Laudi

    Ty, your article is spot on – media companies should start thinking about themselves as ‘purveyors of content’ no matter what platform is used to deliver it to the audience. Everytime I hear someone say “I work in television”, it signals they don’t get it.

    In response to some of the other commentators bemoaning the absence of a matured business model: come on, guys, use your imagination!

    1. Think beyond display ads or pay-per-view as revenue opportunities for content. How about transactional revenue (“watch the movie online, then click to order online the same watch/sunglasses/whatever the protagonist was wearing” or “Watch <>, then click to organise a test drive of Will Smith’s Audi”). Makers of kids toys have been doing this for decades (“watch Transformers, then buy the toy”). Fremantle Media does it with Idol (“watch the show, then pay for a text message to vote for your favourite artist”).

    2. Paid-for editorial content. Anyone who thinks commercial interests aren’t already influencing what Joe Public perceives as “objective news content” is absolutely kidding themselves. There’s a whole industry (public relations) built on Influence. Clearly-labelled and well-produced, paid-for editorial content provides:
    a. a conduit for organisations that have a message to communicate to audiences
    b. revenue for the content company, and
    c. (again, if well-produced by ethical writers) value, credible, useful information to audiences.

  9. Larry028t

    Hello? Business Model? Delivering an audience is not a business model, unless someone is wiling to pay for that, either the audience itself or an advertiser.

    This is a ironic post on a site called “PaidContent”.

  10. It’s true that everybody is failing to understand that they’ve got to build a customer base (in this case, audience) around what is essentially a new platform (the internet) often at the same time of needing not just wanting to keep their legacy business in tact for as long as possible. Some of these industries (and therefore their employees) have not had to build an audience before. It’s not a surprise they’re messing up but the industry’s focus on traffic has kept the focus off strategies to help people learn how to do. Now, the industry is a mess. You can’t have a business without customers.

    Social networks are ONE tool for building audience but if you work on the back end of most publishing sites, just one. You need a suite of tools and specific marketing strategies including offline integration.

    It is never, ever — ever — wise not to marry an audience to YOU. Sites are not making the mistake in trying, that’s smart business. They’re making the mistake in not knowing how to build a real customer base around that product. That’s all that’s going on.

  11. George Busa

    “We spent a lot of time building a single, gleaming temple to the brand in Poughkeepsie, N.Y” Sites placed behind a pay wall is also like catering to audiences in NY or London from Pourghkeepsie is futile and will not be successful.

    Ty is right; those who create content only to hide it behind a pay wall is missing the point. Granted, keeping it free may entail much less revenues or even close down, but this the new reality and it will shake out the weaklings even if they are today’s media giants! The new giants will have a vastly different structure and overhead to maintain leadership and of course product content which will attract audiences and sponsors consistently. Happy New Years !

  12. I get your thesis: The milieu of the online media space is heading in what you think is the wrong direction, sacrificing reach for increased revenue per reader/viewer/user. I disagree.

    What if the volume of content available via low-cost digital distribution is so significant that it never supports audience concentration around one piece of content significant enough to warrant sponsorship deals the size of television ones that pay for production of tv-quality programs? In a world of 100 television channels with coax-delivered content you can reasonably assume that 1% of all viewers at any one time were watching your “channel.” With an immeasurably large number of content options on the web, how can one ever get viewed enough in a reasonable span of time to manifest economics analogous to television?

    Remember, too, that cable viewers are “paying” for those channels, though not selectively or deliberately, at their disadvantage. Perhaps we’ll just start being more selective and paying for programs or program packages that we do want to watch, much to all of our benefit as media consumers. Isn’t this more efficient? Of course this acknowledges that with more efficiency comes less value for the content producer with that value returned to the consumer, which I suspect is the reality of internet media. Those “billions at stake” can’t come back in a world with such massively lower distribution costs (lower barriers to entry, lower capital requirements, lower returns over time, yadda yadda).

  13. @darkwing: there are two sides to that story. Preserving their price point now makes sense *now.* However, moving forward, a consumer who is looking for Warner Bros. films on Netflix, can’t find them because they are delayed by a month ISN’T going to drive to the store to buy that DVD. They are just going to watch something else. Warner Brothers is just minimizing their audience and their revenue.

  14. darkwing

    Nice piece, but I disagree with you about Warner and Netflix. WB needs to do everything in their power to preserve a price point where viewers are paying $4 a head to watch a movie on DVD (say 5 people watch at a $20 dollar purchase point) than $.20 a head to rent from Netflix/Redbox (5 people per viewing session times, 20 people rent a disc Netflix bought for $20 dollars)

  15. Thanks for the great article, Ty. When all we had was a bunch of channels and a tuner, “consumer experience” was as simple as what programming do you put on the airwaves. Now that we have a full digital universe, with unlimited channels, front-ends, multiple devices, and myriad distribution options, it’s about much more than the content: it’s about the experience we create for the consumer. Some of the old media companies think of the pipes first and only; with the consumer a total afterthought. But those that put the consumer first will lead the way to a new model.
    –Ben Elowitz, CEO | Wetpaint http://www.wetpaint.com

  16. @Macbug, you are indeed correct that advertisers are not fully there, but some are. Pepsi is dropping its Super Bowl ad spending from television and moving it entirely into social media (http://bit.ly/8gBgVk). Additionally, while my metaphor is an oversimplification, the point is that there are plenty of other things to do when you open your laptop if you can’t get to your first option, and diminished relevance in both the short-term and long-term is what’s at stake, with the attendant decline in ad dollars following shortly thereafter.

  17. tjleeland

    @Ty: What I don’t understand is how people can’t see that this is exactly the same thing that the recording industry went through. We just saw this play out, and we know how it ends for the companies that grasp onto old models instead of innovating new ones.

    The lessons are right there for everyone to see. You can’t stop consumers from adopting new technologies. They’re going to do it with or without you. You can sue ’em, you restrict ’em, you can charge ’em more, but they’re going to find a way to consume media in whatever way they want to consume it. Learn how to make money off these new habits instead of fighting with them.

  18. i agree as a technical director for a new england media company its rediculous how much they put towards banner ads and paper ads and not into web content, pre rolls video and playing the numbers game of giving it away for free but use preroll advertising …. get more people in watching, they see more you get more for your ads.

  19. While your metaphor is clever, I agree with several other commenters (ors?), that you’re oversimplifying the challenge faced by the media companies (as metaphors often do). I too have worked at several lareg nedia companies (Fox, Scripps and Viacom for me), and believe few would dispute your central tenets–what most are wrestling with is how to get to an endpoint like you describe, without accelerating a deterioration in profits which at least in today’s business model, would undoubtedly occur. Not only do media companies have to make the “right” strategic choices to serve the evolving needs and demands of their audience, but the measurement systems necessary to allow Madison Ave. dollars to follow, need to be in place, and the psychology of advertisers needs to move as well. I think advertisers will follow if given the tools, but those tools really aren’t here yet today. Until that time most media companies are, I think, looking to move towards a world not unlike you describe, while continuing to optimize within the constructs of the business model today. Billions of dollars are literally at stake, and it would be irresponsible to look to accelerate the move without a clearer picture of the new status quo than is evident today.

  20. @Dan S. agreed about Gossip Girl. I think that the CW has been very forward-thinking about this once they had actionable data.
    @Not a Hippie: Point understood, but I think that the economics of the old models are not guaranteed moving forward, and consumers are not obligated to support them.
    @Dumb Article: my underlying point isn’t that everything should be free, my point is that the music industry pursued the same set of tactics you suggest, and they are both greatly diminished and less relevant despite the fact that people consume more music than they did 10 years ago.

  21. Dumb Article

    Philanthopy? Bragging rights? Being cool by being “on line”? None of those things pay the bills. There is a very simple reason why no one wants to canabalize their existing revenues – it would be fiscially insane to do so.

    If and when there is a tipping point towards massive multi channel distribution, and I believe it is inevitable, then you will see canabilazation of the discrete channels en mass. Until then only a fool would do so. (An unemployeed fool at that).

  22. Not a Hippie

    You seem to be missing one thing: if the all that consisted of the business was connecting the media with the consumer in whatever way was possible then you would be right. The reason discrete channels have prevailed is because that is the only way companies got paid. That’s also why they don’t want to give them up.

    Until you can generate as much money in open channels as you can from discrete channels, discrete is going to win.

  23. I think the fact that metrics exist with respect to the Gossip Girl experiment is indicative of the fact that they do indeed get it. What they don’t get is how to deal with making much less money in a multi-touchpoint world when production costs remain the same or are even rising.

  24. standupkid

    This is an excellent description of the pervasive “they don’t get it” syndrome that afflicts old media executives. In my area of focus, local television news, I find it frustrating to watch as companies continue to see alternate platforms as means only to drive viewers back to the 1950’s era product: the 6:00 or 11:00 newscast. It’s like using new technology to reach the audience you already have, instead of the other way around.

    Thanks for the insightful piece.