Jun 28 2007
Show me the money
Noting the enormous costs incurred by traditional media newsrooms Michael Rosenblum has a suggestion:
Go over the local University. Get yourself a dozen bright and eager young journalists. They all have their own cameras and laptops anyway. And start your own local [online] news channel.
The one stop Michael omits is on the way back from the college where you visit with your friendly Venture Capitalist and pick up your first round funding check.
The world of online video world is awash with VC cash. But do act fast - Dan Rayburn, the Executive VP of StreamingMedia.com feels that the “video bubble needs to pop, and soon”.
The problem, as Peter Kirwan explains in the Press Gazette, is that many of the advertising dollars being withdrawn from old media are not showing up online. “According to McKinsey, for example, US newspapers lost $1.9bn in classified ad revenues to the web between 1996 and 2004″ only a fraction of that was transferred to the net.
“… the key questions are these: how much of print’s revenue base will be vapourised by the web? And how quickly will this happen? The newspaper industry’s traditional answers to these questions are (a) Nobody knows, and (b) Relatively slowly”.
Not everyone is so optimistic. Advertisers, it seems, do not place the same value on new-media consumers as many of us might hope:
In the US, digital media consultant Vin Crosbie has calculated that each printed newspaper reader is worth between $500 and $1,200 a year in terms of reader revenues and advertising cash.
By contrast, Crosbie suggests that the average online newspaper reader is worth perhaps $8 a year.
….Some of the benefits of this destruction flow to readers, who are besieged by vast quantities of free online content. But the majority of the benefits flow to advertisers.
Advertisers, Crosbie explains are simply taking advantage of the new “balance of the supply & demand equation. It’s shifted from scarcity to surplus…”.
As thousands more rush to follow Rosenblum’s advice the surplus supply is only going to rise further, until some market correction creates a new equilibrium more favorable to producers.
In the meantime make sure that the first round funding check is large enough to tide you over until the second round.
On a more positive note, Steve Boriss points out that in changing times the whole risk/rewards formula is impacted. Job security becomes elusive but the rewards of success grow correspondingly:
The web is generating new formats and new writing styles that will allow some writers to stand-out and demand higher compensation based on their unique abilities to attract and hold audiences.
Without VC money - all it takes to be successful with Rosenblum’s model is 12 really talented students.
