An Old Problem in the Present Day for New Media

Whereas once they were thought to be climbing to success upon the dying corpses of newspapers and magazines, “new media” publishers and websites find times are getting tough. The same fate that brought low their predecessors, the drying up of advertising dollars, might be in the offing for them, too. Nothing is easy in life or business, especially when you are dependent on the ever-shifting world of online advertising for revenue.

SFGate:

While spending on digital advertising has quadrupled since 2010, an increasing proportion is directed to Google and Facebook. This year, Google, including YouTube, received about 44 percent of digital ad dollars, according to eMarketer, a digital research firm. Facebook has about 21 percent.

“This is a big deal: The Platforms are the FAANG companies (Facebook, Amazon, Apple, Netflix and Google),” said Peter Horan, a venture capitalist and head of Horan Mediatech Advisors. “They have put themselves in between media companies and both their readers and advertisers. It’s important to remember that these companies are in an arms race among each other.”

Mic is not the only new media company to struggle recently. In November, Disney said it would write down the value of its investment in Vice Media by $157 million. Vox is expected to miss projections this year.

After reportedly missing revenue projections last year, BuzzFeed launched an aggressive effort to diversify its revenue, including selling cookware at WalMart and consulting with other companies, including Maybelline, to develop new products with viral social media potential.

The company drove $36 million in sales to retail partners such as Macy’s, Amazon and WalMart through a new affiliate marketing program, according to a company spokesman.

These companies correctly identified weaknesses in legacy media companies and readers responded well to them, Horan said. But growth rates have started to slow, he said.

“Companies like Vice, BuzzFeed, Mic, Little Things were not actually committed to making money in the media business,” Horan said. “Their premise was that they could achieve escape velocity with their audience and revenue growth and either go public or get acquired.”
“The public has gotten more and better content than they would pay for or that ads could support,” Horan said. “It was therefore not a priority to make money.”

There are as many theories on how to make money, especially online, as there are people trying to do so. Henry Ford, who in his day took a new technology and not only revolutionized it’s manufacturing but turned that process into monetized marketing for his business, once said “Many inventors fail because they do not distinguish between planning and experimenting.” It would appear that some in the “new media”, especially those initially flush with investor’s cashflow, confused the two.

Or perhaps they just assumed, against that oldest of business maxims, that digital trees were different that all previous trees, and this time they really would grow to the sky. Apparently not.