The Digital Economist
Hi, I'm Sam Birmingham. I love startups, innovation and challenging the status quo.
For the vast majority of my years, economies have grown, companies have profited and people have got richer on the back of a once-in-a-lifetime demographic shift and debt-fuelled boom. Those days are through.
Economies must evolve beyond rampant consumerism and confront the demographic headwind that had been a tailwind until the Baby Boomers began retiring. Companies must become nimble, innovate and invent new products to address customers' ever-changing needs in this digitally-disrupted world. And as people, we must focus on solving problems and learn to do more with less.
These are the challenges that excite me. They are what I want to get out of bed each morning and be a part of. This is where I share my thoughts.
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I love a good contrarian perspective and all things digital, so this article about the challenges facing traditional media companies was right up my alley:
The news market is undergoing an irreversible split. On one side, digital distribution (on web, mobile and tablets) will thrive through higher volumes and deeper penetration; revenue is not easy to squeeze out of digital subscribers and advertisers but, as some consolation, serving one or ten million customers costs about the same.
On the other side, print is built on a different equation: gaining audience is costly; every additional reader comes with tangible industrial costs (printing, shipping, home delivery). Having said that, each print reader carries a much better ARPU than its online counterpart (bet on a 5 to 15 times higher yield, depending on the product). And, for a long time, there will be a significant share of the audience that will favor the print version, regardless of price (almost). Those are super loyal and super solvent readers…
Mainstream media think their mastheads and audience are their best assets, yet they drown them in tabloid noise interspersed with ads. Not only is that approach wrong, but they misunderstand exactly what their best assets are, and how to maximise their value.
- The shelf life of most “news” is measured in hours, if not minutes. That doesn’t give you long to generate a return, so cut the churn and focus on extending the shelf life of your content - quality not quantity. Directories are still valuable; press releases posing as “news” are not.
- You can’t have one without the other, but your journalists are still more valuable to you than your audience. Syndicate the “news” and focus on “opinion” - I would gladly pay $x/month to have the best minds curate my reading on topics of interest and inform my thinking with critical analysis.
- Since the birth of marketing, newspapers’ customers have been advertising companies, not the end users of their product. The ease with which digital content can be created and distributed has seen ad inventories balloon, putting pressure on prices and, more importantly, margins. The tired old approach is to create more content, attract more eyeballs, sell more ads… FAIL! What media companies need to do is flip their perspective - stop trying to find ads for content; try to find content for ads! A newspaper’s sales team knows every company advertising in their local area, who they want to reach and what they’ve got to spend - put your team to work connecting advertisers with the right eyeballs and you can start generating from content that you don’t even bear the cost of creating or distributing!
I somewhat agree with the proposition that “the print business is not your legacy, it’s your bank”, however I don’t necessarily accept that newspapers must raise their price to survive.
What they do need to do, though, is work smarter to serve their real customers - advertisers - and do more to align their value proposition with the interests of the end users of their product.
