'The Market and the Internet Don't Care if You Make Money'

The title of this post comes straight from the mind-blowing mind of Seth Godin, preaching to the book industry (promoting his book Tribes), but he could just as easily be preaching to anyone in media:

[T]he market and the internet don’t care if you make money. That’s important to say. You have no right to make money from every development in media, and the humility that comes from approaching the market that way matters. It’s not “how can the market make me money” it’s “how can I do things for this market.”

and

The market doesn’t care a whit about maintaining your industry. The lesson from Napster and iTunes is that there’s even MORE music than there was before. What got hurt was Tower and the guys in the suits and the unlimited budgets for groupies and drugs. The music will keep coming. Same thing is true with books.

When I read this, I thought immediately of many assumptions the newspaper industry is making as the decline of its business model accelerates:

• There has to be a new business model to support journalism with the same profit margins as newspapers have enjoyed in recent decades.
• There has to be a way for newspapers to “reverse” the declines.
• Newspapers will eventually find a way to make their web operations as large and profitable as their print operations once were.
• Newspapers can’t be permitted to die, because then journalism will die.

But the reality is that all of these assumptions may be wrong.

Why? Because the web and the market don’t care. The web is the most disruptive force in the history of media, by many orders of magnitude, destroying every assumption on which traditional media businesses are based.

But the market should care, you say. What would happen if we didn’t have the newspapers playing their Fourth Estate watch dog role?

Here’s the bitter truth — the feared loss of civic value is not the basis for a business.

The problem with the newspaper industry, as with the music industry before it, is the sense of entitlement. What we do is valuable. Therefore we have the right to make money.

Nobody has the right to a business model.

Ask not what the market can do for you, but what you can do for the market.

Every conversation about reinventing a business model for newspapers begins, it seems, with a question about how to find a way to pay for what we value in the current product. In other words, how do we find a way to keep doing what we’ve always done and make as much money as we’ve always made?

I’ve rarely heard anyone start by asking what the market values. Where are the pain points in the market? How can we solve problems for people?

You know, business 101.

At Jeff Jarvis’ conference last month on new business models for news, I heard more out-of-the-box thinking in one day than I’ve had in the probably past year. But everyone had to constantly shoo the sacred cows out of the room.

I’ve been accused in recent months of Google (GOOG) worship, because I keep coming back again, and again, and AGAIN to Google’s business model.

Why? Because it’s the most successful media business on the web, by many orders of magnitude.

Why? Because Google solves a big problem for consumers. It helps them find stuff on the web they could never find on their own. And it solves a big problem for advertisers. It lets them buy traffic.

So what’s a problem in the market that newspaper companies could solve? When I know what I’m looking for, Google helps me find it. But when it comes to news, I don’t always know what I’m looking for, because, well, it’s new. And I want the best of what’s on the WHOLE web, not just what one news brand has to offer.

That problem is still largely unsolved.

And it’s just one example (and you can disagree about whether its a problem).

But Google as an icon is a double-edged sword. Google gave birth to the most destructive, soul-sucking, innovation-destroying notion in media today: monetization.

Nobody thought search was a business, until Google found a way to “monetize” it. Now everyone with something big, e.g. Facebook, YouTube, Twitter, etc., assumes there must be a way to monetize it, like Google did.

Newspapers and other traditional media put their content online and try to “monetize” it. We have it, therefore it must be worth something.

We’ve got lots of page views, therefore they must be worth something. We’ve got lots of ad impressions, therefore they must be worth something.

But here’s the problem — so does everyone else.

Everyone is chasing more traffic.

You know, just like everyone wanted “eyeballs” in the 90s.

We’ve got some traffic, let’s monetize it.

But, frankly, the market doesn’t give a shit about your traffic.

So what does the market care about?

Networks.

The web media market is a giant network. Google figured out how to harness the network. But nobody else has yet.

That’s not surprising. Media companies can only think about their own properties, their own content. They can’t let go of the monopoly control business which the web has already destroyed.

Since you made it this far in this post, I’ll tell you a secret, since this post was not meant to be defeatist, but rather a swift kick in the head.

So here’s the secret. Legacy media companies can’t create a new business model for news and journalism by themselves.

They have to work together, to build a network — a giant network of much smaller pieces, loosely joined.

I’ve said this before. And I’ll surely say it again.

But most of the media company executives who read this blog will shrug and go back to trying to figure how to prop up their monopolies.

And those monopolies will continue to crumble faster every day.

I’ll write more about networks and media company collaboration in another post. In the meantime, I’m going to watch the the web’s disruption continue to blow up everyone’s assumptions (including whatever assumptions I still have left).

Newspaper CEOs are meeting for a closed-door summit this week. Maybe someone will forward them this post. Or print it out and set it on fire in the middle of the conference table. Whatever works.

And as for Journalism, I’m less worried.

I’ll repeat Seth: The lesson from Napster and iTunes is that there’s even more music than there was before.

We’ve got highly entrepreneurial, creative, and driven people like David Cohn — who’s launching spot.us this week — working hard outside of newspaper company walls to invent new models for journalism

Journalism will find a way. Even if the industries that once supported it do not.

It took the ruination of the Bush Administration to create the right conditions for electing Barack Obama. Sometimes it has to all be torn down before you can begin to build it back up again.

Comments

[mollytjm:]

this is a wonderful article and so right on target. most businesses just don't get it...at all. everything will be done differently and the more adherence to old models, the more failure there will be. i just bought an iphone...and immediately downloaded classic literature to it...free! ok...i downloaded games too... but we're talking journalism here... my first search was for books.
i remember when there were small free standing bookstores in downtowns. then the malls came...then bookstores in the malls (no more mom and pop...big chains), then Borders and Barnes and Noble put drinks and food and seating into huge bookstores ... no one would have thought of doing this before...after all, people would spill stuff all over the books, right? and then the stores would lose $, right?
but someone had the vision and 'got it'. making the bookstore a social, stimulating, stomach satisfying, intellectual, music listening experinece worked and it still works because of the physical, stimulating, comfortable, social aspect of it.
business models that remain fixed when the social structure changes, lose.
thank you for such an intelligent article. i hope everyone at the conference reads it... unfortunately, those at conference like this often take on a club-like persona, reinforcing the static model while rearranging the deck chairs on the equivalent of the Titanic.

2008 Nov 10 09:30 AM

[Tim H.:]

I won't argue your business model points. BUT what about Obama's election. Newspapers were sold out worldwide. My point is not that the author is wrong and newspaper CEO's do need to change. I bristle with the suggestion that Print is dead or will be dead. When that comment is made what is the meaning "Print will die." Does it mean newspapers will die or PRINT will die? There will always be PRINT! The day after Obama's election proves their is still an interest in Print. Now I know people did not run out to read the articles but rather bought the papers as a collector's item. Which is my point. Printing is more than newspapers. There is commercial printing, printing magazines, printing labels on wine bottles etc... Not everyone has a blackberry and not everyone wants to sit in doctor's office waiting room looking at a blackberry. Me? I rather read a magazine or a newspaper when I am sitting on the toilet taking a dump then looking at a high tech berry or holding a lap top. As for GOOGLE... Agree about their business model. But I know the CEO of Google takes no pleasure in seeing what has happened to the newspaper business. It's very expensive to do the expansive in depth reporting about an important issue. Newspapers and their websites such as the washington Post are still best equipped. When I read a major story I look to the Wall Street Journal, Wash Post, Slate or some other major media center online rather than a blog site.

2008 Nov 10 12:42 PM

[BerkeleyBob:]

Interesting point. I recently signed up for an e-mail subscription to an out of town newspaper that is discontinuing news rack and newsstand distribution as a cost-cutting measure. Not totally satisfactory for this newspaper junkie (read three a day), but at least they are trying.

2008 Nov 10 01:02 PM

[Michael Eis...:]

This is completely wrong. the reason newspapers were sold out on the day after obama won was not because people wanted to read the news, but they wanted to frame the news. You see, it was a collectors item, a fossil, a relic. Not news.


On Nov 10 12:42 PM TJIrish wrote:

> I won't argue your business model points. BUT what about Obama's
> election. Newspapers were sold out worldwide. My point is not that
> the author is wrong and newspaper CEO's do need to change. I bristle
> with the suggestion that Print is dead or will be dead. When that
> comment is made what is the meaning "Print will die." Does it mean
> newspapers will die or PRINT will die? There will always be PRINT!
> The day after Obama's election proves their is still an interest
> in Print. Now I know people did not run out to read the articles
> but rather bought the papers as a collector's item. Which is my point.
> Printing is more than newspapers. There is commercial printing, printing
> magazines, printing labels on wine bottles etc... Not everyone has
> a blackberry and not everyone wants to sit in doctor's office waiting
> room looking at a blackberry. Me? I rather read a magazine or a newspaper
> when I am sitting on the toilet taking a dump then looking at a high
> tech berry or holding a lap top. As for GOOGLE... Agree about their
> business model. But I know the CEO of Google takes no pleasure in
> seeing what has happened to the newspaper business. It's very expensive
> to do the expansive in depth reporting about an important issue.
> Newspapers and their websites such as the washington Post are still
> best equipped. When I read a major story I look to the Wall Street
> Journal, Wash Post, Slate or some other major media center online
> rather than a blog site.

2008 Nov 10 03:21 PM

[jr. trader:]

good article, thx

2008 Nov 10 06:27 PM

[iknoknot:]

great article. the web's disruptive effect is a welcome overhaul to the media machine we've all suffered for generations.

after this last election, I for one will be glad to be rid of the paper-based relics that once used to carry information as news, not opinion wrapped information. I revel at the thought that these bastards that call themselves journalists may be out of work and filling bags at a grocer to make ends meet.

the low barrier-to-entry of the web has unearthed endless excellent and articulate part-time writers who contribute substance over propaganda, dialog over condescension. Most of the good ones put the so-called 'professionals' to shame.

I can filter entire sites at a time (e.g. nytimes.com, AP, etc.). This is true market accountability at its best, and there's nothing they can do but watch their monopoly and propaganda power-base slip away, one click at a time. I wish them a slow and painful death.

With respect to the idea that monetization is a bad thing, I assert that unless such investments (in time and resources) can support the contributors, the contributors will ultimately follow the dollars to other more practical endeavors. I have a hard enough time motivating myself to update my kid's soccer team website, let alone building an infrastructure like facebook for free.

There's no practical way that these massive portals can be done right (security, bandwidth, etc.) via completely community-based support, nor should they be forced to be. So long as the signal-to-noise ratio is tolerable (altavista vs google), the monetization process allows the portals to exist, let alone prosper.

A great though-provoking read. thanks,

--ikk

2008 Nov 10 09:29 PM

[Chris B:]

I might add that Microsoft's monopoly model is about to be ended by disruptive and superior technology that comes off the web - Google and/or Linux.

This changeover will occur within two computer generations, or about 10 years figuring each computer has a lifetime of 5 years. It will be over when you see the Windows logo on those retro T-shirts they sell at Target!

2008 Nov 11 04:28 PM

[Kinabalu:]

The old rule of thumb was that it takes twenty years for a really new, great idea to be accepted. For example, index funds, or, Milton Friedmans thesis that money supply was the only economic indicator that mattered. So someone out there has probably identified the business model that will replace the NY Times. We just haven't accepted it yet. Scott, maybe it's you and your giant network. I hope its not just Google.

2008 Nov 11 07:06 PM

[art2:]

This is a very insightful piece. The most important part of it is that newspaper companies -- to survive on the web -- need to establish a network. Google and Yahoo have networks that function as national advertising and content systems. Newpaper companies, by contrast, mostly function in geographic niches. The solution for newspaper companies is to form a national network for their content and for the advertisers they are trying to market to -- and the most obvious candidate for establishing that network is the Associated Press. The AP should build a technical platform that consolidates all newspaper members on the web. Every member can thereby sell advertising to this platform -- and thus reach a potentially national audience. Ditto for content. This solution at least begins to address the overwhelming advantage internet companies like Google have over newspaper companies right now.

2008 Nov 12 01:54 PM

[User 311958:]

Thought provoking.

2008 Dec 03 12:53 PM