The second wave of the web is here.
Soon you will be asking friends if they are part of the Google plan or perhaps the Amazon plan. In fact, in the very near future, we might all be part of the Google, Amazon, or possibly Netflix and Facebook plan. In fact, it is very possible that our choice of plan will be part of how the coming generation defines itself.
What is the second wave? The second wave is the idea that the internet goliaths of the world are now playing for the $150 or so we spend with the cable companies each month. In an effort to justify and grow the monthly price of their particular content bundle, these Goliaths will acquire, roll up, and merge anything and everything into the offering.
This is an all-out war, and it’s all about who you pay each month for all of your entertainment.
So, what does this mean for us consumers, how did we arrive here and where do we all go?
Let’s start by understanding what the first wave of the web meant to us as consumers. From a content perspective, the first wave of the web was all about content creators being displaced by social content aggregators. Facebook, Twitter, Instagram and others created and now own the distribution paths that content must travel to reach us, the consumer. These companies can create better ad supported monetization at scale, and provide a better user experience than any single content creator can provide on their own. Over the last decade, we have seen media company after media company succumb distribution to aggregators like Google, and more recently to Facebook and others.
While it has been exciting and easy for consumers to receive an infinite amount of free content in the palm of their hand, we all have been playing hot potato on who exactly foots the content bill. For the last decade, we’ve all danced around the fact that it’s impossible to make an ad-supported web economically sustainable for individual content creators and media companies.
With an infinite amount of content online, content creators will never be able to create and sustain enough attention to obtain the advertising rates of yesterday. Today, no professional content company can survive and thrive on ad supported revenue alone. Look at the recent death of Grantland as case in point. While Grantland is owned by ESPN, Grantland was run independently, and only generated revenue through selling ads next to their content. We have seen so many content companies hop on the ad supported hamster wheel, trying to somehow make it work. Companies like Vice and Buzzfeed have even made the hamster wheel sexy and trendy for periods of time, but in the end, it’s all the same. Nobody can do it forever.
Our culture has also suffered. Content in an ad supported world is mostly miserable. We live in an ugly clickbait world. Advertising models for content have created all of the wrong incentives. We’re subjected to an endless stream of terrible content begging us to click, and then click once more. Ryan Holiday wrote the seminal work on the misaligned incentives that arise for content companies in his 2012 book,“Trust me I’m Lying”.
But now, in 2015, something new is happening. We all finally had the sober realization there must be a better way to monetize content beyond advertising.
That’s right. The second wave.
The next wave of the web, the second wave, is essentially the post advertising web. Look at media business headlines in 2015, and they are all about subscription business models. Sure, they get called different names in different formats. In video, we call subscription offerings ‘over the top’ or for short, “OTT”. In print we call it the familiar– a membership or a subscription.
It’s worth noting that all subscription offerings offer freebie content to get you in the door. There is a reason why Netflix and HBO do not hunt you down when you share your login details with all of your closest friends. In business speak, we call this “content marketing”. Content marketing is the idea that companies will make money in the end by some other means after they give you some awesome free shows and articles. This is a huge trend across the web. For the small creators, authors, and one person shops, they give away a staggering amount of daily free content, but are now monetizing through a crowdfunding and tip-jar revolution.
For larger content creators and aggregators, they need a reliable, steady business model after showing you so much great free content everyday. Some large aggregators have started with distributing free content, while others got started by offering premium original content from the start.
For example:
So in a post-advertising web, the big question to answer is who exactly gets your hard earned money each month? That is: Who are you subscribing to for content? We know it used to be all of those damn cable companies. And now it’s Netflix, Spotify, Amazon, and HBO.
Consumers won’t shell out $9.99 a month or more for an ever increasing number of standalone ala carte subscriptions. And the fight for truly exclusive content that can distinguish a service will only make premium content more valuable. There is a reason why NBA salaries and franchises have basically doubled over the last few years. Nothing it seems is more valuable than live premium sports content.
In order to win and gain market share, the internet Goliaths will be forced to continually acquire, roll up, and consolidate everything into the content bundle.
This is the war. This is the new battle.
Soon you will be asking friends if they are part of the Google plan or perhaps the Amazon plan. In fact, in the very near future, we might all be part of the Google, Amazon, or possibly Netflix and Facebook plan. In fact, it is very possible that our choice of plan will be part of how the coming generation defines itself.
What is the second wave? The second wave is the idea that the internet goliaths of the world are now playing for the $150 or so we spend with the cable companies each month. In an effort to justify and grow the monthly price of their particular content bundle, these Goliaths will acquire, roll up, and merge anything and everything into the offering.
This is an all-out war, and it’s all about who you pay each month for all of your entertainment.So, what does this mean for us consumers, how did we arrive here and where do we all go?
Let’s start by understanding what the first wave of the web meant to us as consumers. From a content perspective, the first wave of the web was all about content creators being displaced by social content aggregators. Facebook, Twitter, Instagram and others created and now own the distribution paths that content must travel to reach us, the consumer. These companies can create better ad supported monetization at scale, and provide a better user experience than any single content creator can provide on their own. Over the last decade, we have seen media company after media company succumb distribution to aggregators like Google, and more recently to Facebook and others.
While it has been exciting and easy for consumers to receive an infinite amount of free content in the palm of their hand, we all have been playing hot potato on who exactly foots the content bill. For the last decade, we’ve all danced around the fact that it’s impossible to make an ad-supported web economically sustainable for individual content creators and media companies.
With an infinite amount of content online, content creators will never be able to create and sustain enough attention to obtain the advertising rates of yesterday. Today, no professional content company can survive and thrive on ad supported revenue alone. Look at the recent death of Grantland as case in point. While Grantland is owned by ESPN, Grantland was run independently, and only generated revenue through selling ads next to their content. We have seen so many content companies hop on the ad supported hamster wheel, trying to somehow make it work. Companies like Vice and Buzzfeed have even made the hamster wheel sexy and trendy for periods of time, but in the end, it’s all the same. Nobody can do it forever.
Our culture has also suffered. Content in an ad supported world is mostly miserable. We live in an ugly clickbait world. Advertising models for content have created all of the wrong incentives. We’re subjected to an endless stream of terrible content begging us to click, and then click once more. Ryan Holiday wrote the seminal work on the misaligned incentives that arise for content companies in his 2012 book,“Trust me I’m Lying”.
But now, in 2015, something new is happening. We all finally had the sober realization there must be a better way to monetize content beyond advertising.
That’s right. The second wave.
The next wave of the web, the second wave, is essentially the post advertising web. Look at media business headlines in 2015, and they are all about subscription business models. Sure, they get called different names in different formats. In video, we call subscription offerings ‘over the top’ or for short, “OTT”. In print we call it the familiar– a membership or a subscription.
It’s worth noting that all subscription offerings offer freebie content to get you in the door. There is a reason why Netflix and HBO do not hunt you down when you share your login details with all of your closest friends. In business speak, we call this “content marketing”. Content marketing is the idea that companies will make money in the end by some other means after they give you some awesome free shows and articles. This is a huge trend across the web. For the small creators, authors, and one person shops, they give away a staggering amount of daily free content, but are now monetizing through a crowdfunding and tip-jar revolution.
For larger content creators and aggregators, they need a reliable, steady business model after showing you so much great free content everyday. Some large aggregators have started with distributing free content, while others got started by offering premium original content from the start.
For example:
- Netflix and HBO in premium original video content.
- Amazon in premium video content, video game content, book publishing (and even hosting web services)
- Spotify in music
- YouTube in UGC video
- Facebook in print publisher content
So in a post-advertising web, the big question to answer is who exactly gets your hard earned money each month? That is: Who are you subscribing to for content? We know it used to be all of those damn cable companies. And now it’s Netflix, Spotify, Amazon, and HBO.
Consumers won’t shell out $9.99 a month or more for an ever increasing number of standalone ala carte subscriptions. And the fight for truly exclusive content that can distinguish a service will only make premium content more valuable. There is a reason why NBA salaries and franchises have basically doubled over the last few years. Nothing it seems is more valuable than live premium sports content.
In order to win and gain market share, the internet Goliaths will be forced to continually acquire, roll up, and consolidate everything into the content bundle.
This is the war. This is the new battle.
by Benjamin Smith, Observer | Read more:
Image: Pixabay
