Edited excerpt from Facebook hosting doesn’t change things, the world already changed by Eugene Wei:
When Facebook announced its offer to host content from media sites like The New York Times, the media went into a frenzy of apocalyptic prediction. But whether media sites allow Facebook to host their content or not won’t meaningfully change things. Let’s just list all the conditions that exist and won’t change one bit whether or not you let Facebook host your content:
1. News is getting commodified.
2. Distribution is effectively free.
3. Marketing is cheaper, using social media.
4. Competition for attention is at an all-time high and getting worse.
5. Facebook will continue to gain audience.
6. Facebook and Twitter and other social media drive a huge % of the discovery of content.
7. Media ad experiences are awful.
8. Media business models are not great.
9. Tech companies have better ad platforms than media companies.
10. Tech companies have a tech hiring advantage on non-tech companies.
11. Design skill is not equally distributed.
12. Tech companies are rich.
I can offer some positives. A media company may not be able to be world class at every layer of the full stack, from distribution and marketing to ad sales and producing great content, but it doesn’t have to be. Far better to be really good at one part of that, the one that tech companies are least likely to be good at, and that’s producing great, differentiated content. The fact is, great content is not yet commodified.
(1) The litmus test for the survival of a media business is: “If someone is interested in [the area we cover], why do they have to read our content?” If you can’t answer that question, you’ll lose to Facebook, because it has become the daily content aggregator for most people.
(2) There are two acceptable answers to this question for a media company: (i) “We publish content that the reader cannot miss”, or (ii) “We tell you everything you need to know about this topic (even if you can find it elsewhere), but without the noise.”
(3) Very few media companies publish “can’t miss” content because most of them are in the entertainment business, and entertainment is optional. They are not in the help-you-make-decisions business, where great content is mandatory.
(4) The good news for us: Seeking Alpha is a must-read site for investors. If you invest in small cap stocks, for example, you have to subscribe to Seeking Alpha PRO because much of the coverage of small caps has moved to Seeking Alpha. The bad news for us: “Media ad experiences are awful. Tech companies have better ad platforms than media companies.”
(5) Cf. Charging for content will only be successful if this condition is fulfilled.