Small Business Labs

Media Fragmentation and the Growth of Small Publishers

The 24/7 Wall Street blog has a list of what they consider to be the 25 most valuable blogs.  The list contains indpendent blogs and blog companies and excludes major media company properties as well as blogs that are meant to promote other businesses.  Since all of these are private companies and do not publish financial data, they've based their valuations on publically available traffic metrics. 

Gawker Media is #1 on the list and valued at $150 million.  I was a bit surprised by #2.  It is MacRumors, which is valued at $85 million.  Number 25 is Travelpod, which is a travel scheduling and planning site.  They do not put a value on Travelpod, but it comes right after a site valued at $860,000This list illustrates the continuing growth of small online publishing companies and the ongoing fragmentation of the media industry. 

So does the increasing role search is playing in the consumption of online news and information.  Publishing 2.0 has a really interesting post on how search has transformed online news consumption.  The point of this post is that consumers are increasingly using search to discover news and information.  This allows small news and information providers to develop an audience.  This site, for example, gets most of its non-RSS traffic and new RSS subscribers from the search engines. 

Interestingly enough, a number of large media companies like Reuters and The New York Times are even using paid search links to attract readers to their stories.  I think this advertising arbitrage play shows just how effectively small publishers are competing with large media company. 

While large media companies are not going to disappear, the media industry is going to continue to fragment.  This will continue to create new opportunities for niche publishing companies. 

Lawyers and CPAs Blogging

The CPA Success Blog has a post discussing the growth of legal and accounting blogs.  They say 25 of the top 200 law firms are blogging and that CPA blogging is also growing very rapidly. 

The blog is run by the Maryland Association of CPAs and they also provide a self-guided discovery program on Web 2.0.  While it is called CPA Learning 2.0, I think it is useful for most any service business interested in learning about this topic.

Global Entrepreneurship Week Blog

Global Entrepreneurship Week is scheduled for November 17th - 23rd and consists of a global series of small business and entrepreneurship events designed to "inspire, connect, inform, mentor and engage the next generation of entrepreneurs."

They have a blog called Unleash It! that covers small business topics in general as well as details on global entrepreneurship week events and activities. 

It is well worth reading.

The Writers Strike, Media Fragmentation and Small Business

Interesting article in the LA Times on striking writers negotiating with VCs to set up new online entertainment companies.  These groups are looking to start small, web-based entertainment companies.  Key quote:

"We are one Connecticut hedge-fund checkbook, one Silicon Valley server farm and two creators away from having channels on YouTube, where the studios don't own anything."

Media in all forms continues to fragment with and small media companies are flourishing is a wide variety of media segments.  Entertainment is no exception and while most writers will return the studios after the strike, many will move to small entertainment companies. 

The Power of Professional Journalism

The San Francisco Chronicle has an article on the growth of blog based publishing companies.  I was interviewed by Chronicle reporter Sam Zuckerman several times and I'm quoted in this story.  Being part of the this process reminded me why I like the mainstream media and professional journalism.

Based on when Sam first contacted me, the story was developed over a period of a couple of weeks.  His research included talking to multiple sources with a variety of backgrounds.  The story includes several views on the growth of professional blogs and presents the information in a reasonably unbiased way.  The story is professionally written and reads that way.

Let's compare that with the average blog post - this post will work.  I've spent about 10 minutes on this.  I've done no research except for reading the article.  I'm in no way even considering being unbiased, and this post is written by a amateur who finds writing good hard. 

It's not difficult for me to decide which approach does a better job reporting news and information.

This is not to say all blogs should be written by professional journalists and/or held to professional journalistic standards.  Many blogs are fun to read because they aren't professionally done, or because of their biases.  But my personal hope is as the blog industry grows and matures more blogs - and especially blogs that focus on news and information - employ the methods of professional journalism.

The Start Up Journal is now the WSJ Entrepreneur Channel

Just noticed that The Start Up Journal, the Wall Street Journal's small business site, has been rebranded as the Wall Street Journal's Entrepreneur channel.  In addition to the name change and some site redesign, they now prominantly feature a video section on the home page called "The Small Business Video Center". 

I always thought the branding was a bit odd, so I'm not surprised by the change.  The increased home page real estate given to video is yet another example of the growing impact of online video.

Google, Traditional Media, and the Growth of Small Publishers

Two interesting posts last week related to changes in the media industry.  Silicon Alley Insider has a post called "The Great Ad Shift: Google Sucks Life Out of Old Media" which discusses the extent online advertising is replacing offline advertising.  The point of the post is that online media companies are rapidly gaining share relative to traditional offline companies. Their analysis shows that online companies gained "7 percentage points of market share in a single year" (Q2 07 versus Q2 06).  This is a huge one year shift and not positive news for traditional media. 

The second post comes from Anita Campbell at Small Business Trends.  Her post is called "Google Controls the Fate of Small Publishers", which talks about the growth of small online publishers and Google's impact on them. Key quote:

"In the United States alone there are 20,733 Internet-only publishing businesses, according to the most recently available U.S. Census figures.

Not only are most of them small businesses, they are very small.  Over 90% of Internet publishing businesses — 18,858 of them — are single person businesses.   Another 1,452 have fewer than 10 employees."

Anita also points out this data pre-dates the boom in small, blog based micropublishers that has happened since 2005. 

The interesting linkage is how traditional media views content and audiences versus how Google (and the other online media companies) does.  Traditional media companies tend to be vertically integrated.  They create or acquire content and sell ads against that content.  Traditional media business models assume large content audiences.  To varying degrees, Google and the other online media companies tend to work with large ecosystems of 3rd party content producers to sell ads.  Their business model works well with both mass audiences and fragmented audiences. 

This ecosystem reaches a broad audience.  But at the same time it also serves a large number and wide variety of specialized content markets.  By working with small publishers Google can easily - and very profitably - sell ads into very small, very targeted niche markets.  This is something traditional media simply isn't capable of.  This not only greatly expands Google's market, it also keeps their costs low relative to traditional media since others create the content and develop the audiences.  This model also creates enormous new opportunities for niche publishing businesses, who take advantage of Google's advertising programs as a revenue source.

This model - working with a ecosystem of partners to serve niches too small or too specialized for larger firms to effectively reach - is not new.  The tech industry has been using VARs in this role for years, and there are a growing number of examples in other industries.  What is new is being able to do this in the content industries, which traditionally have been built on mass audiences. 

Niche publishing is now a very viable industry.  Small publishers using business models that leverage large corporation ad networks and affiliate marketing programs can serve extremely narrow niches profitably (sometimes very, very profitably).   This, coupled with the low start-up and operation costs associated with online publising, is leading to a growing number of small online publishing companies.

Small Businessization of Media Part 3

Today's SF Chronicle has an AP article called "Entertainment Sites A Source of Employment".  I couldn't find it at the Chron's website, so I searched AP's site.  They sent me to an article on the site of a radio station in Hawaii called "Web Video Sites Mined by Talent Scouts".  Same article, just a different title.

Anyway, the point of the article is that the Internet is opening up lots of opportunites for small and personal web based entertainment jobs and companies.  Key quote from comedian Nick Stevens who started a video blog that features rants by a fictional Boston sports fan: 

"The web is great.  The single greatest distraction from employment is also the single greatest enabler of employment."

This is a continuation of the small businessization of media trend discussed in a prior post on book publishing and a post on the book "The Cult of the Amateur".

Several Studies on Teens Preferring the Internet Over TV and Other Media

Couple of recent suveys showing teens prefer the Internet over TV.  Edison Media's study compares how consumers view the Internet versus other media forms.  Their survey found that teens think that the Internet is "cooler" that TV.  Not surprising - also not surprising is that the percentage of people thinking the Internet is cooler than TV consistently falls by age.

The Edison survey covers a broad range of age cohorts, not just teens and compares consumer attitudes towards a mix of media.  It contains an excellent set of charts on media preferences. 

New Paradigm, a think tank focused on business innovation in the global economy and founded by well known author Don Tapscott (most recent book is Wikinomics), is doing a long term investigation of Gen Y.  They recently reported that 77% of the world's youth would rather live without TV than the Internet.  I couldn't find a reference to the study on their website, so I don't have additional data. 

Also, OTX Research has study on teen dating.  They found the majority of teens surveyed sacrificed TV watching to go on dates.  They also have data on where teens go for dates and what they like to do on dates.

Changes in Book Publishing - The Small Businessization of Media Part 2

Good post on the O'Reilly Radar blog on changes in the book publishing industry called "Publishing Renaissance".  The post describes the process Onyx Neon Press - a new publishing house - has gone through to produce their first book, which is a novel called "Gravitas".  Key quote:

"It cost me well under my goal of $1k to produce Gravitas from start to finish."

Onyx is using a print on demand service and also using them to put the book in the hands of several of the big book distributors.  Their only post-production cost is printing the books, which is described as "about $1 per copy higher than a traditional printer at high volume, and cheaper than a traditional printer at low volume".

Print on demand services like those used by Onyx open up the book publishing market for small book publishers and authors.  These services also turn fixed costs into variable costs, which lowers project risk and reduces upfront capital requirements.  Another good example of the media industry providing more opportunities for small and personal businesses.