Posted by Tom Foremski - June 6, 2014
The huge challenge facing media companies as readers shift to mobile platforms, is far worse than is generally known.
Say Media, an online publisher and advertising network based in San Francisco, last year reported that mobile ads generate just one-fifth the revenue of a desktop ad. It's become even worse.
An industry source with access to massive amounts of advertising data tells me mobile ads are a disaster for media companies. He has seen detailed reports from large publishers and ad networks that show advertising on mobile platforms is generating as little as one-tenth the revenue compared with desktop advertising.
Traditional media companies that were struggling with online ads that produced one-tenth the revenue of print, now have to cross an incredible chasm: $1,000 dollars in print advertising becomes $10 on mobile.
Digital media companies now find themselves in the same situation that traditional print media companies faced ten years ago: they are in the path of the next disruptive technology wave and they have to figure out how to transition to a business model that offers one-tenth the revenues from advertising. Do they show ten times as many ads?
This second apocalypse is moving far faster than the first apocalypse, which was the shift from print advertising to digital ads.
The revenue chasm can be seen in Mary Meeker's recent Internet deck. It shows the massive gap in mobile ad revenues (and it's not because print is "way over-indexed.")
Even Google is having trouble. The many news stories earlier this year about Google pulling out of its Google+ social network missed the real story: Google is struggling to monetize mobile and it is all hands to the pump as it transfers more than a thousand engineers from other projects.
Google's problem with mobile has been masked by Google's policy that forces a percentage of mobile ads into the total advertising bought by companies, even when mobile has no relevance to what they are selling.
Paradoxically, media companies that still have significant revenues from their print advertising business have a temporary advantage over digital media companies because the decline in print revenues is far slower than the loss of desktop ad revenue.
The New York Times' newspaper business will be seen as an important protective asset, buying time while the media industry tries to figure out how to monetize their readers' shift to mobile. It certainly can't be done with ads.
I was invited to take part in a recent hackathon to spend the weekend creating new types of media apps, as a way of trying to save journalism through innovation.
Apps won't save journalism. It is innovation in the business model that's needed. A new way of presenting the work of journalists is useless without the means of generating funding for that work. If ads can't fund journalism on mobile then is there another way?
Journalism is losing its desktop ads revenues in the shift to mobile — it was lousy revenues — and now they are even worse.
Billionaires can't save journalism...
The best intentions of billionaires such as Amazon's Jeff Bezos, with his $250 million purchase of the Washington Post; Ebay's Pierre Omidyar and his $250 million investment in his First Look Media startup, cannot save journalism. Neither one of these billionaires, no matter how clever their technologists, can save the media industry alone.
A solution has to be found on an industry-wide scale in order to halt the media's crumbling business model and to begin to reverse the trend and rebuild its fortunes.
Individual media ventures, no matter how well funded, or how much high quality content they produce, will not succeed as self-sustaining businesses unless there is a new media business model available to all. We don't have it. And it's the biggest failure of our digital age because media informs and educates all citizens and governments, and influences the many complex decisions that have to be made.
Garbage in — garbage out. We will make increasingly poor decisions on important issues such as the environment, economy, energy, enterprise, elder healthcare, education — and that's just the issues that begin with "e" — there's plenty of others.
This is why the media industry's crumbling fortunes cannot be ignored. They are tightly bound to everyone's future prosperity and quality of life. We need innovative media business models and we need them now.
I have some proposals that I will share soon.Tweet this story Follow @tomforemski