Posted by Tom Foremski - November 14, 2014
Say Media, the San Francisco publisher of ReadWrite and many other sites, is looking for buyers for its titles as it pivots into a media technologies vendor.
Matt Sanchez, CEO said it was hard for the company to focus on two businesses: growing its media brands and developing media technologies for media companies such as its Tempest content management system.
Lucia Moses at Digiday reported:
"When we launched Say, it was really about, how do you provide technology and services for independent media," [Matt Sanchez, CEO] said. "It was this vision of building the modern media company by building, partnering with and buying independent media companies, build the tech beneath it and think holistically about the entire media stack. We just came to the conclusion that it's very difficult to do both."
Foremski's Take:The disruption in the industry isn't confined to traditional media companies — it includes new media companies. The move to mobile is killing them.
Advertising on mobile is a massive problem that is always presented as a huge "opportunity" such as in former Wall Street analyst Mary Meeker's annual report on the Internet. Her slide deck lists US mobile ads as a $30 billion opportunity waiting to be tapped. There is no "opportunity" — the reality is that publishers earn as little as one-tenth the ad money on mobile versus desktop.
Will they show 10 times as many ads to make up for it? That would obscure everything on a smartphone screen.
The move from print to digital produced about one-tenth the ad revenues and now with the shift to mobile there is an additional one-tenth reduction.
It is the second decimation of the media industry. It's not surprising that Say wants to rid itself of its media group.
A paper cushion...
The first media Apocalypse is still in progress — more than a decade of transition to digital is still far from finished. Older publishers, including the New York Times, that still have a substantial legacy print advertising business are lucky, compared to the pure digital media companies such as Say. That's because print ads are going away more slowly than the lightning fast transition to mobile media content.
Say doesn't have a legacy print advertising business to cushion the move to mobile. It had been doing very well, expanding to more than 400 staff as it acquired media titles and ad sales mushroomed to an estimated $100 million in 2011. Plus, it has been quick off the mark in offering new promotional products to advertisers, that improve engagement, native advertising, etc, whatever was trending in the ad world as the next great ad format.
But it wasn't enough to fill the gap in revenues as ad rates across the industry continued to plummet.
Say also worked hard to improve the quality of its editorial content. But with the rise of programmatic ad trading there is no way to profit from producing higher quality media.
Ad-trading algorithms are blind to quality. When machines trade ads there's never a chance to meet face to face with a media buyer and sell them higher-priced ads based on better content.
It's easy to see why Say wants to just sell tech. But will there be enough media companies around over the next few years to become customers for its Tempest magazine publishing platform?
Maybe an extra pivot is necessary: sell to corporations. Every company is a media company and needs the same publishing tools. And they don't need revenue from ads. It's the rise of corporate media — grave new model for the media industry.
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