06:39 AM

New-ish new media companies face formidable competitive challenges from today's emerging new media companies

by Tom Foremski for SiliconValleyWatcher.com

I think of "new-ish" new media companies as being companies such as Cnet with its News.com, CBS Marketwatch, The Street.com, Slate, Salon. I'll even throw into that designation the online groups of long established media companies such as BBC Online, NYT.com, FT.com, WSJ.com, etc.

Basically, any online media company/group (producing original content) set up pre-dotbomb (2001) I would lump into the "new-ish media" category. And looking back on those online publishing ventures, I can't see where there was any compelling competitive/operational cost advantage over traditional media companies.

Let's take a look at what new-ish media companies had to do pre-dotbom:

+The new-ish media companies had to build a new brand (extremely expensive).

+They had to build a large IT infrastructure to publish and distribute their content.

+They had to develop, or customize content management systems to their needs so that they could publish online--a lengthy and very expensive process.

+They had to lure away lots of journalists and editors with promises of top dollar salaries because it was the dotcom boom years--a rare moment in history when journalists were able to earn a decent wage.

+They needed to hire IT experts to run their IT departments--also at top dollar salaries because of huge demand


+Yet they still needed everything else: advertising sales people, HR, admin staff, large offices in expensive downtown locations, etc.

Where was their cost advantage over the traditional media? Well, they didn't need printing presses, delivery trucks, pay postage to send out subscriptions, er...anything else?

The traditional media had a profitable business model, Dow Jones for example, was making a ton of money in the dotcom boom years, and so were many other publisgers. The new-ish media companies didn't have a profitable business model, they were trying to convince/educate advertisers that online ads were a good thing. So where was the cost/competitive advantage for the "new-ish" media companies at that time?

The traditional media companies launched online media businesses too. And they did it in much the same way, hiring separate editorial staff for the online group, developing expensive content management systems to publish online and in print, adding offices in expensive media districts, and brand building. The Financial Times for example, hired Dan Akroyd (he of Ghostbusters and SNL) to head up a very expensive TV based FT.com brand building campaign.

The competitive advantages of today's emerging media companies, such as Atomic Ventures, the publisher of "SiliconValleyWatcher.com--Reporting on the Business of Silicon Valley," (shameless plug!), and others, are tremendous. I'll explain here: The advantages of new "new media" companies...