Digital Media Econ 101

By Digiday • July 11, 2011 •

Digital Media Econ 101: It’s going on five years since Jeff Zucker made his famous “analog dollars for digital pennies” statement. It’s now been revised to analog dollars for digital dimes. Progress! But the truth is this phenomenon where user attention in digital media isn’t valued the same as analog media isn’t going to change anytime soon. Clay Shirky declares it not even a problem but a reality. The question for newspapers and other publishers is how to adjust to that reality, rather than complain about it. Shirky makes the point that newspapers in particular thrived through a local monopoly. The Internet shatters that. The news business is the advertising business, and newspapers are far too inefficient to compete with other aggregators of consumer attention in the digital world. That’s why he endorses subsidies for news gathering. The alternatives would seem too painful. If newspapers want to paly the page view game, they’ll abandon their editorial missions. If they try to charge, they might find too few people willing to pay. Shirky.com

Beware of MBAs: Silicon Valley is obsessed with engineers, who are obsessed with product. That can sometimes lead companies astray, as they seem almost disinterested in the business side. But longtime auto executive (and engineer) Bob Lutz makes the case that this is the strength of Silicon Valley. After all, the auto industry went to the pits when the MBAs started running the show, not the engineers who were obsessed with getting the product right, not shaving off savings in the name of “efficiency.” Time

Tech as Media: The new media giants don’t want to be called media at all. Technology companies are the new audience factories, but they mostly decline the label of being in the media business. Adweek writes that this is at the heart of many problems afflicting digital media. There is, of course, a gulf between Silicon Valley and Madison Avenue. That’s undeniable. The “is Google a media company?” debate can be tiring and semantic. Yes, it’s a media company in a way but the heart of Google is an engineer-driven tech company. Same for Facebook. The fact that they make money off selling adveritising is, in many ways, incidental. It’s conceivable to think up a scenario where Facebook makes a majority of its revenue through means other than advertising. But the real point is for these companies to thrive, as Lutz pointed out, they must be driven by technology, not ad sales. Adweek

Google+, a Developer’s View: The tech world’s recent obsession with Google+ centers around the question of whether it can be a credible Facebook competitor. Much of the focus so far has been from the user point of view. But a key driver of Facebook’s power is the armies of developers that build on its platform. In the eyes of one developer, Christ Turitzin, Google+ is a welcome counterweight to the outsized power of Facebook. The big if, of course, is whether it can build a scale that comes anywhere near Facebook’s 750 million user base. That big base is what keeps users and developers there. Google+ could be endlessly interesting and cool, but users won’t spend time there if their friends aren’t there, and developers won’t bother if the users aren’t there. Momentus Media blog

Whither the DSP: AdExchanger polls a dozen industry leaders on the challenges facing the demand-side platform. The responses run the gamut but one common theme in many is that targeting is not enough. DSPs promised a level of targeting that would revolutionize advertising. It hasn’t happened. They’ve improved efficiency, but data alone is not going to solve the digital media puzzle. AdExchanger

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Digital Media Econ 101

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