Publishers' Real Problem? Technology
Twitter epitomizes the pre-Y2K and even pre-2008 Internet. As long as investors pour cash into the company, there's no immediate need for it to make a profit or any money at all.
Announcements late this year that Bing and then Google would include Tweets and Facebook posts in their search results may have been promising, but still told us very little about a revenue model.
When co-founder Biz Stone sent Twitter users an e-mail regarding updates to the company's Terms of Service, one potential revenue model was quite evident: "...we leave the door open for advertising. We'd like to keep our options open." Twitter's CEO Evan Williams would then address concerns regarding not only a clear way to make money, but news about slowed growth and hacker attacks.
The Harvard Business Review is usually way above my head, but did a good job explaining this mess: "Financial capital was misallocated on a historic scale by toxic financial instruments... Investors are rushing into markets that look appealing today, like minigames. But let's face it: minigames aren't going to be durably, world-changingly profitable..."
I wasn't surprised when Eric Schmidt of Google admitted that his company overpaid for YouTube by $1 billion. It reminded me of the laughable purchase that Primedia made in 2000 when it acquired About.com for $690 million, only to pawn it off five years later to The New York Times Company for $410 million.
There's a long list of examples showing media companies overpaying for technology that, at the time, they knew very little about. Another one that I always remember is Jason Calacanis' Weblogs start-up walking away with $30 million from AOL.
Publishers of all shapes and sizes face difficult times for many reasons, but one that never gets mentioned is that new technology comes and goes so fast. Traditional publishers aren't nimble enough to understand technology's impact on our businesses. Microformats and Uauth are just two more recent examples that I can think of.
To me, there is a simple solution. For decades, we have connected our audiences with advertisers while publishing content that brought our loyal readers coming back for more. Companies like Google recognized this and reaped the rewards. Today, start-ups like LiveIntent are onboard as well.
New technology should be shared with publishers at very little or no cost of entry. In exchange, we continue to do what we do best and let other companies share the rewards. My apologies to corner offices: You can no longer have your cake and eat it too.