Making social media profitable: Silicon Valley and San Francisco media try to figure it out
The buzz in media circles for many years has been how traditional print publications, such as newspapers and magazines, can stay alive in this age of the Internet, where content (for the most part) is free.
The challenge of remaining relevant (and profitable) isn’t limited just to print pubs, however. It encompasses old broadcast media, too, including television and radio. Briefly, how can these models stay in business in a mobile era in which nobody wants to pay for anything, and advertisers are having second and third thoughts about investing large quantities of money into vehicles that look increasingly anachronistic?
There are no simple answers. This blog has grappled with the question for years, as have other blogs and social media platforms. Some extreme social media adherents have argued that print and broadcast media are inexorably doomed. Others, including myself, have said, No, that’s not the case, we’re in an evolution whose outcome is uncertain. Nobody really knows. On the many occasions I’ve been asked to make predictions, I’ve resorted to a standard quip: If Rupert Murdoch doesn’t know what’s happening (and he doesn’t), then how am I supposed to?
If you think about it, the times are indeed changing, what with the entire world going social and mobile, but beyond that, we don’t really understand what this means for traditional for-profit media. We know that the instrumentation of accessing media is changing—from paper and plugged-in electronic things to portable, wireless things. What’s so difficult to figure out, though, is how information is going to be researched and reported, if the money that used to pay for it is draining out of a system increasingly reliant on “free.” There used to be standards of journalism that reporters were expected to respect, if they wished to get paid. There used to be obligations to the society at large, to be useful and helpful. Now that everyone in the world can be his own reporter, what happens to those standards? To put it another way, can Twitter substitute—in value, relevance and historicity–for the New York Times or, for that matter, for the hometown newspaper or public radio station?
Smarter minds than mine are grappling with this question, and it’s not surprising that many of them live in my neck of the woods, the Bay Area, where not only Silicon Valley is located but also that bastion of traditional media, San Francisco (whose big newspaper, the San Francisco Chronicle, almost went belly up a few years ago). San Francisco also is home to one of the most successful, wealthiest public radio and television stations, KQED, which just announced that it’s partnering with two other nonprofits to create “a $2.5 million accelerator fund for selected media startups — of the for-profit variety — to tap.” (An accelerator fund invests capital in externally-developed companies in return for capital, whereas an incubator fund brings in an external team to manage an idea developed internally.)
The investors, who call themselves Matter Ventures, are looking for “media startups with multi-disciplinary teams who have early-stage prototypes, such as participatory platforms, mobile applications, B2B media services, and content production engines.” Ring a bell? Think of a website that produces content (say, a blog), that encourages two-way communication between provider and users (such as a blog), and that can go mobile. They seek “entrepreneurs who show high potential to create media ventures that make a meaningful, positive impact on society while pursuing a sustainable, scalable, profitable business model.”
That “profitable business model” thing is the catch. How would that work for, say, something on social media that’s wine related? Wine blogs have proven notoriously incapable of producing anything beyond modest profits, if any. In this, of course, they echo the Internet in general, where many are called but few are chosen. There are very few web platforms that make money. Porn does. Google does. Online stores do. But those aren’t what Matter Ventures is looking for. The CEO, Corey Ford [who was involved with ex-Google CEO Eric Schmidt’s venture capital fund), is aware that a “profitable business model” on a social media platform is really hard to achieve, but he believes that the brilliant minds can come up with something. “Is there a way that we can leverage that type of [Silicon Valley innovation] model to support innovations in the areas we care about, in the future of media that matters?” he asks. He thinks there is, but he can’t say what it is, anymore than anyone else can, beyond proposing that “a culture of experimentation”, properly loved and cared for by Matter Ventures, can succeed. The new business will have “to impact society in a way that makes its citizens more informed, engaged or empowered.”
Who knows if this will succeed? It’s risky for the investors and particularly for KQED, whose donors may well ask why their money is going towards such experimental things instead of paying the bills. But if anyone can figure out how to make social media make money, in a way that helps society, it’s the combined brain power of Silicon Valley and San Francisco media.
Thanks, Steve! As usual, your reporting adheres to the highest standards. There will always be a place for professionals like you.
You should check out some of the ebooks and materials that Hubspot puts out. They have excellent strategies, clearly laid out plans, and data supporting the ROI of inbound marketing, social media, blogging, and other New Media strategies. I think they are a leader when it comes to framing the new marketing strategies and demonstrating their effectiveness.
So many new sites and agencies are popping up.A few that come to mind are MediaPiston, Hubspot, Pitchengine, and HaRO (REALLY good platform to bridge the real life news reporters with bloggers and online companies that want to get a pitch out).
Good post.
ROI has been and will be the key phrase in the space heading into 2013. What these agencies/firms need to do is stop trying to convince brands what having a social media can do for them. More focus should be on companies that understand that their brand needs a social media presence in order to stay relevant in the years to come. Once brands begin to understand that social media is more about creating context than creating content, the social media agencies that have a strong reputation and a high google search ranking will start to see a large growth in business (as some already have).