Everybody’s a network

In the future of media, which is now, everybody is a network. In the past, networks were defined by control of content or distribution. But now, you can’t own all distribution and content is controlled where it’s created. So, I wonder, where’s the value and where’s the money in the fully networked world?

What is a network now? Your friend pointing you to something to read or watch is a network. The collection of people putting a YouTube video on their blogs makes a network. BlogAds bringing together 800 blogs for an MSNBC.com ad buy is a network. When you subscribe to a collection of feeds, or when you publish up a blogroll, or when you put a tag on your blog post, or when you use a Flickr tag that others use, you are a network.

Networks are about sharing now; they used to be about control. Networks are two-way; they used to be one-way. Networks are about aggregation more than distribution; they are about finding and being found. Networks are now open while, by their very definition, they used to be closed. You join networks and leave them them at will; you can join any number of networks at once and content can be found via any number of networks, there is no practical limit. Networks used to be static. Now networks are fluid.

For us, the people formerly known as consumers, this is a better world. We can find the content we want from anywhere by relying on networks we trust because we know them more intimately and they even know us; we are no longer a one-size-fits all mass. For content producers, which is any of us now, it’s also better, for the barrier to entry — and to the public — is destroyed. And for content itself, it’s better because the good stuff can be found, amended, corrected; it can live longer and live in context.

But what about the networks themselves? Where is the value in networks now? Where is the money?


The old networks are hosed and they are finally realizing that. Suddenly, the dominoes are tumbling, all at once. We all know the latest signs:

ABC pissed off its old channels of distribution — broadcast affiliates, cable system operators, and retailers — by putting up its shows on iTunes and online. Umair Haque says they didn’t go far enough and that’s true, but I say this journey begins with a single step and ABC’s first step was a doozie.

Warner Brothers, in turn, is willing to piss off its channels of distribution — namey, networks like ABC — by doing a deal to sell shows directly to consumers via Bittorrent. Who needs networks?

At the same time, Ad Age reports that Bolt found “only one in four 12- to 34-year-olds can name all four major broadcast networks: ABC, NBC, CBS and Fox.” I tried that experiment at home with my teen son and he couldn’t name them, either (“uh, ABC… NBC… CNN?”). My preteen daughter has no idea what broadcast is. The power of the networks as distribution platforms and brands is diminishing fast.

On the business side, the old networks have no end of new competition. The scarcity economy is over; networks cannot continue to raise their rates even as their audiences shrink, because they no longer control the clock; there is always somewhere else to reach audiences — somewhere more efficienct and less expensive, by the way. The upfront buying season for commercials is going on now and the only way the networks can save themselves from the inevitable shrinkage Warren Buffett predicts for newspapers is by coming up with blockbusters. But as Umair Haque points out often, the blockbuster economy is not a longterm winner and it is getting riskier and riskier. See also Seth Godin: “If your marketing strategy requires you to hit #1 in order to succeed, you probably need a new marketing strategy.”

On the “consumer” side, the people formerly known as viewers have taken control of what, when, and how they watch and they do it without commercials.

And of course, the networks face no end of competitors in content, as well. Rocketboom now has twice the audience of many cable news shows because the stranglehold the networks had on distribution and audience is over. The audience is on stage. Your customers are your competitors.

Or maybe not. The smart network response to all this is to liquify. You let your stuff be found anywhere, in any medium and any network. You let your public distribute for you (see Jon Stewart’s Crossfire rant). Most important — and this is where Umair said ABC should have been going next — you should recommend good stuff to people and it shouldn’t be just your stuff; you use your relationship, trust, and resources to aggregate stuff and audience across the world of possibilities. (This is essentially what I’m also suggesting to the BBC in my Guardian column this week, coming soon.) In the old static-network world, it made no sense to send people to other networks; in the new, fluid world, they’re going to go there anyway, and so the best thing to do is to help them find the best stuff, redefining the value of a network. And from a business perspective, I argue, you’re wise to grow audience and ad inventory across open networks of the stuff you recommend. Umair says that ABC took a good move in unbundling content from distribution but what it should really be doing is rebundling content with audiences:

Rebundling is where value capture will happen – at communities, reconstructors, markets, networks – that direct people’s attention to individualized ‘casts. This is where branding will be reborn – and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)

Add to this Om Malik arguing that by giving and selling their shows directly to the public, the networks and producers are also disrupting the folks who thought they were the networks of the future: portals.

And see John Hagel saying that networks have a choice between content and relationships.

The most powerful brands in the media business will be held by successful intermediaries that help to consistently improve return on attention for audiences. In the process, the nature of the brand promise will change in a profound way. It will be a massive opportunity for media companies that understand the shift in economic and competitive dynamics and that focus on the rebundling plays required to build these brands.

There’s another way to frame the strategic opportunity/challenge for media businesses going forward. In addition to unbundling and rebundling of content, media companies face a choice: do they want to remain product businesses or do they want to become audience relationship businesses? …

Of course, media companies have elements of both embedded in their companies today, but their hearts and minds are firmly in the product business. Here’s the test: how open is the media company to providing access to third party content on behalf of their audiences? ….

[A]udience relationship businesses take these proliferating content options as an opportunity, rather than a challenge. The more options there are, the more value that can be created by organizing, packaging, presenting and adding to these options for specific audiences.

I agree that we’re headed to a relationship/aggregation economy in media. I think that networks will become fluid, ad hoc, two-way, and open.

But then I still have to come back to the question: Where is the value in fluid networks? Where is the money? I don’t know the answer. For once, I won’t even pretend to.

: : :

These seem to be the choices:

If you just recommend great content, you may build a trusted relationship and a strong brand. But how do you get money — with ads people see on the way to the destinations you recommend? OK, there’s certainly value there. (See BoingBoing, Instapundit, and portals.) But I don’t know how much, or how many will make much, or how long it will last.

If you just aggregate content in full (that is, presenting the complete content over linking to it), you may have viewers but you soon won’t have content, for the creators will want the traffic to come to them in their space serving their goals. (See Yahoo, Breitbart, Blogburst.)

If you just sell ads on these recommended places, you can make money and so can the sites. (See FM Publishing, BlogAds.) I’ve been pushing for an open — and fluid — ad marketplace.

If you just make content you will, of course, have value, but you won’t recognize that unless your stuff is seen and that means you need to be part of networks or have to spend marketing dollars. (See any producer, publisher, writer.)

The advantage of the old, closed networks, of course, is that they combined all this: ABC recommended the show by putting it on the air; it aggregated the content; it aggregated the audience; it sold the ads; it shared the revenue. Life was so simple. Well, so much for that. So what systems will serve the interests of producers, audiences, aggregators, and advertisers?

I wonder whether success in the future, even in an open world, will depend on offering more than one of these aspects of fluid networks:

* You put together recommended sites and sell ads across them.

* You create content and aggregate others’ content.

* In a different context, one of the smartest media execs I know proposes another hybrid model that shares ad revenue between destination sites (to give them the motivation and resources to do good work there) and sites that send them traffic (to motivate them to do that).

But the added complication in all this is that you won’t join just one network. You’ll go to multiple places to get recommendations, and you’ll want your content to be linked on many places to get traffic, and ideally you’ll be able to get ad revenue from multiple sources. This suggests an even more complex hybrid model: He who sends you traffic gets to share in (and perhaps sell) ad revenue based on the traffic sent. So if Instapundit sends me traffic, I give him a share of my revenue for doing so. Or I let my content appear on another site via, say, Blogburst, in return for a piece of their ad revenue. It’s getting overcomplicated very quickly.

Sorry for this overlong treatise on networks. My point, in the end, is only that we are entering uncertain and uncharted waters in fluid networks. It’s not clear where the value will be captured and how it will be shared.

: LATER: See also David Galbraith, Kevin Werbach, and Cory Doctorow on the post-scarcity economy.

  • Sebastian

    “ABC recommended the show by putting it on the air; it aggregated the content; it aggregated the audience; it sold the ads; it shared the revenue. Life was so simple. Well, so much for that.”

    Too easy. Try a closed network like HBO. Looking at the 2006 vs 2005 numbers for TW’s cable operations, it sure doesn’t look like it’s ‘exploding’.

    Ads aren’t going to pay the entire tab for the next generation of new networks.

  • Oh man, Jeff, I thought my posts were depressing — pass the vodka.

    But seriously, what if media isn’t a business anymore? What if it becomes like poetry — lot’s of people do it, but nobody ever expects to make any money from it.

    I know, just because there aren’t obvious answers yet, doesn’t mean somebody won’t figure it out, but for the moment we all sound like the horse and carriage industry 100 years ago. Or the US manufacturing industry 20 years ago. There isn’t always a solution to structural decline.

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  • bit torrent

    The new networks are services such as YouTube. The cheap bandwidth prices are not being passed to the small people like me. I am still paying $1.30 per Gb on my hosting so I can’t afford to host my own video. So my only way of distributing video is to use YouTube etc.

  • deananash

    I think that Scott Karp has the right idea, but perhaps the wrong analogy. Instead of poetry, I suggest that it becomes like music. Millions (billions?) of individual performers, tons of small bands, lots of “one hit wonders” and a tiny percentage of superstars.

    I also see product placement as a potential solution. With media totally (eventually) connected to the web, the ability to know how many times a product placement is viewed makes it easy to monetize it. And this would be money that advertisers would pay AFTER the fact. So, I include a can of coke in my video, and if I get a thousand hits, Coke sends me a free six-pack. If it goes viral, and hits a million views, Coke sends me a check…somebody please tell me why this WON’T work.

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  • You definitely have good ideas. Still, I don’t see the old way systems of the networks going away any time soon. They’re just going to have to incorporate more of the internet into television.

    Atomic Poet

  • I agree with what you’re saying. I’m coming at this from a different perspective. I think there’s too much disparate content out there, and that it becomes harder for people to find the content that they’re interested in.

    More so, smaller creators of content are vying for people who are already taxed, attention-wise, so they’re getting passed up for the easy-to-find top 100 products by vote.

    I wrote about this in a post called content networks are the new blogs, where I argued that it’s not enough to be a quality voice in the wild any longer. There are too many. Those voices have to band together and focus on “packages” or “networks” of content. (I prefer network, but using your language above, I’d cloud things).

    This is a great post. Thanks for keeping the conversation going.

  • One of your last points, re: “So if Instapundit sends me traffic, I give him a share of my revenue for doing so. ” reminded me of how old pr0n sites used to work. (they might still, but I wouldn’t know)

    They used sophisticated link/traffic trading programs costing thousands of dollars to make sure their link partners (who sent them traffic) would get sent back the appropriate amount.

    Maybe, as usual, these crafty adult operators were ahead of the curve? =) Though I know you are talking about something else, it just reminded me about that.

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  • Interesting analysis Jeff.

    I would agree that the network is fast becoming the dominant metaphor for understanding media. However, if you look at the underlying motivations of why consumers are participating through blogs and social communities – it is fairly clear that the most salient feature of networks today is discovery not distribution.

    Users join networks in order to get found, be noticed, earn publicity and steal attention for whatever they create or stand for. The difficult thing for traditional media companies in this scenario is that their content is now just one of many things vying for attention from audiences, including audience members themselves.

    Interestingly – there is a good example of the shared revenue business model for aggregators that you mention. Adult site operators and affiliate marketers have long worked out that it is better to link to competitive content and earn a percentage of that downstream revenue, than aggregate and sell just your own material.

    I think many traditional media companies have coasted on the aggregation business model for some time – and this will be one of the tougher challenges for them as audiences discover that so called exclusive content that could once be locked down by medium or region – is now available everywhere on multiple platforms.

    It must be the day for network media theories. I posted a reply to some similar comments by Charlene Li at Forrester today as well here

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  • I’ve been thinking about this subject for a very long time as well, actually even years before I wrote to David Weinberger back in Feb 28, 2002 with an email entitled “Paradox: In Giving, You Make Yourself Stronger”.

    To be honest, I don’t think it’s achievable…yet. The number one reason is that it requires a huge change in thinking, something that most people aren’t ready to embrace yet. In effect, a paradigm shift to occur. What’s the shift? Basically instead of a payment (take) economic approach, you instead shift to a reward (give) economic approach. Why is this necessary for the Web? Because it helps to maintain open and accessible information that can be viewed by anyone on the Web (i.e. open shared network), something that isn’t possible with a gated payment approach.

    In effect, what’s happening is that instead of paying someone in advance for their content or recommendations (i.e. they take your money first), you instead reward them for their recognized contributions already received (i.e. you give them money afterwards). At no time is money being forced to change hands here. It’s all freely given. Think of it kind of like an investment (i.e. VC), in that your reward is in the hopes that they will use it to continue creating great content.

    I see the two steps to achieving this.

    1) Achieving a tipping point.
    2) Creating an easy system to manage the flow of money.

    I honestly believe achieving the tipping point is the more difficult of the two. You could get some of the more influential bloggers to spread the awareness of the idea which hopefully in turn will get others to get involved themselves (i.e. I’m setting aside $20/month to give between a handful of people that I value their content as an investment and reward for their ongoing efforts). However again, I can’t see this happening. People are ingrained to think that they shouldn’t have to pay for something unless they absolutely have to do so, no matter how great it is.

    Creating a system to manage this new flow of money (in reverse though to normal commerce) is the easier of the two. I mean I could theoretically do this manually right now via my traffic stats. Who’s recommending / referring me the most? These three people are. Ok, I’ll give them a percentage of my profits what I think is fair. Obviously having a system that handles this for you would be much easier. Ok, Jeff at Buzzmachine is driving a lot of traffic to me. I’m going to give him 5% of my monthy contributions with a maximum cap of $1000. After that, the system takes care of everything. Yet at any time, you can change the parameters of this “flow” of money from you, however you like.

    So to summarize, I only see one way to invest / inject money into the system / network and that money comes from us alone. Once injected though, it just needs to be kept flowing / moving for it to work. In effect, the site’s that receive the most contributions should be the site’s that are actively contributing the most (to bring awareness to other great content and to help them achieve sustainability as well). The end result is that everyone becomes involved in the sustainability of each other. In effect, we collaborate within the commons to collectively ensure the sustainability of each other as best we can.

    Oh one last thing. I’m not against capitalism (if you’re wondering). I actually believe everyone should be truly rewarded for what they create. The thing to realize is that this economic approach is only doable on the Web. You can’t walk into a grocery store, grab a bunch of groceries and say I’ll give you a reward later if I like it. Just doesn’t work that way, as we all know. Yet therein lies the problem. The only way to be able to support ourselves offline in the real world via our online work is by taking our offline money and injecting it into the online world somehow. That’s the only way to start generating this shift, so that eventually once the “snowball” (and money) does starts rolling in the right direction, more and more people’s incomes will come from the Web.

  • Dean A. Nash

    I was hoping someone would comment on product placement, with payment based on number of views (or click throughs if we’re talking about a static ad). Nollind, I agree with you a lot more than I disagree, however I seem to recall Seth Godin talking about the fact that when people read/watch us, they are paying, as in paying “attention”. The fact that they have given us their time – their most valuable asset – that they have chosen to read, watch or listen to us is thereby the most valuable form of payment available. After all, as you said, “we can always support ourselves offline”. But getting someone to pay attention to us, that’s priceless.

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  • The new world of, shared everything, seems to be one by which our content as information providers is certainly measured. However, it appears that what is measured, and really valued by the world of informed readers looking for the value in the content, is not even so much the content itself, as the selfless intent conveyed by the author. ie. Giving information for the sake of giving it, when everyone knows that you have no profit based motive at all. Value to the reader and user of the knowledge is simply measured by their recongnition of the fact that the information is being distributed to them from the heart of the provider. The informations’ value is in the selflessness of the provider. Just like advice that you value from a friend who has no other motive than to tell you the truth.

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