We can’t see the internet for the wires. We talk about the internet as technology — computers and cables — but more and more I see it as people: people connected with each other, people speaking, people shopping, people learning.
I am finally seeing media the same way: people, unmediated. This is the basis of our new degree in social journalism at CUNY. And this is a worldview and business model confirmed by Samir Arora, CEO of Mode Media (aka Glam) in a session I moderated at this week’s DLD conference in Munich. Samir presented a new taxonomy for media companies and a new view of their profitability based less on the value of their content than on the value and scale of the people they connect. It’s a new, powerful, and unappreciated vision.
I have been writing about the power of networks for a long time and that is why Samir walked into my office seven years ago saying he had to show me a slide of his, because it confirmed what I’d been saying. This ugly bit of PowerPoint — often compared to some bizarre biological experiment — exhibited the scale Glam had achieved as a web property over rival iVillage. Glam did that by building networks of independent bloggers instead of owning, creating, and syndicating content, the old way. In short order, Glam had beat iVillage.
Since then, Glam and its associated brands — collectively Mode Media — have grown from 20 million uniques in the U.S. to more than 400 million worldwide. Mode is now the seventh largest web property. iVillage is gone.
How did Glam do that? People.
In Munich, Samir presented his analysis of media sites with this slide. It is worth studying.
On the left are content companies, on the right platforms.
In the top right box are companies that don’t pay for traffic or content. Examples: Facebook, Twitter.
In the next box down are companies that don’t pay for traffic but do pay for content via revenue share — that is, only content that makes money. Examples: YouTube, Mode.
In the next box down and to the left are companies that don’t pay for traffic but do pay for content they create, whether it is seen and monetized or not. Examples: Yahoo, Aol/HuffingtonPost.
In the next down are companies operating under the classic media model that pay for content and pay to market it. Examples: Most any newspaper or magazine company, and Samir puts BuzzFeed there.
Then come ad networks and technology companies, which create little value themselves but profit from tremendous volume.
Now look at the margins on the left. Samir defines media margins as profit after the cost of content and traffic. Note how high the margins are at the top and how much they fall off. What makes the companies at the top so profitable? They enable people to both publish and share. They don’t make or buy content on the come. These are the new social media companies — that is, media companies that grow by being social.
Finally, Samir took a chart the Washington Post made looking at the top 20 web properties over the last two decades, marking the growth of Facebook (which operates at the upper right of his chart) and breaking out YouTube.
Samir became a friend and I advised Glam and so we talk often and when we do we always marvel that more media companies have not learned the value of networks. Today at the World Economic Forum at Davos, I just moderated a session on extending the Forum’s work on updating copyright to other industries and other forms of what we call intellectual property but I prefer to just call creativity. At the end, the founder of a startup came to me and contrasted the attitude of entrepreneurs with that of big media and manufacturing companies in the room. They all care about making products, he said, but we don’t. We care about networks. That’s is where the value is. The value of Facebook — his example — is not its product, its intellectual property. It’s value is its networks.