A New Business Model For A New Era

businessmen

I think Mitch Joel is one of the brightest minds in social media. But today, I've gotta take issue.

Mitch recently responded to a new Pew Research Center poll showing that television has been overtaken by the internet as a primary news source. I highly encourage you to read Mitch's thoughts here: Breaking News On The Internet. His concern is that new media (blogs, Twitter, etc.) has overtaken traditional media too quickly for a replacement advertising model to be accepted. After all, who is going to pay for all of the content online?

Now, I almost always think Mitch is right on target. But his recent post harbors some assumptions that I've been hearing more and more often from a lot of sources, but which I think are detrimental to social media marketing in its current incarnation.

In other words, it's not just Mitch - we all need to be careful about how we consider social media and how it relates to a business model.

Here are 4 assumptions I hear in the marketing community that need a good debunking:

  1. Traditional media and new media are selling the same thing: It's simply not true, so let's not talk about the two systems as though they were. TV and radio were made to sell ads; the internet is advice and expertise. Rick at eyecube said it well: "Television isn’t a medium for telling stories and disseminating information, it’s a medium for selling ads. As such, the goal is not to produce quality programming, the goal is to produce programming that will attract the most eyeballs." He goes on to make salient points about the quality that results as such, but my point is to take caution when comparing apples to oranges.
  2. The old business models were correct: Sure, advertising worked, but that didn't mean it was good. As long as a terrible product brought eyeballs or cash with them, do you really think the fat cats cared? In the old business model, marketers were shills. But now, good products tend to succeed and bad products tend to fail (and at a faster rate too). The old model sold people Ford Pintos. Now, we recommend Amazon.com to our friends. Who would want to return to the old model?
  3. Advertising is the only business model: The most surprising aspect of Mitch's post is that advertising is the only business model mentioned. There's no talk of a donation model (open source software), a merchandise model (Toothpaste For Dinner), a gimmick model (woot.com), a subscription model (The Bitterest Pill podcast), a community outreach model (Lululemon), a recommendation model (Zappos), or any other type of business model. None of these companies engages in advertising on a large scale (if at all), yet they are all very healthy businesses.
  4. The lack of a business model is a bad thing: Why? Unlike TV and radio, the content is already great. Mitch kind of admits this in both the Pew post and one from a few days earlier, named Bad TV, respectively:

    “Any idea how long it took channels like newspapers, radio and television to optimize their product to make it so appealing to advertisers? Most advertising professionals would argue that all of these channels are still working at it.”

    "[T]here is so much good content on the Internet that it is overwhelming. Where both [a DVR and an online news reader] enable you to avoid a lot of the noise, the Internet just has way too much relevant and good content - no matter what your varying interests may be."

    In other words, the hard part has been done: good content is everywhere! That's great! People find new ways to make a buck everyday online, so don't worry about it - the hard part is creating good content and cultivating an interested community.

Mitch says the internet is growing too fast - for whom exactly? Obviously not the viewing public, especially the young, if you read the Pew survey results. Obviously not us social media early adopters. So who? The suits? The record labels and the movie studios? Everyone else who tries to make a buck off of the content producer? Hey, screw 'em.

Out Of Whose Wallet?

Despite the assumptions I drew from Mitch's post, his main point is this: Who is going to pay for all of the content we consume online?

It's a valid question. Of course, good content has a price tag. But I think we've gotten too used to advertising paying for everything and it's turned advertisers into editors. That mentality won't work in this new era.

And Mitch and others get this, I think. In a post on Christmas Day, he wrote about a potential journalistic endeavor: "Hustling for banner ads is not going to generate the revenue that you were hoping for, and by focusing on this - instead of the quality and relevance of the content - it is only going to cause you to be distracted."

So let's not get distracted because of the business model. Tell business owners and old-school marketers this for now: Provide content, then build trust, then rake in new business. It's uber-simplified, but that's how you provide content at a profit.

This Isn't Personal

I count 10 blog posts in the last year alone where I had nothing but glowing things to say about Mitch. He and other new media folks are providing a light in the darkness to millions.

My concern is only that we keep moving. Sure, let's talk about business models and figure out how we can all provide the most use for our clients and make an honest buck doing it. But let's do it in a spirit that fits the new era, one where we don't get tripped up comparing things to how they were in the past.

Why? Because we're in a freakin' awesome point in time! Social media marketing is creating more honesty, value, and conversation - and I suspect that both Mitch and I would agree that's a wonderful thing.

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(Image courtesy of Y-J via Flickr)