Tuesday, October 16, 2007

Rush to the Feeding Trough




This past few day and weeks we have seen announcements of how Entertainment, Media and Advertising/Marketing companies are teaming up with and investing in the "Second Tier " of Second Life, with ESC and Millions of Us in the forefront. We have seen Armani and Herman Miller enter the "game" repeating all the mistakes made by so many others before them.

We have heard of the giants, Google and Microsoft stalking the playing field. We have heard of IBM, SUN and the "Open Source Family" all in the same room discussing the new "Architecture and Standards for the 3D what ever you want to call it". What we did not hear as much about was the new tools for content creation, user ownership rights, the social aspects of living in the "Virtual World" or about improving opportunities for USER expression, growth and profit.

I will leave others to report and speculate on this mad rush to the feeding trough, but they all should reflect on this.

There are a few models that have worked the best with the Web, The EBay user content driven/take a percentage model, The Microsoft , buy a licence/subscription model and the Google/Yahoo advertising model, to name the top three. Obviously the players in the latter are now making the most overt noises, looking for a primer position. They should keep in mind one thing though. it will always be about content and perceived value to the USER. How can I as an end user make money or just enjoy the experience; as reported in Yahoo News 10/12 .

.......The catch, according to some, is that much of the money flowing toward the Internet is concentrated on a few dozen of the most popular sites. That has left smaller, less well-known sites at a severe disadvantage when it comes to attracting advertising money and surviving.


In the United States, the top 50 Web sites accounted for more than 90 percent of the revenue from online ads in the first half of 2007, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The top 10 sites accounted for 70 percent of the revenue.


All the while, the number of Web sites continues to grow, creating more competition or audiences -- and advertisers -- who can also choose among video games, movies, TV, portable music and every other type of media entertainment.
"It's not like the old days, when it was 'if you build it, they will come,"' said Jonathan Sackett, Chief Digital Officer at Arnold Worldwide, a Boston-based advertising agency. "Now if you build it, they probably won't."


One alternative for Web sites would be to bank on subscriptions rather than advertising revenue, but few existing outlets have been successful with that model. The reason is that unless the site offers extraordinary content, people simply refuse to pay for it, said Mark Miller, president of RMG Connect, an advertising and marketing agency.

"If Warren Buffett wanted to put out his own subscription newsletter online, well, I'm sure he'd get a bucketful of people to subscribe to it,"

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