Publishers Need a New Understanding of Business Models

Jason Hirschhorn is a man with an illustrious past in the media business and much to say about the future of media. The industry ought to be listening to him now that he’s writing again.

Born in New York, home of the media business, he cut his teeth on a company, Mischief New Media, that was bought by MTV, and joined that company as Chief Digital Officer. This meant he worked for the great Sumner Redstone. As if that weren’t enough, he went on to work for Rupert Murdoch as CEO of MySpace.  His belief that the media business was going to change then led him to work for Blake Krikorian, the founder of Slingbox.

Since then, he has served on the boards of MGM and Pandora. But the most interesting thing he has done, from our standpoint, is found a free newsletter service called MediaRedef, which quickly became a source for all the industry changes the content business was undergoing. Here at ZEDO, we read MediaRedef voraciously, as everyone in the media business should.

That’s how we learned in advance of most people who were still in the weeds that the TV business was shifting to digital, and with it the business models and the ad dollars. In October 2016, Redef put out a 3-part series on the future of the video business.  

He believes new fortunes will be built on video, as they were on TV. In the deck he uses to discuss this future, he details the changes.

  • Why the television business is less stable than it appears
  • How the fundamentals of video industry has been upended – not in the sense of “digital distribution”, but also in how you make, fund, release, discover and share content
  • The seven consequences of the new video status quo, from the commoditization of content to the emergence of new storytelling formats and the monopolistic dangers of digital distribution
  • Why we’ve seen over-the-top efforts from incumbent media companies struggle and new entrants pursue growth in under very different operating models
  • To this end, we put forward our take on new models of distribution – not AVOD versus SVOD – but brand new operating models. We define them in five ways, “Scale Feeds”, “Social Feeds”, “Identity Feeds”, “Feed Navigators” and “Feedless SVOD”

What are these business models? Well, SVOD stands for subscription video on demand, which is the model of Netflix and Hulu. TVOD is transactional video on demand, which is the model of Amazon and Apple.  And then there is AVOD, ad-based video on demand, which is the segment we are in.

Two years ago, Jason predicted the changes we are seeing now, but he also predicts further change. If you are a publisher in our business, you should have already seen this deck. 

It should be reassuring if as a media company you are willing to change, but it is terrifying if you think your current models will survive.  Media companies focused on ads v. subscriptions are fighting the wrong battle. The war is over content.

There will always be an audience for niche passionate users, and publishers should now concentrate on encouraging and creating their niches. Once the niches (the audience) have been created through good content, there will be multiple distribution models