The Future of Content

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Over here at Kapost, we talk to a lot of publishers and people creating content.  These are all sorts of people such as large known publishers, college newspapers, small company blogs and mommy blogs.

We noticed one obvious trend and one not so obvious one.

The obvious trend is that traditional journalism is struggling.  Companies that rely on their content to generate traffic for ad revenue are hurting.  They aren’t getting enough money for their content so they are doing all they can to get leaner and meaner.

The not so obvious trend is that many companies who are not content-based companies are hiring more and more journalists for themselves. They are doing so to populate their blog.  This is a marketing tactic and one that is pretty effective and becoming more and more popular.  This is a large emerging segment and, in my opinion, is the future of content.

My partner Toby wrote a great piece about this that was published today about this topic.  He goes even deeper and gives some good samples of why hiring journalists for non-content companies work and why it doesn’t for ad-supported folks.   He compares Fitness Magazine with the company Weight Watchers.  Both produce high volumes of content about dieting and exercise for essentially the same audience.  He concludes:

Fitness likely generates around a $6.50 effective CPM for the ads that it runs, a blended rate for its direct-sold and remnant inventory that is consistent with industry averages. Assuming that three ads are run on each page and that the average visitor visits five pages, Fitness would have an ARPU of about $0.10.

Weight Watchers, on the other hand, does not run ads, but tries to convert visitors into becoming paying customers. Given its $194 price point and a conservative 2 percent conversion assumption, the ARPU for Weight Watchers is $4. What we see here is a 40X ARPU difference between the media publisher and the content marketer.

This is a big difference.  People follow the money, and the money now is in content for marketing and not content for revenue.   That’s the future.

 


You know you’re in Minnesota…

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…when you open up a menu at a bar (Bunny’s) and you can order Walleye Fingers.

On another note, I didn’t know that the bar Bunnys in St. Louis Park got its name because the owner needed a sign and the sign maker had a spare sign with the name “Bunny’s” on it.  So he got it for cheap and that became the name of the bar.  Funny.


I Still Believe in Patch

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AOL released their earnings last week and the market did a collective vomit-in-their-mouth over the results and their market cap dropped by one third.

Lots of the criticism came from AOL’s expenses in producing content and skepticism that they will ever make enough money on the content they are producing.  It also came out that they are spending $160 million a year on Patch which equals about $150k a year on each site.  One analyst (Robert Peck at Quasar Capita) said about AOL, “If you sell lemonade for $1 and it costs $800 to make it, that’s not a great business.”

Personally, I think AOL should continue to focus and pursue Patch. What’s their alternative?  Since Tim Armstrong has taken over, AOL has gone down the path of being an online content company.  That’s their strategy.  To abandon it would mean to become something completely different – something they have no vision or focus on.  Web companies don’t succeed and don’t create value by copying existing incumbents. They do it by innovating and building new distinct and unique offerings.  A hyperlocal site that covers and reports local news, that has local advertising and other deals tied in will exist.  The world is asking for it. AOL is uniquely positioned to build and provide it.  The newspaper is dead, and in 10 years online/mobile outlets are going to be the primary way news is found and read.

Of course, there is a question of whether they are structuring it correctly.  $150,000 a year seems steep for each site.  Could they do it more efficiently? I’m sure they can.  And, even people working there are admitting that their current attemps at revenue have been bad. But to call for them to stop doing it is just dumb.  I’m bullish and still believe in Patch and i think it’s a bold and interesting strategy for AOL and their only chance of being a relevant company in the web space.  I hope they make it work.


Yes, I’m excited for the Timberwolves

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I’m a big NBA fan.  Each year i get excited to see how the MN Timberwolves do and i’m especially excited this year.

The only way to become great in the NBA is through the draft.  It’s the only way to get the true superstar and you need the true superstar to win a championship.  You have no idea when you draft Dwanye Wade or Kobe Bryant if they are going to be All-NBA or out of the league in 5 years.  Some players fizzle, some grow to superstardom – you never know.  But one thing you do know is that if a player becomes an elite player, the Timberwolves will NEVER get them unless they already had them.

This year i’m especially excited because we have two new rookies that could be the next players that set the league on fire.  They are Ricky Rubio and Derrick Williams.

Both were drafted high (Rubio at 5, Williams at 2) and both were touted to be one of the best in their class.  How they will actually perform, nobody knows.  But i’m pretty frickin’ pumped to see Rubio leading fast breaks with Williams and Wes Johnson on one wing and Kevin Love trailing for 3’s and rebounds.

Check out this video. Just a few years ago people were talking about Greg Oden as one of of the best draft picks in recent memory.  The number two pick – Kevin Durant – was considered risky.  Well, here’s a video of him taken yesterday when he went absolutely insane.  I’m hoping some of that similar draft luck comes to the T-Wolves.


 

 




Speaking my Blog Post

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I get tired of remembering and also tired of writing.

My new desire is to just speak stuff and have it appear.  Twitter was easier than blogging but talking is even easier than that.

Henry James dictated his novels to his secretaries and it seemed to work out ok for him.  I was always hesitant of voice recognition but it’s now so good in fact that I just dictated this entire blog post via the Dragon app on my iPhone. It was a total joy.  I’m able to talk at 300 words a minute but I can only type and 50. It’s actually a no-brainer and I’m now wishing there’s a version of Dragon I can just leave running all day and have a text archives of my conversations in the office. I want everything I talk about be captured.

The web is already filled with tons of useless babble – and it’s about to be filled with a lot more of it. 


Why Turntable is Kicking Ass

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I have a new love in the office and it’s called Turntable.fm.  If you haven’t heard about this web application, it’s a website where you can go and play music.  Except it’s not just you playing music, it’s a table where you and up to 4 other friends each rotate playing music.  So, you play a song, then your friend, then another friend and then back to you (if only 3 people in the room).  If you’ve in an office where music playing is public or you want to get music suggestions from friends, this is the perfect application.

 

There have been a million music applications built in the past 5 years, so the question is: why is turntable successful where the other ones weren’t. Here’s why:

Continue reading “Why Turntable is Kicking Ass” →

Funniest show on TV right now? Easy, it’s “Children’s Hospital”

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There’s a program that has only 10 minute-long episodes that’s on only at midnight once a week on the channel Adult Swim.  It may be random, but man is it glorious.  I challenge you not to love this show.  Check out this quick episode:

The show is created by Rob Corddry – who most of you know from Comedy Central – and the storyline centers on the staff of Childrens Hospital, a hospital for children, named after a doctor named Arthur Childrens. The hospital sporadically (and usually without reason) is mentioned as being located within Brazil, despite making virtually no effort to conceal that the series is shot in Los Angeles, California. Corddry is part of an amazing ensemble cast portraying the doctors, which includes Rob Hubel, Ken Marino (Party Down), Megan Mullaly (also from Party Down), Malin Akerman, Henry Winkler and many other commedians you probably know such as Michael Cera who does the intercom annoucements in the hospital.

The show is now in it’s third season.  I personally think the 3rd season has been the funniest so i would jump directly there if you can.  Enjoy my friends.  It’s aways such a treat to find such awesomeness.



Making Progress

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You can read all over the internet how hard it is to build a company from scratch.  There’s customer development which leads to product/market fit which leads to revenue which leads to profitability.  And that’s only if everything goes right.  It’s a challenge.

The analogy i always have in my head is a walk in the woods.  When you start a business, it’s like walking through a dense jungle.  You have a machete, hacking your way through the brush, and talking to whoever you can, trying to find a path.  Once you get a product and a sense of direction, you find a path, the walk becomes a little bit easier but, as they say, you’re not out of the woods.

As you talk to more customers and continue to develop your product, that path becomes wider and eventually turns into a dirt road.  Improving the sales and dev process plus hiring more help turns that road into a paved road and eventually, if everything goes right, it becomes a highway.

Each step of the way is exciting.  Right now at Kapost we’ve built a path and we’re working hard to turn that into a road.  It’s hard and challenging but it’s also damn fun.  We have a great team of folks and the daily progress we’re making is impressive.



Foursquare vs. Quora: which would you invest in?

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I had an interesting debate at lunch the other day with Toby about which company we’re more bullish on between Foursquare and Quora. To paraphrase Hansel, both are “so hot right now.” Both raised money at a very high valuation (Foursquare raised $20 on $95 million and Quora  11 on 86), yet both provide reasons to be skeptical.

With Foursquare you have an extremely popular mobile location app.  However, most people don’t “get it” – as in they don’t see reasons for checking in everywhere they go, don’t live in a dense-enough location where it serendipidous run-ins are possible, nor do they want to share that information.

Then there’s Quora.  It has some obsessed users who are contributing very original and valuable content.  The online Q&A industry is a great segment of the web but there are questions of whether the site ever get attention from mainstream users.

For me, my money is on Foursquare.  It’s one of the few mobile apps that capitalize on a user’s geopgraphic location.  It’s fun to use and has a lot of untapped potential.  The integration with gas stations and Starwood hotels are just the tip of the iceberg for them.  I do feel that only 10 or 5 percent of users who register end up regularly using the service but as they continue to get good deals to entice not only new user acquisition but engagement they will grow and be successful.   One criticism i have heard is that Facebook places will take out Foursquare.  I don’t think so and ironically actually wrote a response of why on Quora.  In fact, you can see from this graph how FS’s growth has increased since then.

That’s not to say that i’m anti-Quora. I’m not.  I think it’s one of the best web UI’s I’ve ever seen and I do find it useful.  I just wonder about it’s mainstream appeal.  So, if both had a $100 million valuation and i had to put my cash on one, I’d place it on Foursquare.  What about you?


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