By Jim VandeHei
Digital media companies are caught in the “crap trap,” mass-producing trashy clickbait so they can claim huge audiences and often higher valuations.
Here is how they fell into this lethal trap: They got into the content game to produce news or info they might be proud of, believing they could lure us to read it and maybe even pay for it. They quickly realized it’s expensive to produce quality content and hard to get a lot of people to click on it, much less pay for it. So they deluded themselves that the better play was to go for the biggest audience possible, using stupid web tricks to draw them in. These include misleading but clicky headlines, feel-good lists, sexy photos and exploding watermelons.
And it appeared to work. Traffic spiked. Costs were contained. But revenue never followed because everyone else was doing the same tricks and getting the same spikes—and the simple law of supply and demand drove down the value of their inventory. This dynamic helps explain why Mashable recently laid off so many journalists, BuzzFeed saw its growth miss the mark and many media companies and investors are freaked out.
Here’s the good news: This era is getting flushed away. Some companies feel self-conscious about the trash they are producing. Many others realize it’s simply not a good business model. But the savviest ones see a very cool reason to change: A content revolution is picking up speed, promising a profitable future for companies that can lock down loyal audiences, especially those built around higher-quality content.
In coming years, the revolution will likely demolish much of what we read and watch now. State and local newspapers and TV? Gone. Their models are fatally flawed. General interest magazines such as Time and Newsweek? Gone or unrecognizable shells of their former selves. Traditional TV and cable? Shrinking and scrambling. Clickbait machines such as Gawker, or Ozy, or Mashable? Gone or gobbled up by bigger players.
At the same time, the need for content, especially (but not only) video content, will explode. It will be a mad rush that makes the 1980s’ race to create new cable channels seems like a leisurely stroll.
The pipes for distribution of content are mostly set. Facebook, Amazon, Google and Snapchat will be joined by the savviest traditional media companies such as Comcast and new media players, most notably Netflix, Apple, Vimeo and others.
Those pipes need content. And that content has to attract loyal audiences willing to cough up money to watch it—or more likely watch it, listen to it and read it.
This is why BuzzFeed, Vox, Business Insider, Upworthy, Mashable and so many others are pivoting fast to video content creation, hoping they can turn their big audiences into loyal audiences addicted to videos. It is safe to assume a lot of the content will be clickbait as they try to game the Facebook algorithm for short-term ad dollars. This fad will take a long time to burn off. It’s also safe to assume many will die off in the process.
For all the hand-wringing about BuzzFeed’s business performance this past week, the company is on pace to grow revenues by 50% in 2016, giving it more than enough cash and reason to help lead the transition.
But with time, the demand for loyalty, uniqueness and durability will shift the emphasis to higher quality.
So instead of scale for scale’s sake, the next phase of the media revolution will be creating content of consequence and value. It will continue to be messy but the trajectory for the coming decade is promising. Listen carefully to what Mark Zuckerberg says of late and you can tell he wants quality content, not just quantity, and one day soon will probably want to produce some of it directly at Facebook. Same goes for Snapchat as it expands its content ambitions.
A similar revolution is sweeping through the written word space. Print is obviously dead—the only question is when. But the bigger challenge for those who love writing and reading is that advertising in the digital space is slowing—and the problem gets much worse once most reading is done on phones. It’s simply easier and more efficient to run ads on Facebook or Snapchat, which have bigger audiences and better technology to match readers with things they want to buy or do. And, let’s face it, you can only be so creative with ads on a four-inch screen—a limitation which is more of an issue for traditional print publishers on digital.
We are basically there. I helped create Politico a decade ago—and it still has a newspaper, a magazine and awesome desktop presentation. This continues to have huge value. But, as we think through a new media company or where the puck will be in five years, our focus is only on mobile, social and whatever else is next.
This shift toward mobile and social will force media companies focused on writing and pictures to find ways to get more people to pay for their content. Politico does this with high-end subscription content for professionals. We call it Politico Pro. The Information provides similar expertise in the tech space. But there are other ways to do this.
The creative companies will do this by paying a lot more attention to delivering better information in more efficient ways. They have to think about making people smarter and their lives easier and more enjoyable.
They will stop clinging stubbornly to writing the way journalists want to write and more in the way readers actually want to read. In return, readers will have to pay up and if they need and love the product, they will, and gladly so.
You see this unfolding already: The New York Times mobile site offers a far more enjoyable and efficient way to read the news than its newspaper—and digital subs are rising. Vice hired one of the smarter minds in journalism, Josh Tyrangiel of Bloomberg, and is throwing 150 people at reinventing the nightly and weekly newscast for HBO.
Ken Lerer is right: This is the golden age for content creation.
In all likelihood, the revolutions in video and digital will merge into one: with a new generation of media companies producing content we watch at home, listen to in our car and read wherever on the go. And thanks to technology, all your devices will know what you want, where you are and how to serve up content the way you want to consume it at that very moment.
Just like the Web destroyed the newspaper world; mobile will destroy the desktop world and on-demand video will destroy the TV and cable world. But from the rubble will emerge a much better, more eclectic, more efficient way for all of us to watch, read and listen. It will be brimming with content we can be proud of—and happily pay for.
—Jim VandeHei is the co-founder of POLITICO, a digital media company. He recently resigned as CEO and announced plans to start a new media company with Mike Allen, author of the POLITICO Playbook, and Roy Schwartz, the outgoing chief revenue officer of POLITICO. He is part of a group of advisors to The Information.