When friends heard I was working on a startup, some asked what technology I’d be working on. Others asked what business problem I’d be solving.
It’s true I tend to get caught up in technology while lacking concern for an associated business problem. Technology is fun, business problems can be less so.
But with this startup, it was all about the business problem, except "business problem" was a masterpiece of understatement. When I think of business problems I think of needing a more efficient way to screen candidates, or a better way to automate social media. My customers don't have a business problem. It's an industry in crisis.
Most of us content lovers have embraced the shift to digital over past decades. Limitless free content however we choose to access it, and long may it live. However, many of us are also aware that digital publishing is in trouble. I didn’t understand the extent until I looked further.
Here are the numbers that stood out for me:
Revenue Growth is Locked Up
The amount of revenue growth from US digital advertising spend owned by Google and Facebook alone.
The Market is Locked Up
The proportion of digital ad spend earned by the top 10 US companies in 2020.
Readers Don't Pay for Content
The proportion of readers willing to pay for online news.
Paywalls Can Do More Harm Than Good
The amount of revenue contraction that can be caused by the introduction of a paywall, according to a study of 79 firms.
COVID Hasn't Been Good to Publishing
The amount of decline in digital ad spend for the media sector during the covid pandemic, despite 78% of people claiming to consume more online services during the period.
These numbers illustrate the increasingly non-viable business model of a global digital publishing industry, an anxiety-inducing proposition for players in this market.
This blog series will look at how business models are adapting to this new environment, and creative ways digital publishers are maximising growth.