A Thought Journey in Digital Media

A couple of months ago, I joined a certain digital media startup, having zero prior experience in the media industry. What followed was a series of learnings and discoveries, product pushes, deadline misses and extensions, and a rollercoaster of emotions along the way. But throughout it all I’ve tried to collect my thoughts so far on the industry, and where I think this is headed.

Perhaps due to having a significant portion of my career and training in Finance, I’m used to thinking of the present value of a business as the sum of its discounted cash flows. If a business produces certain goods or services, which it sells to its customers at some price, then its cash flows over a certain period will consist of sales of items minus its operating and non-operating expenses over the period.

What about media? Well it still generates sales; usually in the form of ads or paid content, from which we subtract operating and non-operating expenses; which mostly equals the cost to produce and distribute content. In this sense, the media business is just like any other.

The old media

The media universe used to consist of product categories easily separable by their transmission form: newspapers, magazines, TV, radio, books, etc. However, the digitization of print as well as audio-visual content and consumption has not only completely transformed the way content is made, it has also eliminated the infrastructure and distribution mechanisms that make each of these forms unique.

Newsrooms today are no longer attached to printing presses waiting for the morning copy; radio stations now compete with, or have even partially converted to, podcasts on iTunes or Spotify; TV broadcasters are piecemeal distributing through Youtube; and once-illustrious print magazines such as Tempo or Gatra are dying and failing in their digital rebirth efforts (perhaps The Economist is the only exception to this very global trend). All this contributes to an overarching sense that in the jungle of digital content, things are very different. And soon, things will be even more different.

The new media

In digital media, revenues are usually simply a function of your ability to attract and sell pageviews, and the marginal cost to produce a unit of output is almost negligible. In this new media paradigm, pageviews are the be all and end all. The ability of your site to attract pageviews dictate your ability to route advertising income, which in turn dictates revenue. Thus, it makes sense to think of the value of a digital media business as the sum of its discounted future pageviews.

Naturally, there are other factors that affect how efficiently a media business translates pageviews into cash – such as its standing relative to competitors; its content availability as well as push efficiency across channels; and perhaps most importantly, its ability to understand and position itself within the whirling and shifting of user expectations and behaviours.

Perhaps the best image I can conjure of the digital media consumer is that they are sluts. They are fickle, they play around with multiple partners, and they have zero loyalty. In digital media jargon, this means that they have no attention span contributing to small session lengths, they consume content through multiple channels and they exhibit high bounce rates as they move fluidly between platforms and content creators or channels.

What does this mean? In a world where the news product has become commoditized, whereby the same breaking news in detik is accessible in kumparan within 5 minutes (and vice versa), it’s getting harder and harder for digital media brands to differentiate themselves. And yet the disloyalty and fluidity of user behaviour demands that they must differentiate or die.

Knowing this, digital media’s obsession with pageviews is a double-edged sword; whilst on one hand pageview numbers form the basis for the product we are selling and ultimately our sales numbers, on the other hand it distracts us from what ultimately really matters – the user experience.

But then again, if the mindset is that the value of a digital media business is the sum of its discounted future pageviews, how can we say that UX is what really, really matters?