Actions Speak Louder Than Words
I’ve historically liked to think about journalism in two broad categories — I tend to use the handles “creative” and “service” for the two types. These are not necessarily the appropriate technical terms, but I believe they help frame the relevant issues and discussion.
Creative journalism as I refer to it includes the world of opinion/editorial, breaking news stories and in-depth reporting difficult for the amateur to do. This side of journalism is undergoing a significant (r)evolution — breaking stories has become increasingly competitive and drowned out, what can be truly classified as in-depth reporting has shrunk, old voices have been quieted (LA Times) and new voices have arisen (Gawker, the blogosphere in general) and there has been a fundamental splintering of contributing voices and consuming audiences — but the value of these voices as a whole remains and will. Pundits, commentators and brands will persist.
Service journalism on the other hand is that massive swath of journalism that provides the consumer with general news and information as well as vertical-specific news and information offerings.
The general news business (in addition of course to the issues on the classified side) has been eaten alive by the proliferation of sources, professional and amateur, and the speed at which they can gather and broadly communicate info. Outside of what’s left of breaking news and in-depth reporting, the gathering and delivery of news has been fundamentally commoditized. While the content may not always be “professional” (whatever that means), it’s certainly good enough and almost always beats to the punch.
It is the world of vertical-specific media offerings though that I believe will increasingly feel the heat. While there will be editorial properties that flourish as valuable niche offerings in this area (NYMag), this category of news and information will be increasingly usurped by what I’ve been lately thinking about as the “social activity economy.”
The first battle of this war was fought on the UGC front. Sites like Yelp, TripAdvisor and others replaced the traditional service journalist with users. This was a profound shift in the source and economic model for utilitarian content. But it was just the beginning.
More and more, this world of UGC is moving closer towards mapping user action and intention and linking it to the social graph (Facebook), influence graph (Twitter) or site-specific graph to provide valuable context.
In other words, we’re now getting data on what people do vs. what they say. And we know who these people are and how they matter to us given their public profiles.
Sites like Foursquare in local and GDGT in technology are providing implied content via your friends or influencers actions and desires.
Blippy takes this concept even further, where purchases of those you choose to follow serve as the basis of your content consumption experience. Imagine users feeling comfortable sharing their purchase behavior just a few years ago? And over time, this sharing of personal information will become even more seamless.
Coupled with data as to the quality of the consumption experience and context as to the provider of that data, you have magic.
This is a world where where action forms the basis of content, community provides context and data lives in the center.
At their core, actions speak much louder than any standalone words — professional or personal — can ever speak.
The Beauty of Marketplaces
Having been involved with a number of businesses that are reliant on concentrated and powerful suppliers, I can tell you that it’s never fun.
Chris Dixon has a great post on this topic yesterday as it relates to the video business and dealing with the Hollywood supply chain, which was ultimately Joost’s undoing.
This point applies more broadly to all markets with concentrated supply. Suppliers will hold up distributors every chance they get and almost always struggle to embrace today’s necessary digital ubiquity, fearing erosion of their business rather than recognizing the power of massive distribution. And they will always make your life difficult.
To be clear, this does not mean that the Joost/Hollywood example is ultimately instructive and successful businesses cannot be built in markets with concentrated and strong suppliers. They absolutely can. They are just fundamentally tethered to and limited by that supply.
Examples of businesses I’ve been involved with in this vein include Ticketmaster in ticketing and Interval in travel. Everyone is familiar with Ticketmaster, but Interval is a fantastically successful timeshare membership and exchange business.
Interval is a very instructive example as its business is made up of two parts:
1. The first requires them to secure deals with timeshare developers that allows them to acquire members to their program.
2. The second is an exchange for members that allows them to exchange their allotted time with other members, thereby increasing the flexibility and value of the owned inventory for the vacationer. So for example, if you own a week in Miami in December you can trade it for a week in Beaver Creek in December.
Interval’s marketplace business is beautiful and drives pure margin. But it is limited by the supply contracts it has with timeshare developers. It is not a truly open marketplace.
On the other hand, open marketplace businesses have scale potential that is only limited by the size of the market in which they play. And the web is perfectly suited for these kinds of businesses.
Examples include OnForce, BountyJobs, ServiceMagic, HomeAway, StubHub (& SeatWave in Europe), Match and of course Skype. They all operate independent of these supply constraints, and are better off for it. As long as there are technicians, recruiters, home contractors, home inventory, tickets outstanding, single people and folks that use the phone respectively, these businesses can play.
Newer business models are taking advantage of these dynamics as well, like Kickstarter in fund-raising.
Some of these businesses are P2P like Skype & Match, others are B2C like ServiceMagic and HomeAway and others are B2B like OnForce and BountyJobs. Markets and supply in these businesses differ — for Match it’s people, StubHub tickets, ServiceMagic contractors and OnForce techs. Some charge on one side of the transaction and others like Match charge participants on both.
All of these factors need to be considered when evaluating these businesses. But the basic principle is the same — no one person or entity can hold you over a barrel. And when you get a lot of folks participating, watch out. Growth tends to be explosive.
The trick with marketplaces is getting them started, and there are a number of ways to help grease the skids in different marketplace concepts. That’s fodder for another post, but one key thing to remember is who your supply *really* is.
In most marketplaces, supply is the end-user or provider of services rather than the purchaser of services. Remembering this and building around it will go a long way towards ensuring success.
I have long been compelled by marketplace businesses and continue to be so. If you’ve got one or are building one, I’m keen to hear about it.
