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Internet Mass Media Bubble?

April 16, 2009

Advertising people love mass media outlets because they make life a lot easier to tell someone something about their thing. If 3 million Americans watch something on TV, then an ad on that thing will be seen by 3 million people.

So when MySpace started to show large numbers, the spidey sense of advertising people around the world tingled. In a world of diminishing mass media outlets, a place like MySpace, and then Facebook, and then YouTube, where hundreds of millions of people lounge about, is a pretty cool proposition.

Maybe mass isn’t dead yet. 170 million people on Facebook might be the re-birth of mass, web 2.0 style.

Note: TV isn’t dead. More people are watching more TV, and there’s even a sort of bubble in good TV approaching. There is a lot of excellent content on TV, and not enough time to watch it all. We missed the Wire at our house. Barely have time to watch Weeds. Wanted to watch Dexter, but gave it up for Life. The point is, TV has stopped being mass and is moving to niche.

But back to YouTube, a Google offering.

“According a recent report by analysts at the financial-services company Credit Suisse, Google will lose $470 million on the video-sharing site this year alone.”

Link.

I think this has implications for Facebook, since the costs at YouTube, and thus Facebook, are from the mass appeal of these sites. It costs money to host all the videos in server farms. As Facebook encourages people to add videos, with the ability to add a video, in real time right to Facebook, the cost of hosting content must be shooting through the roof.

And therein lies the rub. One can argue that these companies are in trouble because they launched without a plan to make money. And that’s right. I think it’s better to think of this as an attempt at mass, that seems likely to fail. I think that analysts are looking for mass appeal from web 2.0, who’s appeal is the ability connect on a niche level.

So my fear is that news of YouTube’s bleeding of money will be considered evidence that Web 2.0‘s bubble is bursting. And while this blog wondered if we were in a web 2.0 bubble, I now think the future of web 2.0 is more like Ning.com, and less like Facebook.com.

Ning offers people the ability to create their own little niche networks. They can be free, or with a little bit of money, they can be customized. But, I doubt that a Ning social network will ever have mass appeal. It will have niche appeal.

And that’s really part of the appeal of web 2.0. The ability to get like-minded people into a room together to talk about things. That’s what blog are, to a certain extent. A place to talk about ideas for ad agencies in social media.

Mass is the the issue for newspapers. To be profitable, they need numbers. To get numbers, they need to be everything to everyone. But the ad model isn’t keeping up in an era of increased mass options. The ad model is based on millions of people watching, not a hundred. This blog, for instance, doesn’t get enough traffic to be considered an option for large brands because the impressions would be meaningless. But what if the modelled changed?

Currently, ads subsidize the content in a very competitive marketplace. Brands are first charged for impressions by media companies, and then the ads are thrown into the pit to fight with DVR, other ads, or a beer in the fridge, to turn that impression into an action.

But what if the model wasn’t an ad model, but a sponsorship model? What if brands sponsored Ning groups? What if brands sponsored social media sites? True, it’s a lot harder work, because relevance will really have to matter. But it would mean instead of measuring impressions, we’d measure engagements. Actions.

Personally, I think that’s the future of social media. YouTube and Facebook were good at changing behaviors. YouTube taught people to share, Facebook taught people to join. And now, the next chapter begins.

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