If there is one lesson to be learned from the recent announcement that AOL is relinquishing editorial control over its Fanhouse brand and outsourcing its sports coverage to Sporting News, is that being on the Internet does not necessarily equal financial success.
AOL dumped Fanhouse, because even with nearly 10 million unique users, they couldn’t generate enough advertising revenue to make it economically viable. Sporting News is facing the same challenges but hopes to leverage the Fanhouse traffic and boost its current base of 2.9 million monthly unique users. Sporting News President Jeff Price told Mediaweek they needed the boost because advertisers “wanted more reach.”
Imagine that. Two companies with millions of readers each month still can’t generate enough revenue to thrive.
Where else but the Internet would an audience of ten million and nearly three million be snubbed? Magazines with similar circulations wouldn’t face that bias. Neither would television or radio programs. Yet, the value of a set of eyeballs on the Web is perceived to be much lower.
There are many reasons why this trend will continue. One is the migration of eyeballs to social media networks like Facebook and Twitter. With more than 585 million Facebook users, many sports and media organizations are wisely steering fans to these pages instead of their websites. Another is that the rapid absorption of tablet computing is rerouting destination consumption of information from the Internet to applications.
With the exception of the truly elite websites, there is only a small market share up for grabs. With 75 percent of all web traffic going to the top 10 most trafficked websites, the other 80 million websites are left fighting for crumbs. Because of this saturated market, the value of search ads and banner ads continue to decline. Online advertising generates incremental revenue in comparison to the traffic generated and the resources required to generate the traffic.
There are exceptions, but many of them are content farms that thrive on content from mostly unpaid writers and attract traffic through SEO manipulation. If Yahoo! and it’s 52 million monthly unique users to its sports website isn’t enough to help that company thrive, what chance does any other media company or sports entity have to succeed?
If Time Warner couldn’t make its merger with AOL work, what makes Price and the team at Sporting News think things will be any different this time around?
There is a potential saving grace. Technological advances and creative mobile apps, such as Flipboard, which repackages web-based content into a magazine-like format, are leading to an increase of media consumed per person. Also, the ability for websites to be opened and navigated within apps also brings hope. Especially now that Apple introduced the App Store to its PCs, which combines the best of both worlds.
Navigating the business of the Internet is a slippery slope at best, but it is a necessary evil for offline brands that which to extend their reach. Riches have been made by the few that broke out from the noise and separated itself from the pack but for most others, the road of the Internet has not been paved with gold.
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Image by zharth
The model of newspapers has not completely translated online the same way. You said it, when you have the overhead of paid writers, that cuts drastically in to the revenue. The best model that I have seen, thus far, is the one of the blog. There are thousands (or more) of folks running blogs and generating an income over six figures. I think that can be done in a hyper-blog format for a commuity or niche, but there has to be some user-submitted content to make it work. Other content can be provided by folks who are seeking exposure for their own busniess, website or blog.
The exception would be when a multi channeled media company (ie, ESPN) runs its own website and uses aleady-paid writers to produce content along with short videos.
In short, we are still figuring out this online world as far as news is concerned!
You fail to discuss some of the successes out there right now like sbnation, yardbarker, and bloguin plus the 1000s of independent blogs. These are the sites that are hurting the old school sites by taking away their traffic with better content.
Fanhouse was doing just fine until they decided to higher a bunch of overpaid writers and Sporting News is a dinosaur who makes money off newspaper subscriptions. Their online presence has never really been good.
@sportsblognet Exactly. The new model is still evolving, but the old print model isn’t working and may never work. Companies that can’t figure that out will continue to see their profits plummet until they fade away.