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Why legacy media went off the rails

Diet-train-wreckWhy did legacy media go off the rails?

It was operator error. But it was on the business side, not in the newsroom.

In their migration to the digital world, legacy media have been fairly successful in digitizing their content, but they've failed to exploit the real driver of revenue -- digital media's targeting capability.

Advertisers haven't flocked to digital media because they prefer bits to atoms, but because digital media can marry their messages to receptive audiences.  An ad in the New York Times theoreticaly can "reach" millions of readers, but only a handful actually notice it and even fewer are interested in the product or service advertised.

Google Ad Words has long matched ad messages to people searching for a specific topic. Now, new apps from the likes of Apple and Facebook will match ads, people, and some of the best journalism available.

The recently announced Apple News app will curate articles from mainstream media, feed it to people with a pre-determined interest in them, and accompany them with ads targeted to their past buying behavior, demographics, and attitudes. Of course, Apple will share ad revenue with the source of the article. Ditto Facebook's Instant Articles feed.

Both apps promise to give readers highly personalized feeds tailored to their interests, something legacy publishers like the New York Times have been unable -- or loath -- to do.

Legacy media's inability to make money from their content hasn't been a failure of journalism, but of the business side that's supposed to feed it. The closest the business side has come to producing a new revenue stream is "native advertising," which is essentially an effort to disguise ads as  journalism. 

Meanwhile, many publications are willing to give up 30% of the ad revenue associated with the stories Apple and Facebook decide to publish.

Prediction: they'll get hooked on that revenue, Apple and Facebook will reinforce their positions as dominant information channels, and that 30% share will shrink. 





Agree with the author of the article. The bigger issue for targeted digital advertising will be ad blocking. As consumers grow weary of intrusions into their personal communications streams with uninspiring ads (despite being targeted), they just may shut out advertising altogether hurting both content creators and advertisers. Apple's next release is rumored to block ads as the default setting. Given the pervasiveness of their smartphones, this could really shake things up and completely disrupt traditional business models. Whatever happens, someone's still got to pay for or subsidize content.

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