Nickl’s Sumorwuo Zaza on the Future of Subscription-Based Media

Erich Princeamp160 Prior to starting at Nickl you worked at The Huffington Postamp160 What is surprising for many people is the difficulty HuffPoamp160has had in generating profits despite large volumes of page viewsamp160 What made it so difficult to translate clicks into profitsSumorwuo Zazaamp160 When I think back to my time there the first thing that jumped out was that everyone was angry that digital advertising was getting eaten up pretty quicklyamp160 All of the industry reports we were reading said that digital advertising was growing year over year but it was clear that Facebook Google and maybe a few other tech companies were capturing the growthamp160 When I started really digging into the numbers I realized that more than anythingamp160we had a lot of different consumer setsamp160 There were people who loved Huffington Post and wanted to read it day and night then there were people who just found an article on Facebook and were happy to see it but it didnamp8217t really matter if it was from us or say BuzzFeedamp160 amp160 The key marketing barrier was that we were treating all these people the same that we had loyalists and visitors that we would never see againamp160 They had the same experience and were monetized the sameamp160 That to me was the biggest insight that led to the founding of NicklPrinceamp160 So one of the main things online media companies need to do is find a way to monetize people who are choosing to read them reliably instead of just happening to read an article here and thereZazaamp160 Exactlyamp160 Itamp8217s not a new conceptamp160 If you think about it the most successful forms of media specifically TV have a combo business modelamp160 So you have channels that are paid for by way of cable licensing agreements and there are channels that have an ad feedamp160 They are still doing advertisementsamp160 Obviously if you are a channel that has brands people really love you can do things like events you can do things like merchandiseamp160 Thereamp8217re just a lot of ways to think about how to make a business or how to have a relationship with a customer with mediaamp160 When I was at Huffington Post there was only one way to pursue this relationship get as many eyeballs as we could on the page and throw ads in front of themPrinceamp160 Are payrolls the futureZazaamp160 Payrolls are a part of the futureamp160 My hunch is that everyone will try payroll because media always tends to go through the cycle like amp8220X is the solutionamp8221amp160 I remember when everyone was like amp8220Video is the solutionamp8221amp160 You go a little further back and it was amp8220Boombox is the solutionamp8221amp160 But itamp8217s so brand specificamp160 I think we are going to be in an 1824month period where people will say amp8220Paywall is the solutionamp8221amp160 Everyone is going to try it and they are going to figure out the limitationsamp160 Some brands are going to win a lot of brands are not going to do as well as they hopedamp160 Then theyamp8217ll figure out some combinationamp160 Theyamp8217ll do licensing agreements theyamp8217ll do micropayments theyamp8217ll do eventsamp160 But I do think a directtoconsumer model is going to be a big staple for the long termPrinceamp160 Are we going to move away from a climate where people expect to be able to read content for free and have that reading subsidized by adsZazaamp160 I think soamp160 The challenge is that itamp8217s hard to change and especially to internalize behavior at the organizational level when everyoneamp160from the editors to the revenue peopleamp160is compensated and incentivized by scaleamp160 Itamp8217s hard to say amp8220Okay letamp8217s incentivize everyone by customer lifetime value and customer acquisition costamp8221amp160 Itamp8217s like amp8220Whatamp160 I donamp8217t even know what those things areamp8221amp160 But everyone is going to have to figure out how to get there on their own and my sense is that itamp8217s going to be topic specificamp160 If you are in news and I mean breaking news I think itamp8217s going to still be adsupported because speed is the name of the gameamp160 If you are in any type of analysis thatamp8217s related to lifestyle youamp8217re going to have a better time doing directtoconsumer because people really want that contentPrinceamp160 Whatamp8217s going to be the impactamp160of Apple NewsZazaamp160 There are a couple of things happeningamp160 One people who said payroll payment and directtoconsumer are the future just got validated in a big way with Apple entering the spaceamp160 Theyamp8217re obviously a tech company but they see a lot of opportunities in mediaamp160 The second thing is that people will discover that aggregation is different from bundlingamp160 When people talk about bundling theyamp8217re always like amp8220Well I donamp8217t want to work with that brandamp8221amp160 At Nickl we really think about a world where you can work with brands but still keep your own website and still keep your own identityPrinceamp160 Last year Google and Facebook collectively swallowed close to 60 of ad revenueamp160 Do you see a future where the media companies start to capture a larger shareZazaamp160 Itamp8217s amp8220noamp8221 because the reason Facebook and Google have captured so much of the digital ads space really comes down to some of the structural constraints of advertising on mobileamp160 Facebook and Google because they have firstparty data and because they have their own ecosystemsamp160are able to match a user to his or her behavioramp160 When you are a media company and you donamp8217t have an app that has a hundred million people youamp8217re not really able to competeamp160 Itamp8217s something we talk about all the timeamp160 Itamp8217s hard to be a media companyamp160 You have to do a lot of homework you have to think about delivery you have to think about audioamp160and now all of a sudden youamp8217re going to become an expert on data collection synthesis and creating robust user profilesClick the social buttons above or below to share this content with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writersamp160

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Nickl’s Sumorwuo Zaza on the Future of Subscription-Based Media

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Erich J. Prince

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Nickl’s Sumorwuo Zaza on the Future of Subscription-Based Media

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