Comment by hooande | Hacker News Reader

Comment by hooande | Hacker News Reader

I'm starting to understand that most websites, especially websites produced by YC companies, are really media companies. From a business perspective, most of our startups have more in common with MTV or the New York Times than we do with Microsoft. We make money in the same way that any media company does - by selling advertising.

I don't think there is anything wrong with that. It's certainly riskier and subject to the whims of a fickle public. But there is also a bigger reward for success.

Saying that a new media company should charge their customers before they become popular seems counter intuitive. IIRC, this is how the Onion and many other major media publications began...they gave their product away for free until enough people read it that they could charge for ads.

It seems to me that most of the author's points could apply just as well to starting a new magazine or newspaper. Yet, I don't think that many people would agree that college newspapers are killing themselves by giving their products away for free. I think that the expectations people have for web startups would change if people looked at them as media entities and not software companies.

The Onion predates the www. They were a subscription-based tabloid (and still are). Generally, free media is bottom-of-the-barrel and advertisers prefer paying audiences. The traditional broadcast networks are the biggest exception, but that's probably a holdover from their predating cable. I've mentioned the stats before, but the nytimes has 10 times the web traffic as print, but 1/10th the ad revenue. (Those numbers are wrong, but it's something like that.)

I was referring more to the print publication of The Onion and the New York Times than to the websites. To clarify my point, starting a website with an advertising based revenue model is similar to starting a new newspaper or magazine. I used The Onion as an example because I remember it being freely available in bars back when I was in college.

I don't have any marketing data on whether advertisers prefer paying audiences or not, but I assume a lot of that would depend on the advertiser. I know that the bigger players in web media (facebook, myspace, etc) are definitely "bottom-of-the-barrel" when it comes to advertising rates because they reach such scattered demographics.

With that being said, I don't fully understand your point about advertisers preferring paying audiences. I think the problem is in the math. If I start charging for content (turning my users into a paying audience) then I'm going to most likely going to serve less page views. I don't know if the extra money advertisers are willing to spend for my now paying audience would be enough to offset the loss in page views.

The main example of a media website with a paying audience I can think of is the NYT, and I think the only reason they can get away with charging for content is because they've been established for so long. I think the rest of us are going to have to decide between 1) charging up front 2) trying to build a media property 3) trying to make money from premium subscriptions (which usually just amount to being donations from dedicated users).

Thanks for the reply, I'll definitely be thinking about this.

Advertisers in print media base their pricing on how many paying subscriptions the magazine or newspaper has, not overall distribution.

Printed publications make far more per unit from advertising than they do from the subscription fee. If advertisers didn't care about paid subscriptions, it would be in their interest to give their magazine freely to anyone and everyone who wanted it. But they don't because advertisers only care about paid subscribers. That is why magazines seem to try as hard as possible to give you nearly-free (but still paid) pricing on subscriptions.

I don't know why that is, but I know enough about the publishing industry to know it is true.

I think in part because the ad agencies want to overspend the money because of commissions.With the cheap (and effective) costs of internet ads, they would soon be gone.

Despite the fact that the Onion is a subscription-based tabloid, they still get the majority of their money from ads.

Nearly all newspapers and magazines are well into the black before you buy them. Consumer research just says we don't value a magazine that's free. (Vice is upsetting this current model)

That fits in interestingly with the free-but-guilty NPR model.

I'd like to hear you expand your thoughts in an essay (no pressure). This is intriguing.

Carr made the same point recently: http://www.roughtype.com/archives/2008/03/the_mediaizatio.ph...

I've actually made this observation myself. Some products will be consumed by a wide audience, making them more like media. Some products will provide a targeted service, making them more like traditional software.

It's crazy to think either that all internet services will tend to free, or that no startups can offer services for free. Like most things in life, the sustainability point is somewhere in between.

Being targeted doesn't necessarily make you unlike media. The whole business model behind most behind magazines is delivering a targeted, valuable audience to the right advertisers.

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