Monday, April 18, 2011

Retweet: SAY Media and the contrast with old media

Dan Frommer of Business Insider has a story this afternoon about SAY Media, predicting that the company will soon makes its first acquisition. The company here, SAY, offers a good window into the starkly different worlds of new media versus old.

SAY Media is the new name applied to the merged companies VideoEgg and Six Apart. I noticed VideoEgg after they had put their software solution on AOL, allowing AOL users to upload their videos for sharing much like YouTube. From AOL's perspective I'm sure that it was a good way to get in the game of video sharing.
At the time VideoEgg was getting going, 2005, I was working for a Chicago-based online video company – having joined precisely because it was a start-up and because, well, how many online video companies are based in Chicago, this sounded exciting (it wasn't).

My job was to get advertisers interested in our video content. The problem was that no one was watching our video content because the company did not promote its website which hosted the content. As a result, we had no answer to the very first question out of a customer's mouth: how many people will see my ad?

I immediately knew that the first thing we needed to do was get an audience, and the best was to do this was to have our content shown on other people's sites. Enter VideoEgg. They were getting content from those who were uploading their personal videos, maybe they would be interested our content, professional made short videos on topics such as gourmet cooking?

So off to the West Coast I went, to the funky South of Market office that is still their home.

I was sick as a dog that day when I met with the team. It had been ten years since I left San Francisco, and it took me maybe five minutes to realize that I had completely misunderstood the company, I was thinking like a Midwestern working for an old media company rather than thinking about it from a New Media perspective. To me, VideoEgg was a software company, providing AOL and other companies with video software solutions. To VideoEgg, they were a media company trying to build an audience.

The meeting took place in a small, cramped conference room with this large group of people there. Why were all these folks in this meeting, wasn't I just meeting with Matt Sanchez (the current CEO of SAY Media)? No, all these folks had an interest in VideoEgg being a success. If they succeeded all of them would be millionaires.

I left the meeting a bit depressed, and not just because I wasn't feeling well. I was working my butt off trying to get other companies to host our content, but I was also fighting a losing battle back at the home office trying to make their owner of the company understand that content is without any value whatsoever if no one sees it. He simply didn't get it. Further, he insisted that he would decide what the content would be that would be produced, on the content partners I was trying to line-up. Conflict ensued and eventually I was out of there.

For VideoEgg, their model was typical New Media: we'll give away our software solution so that lots of websites will be able to host video. We'll then sell that audience to advertisers. That business is currently driving big dollars. For the customers like AOL, the business proposition was simple: this is FREE, you might even get a share of the revenue, and the content is all yours.

Meanwhile, back in Chicago, the old media video folk are still, six years later, still trying to get other companies to host their content. Their proposition is also simple: its our content, you have no say, we'll sell the ads, get the revenue, and you might be able drive some additional traffic, though all that traffic will be diverted back to our channels.

The lesson for old media companies that I took out of the experience was this: don't fall in love with your own content, the value lies in the audience, and include your team, not just your managers in meetings and strategy sessions. But most importantly, have a strategy that builds revenue, and build the company and the products around that strategy (as opposed to creating a product that trying to figure out a strategy to make that product successful).

What really impressed me about VideoEgg, back in 2005, was that it was a sales driven company that wanted to aggregate an audience, and it knew how to monetize that audience.