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Facebook is wrestling with a business challenge more traditionally found in legacy media: how do you translate consumers that don’t think they have a commercial relationship with you into relationships that that other firms will pay for? Despite 955 million active users and increasing revenues, the company has lost a third of its share value since its IPO in the spring.   The exuberance that surrounded its IPO and overpriced its shares has worn off and investors are realizing that being big isn’t enough to ensure business success. Its latest earnings reports show the firm lost money, $157 million, in the second quarter on income of $1.18 billion. Facebook’s challenges are symptomatic of a long line of “successful” digital firms that are experiencing monetization problems, including Yahoo, You Tube, AOL, and Twitter. Despite large numbers of users globally, they still lack effective business models to generate revenue levels congruous with their size. They may provide...

Applications that aggregate articles based on what others in one’s social network are reading and reformat them into an attractive magazine and presentation formats are growing in popularity, but they are raising concern among some publishers. The processes build upon the referral and curating functions of colleagues and friends in social networks and reduce the need for users to go to multiple sites for content on their own. Some of the best known social magazines are Flipboard, Newsmix, Currents, and Pulse. Some publishers are starting their own social reading apps, such as New York Times that has a Facebook app pulling together stories that friends have read in NYT. Many publishers are fearful of these developments, however, because they represent another step away from publishers controlling when, where, and how readers use their content, reduce the impact of the publishers’ brand strategies, and diminish control over the presentation and marketing of their content. But publish...

Editors matter. The March 28-April 4, 2011, edition of the struggling news magazine Newsweek —which I admittedly have not read in years— provides some of the finest articles I have read in many months, illustrates the limits of online and social media, and shows why editors matter. There is great benefit from both edited and unedited media and I don’t believe they have to be seen in dichotomous choices for the future of media. But I believe those who argue they don’t need to edited media doom themselves to narrowness and ignorance. If I relied only on the links I receive daily from colleagues on Facebook, my news alerts for topics of interest, or digital listings of stories, I would miss the most important contribution of edited media—the service editors provide by reviewing and thinking about the world and putting journalists to work to provide a coordinated understanding of the available information. This week’s Newsweek epitomises that reality. Although I often have my attentio...

As publishers move more and more content to the Internet, mobile services, and e-readers, these digital activities change the structures and processes of underlying business operations. Many publishers, however, pay insufficient attention to the implications of these changes and thus miss out on many benefits possible with digital operations. This occurs because publishers become focused on issues of content delivery and uncritically accept the fundamental elements of the processes involving platforms and intermediaries. In order to gain the fullest future benefits from the digital environment, however, publishers needs to strategically consider and direct activities involving the users, advertisers, prices, and purposes of their new platforms. In creating business arrangements with platform and service providers and intermediaries, 4 fundamental strategic principles should guide your actions: 1. Control your customer lists . The most important thing you do as a publisher is to create ...

The high hopes that News Corp. had for MySpace when it paid $580 million in for the social networking site in 2005 have never been realized and appear more elusive than ever. Consequently, MySpace co-founders Chris DeWolfe (who is CEO) and Tom Anderson (who is President) are being pushed out of their management roles in major shakeup of the company's leadership. The move is signals News Corp’s concern over the site’s declining market share and poor returns. In the past three years Facebook has surpassed MySpace in total number of users worldwide, but MySpace has managed to remain the largest site in the U.S. and has 130 million users globally. In 2008 the company had estimated advertising revues of $585 million, with the bulk coming from its ad-sharing deal with Google. But it will take a long, long time for News Corp. to recoup its investment at that pace. That revenue problem is compounded because Google has been unhappy with its MySpace deal and is unlikely to continue it at pre...

Humans are social and tribal animals and we have always collectively contemplated the meaning and potential responses to issues and events. In the past tribes gathered around fires and villagers gathered in taverns, cafes, and community halls to consider contemporary developments. Individual engagement and participation in discussion were the norm, with some reliance on leaders and those who held the history and wisdom of the community. Lifestyle changes in the 19th and 20th century society created mass society and reduced time and opportunities for collective contemplation. It was replaced by a form of representative contemplation and a greater reliance on expert and professional commentators. The effect was primarily to produce communications telling members of communities what to think and do. Contemporary communication technologies are dramatically altering that situation and supporting a return to collective contemplation. While not producing face-to-face discussion, blogs and tec...