By Yvonne Von Jenna
Revolutions, by definition, are marked by surprises, upheavals, and wildly
volatile swings. During the early stages of the industrial revolution
thousands of start-ups failed because their business models were wrong,
their drive and optimism misdirected. No one knew how to operate in the
emergent, post-agrarian environment. Businesses had to invent everything
anew – products, services, factories, distribution chains. Many
assumptions, business models, and companies didn’t survive. The
companies that survived did so because of their adaptability.
We’re only in the first stages of the digital revolution, with the new media
industry caught in the center of the storm. There are few emergent
practices to provide guidance to new media companies and no ‘pure’ new
media business model has evolved such that exists for television, film,
publishing, or music. Thousands of start-up companies have failed because
they gambled too much on incorrect assumptions.
The survivors in the new media industry have been those companies that
have been able to establish solid, profitable businesses based on service
fees while adapting through small, smart gambles on emergent
opportunities (such as added, complimentary service offerings,
cross-platform entertainment-based content creation, and product
development). This becomes apparent when you look at the adaptations
of revenue streams that are occurring in the marketplace.
Service offerings – the base of any successful new media company - have
evolved considerably in recent years. Originally, demand was for visual
representations (e.g. CD-ROMs), then website development and now is
primarily website enhancement. The emphasis has moved from being
design intensive to being technology, back-end intensive. Success in
services has depended not only on attracting, knowing, and properly
servicing the client but also on recognizing the next important client focus
and capitalizing on it.
Some successful new media companies have complemented their service
revenue through add-on, complimentary services such as hosting,
software development, strategy, etc. For example, Bluespark makes more
of its money from such services than from web development, while
ThinData complements its revenue by managing and hosting its clients’
sites and licensing its content management systems. In essence, they
have adjusted their service offerings to meet the needs of their clients
and in return, receive higher revenues per client.
Cross-platform entertainment-based content creation is another model
that some new media companies have been adopting. New media
companies playing in this space include:
- Decode Entertainment created Angela Anaconda (plus a slew of other cartoons), both for TV and online
- Dunedain created the Lord of the Rings site, based around its Trivia Engine product, for distributor Alliance Atlantis
- Live Audio Wrestling creates content for online, books (for Stewart House publishing), and radio (such as Corus Radio)
- Smiley Guy Studios is creating The Seen, an animated TV and Web show for The Comedy Network
- Snap Media created the Degrassi: The Next Generation site with Epitome Pictures for CTV
Originally, these players created content for traditional media and used the
web component as an add-on. Now, some are beginning to effectively
move the characters created for the web onto traditional media although
the revenue streams still derive primarily from the old media portion.
Yet other new media companies have moved beyond creative development
to product development, such as ThinData with its Newsmanager and
Dunedain’s Trivia Engine. They have re-tooled products originally created
for service clients and are re-selling them as stand-alone products. The
products tend to be partially developed and pre-packaged (i.e. 50% to
80%), with the remainder customized. They allow for differentiation with
clients, the up-sale of other products and services, and larger per unit
profits once development costs are covered.
The ability to survive and thrive has depended on navigating the
turbulence. But the turbulence continues and there are no guarantees
other than the choice lies in adaptation or extinction.
Yvonne von Jena is a Corporate Development Executive/Business Development
Strategist with over 14 years experience across broad industries, products, and services.
She has also worked in Corporate Finance at a boutique brokerage, as an Analyst for a
large bank, and as CFO/COO of an Internet advertising agency. Yvonne has an MBA
from U of T.