The Most Overlooked Opportunity In Digital Media Today
The landscape of digital media is looking post-apocalyptic right now…
The headlines speak for themselves:
It’s pretty bleak. And yet I’m bullish.
The reason is this: there’s an opportunity in the broader digital media space that here at Rooks Nest Ventures we’re surprised doesn’t get more attention, but we’re expecting that to change. The opportunity is in B2B media.
The Consumerization of B2B Media
Notice how the companies in the headlines are all consumer-focused digital media companies.
Buzzfeed, Medium, Vice, Vox et al.
They tend to receive the vast majority of funding, see the most experimentation, and garner the most attention.
There is however much more to media than that.
Media entrepreneurs and investors looking for under-explored potential should shift their gaze from the B2C world of digitally native media to the B2B world — i.e. content and information products aimed at companies and professionals.
After all, there are key features of the B2B media opportunity that are comparable to those that made consumer digital media once look so attractive:
1) There is plenty scope for operating assumptions of legacy B2B media companies to be challenged
The University of California Berkeley’s recent termination of their subscriptions to Elsevier, the world’s largest scientific publisher, is a case in point. UC Berkley aren’t just anybody. They are the largest public academic system in the US. Here’s their librarian Jeffrey MacKie-Mason:
“The prices of scientific journals now are so high that not a single university in the U.S. — not the University of California, not Harvard, no institution — can afford to subscribe to them all.”
The stage is set for a new entrant to challenge a legacy business model dependent on analogue dollars with a disruptive one that thrives on digital pennies. The market is literally crying out for it.
2) There is plenty scope to re-imagine the functions of B2B media
For example, take the Bloomberg Terminal — software used by financial professionals to access media relevant to them: news, market data, connection with other professionals and the ability to place trades.
A Bloomberg Terminal costs more than $20,000 per year, per user, and generates over $10bn of annual revenue for Bloomberg. Nearly 40 years after it was founded, is it still the best conceivable — not to mention cost-effective— way of performing the job it purports to do? For all its potential customer groups? There is at least a chance that the answer is no.
3) There is plenty scope in the B2B world to use media to reach valuable audiences in new — and potentially better — ways
There must be, given how uninspiring and anachronistic some B2B publishing remains.
I mean, never judge a book by its cover, but publications like Farm Show (pictured below) which has 300,000 paying subscribers in the US and Canada alone, service large global industries and yet look like they haven’t changed in decades.
These are just three examples. There are bound to be many more out there.
B2B media offers the features that made consumer digital media once look so appealing, without the issues that have caused recent challenges in the sector, namely: Facebook and Google’s stranglehold on distribution, programmatic advertising’s superiority in reaching audiences, and generally excessive competition.
We’ve just come out of a period where some of the world’s smartest entrepreneurs and investors have invested heavily in consumer digital media, and the ROI on that is hanging in the balance. The time is clearly ripe to use the lessons learned from all the consumer digital media activity to experiment in the B2B arena.
1. The influence of Millennials in the workplace
The trend in recent years towards the “consumerization of enterprise” was caused by end-user expectations of workplace technologies being conditioned by the technology they use in their everyday lives.
Similarly, I think end-user expectations of work-related media (i.e. content and information services) will increasingly be conditioned by the media products and other consumer products this millennial generation use outside of work, and the kind of media this generation was used to using before they even entered the workforce.
I cite millenials in particular because the data shows they are becoming the dominant generation at work—within the US labour force they recently surpassed Gen Xers in number, and inevitably, they will soon surpass Gen Xers in influence.
Crucially, millennials will increasingly control budget decision making positions inside of firms in the coming years. What kind of media products will they spend those budgets on?
2. We’ve learned from consumer media
Increased activity in B2B media could benefit from being a “fast follower” to the 2013–17 rush of activity in the consumer media world. Some of the factors that have hit consumer digital media so hard do not necessarily apply in B2B:
- The general dominance of Google and Facebook (or the B2B equivalent, LinkedIn) may be far less relevant in the context of B2B media than it has proven to be in the consumer realm. Social and search are key content discovery channels for consumer media, but there are other channels available in the professional environment: e.g. top-down distribution within a workplace, firmwide subscriptions and software applications.
- There are more robust business models to play with beyond advertising. E.g. For work-related media products companies can target corporate spend (e.g. budgets for professional development, marketing or other SG&A). And where there is a professional or career ROI, that opens up additional share of individuals’ wallets.
3. Where we are in the cycle
To the extent that we are in a digital media market crash, with deal volumes and market sentiment being way down on their 2013–15 highs, post-crash bear markets can be the best time to invest in (and build) anything if you play your cards right.
Intriguing signs of what’s to come
Some entrepreneurs have seen the digitally native B2B media opportunity early, going back several years. The most interesting ones I have come across include:
- Industry Dive: A network of newsletters for decision makers in waste management, construction, education and other industry sectors. Currently generating $20m+ in revenue, having launched in 2012 and only raised $900K of investment.
- Seeking Alpha and Smart Karma: Both are platforms for user-generated financial research network providing content aimed at financial professionals.
- Sci-Hub: The controversial platform providing free access to millions of pirated paywalled research papers and books serving 200,000+ requests per day. While I do not condone piracy, platforms like this tend to be symptomatic of business model failure elsewhere in an ecosystem, and they can also foreshadow the future — would we have had Spotify had we not lived through Napster, Limewire etc?
I think these are just the start.
I’m excited to see even more experimentation along these lines, as well as along lines I can’t even imagine.
Of course, some would have you believe that venture capital has no place in the media business, let alone the B2B media business. Some argue that venture scale outcomes just are not possible there. To which I’d refer them to companies like Elsevier and Bloomberg, both mentioned above, and other legacy B2B media companies like them, who all turnover $billions of revenue a year. Sounds venture scale to me.
The world of digital media is bigger than Buzzfeed. It’s bigger than Vice. It’s bigger than any of the umpteen companies that have generated unfortunate headlines of late, and it’s bigger than the last three or so years of seemingly never-ending bad news.
What would happen if we took the best features of consumer-focused digitally native media companies, the best parts of their original appeal, and applied them to B2B sectors?
What would happen if we created new B2B media products as engaging as Buzzfeed at its best, as delightful to use and to contribute to as Medium, and as creative as Vice?
What would happen if we utilised formats we take for granted in consumer media — audio, video, user-generated content—and brought them into workplace media and information products?
In short, what would happen if we consumerized B2B media?
These aren’t questions I hear discussed a lot, and yet my suspicion is that exploring these questions could be a very fruitful exercise for entrepreneurs and investors alike.
The consumerization of B2B media is the most overlooked opportunity in digital media today.
- If you’re working on something in this space, or you’ve come across an interesting project, I’d love to connect — please contact me at firstname.lastname@example.org or on Twitter I’m @mladzekpo.
- Also follow Rooks Nest Ventures @RooksNestVC for updates from our team.
- If you liked this post, please let me know by giving it a “clap” below!