Pick an audience. Any audience. Pick any group of people who anyone would be interested in reaching, and Facebook and Google will have approximately 100% coverage.
Google, Facebook, Twitter, Pinterest and their ilk have also managed to build this coverage without any original content. Sure, they have infrastructure and R&D cost to worry about, but their marginal cost of reaching a specific audience can be rounded down to zero. They can reach any audience on the planet, and do it cheaper than you can.
Taken together, these two facts mean that selling access to audiences is no longer a viable strategy for media companies. There is simply no money to be made that way, not with the cost structure of a traditional publisher.
If publishers can’t sell audiences, what can they sell? Two things: context and setting.
Let’s look at an (admittedly strenuous) analogy in the retail world. Why is Tiffany’s valuable? It’s not because they have unique reach in the audience of affluent individuals. Apple reaches most of the same people. Whole Foods Market does as well. Tiffany’s advantage is that they reach their audience in the context and setting of buying expensive jewelry; the end result is a 60% gross margin on sales. That’s 50% better than Apple’s and 70% better than Whole Foods’s margins, simply because the latter companies have customer relationships—with the same customers—that are more generic and everyday in nature.
The New York Times is not full of ads for Chanel and Cartier because rich people don’t use Facebook; it’s that way because Pulitzer-winning journalism is something luxury brands are quite keen to associate themselves with. For them, Uncle Rob’s status updates are inappropriate as context, regardless of his, or your, net worth.
The implication of this argument is that traditional media, in the sense of original content and reporting, is a premium product. It simply must be, because producing content any other way is a losing proposition. Powering a bulk ad impression with a well-researched piece of investigative journalism is like fueling your car with 18-year-old scotch: it can be done, but you probably have to be an eccentric billionaire to keep at it for long.
Marko Karppinen is Richie’s founder and CEO. You should follow him on Twitter here.