All in all, media companies are doing alright in America. In China, things are different. Traditional media companies all cry wolf, but are still making money hand over fist, while media, the supposed young Turks, are trapped.
In America, Traditional media is losing money but surviving. There are certainly bad news: Newsweek is tranforming itself, yet again; Rupert Murdoch is shedding his beloved print media. But there are also good news: billionaires still love media. The Financial Times loses money, but it may be the perfect forum for Bloomberg’s story tellers, so Mayor Michael Bloomberg may splash a tiny part of his $29 billion fortune for it.
In regard to new media, things are also looking up. The Verge is an awesome site with awesome tools, and according to its owner Vox Media, is apparently “very profitable” after only one year of operation. This proves TechCrunch and their AOL siblings are not anomalies after all. This may also explain why there are new attempts like Medium popping up all the time.
Things couldn’t be more different in China. The report of the death of traditional media has been greatly exaggerated. Publishers still make money by printing and selling books, newspapers and magazines are still making money by selling new issues.
New media companies like tech blogs are prospering if you are simply counting them and disregarding fact that none of them are making money. In fact, this has been going on for so long that some commentators are literally starting to predicate how each tech blog will fall.
Even aggravators are not doing well. No one knows whether mobile reading will produce revenue or not. That’s why Xianguo, the Chinese competitor to Flipboard, is essentially taking the approach of wait and see.
To understand why this is, we have to analyze the media landscape of China and abroad. Traditionally, media companies made money through three methods. First, and the most obvious, is to sell content as you would any commodity, make consumers or advertisers pay for what you have to offer; the second is Warren Buffett’s favorite, monopolize information and make yourself a toll booth; the third is to use content as a loss leader, make money through some other products.
In America, The New York Times and the Washington Post will fall in the first category. They offer premium news, and people would pay for them, albeit we don’t know if enough people will pay for them for them to be profitable. This model is being challenged all over the place, as Newsweek can attest. But quality is a relative thing, and certain companies are bound to survive the great onslaught.
So Even though they have lost their bread and butter, traditional media still have immense legacies to fall back one, and win, lose, or draw, they will go down swinging. The Washington Post probably may or may not save itself simply charging its readers, but this is the route Philly Inquirer and other publications are taking. In addition, Americans pay generously, so even relative newcomers like The Verge can make money by simply offering quality contents.
In contrast, the toll booth model that media used to thrive on is basically dead. Instead of local papers such as The Rocky Mountain News monologizing everything from where to rent houses to how to find jobs, Google and other internet ventures have ate their lunch, broke their lunch box, and put them out of business. Toll booth still exists, but they are now utilities, not media companies.
The loss leader model is the great white hope. Newbies like TechCrunch makes more money on their events. Even a traditional powerhouse like the FT functions that way: Bloomberg is interested in the newspaper primarily to sell more of their $200,000 terminals.
In China, there are similarities to America. The toll booth model does not work here either. In the commodity model, however, Chinese traditional media are clearly the winner. There is still a large population willing to pay for traditional media. New media, on the other hand, are taken for granted, and that’s unlikely to change for the time being.
This also means traditional media, with more eyeballs, are good loss leaders, while new media are not. Another factor we must consider is the fact that Chinese media are great loss leaders-for the Chinese government. All the major important media properties are government controlled, and things will remain this way.
With all things working against them, even the best new media companies in China may be barely profitable at best. Chinese new media is the future, it will always be.