Friday, November 03, 2006

The Economics of Online Publishing


Fragmented Industry

The blogging landscape is highly fragmented. The exceptionally low barriers to entry allow many individual bloggers to set up their own websites and start publishing straight away - this acts as a major deterrant against 'industry domination' or 'monopolisation of talent' that may be attempted by any individual website.

Furthermore, the multitude of topics that are available for blogging make it extremely difficult for any individual blogger or group of bloggers to be all things to all people. Instead, individual bloggers are given the opportunity to specialise in what they know best for their own tailored audience.

Blogging Strategy

With this in mind, the best thing bloggers can do is to try to specialise in specific topics and create their own niche. They have to differentiate themselves from others and have a unique blogging proposition (UBP). Those who are able to do so create a unique brand and following of readers which are able to tell the difference between a certain blog and other different blogs.

Successful blogs differentiate by
  • tone of writing
  • specialising in topic
  • specialising in writing for a particular audience
  • have a unique way of differentiating their content from other blogs

Strategic Traps

Trying to dominate the blogging landscape is a sure recipe for failure. This is because the underlying structure of a fragmented industry makes seeking dominance futile, unless the structure can be fundamentally changed. The low (virtually non-existent) barriers to entry into blogging make this an unlikely proposition. Trying to be all things to all people maximises the vulnerability of a website to the competitive forces of other bloggers who are able to specialise and focus and produce content in specific niches, much better than a website which tries to dominate, can.

Hence, blogs or other websites which try to create a 'one-stop shop' or to be all things to all people are almost doomed for disaster. Take for example this website which is trying to be a centre for opinion and commentary - it is fighting a steep uphill battle against the fragmented nature of online publishing and looks set to struggle unless it changes its strategy to address the fragmented nature of online publishing.

B. News Operations

Unlike blogging, news operations are not highly fragmented. This is because it takes massive investments and a large managerial effort to produce a coordinated news production operation. Websites like the and build off the platform which consists of a global staff of journalists and news production crew. The large economies of scale make news production operations a naturally consolidated industry - it is important to distinguish this feature from the blogging industry.

C. Online Magazines

Online magazines are somewhere in between the large scale news operations and the small scale fragmented blogging landscape. And because they are somewhere in the middle, the face both competitive forces from individual bloggers and the large scale news operations - online magazines have to clearly differentiate themselves in order to survive.

This can be accomplished when a group of writers with a common goal, and unified editorial style - band together. This can form operations like 'group blogs' which are clearly centered around particular topics, like this website. A set of common minds with a clear niche can succeed, without falling into the trap of trying to 'dominate' or to be a 'one-stop shop.' Successful group blogs can continue the evolution into online magazines where they can start to derive the benefits of scale economies, learning curves, and managerial efficiencies.

D. Conclusion

So, which category does your website fall into? Take heed of the strategic landscape and pitfalls, and take the write strategy to online publishing. And if you do so, you should find your hits rising rapidly, along with all the benefits that entails.

This essay is also published at SGE

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