Media Companies Embrace Innovation by Nurturing Startups | Street Fight

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Media Companies Embrace Innovation by Nurturing Startups

4 Comments 12 April 2012 by

With a few notable exceptions, major media companies have not been known for their innovation in the digital age. After first spending years with their heads under the sand pretending that online media wouldn’t supplant their traditional business models, they have largely created defensive digital products, hoping to keep from falling behind rather than looking with a fresh eye to the possibilities of the digital future.

It’s telling that the news of the week is that of  Instagram‘s sale to Facebook for a sum greater than the market capitalization of the New York Times. Does anyone believe that traditional media companies, with all of their layers of bureaucracy and ingrained culture, could have created a digital product that would grow to be as quickly valuable as Instagram, or which could have gathered as many passionate users as the similarly hot Pinterest?

The answer is no, but it’s worth examining the reasons why not, and what needs to change if these traditional companies are going to finally evolve enough to innovate and compete — and to create the kind of valuable digital properties that are springing up everywhere around them.

One way that a few organizations are approaching this issue is by working to bring digital media entrepreneurs into the fold, with in-house incubators and grants for innovation.

The Knight Foundation has long nurtured media startups. With their latest news challenge competition, Knight has adopted the Tumblr blog platform and reduced the application to a seven-question elevator pitch. The mission of the new entrepreneurial society is speed: identify good ideas, get them funded and support the business execution. Hundreds of startup accelerators like Y Combinator (here’s a list) and the burgeoning crowdfunding movement (here’s another list) make it easier for entrepreneurs to get funded in the same way YouTube is being used to filter and identify creative talent.

Michael Maness,VP of media innovation & journalism at the Knight Foundation, told me recently about a couple of notable projects to bring innovation into media, the Public Media Accelerator and the Philadelphia-based Project Liberty Digital Incubator. “We realize that entrepreneurs need a comprehensive set of resources, and are developing a new program for the next group of Knight News Challenge participants,” said Maness. “We’ll be creating camps that mirror the Y-Combinator experience, and we’ll hopefully start to see other media organizations develop vertical accelerators like Turner’s Media Camp.

“On the hyperlocal front, I don’t see accelerators for local business startups, but we’ll start seeing local media projects crowdfunded,” he said. “For example, a new journalistic venture named Matter just got overfunded on Kickstarter; it’s similar to an earlier citizen funded journalism model Spot.us, a 2008 Knight funded startup.”

Meanwhile, David Austin, the senior director at Turner’s Media Camp told me a little about what a media company like Turner can do to bring startups in-house and nurture their development: “Traditional media’s strong suit is its quality content, and they need to find the most effective ways to get that content consumed,” said Austin. “Media Camp differentiates itself as an accelerator by providing entrepreneurs with channels to well known Turner media brands, and give them instant visibility. In the long run, we expect to build Media Camps in Los Angeles, New York, and overseas, and hope to impact how media is consumed on different local and cultural levels.”

These types of efforts point the way toward plenty of opportunities down the road for media companies that are willing to take the plunge. Media executives need to accept that the world has changed and adapt accordingly, and perhaps the next generation of agile startups may not be competitors destroying their value — but rather subsidiaries creating new revenue streams and value.

Patrick Kitano is founding Principal of Brand into Media, a strategy group for social brand management solutions, and administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of Media Transparent, and contributor to Social Media Today, Daily Deal Media, and The Customer Collective. He is reachable via Twitter @pkitano and email pkitano@gmail.com.

Image courtesy of Flickr user Seth1492.

  • Ken Aaron

    It seems the most of the incubators or nurturing organizations are focusing on everything but the number one question: how to build a profitable, sustainable media organization? The latest Knight competition seems a bit like reality TV. Its a process reduced to 7 questions, meant for quick turn. Only one question, the last, asks about how they plan to sustain themselves. Just how many of the Knight funded startups have actually grown to be profitable businesses that other startups can look to as examples of successes they can learn from or emulate? Crowd sourcing is hot, right now, but how long with that last as the majority of projects fail? Crowd sourcing seems like a flash in the pan strategy.

    The current environment seems more like who can build the coolest “thing” with the hopes of selling it to someone, rather than building a business. Using the Instagram acquisition model only reinforces that. Instagram had no way of making money, the play there was to be acquired. In that they hit a home run. But it still remains to be seen if Facebook can be a profitable sustainable organization once it has to answer to shareholders. 

    How about a little more emphasis on creating a sustainable business? I know its “boring” but it is key to the growth of our industry.

    • http://brandintomedia.com/ pkitano

      The incubators are charged with getting entrepreneurs launch new business models, and their charter is to make them sustainable using their resources. I see the new media initiatives conducive to building sustainable business. Instagram was strategically acquired to make the company more sustainable by leveraging Facebook assets, and vice versa to extend Facebook’s reach into mobile apps; it likely won’t die on the vine.

    • Laura Rich

      Hi Ken - 

      Really great point. And, to also toot our horn a little, that’s precisely why Street Fight exists. We see that whenever there are a lot of companies moving into a space, the key to long-term success is in finding sustainable business models. It’s a “street fight” for market share and longevity – and sustainable business models are central to that. We hope that the Street Fight website serves as a resource for finding and thinking through the strategies that will last.

      At the same time, Pat’s piece is key because incubators are one starting point for those sustainable business models. They give some entrepreneurs who would otherwise not have strong channels into the marketplace a place to start, gaining important connections to funding that will help sustain the business as they build out and work to develop sustainable business models (if they don’t have one already), and to important partners that similarly help grow the business.

      Exits don’t always quash potential, as Pat notes the new owner may in fact bring the resources that are exactly needed to create that sustainable business models.

      There are many paths to success and we’re happy to get the conversation going around where they are.

      Laura
      Street Fight

  • Editor at CaryCitizen

    Well said. My hyperlocal gets 74,000 reads a month but is treated like a freak or a pariah by established media. Too bad for them. Thanks for the insightful story.

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