RonAmok!

I looked around the crowded restaurant for any sign of my friend, who caught my attention with a wave of his hand. As I got closer, I noticed two other gentlemen sitting at the table with him. He introduced us, then apologized, explaining that their meeting was running a little long, but that I was welcome to stay until they finished.

Who doesn’t like being a fly on the wall, right?

It took me a few minutes to lock-on to the conversation, but I finally understood that they were discussing the development of a new reality television show. You gotta love LA!

I sat there like a mute, listening intently. One volunteered to write the treatment. Another would scour his contacts to find the right people to pitch. As they wrapped up, one of the gentlemen looked to me and asked, “What do you think, Ron?”

Uh-oh. There’s nothing worse than being asked a question by a perfect stranger who has no idea who you are. Add the fact that you’re a guest at the table, and the complexity of the social situation compounds itself exponentially. I looked to my friend for guidance. If he had given me the waive-off signal, I would have bit my tongue. Instead, he smiled and gave me the green light.

“Why do you need them?” I asked.

“Need who?”

“Whoever you’re pitching the show to. Why do you need them?”

He looked at me as if I had two heads.

I explained that if they truly believed in the project–if they wanted to maintain control of their own destiny, why not consider producing the show themselves and releasing it online?  I offered a litany of benefits to consider, including creative control and the ability to find the right audience as opposed to the biggest one.

They listened politely, asked a few more questions, and then wrapped up their own conversation.

I don’t think that they’ll change their plans, but online publication should at least be a consideration. Our networked world has opened all sorts of possibilities for indie producers.

What story have you always wanted to tell? What’s stopping you?

Photo Credit: Library of Congress on Flickr

This morning, Chris Brogan published a blog post where he revealed that his new joint venture, Third Tribe Marketing has added 2000 subscribers since its launch last month. At $47 per month per subscriber, that’s an annualized revenue stream of $1.128 million.

As an executive, think about this for a minute. Here is a brand new venture that flipped a switch and opened a revenue stream of $1.128 million–instantly. Add the fact that it did so without spending a dime on traditional marketing or advertising and we have an interesting case study for our theory that Audience is an Asset.

Over the past five years, Chris has built an audience that consists of 47,000 blog subscribers, 125,00 Twitter followers, TBD Web visitors, and TBD email newsletter subscribers.  By asking it to participate in Third Tribe Marketing, this aggregated audience responded by producing 2000 subscribers paying $47 per month.

Put another way, Chris has built a financial asset that can distribute a $1.128 million annual dividend. Therefore, if we use a multiple of 10 times earnings, can we assume his audience is worth $11.28 million? Not even close. It’s worth much more because this audience pays more than one dividend.

Consider Trust Agents, the book that he co-authored with Julien Smith, that rumbled its way to the New York Times Best Seller List simply because he asked his audience to buy it? Or what about the business and speaking revenue his asset generates for his company New Marketing Labs? By adding up all of these revenue sources and multiplying the result by whatever multiple you’re comfortable with, we can calculate a real and tangible financial value for an online audience.

The value of your social media investments is calculated through the dividends your audience asset can distribute to you.

And for those fixated on ROI justifications:

Assuming that Chris worked 80 hours per week for five years creating valuable content (a number that I believe is conservative), he invested 20,000 Brogan hours into building this asset. Does the investment justify the return? I think so.

Photo Credit: C.C. Chapman

For the past few months, I’ve been seeking alternative ways to quantify the value of Social Media through studying the financial statements of publicly traded media companies. I found something interesting while looking at the FY2009 balance sheet of  Media General, Inc. One of its line items,  FCC licenses and other intangibles – net, lost 66% of its value in just two years! That’s $426 million! Gone! But where did it go?

Here’s how the item is described in the report:

FCC broadcast licenses are granted for maximum terms of eight years and are subject to renewal upon application to the FCC. The terms of several of the Company’s FCC licenses have expired, however the licenses remain in effect until action on the renewal applications has been completed. The Company filed all of its applications for renewal in a timely manner prior to the applicable expiration dates and expects its applications will be approved as the FCC works through its backlog. The Company’s network affiliation agreement intangible assets are due for renewal in a weighted-average period of three years. The Company currently expects that it will renew each network affiliation agreement prior to its expiration date. Costs associated with renewing or extending intangible assets are insignificant and are expensed as incurred.

Let’s think about this for a minute. Media General is a company that owns 18 television stations, 21 daily newspapers, and publishes over 200 specialty publications. It’s broadcast business unit is required to purchase licenses from the Federal Communications Commission in order to transmit programming. FCC licenses are scarce resources, meaning that if Media General owns one, its competitors can’t, creating a competitive advantage that Media General has assigned a real financial value to through its balance sheet.

Compare and contrast Media General’s broadcast business with those of us who publish content online. We have no such restrictions. We don’t need to purchase FCC licenses and therefore are not subject to their trappings, such language restrictions, geographic limitations, public service announcements, and bidding wars that translate into hefty operating costs. Add the cost of broadcast equipment and radio towers, and we, the digital content producers, have a huge competitive advantage over traditional broadcast companies just by comparing our respective distribution costs.

Historically, traditional media companies have made their money by investing in two things: building their audiences and owning the distribution channels to those audiences. In the past, the combined value of these pieces was large enough to sustain a profit through renting access to them through advertising. Unfortunately, the value of today’s broadcast assets may have dropped to a point where the rent (advertising) won’t cover the mortgage (distribution costs) anymore.

And lastly, let’s revisit the question asked earlier: “Where did that $426 million go?” Did it just vaporize into thin air? Maybe not. I contend that its value was absorbed into the digital distribution channel, where it sits, waiting for smart companies to take advantage of it…companies that believe that Audience is an Asset.

Tags:Audience is an Asset Ron Ploof ronamok FCC licenses