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If you haven’t started following L2 Inc, then you should ASAP. They’re a top-notch research firm and develop some amazingly useful reports and studies. They have a membership model, which isn’t cheap for full access to all their reports & studies, but for large companies who want the latest quality data and analytics, this is a drop in the bucket and allows them to make more informed decisions based on consumer behavior. However, for us little guys, we can watch their videos, blog posts and excerpts of their full studies. But maybe they’ll read this blog post and toss me a courtesy membership 🙂
In one of their recent Winner & Losers videos, Company Founder, past CEO Scott Galloway, and personality of their Winner and Loser videos discusses advertising-based revenue models used by many Media distribution companies such as Business Insider.
Statistics
- Business Insider was recently purchased for 343 Million by German media giant Axel Springer.
- 90 Million Unique Visitors per month, per Google Analytics.
- 50 Million Annual Revenue. (est.)
- ~ 60% of the site’s traffic comes from mobile devices, and almost 40% of it comes from social networks.
- Business Insider generates about $0.50 per user to provide the advertising on their site.
Source: “Some facts about business Insider’s acquisition by Alex Springer,” Matthew Ingram, Fortune, September 9, 2015.
At 2:15, Galloway makes a colorful argument against this model by saying –
“…or put another way, Advertising or businesses based on advertising suck and are gonna go away. This business model makes no sense. So essentially I have to endure advertising such that the Business Insider can get $0.50 from me. Tell you what, here’s $0.60 and spare me from your shitty advertising. Advertising in dying and despite some of the high valuations some of these new media properties are garnering, this entire model is about to be flipped on it’s head.”
With many other distribution sites offering a Paid Subscription Model to NOT have advertising, such as Netflix, Pandora, and Hulu putting pressure on traditional distribution sites with an advertising-based revenue model, the market is going to change and quick.
Subscription-based revenue models such as Blue Apron, Men’s Wearhouse, Dollar Shave Club, eSalon, The Honest Company, & Shinola Detroit are leading the way in eCommerce growth and reacting to market demand for less advertising and ease of purchase.
Source: Internet Retailer 2015 Top 500 Guide
Hulu Options
Pandora Membership
Netflix Options
They have never advertised on their platform, which helped their initial adoption by the market. They now offer a range of plans which only vary by the # of devices that can be accessing the account simultaneously and the availability of Ultra HD for the Premium Plan.
Read the full article from From L2 Blog
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