Media Marketplaces and the Future of Digital Media

As magazines experienced in the 1950s – 2000s, the subscription model allows you to cater to micro-markets because a smaller audience base becomes viable when they are paying directly through subscription instead of indirectly via ad impressions.

For media marketplaces, curation is another important dimension here — open marketplaces vs. selected content. YouTube doesn’t curate much, but Netflix does. Twitter will curate their acceptable ads, Facebook holds a policy of curating less on ads.

This is a big reason why subscriptions present an opportunity. They simplify the network effects to two sides. Content as supply, a paying audience as demand.

Of course, there’s a downside to this ad-driven model. 3-sided marketplaces are less durable than 2-sided ones. Why? Because for the content, attention is demand. When the advertisers “steal” part of the attention, the core marketplace gets less of it and becomes weaker.

But an ad-driven marketplace adds a deeper layer, where the audience is actually on the supply side. Their attention is what demand-side nodes — i.e. advertisers and content producers — want.

Media marketplaces are unique because they have two layers. On the surface level is a “content marketplace”, where content is the supply and attention/views/traffic/eyeballs are the demand.

Now is a great time to build a media marketplace. Not only are the audiences now in the billions, but subscription-driven media marketplaces are becoming viable again. Evolving payment options on mobile and the ease to connect with micro-markets through other media marketplaces make subscriptions newly powerful.