How the MyFox deal badly hurts the affiliates
Steve Safran August 17th, 2007
With the MyFox deal, the Fox-affiliated television stations have just taken the path of least resistance in the area where they need to make the biggest strides. They have chosen ease over risk. In doing so, they have given away access to fully half their sales inventory. They have just sold their chances for success to a low bidder who is the only winner in the deal. And they are making the announcement that they are not interested in the local web at all. This is going to be a mortal wound, self-inflicted by people who still believe it’s TV first, then web as an afterthought.
In adopting the MyFox platform, Fox affiliates have made an error that many stations before them have made - they’ve just made it about seven years after those stations made that mistake. Those stations have learned from their past. Why didn’t Fox take a tip from its competitors?
We have seen stations fail in their online attempts. What do those failures have in common?
In short: ownership.
The stations that have failed to make money from their online efforts are those that have failed to take ownership - true ownership - over their sites. By handing over the command and control to vendors, stations get into this loop where A. They produce an inferior product, B. They make no money and so C. They don’t invest in the product.
And at a time when station groups are finally taking back control of their own sites, Fox affiliates are acting as though there are no lessons to be learned.
The problem is that the Fox stations are thinking that the web is television. In television, you can take a graphics package, put a new city’s name on it, and drop it in just about anywhere. While that’s not especially creative, it’s not the kiss of death on television. Templates can work in TV news, if not terribly well from a quality standpoint at least from an efficiency POV.
But the local web is something different. It is not about taking your television product (already produced according to a template) and putting it into a template online. This recipe will absolutely end in disaster. The Fox affiliates will not make close to the revenue they could make if they were to take matters into their own hands. The MyFox model is based upon getting as many pageviews as possible to a station’s website. This is inefficient. Stations need the best model for the aggregation and distribution of information. The need Web 2.0. That’s where this model comes up short. Implementing it will put the Fox stations years behind the social web the moment they launch.
The local web is not about templates and newscasts - it’s about people. How stations aggregate the voices in their community and reflect the needs and wants of the community is what matters most online. Stations need to have multiple niche site offerings that address the many colors of life that are unique to their own towns and cities. They need to have the flexibility to change their site and its processes on a moment’s notice. The web changes all the time, without notice. Corporate templates do not, generally, leave room for that sort of change and speed.
Revenue sharing is an idea that has to stop. As part of this deal, the Fox affiliates are giving Fox Interactive Media access to half their online sales inventory. Just like that, stations will be handing FIM access to inventory worth far more than what it would have cost to build a new site - every year. It’s quite a siren song - “We’ll do all the selling and you’ll get a 50 percent revenue share.” The trouble is that nobody gets rich off revenue shares - except the people who are doing the selling across many stations. Aggregators - in this case FIM - can make money in this model. The stations cannot hope to see anything close to what they would sell on their own with the right sales strategies.
Here is the question most commonly asked about TV station web offerings: “What are we supposed to do? We’re not budgeted to hire a staff.”
Here is the answer: Budget for a staff.
Businesses don’t succeed without investing in themselves. When major newspapers started television stations, they didn’t say “we’re not budgeted for anything special, so just point a camera at our guys writing news copy.” Stations need a real, honest-to-goodness business plan that treats the web as a separate profit center. The sales staff needs to be fully incentivized. and the web producers need the freedom to create the content they know their audience wants.
There has never been a better time to build a web team. Open source software makes it possible to have robust content management systems for free. Start hiring people in your IT and operations departments who understand the web and make the web a part of their job. Thinking “we need one person to do the web and another to do TV” is exactly the problem. You need to transform your station so everyone chips in to all platforms.
Stations are spending a fortune upgrading their TV equipment to HD right now. They understand capital budgets. The irony of the HD conversion is that all the money that the locals spend will not translate into any more advertising money. They’re doing it because they have to. But faced with the opportunity to invest in the web, where there is real money to be made, suddenly the stations say there’s no budget.
Those who do not invest in themselves get exactly the ROI you expect.
The most frightening aspect of this deal is that the Fox stations are so casually giving away access to half their ad inventory for national ad campaigns.
I hear the argument “What can joining the Fox platform hurt? Every penny of national ad sales helps the locals.” The logic behind this model is that Fox will be able to make national ad sales across this new network. So? The local web is not predicated on national ad sales. The local web is about finding new, local advertisers who never could afford advertising before. It’s about building niche sites and then finding local businesses to sponsor those sites for far more than you would get selling the sites to a national ad firm on a CPM basis. You don’t find solutions for problems that face local advertisers by building out a network that can sell 10 million eyeballs to Coca-Cola.
This play helps FIM and it hurts Fox affiliates, plain and simple.
Successful sites constantly evolve. If a site is exactly as it was a year ago, it has fallen behind. Sites like Facebook, YouTube, Google, MySpace, Digg and others make significant changes to their models every few months. Television station sites can only have this kind of required flexibility if they have full control and ownership.
The web is not syndicated programming. You can’t buy a site, stick a wrapper on it, and call it yours in your local market. What the past several years have shown us is that homogeneity and Web 1.0 thinking leaves online stations’ revenue efforts and technological advancement moribund.
Now, there is no rule that says TV stations have to have websites. Many still don’t really bother with much, preferring to put up a placeholder site with basic information. That’s fine. If you don’t want to be in the web media business, then don’t jump in. But if you’ve made a tactical decision to get into online media as a business, the first question cannot be “How do we do this as cheaply as possible with as little risk as possible?” Nobody built their TV stations this way.
If I could offer any sort of advice to the Fox stations that are adopting the MyFox model, it is this: do whatever you can to differentiate yourselves. If the MyFox page is your brand extension site, so be it. Don’t think of it as the “master site.” It is just one part of an overall strategy. Don’t let it be the only part of your station’s web efforts. Build a 2.0 strategy on your own that your station can have true ownership over. Take the tools that MyFox offers and start playing around. See if there are new and different uses you can find. Have a rule that the MyFox page can only have a limited amount of information repurposed from newscasts. The rest has to be original and community-generated content.
So there is some hope here. It’s just a shame that the Fox stations have chosen not to learn from the mistakes of their competitors. They will learn on their own, however, and the smart Fox stations will not cede full control and this product stop their purpose of transforming into a 2.0 company.
After all, smart web people always come up with workarounds.
19 Comments Add your own
1. invitedmedia | August 17th, 2007 at 7:39 am
didn’t you just say the ib/cnn deal was good news only a few weeks ago?
what’s so different here?
if my recollection is incorrect you have my apologies, but i don’t think it is.
and what’s this “1/2 of inventory” you talk about? i thought online that ad inventory was infinite? the web is not tv, so therefore the gov’t has yet to regulate the amount of advertising one can have, right?
besides “advertising is content” as someone else likes to say.
2. Barry | August 17th, 2007 at 7:40 am
Great read. I don’t know all of the details, but I think they are doing the same thing again with their new FoxJox dot com web sites. Does anyone know more about it?
3. Rob | August 17th, 2007 at 8:35 am
Steve,
Hypothetical question here. Lets say you’re the GM of a small market TV station. You have a staff of maybe a dozen people in the newsroom. You don’t have the budget to upgrade to HD or get new news cameras, so what do you do about your web presence?
That’s the reality in small market America that GMs are faced with. Are they going to hire that fresh-faced new anchor that might improve ratings for their TV newscast or hire a web guru to improve their website? You know that’s a no-brainer, and that’s what stations are dealing with out there.
I bet that of those affiliates switching to the MyFox solution there are some that are just being lazy about their web presence but I also bet there are some that just don’t have the time, manpower, money or knowledge to make a website profitable and successful.
In my experience working for Belo, I saw the company dump tens of millions of dollars into that !@#$%^ CueCat and then ate their losses. They tried anything, everything, pouring millions of dollars into developing their Gold, Platinum and Plutonium Standards for their websites.
Today I work for a family-owned organization where we’re dealing with tens of thousands of dollars for web development.
That’s the economic reality that many organizations face. They just don’t have the capital to make their web presence as strong as they envision them to be.
Thankfully, however, we’re not a Fox affiliate.
BTW, if anyone wants a never used CueCat I have one lying around here somewhere.
4. Anon | August 17th, 2007 at 8:36 am
Fox news sucks - its no surprise that they are “myspacing” their pages with a generic template. I went to my local fox website once, and never returned. I agree its a bad idea - but didn’t Fox just sell a bunch of its affiliates anyways?
5. David Johnson | August 17th, 2007 at 8:46 am
great manifesto, saf. just great.
i think the deal is exactly as you state it, my position in my comment yesterday should state that more clearly that it makes sense for FIM. My point: If the locals are using doubleclick or google or another third party ad vendor, then why not do it with FIM instead? If you are going to be splitting your revenue anyway, you might as well split it with a stakeholder in the core product space instead of a web pureplay.
the ownership groups of the local stations need to offer their own network of ad serving, one that allows the customers you’re talking about above to buy ads and manage their own campaigns through a web service platform. big companies like tribune, belo, scripps, gannett, should all be developing solutions like this, and doing it in an open source platform that would allow them all to work together. the big win is then offering all the bloggers and microsites in your community a google like adwords block that you sell into and split the revenue with them.
face it, FIM knows who is going to be gobbling up the $63 billion online advertising pie when the tipping point hits in 2011. it will be big service providers like google and yahoo, and the majority of the ads are not going to be on content, per se… they’ll be on webmail, chat platforms, google docs, etc, because we spend more time online communicating than pretty much anything else.
if we want to keep the money we’re losing around our content and services as this shift happens, we need to be offering better advertising services to our local advertisers.
6. Bob Jones | August 17th, 2007 at 9:10 am
It depends how much control they have handed over … in reality, a platform is a good idea … Fox handng over the software to power the sites is good as its actually more likely to make better local sites. Its the example of most forums on the net running a PHP script, like vBulletin … rather than people making their own.
Ofcourse vBulletin doesn’t impose a unified design which could be a problem.
The most important part, as I’m sure this blog would usually agree, is content … the content will still come from the local stations.
7. Rocker | August 17th, 2007 at 10:32 am
Agree with Safran that there are a lot of issues..or at least big question marks…about this deal. But templates are not one of them….content is what’s key, as Bob Jones points out. Templates are good…users don’t know and don’t care if Peoria looks the same as Dubuque, and there are significant national sales advantages to conformity. And frankly, most people involved in TV station websites (often being pushed by TV creative people, no doubt), no nothing…nada…about best practices in web design, so inviting them to do their own design….uh, bad idea. As evidenced by the comments/”critiques” posted right here whenever a group launches a new design.
8. Michael Gay | August 17th, 2007 at 11:06 am
Hey Steve, Broadcasting and Cable picked up your post and is linking to it.
Welcome to all those reading LostRemote for the first time!
9. tested | August 17th, 2007 at 11:18 am
I’m kind of neutral on this deal. As you say, many of the Fox affiliates have failed to do much with their websites at all. Like it or not, the MyFox template is a vast improvement over what most of these stations currently have.
I agree with the general idea that everyone should contribute to every platform that a station has. However, it’s hard to expect a great website or a great newscast if you ask producers from either venture to split up their workload. At some level extra staff does have to be hired and it does have to be budgeted for. It’s hard for most managers to justify such a cost if that person is only going to do this extra work part of the time and do work that others are already doing for another part of the time.
One encouraging sign: I have checked out many of the myfox sites and see more differentiation than I thought I would. I also see a lot of community generated content and content from anchors and reporters that gtets on the web long before it gets on the air.
I don’t really see this deal as any different from IBS or WorldNow.
10. Rick | August 17th, 2007 at 11:47 am
I think that overall the deal makes less sense for sites in larger markets than in smaller ones, but I can see the attraction in this for a lot of people. In smaller markets, you have essentially a turnkey operation, and the ability to do things such as stream Fox shows and other multimedia stuff that would normally be problematical for a #120 market web site.
Actually, I’m pretty impressed with the Fox folks. I almost went to work for them at one point, and from what I could tell, they had a better sense than most broadcast network folks about the possibilities of their sites.
11. Don Day | August 18th, 2007 at 1:20 pm
Steve –
I can’t agree more. The MyFox setup truly is the worst of the “big group” bunch (IB, WorldNow, etc.) Ugly, not functional, lite on content, poorly executed, and clutter heavy. The rev share is bad bad for the affiliates - and ties them into a poorly executed platform, and drowns out their local brands.
“How do we do this as cheaply as possible with as little risk as possible?”
My how…
12. Anonymous | August 18th, 2007 at 5:13 pm
they froze belo’s pension plan?
13. David Martin | August 19th, 2007 at 10:49 am
Bravo, Steve! Excellent post.
Allow me to suggest the obvious. We have a leadership problem. The generation of leadership now at the helm is faced with a sea change they are unable or, in some cases, unwilling to confront.
Too many came up in the days when all one needed to do was keep the carrier on and you made a good living. Capx investment in DTV is the result of regulatory mandate. Initiatives to compel cable operators to carry new spectrum offerings speaks directly to the problem at hand. We have a massive failure of imagination here. The most effective and efficient approach to getting local cable operators to carry programming is to offer local programming that cable customers value, programming cable customers want. What investments are being made in creating local original programming? Is the NBCU Weather product engaging and different enough to stir local consumer demand? Chances of a consumer driven I want my Weather Plus? The safe wager is 6 to 5 against. My point is if leadership fails to see DTV as a significant game-changing opportunity then it is, perhaps, unreasonable for us to expect these same leaders to have any grasp whatsoever of the promise, opportunities of local Web 2.0
A serious leadership problem, an ongoing failure of imagination, industry genetic blindness and inertia are creating second and third order effects it will take us years to address.
14. Charles | August 19th, 2007 at 4:17 pm
Sure the MyFox template is not Web 2.0 ready, but don’t you think the next build of the sites will be? You have to believe something is brewing.
15. Anon | August 20th, 2007 at 7:25 am
Like Rick, I almost went to work there as well, so I’ll phrase this as more of a statement on the industry as a whole, not just FEM.
But have we come to a point where we can feel comfortable with poor journalism? I think many readers here got into news because we wanted to work on great stories, not because of all the technical possibilities that would come available after we’d launched our careers. NO ONE is wondering why the journalism is so bad on those sites, which are racked with weak headlines, shoddy writing and just awful presentation overall.
It’s sad that we critique this shortcoming and that one, but we overlook the quality of the real reason why we go to the sites in the first place — to read the news!
16. Meredith Arnold | August 20th, 2007 at 9:42 am
After reading the blog and 15 comments it becomes clear that many don’t have a clue of what is truly going on with FIM, or the Afiliates.
In fact, do not really understand what is going on with local stations related to the Internet initiatives…
What I see FIM offering and opportunity for local stations to take advantage of a vast technology network and national services, which most stations cannot afford, not even IBS, or WorldNow. It is expensive to keep up with technology and a majority of local TV stations are not even in the game.
It seems to me local stations need to focus their attention to providing local content (original) and if FIM is willing to provide a platform with latest technology, each party can focus on what they do best.
Steve is just trying to drum up issues for us to comment, not truly get to the source of local station issues…
MA
17. Safran | August 20th, 2007 at 10:10 am
I haven’t jumped in yet, as I’m writing a follow up, but Meredith has prompted me…
I’ve heard the LR Faithful accused of a lot of things, but the one thing you can’t say about them is that they don’t have a clue as to what’s happening at the affiliates.
This is a site by and for people who have a ton of experience at the affiliate web level, Meredith. These people are experts and it’s wise to take what they observe a bit more seriously than you are. They understand exactly what is going on at the local stations because so many of them work in those stations.
The ones that don’t work in those places are consumers of online information. They aren’t in the least bit interested in hearing excuses about why local information providers “can’t” do something. If those providers can’t give information the way consumers want it, the audience will find it elsewhere. We had best listen to what the audience is telling us, and not tell them they don’t know what they’re talking about.
As for me trying to “drum up issues,” that suggests I am not sincere in what I write about. Not only is that insulting to me (which I can absolutely handle), it’s insulting to the people who bother to read this stuff, share it and comment on it. We could have a far more popular site if all we did was make trouble, gossip and “drum up issues.” (Don’t think we haven’t considered it, either…)
Meredith, you may find the FIM offering to be exactly what the stations need. You may support it. You may believe it is a platform that provides the “latest technology.” (I’ll let the IBS and WN folks determine whether their stuff lives up to the FIM offering. I imagine they’ll have some thoughts.) That’s great - we’re all about the debate here at LR.
But you are absolutely wrong (or haven’t read us enough) if you think the people who come here every day to share their thoughts and ideas don’t know what’s going on and don’t understand the source of the problem. They live the problem. They offer great ideas to resolve those problems. They know the frustrations far better than you give them credit for.
18. Kevin | August 22nd, 2007 at 8:56 pm
Steve-
First, I am not a much of a fan of the MYFOX design, but it certainly is clean and showcases select content and advertisers with very little clutter. As a Web professional with 11 years running TV Web sites, I can tell you that keeping sites clean is a constant struggle, especially if you have overzealous creative services, news and promotions departments, or worse yet, an untalented Webmaster.
It’s not my place, but I feel compelled to appeal to you. I mean this in the nicest way, but you MAY need to take a step back and take a deep breath. You seem a bit too outraged by Meredith’s comments. The way I read it, Meredith was saying that you do not know what conversations are going on in the FOX ownership groups. She is probably tied to FOX somehow and privy to conversations.
To her point, many TV stations and groups (Gannett, Scripps, NBC, CBS, etc.) are experiementing with Web 2.0 strategies, blogging, separate verticals and brands, etc. I have worked at three of the big media companies and all are actively experimenting and many of those intiatives are overlooked on LR. Why? Partially because the experiments are kept quiet for strategic advantage. So, while I can’t speak for Meredith, I didn’t think she was calling you or other people at LR ignorant. I think she was suggesting that you were speaking out of school, of things you do not know, and for that reason possibly too harshly.
Kevin
19. Pertzborn | August 23rd, 2007 at 9:42 am
Steve,
How untrue!
Check out Myfoxstl.com. It’s one of the best MyFoxs in the country.
Is it making money? As a marketing tool, Yes! It’s worth the investment in branding the local Fox product and for breaking news. The website often beats the on-air product.
The blogs are very interactive and community based. The anchors and reporters are very involved.
It also allows viewers to watch newscasts on the web anywhere in the world when traveling.
Also, by having a universal template and national and international content, the web producers can focus on the latest news and special sections designed specifically for St. Louis.
As always, this website is in flux and FOX is already working on the next generation.
I’m not a tech. nor an MBA, just a Journalist who enjoys the interaction of MYFOX compared to the competition’s websites
Stay tuned.
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