Here’s the deal. Digital media is not about scarcity and never will be. That’s the old media game. Online it’s about ubiquity, about being part of the conversation, about links, authority, page rank, and if you are a news organization like the WSJ – its about anchoring the discussion
This post is not about whether the WSJ has the right fremium strategy or not, but about what it takes to have an awesome brand these days.
Since Sun’s $1bn acquisition of MySQL last week I have been reflecting on what it takes to drive that sort of massive valuation (and congratulations to the entrepreneurs and VCs involved – it is great to have another $1bn deal in Europe – I wish it could have been me, but heh….).
And it was a massive valuation. Revenues were around $70m.
I think it was MySQL’s brand that made Sun want to pay $1bn. Sure there are lots of other great things about MySQL that would have helped get them there, including it’s strong and disruptive position it the database market, but the x-factor around their brand will have been a big help. MySQL is cool, it is a movement, people want to be a part of it, and are proud to be associated with it. It is what Hugh would call a social marker.
This is what Fred is talking about for the WSJ. They will become a social marker by doing the things he describes – by focusing on links, authority, page rank and anchoring the discussion.
A lot of the most successful web companies have captured this x-factor for their sectors and it has done wonderful things for their valuation. Just look at Google, Facebook, Myspace and YouTube in the US and LastFM, Skype, and FriendsReunited here in Europe. All these businesses became social markers. People were asserting their identity by associating with these brands.
Powerful stuff, and as Sun has shown, something that big companies are willing to pay up to acquire.