The Hype Hyperbola
While we’re on the subject, Techmeme’s Mahendra Palsule pointed me towards this C:Net article arguing that the media focus on what is sexy, not a decent business (he was noting it as a part-answer to this article I wrote awhile ago). The gist of it is:
A new report by ITDatabase that examines tech coverage over the last six months from eight top business news publications raises some questions, in particular: Does the business press factor companies’ revenue and profits into their tech editorial agenda?
The report shows that Apple and Google dominate, while Twitter and Facebook are far more discussed in the business press than Intel, Dell, IBM, or even HP (the largest tech company in the world).
The eight publications surveyed are: The Wall Street Journal, The New York Times, Forbes, Fortune, BusinessWeek, The Economist, Financial Times, and USA Today. Over a period of six months, ITDatabase measured coverage by the number of times a tech company was mentioned in print and online in these publications, including blogs such as All Things Digital, which is affiliated with the Journal. (Disclosure: I am an adviser to ITDatabase.)
There is a chart in the post that shows Apple and Google getting the lions share of the publicity – its a power law graph by the looks of things – and it reminded me of a graph I saw many years ago, drawn in semi jest by a McKinsey colleague at the time, Ralph Lewinski. This curve explains the Hype Hyperbola (see the diagram above), ie the truism that sexy industries tend not to be profitable. This is typically due to one of 2 reasons:
- They are new industries, which usually tend to be unprofitable because they are giving away value to get market share (and/or have yet to find a business model)
- They are established and still sexy, in which case people will enter the market, and even work for them, for much less money than for less enjoyable industries
Which is of course why New Meedja startups are the poorest churchmice (its not a LOLcondition) of all as they fit both conditions 
Social Media profits (if you exclude the purchases of sites by the Dumb Money) drive the current “biggest $0 billion industry” going.
Google and Apple are exceptions in that they are both sexy and profitable and so really get the press attention. Typically they are profitable because (like old fashioned TV, which was once sexy) they have built strong barriers to entry. They are also both very powerful, especially in the Valley – the difference in coverage tone on Google Buzz between the independent bloggers and the Tech Media (including the big blogs) was quite remarkable.