Hot damn! Scott Karp has a killer post on new media. You should read the whole thing, but below are some key quotes.

Here's a great summary of how value works in Internet media:

Media is about conversation and participation. Consumers can create their own media. Value is being created at the edge.

"The edge" means value is created external to the firm -- think user-generated content.

He then succintly summarizes the digital media problem:

The problem, as many people have stated many times, is that the more everyone participates in content creation and content interaction, the harder it is to navigate the sea of information to find what’s useful.

He goes on to state that the problem with a lot of digital media sites like Digg and Reddit is that the audience just isn't that proficient in certain topics, and hence the result is collective decisions being made by people that aren't knowledgeable enough to make these decisions.

And he's exactly correct. Related to the fact that editorial decisions are being made by a community that lacks the required knowledge/expertise is the fact that so many of these new media sites (Digg is the most visible example) place very little emphasis on building relationships. In other words, there needs to be a human touch.

The digital media winners will be those that can get user-generated content from knowledgeable authorities on the given topic. The traditional problem, though, is that experts on whatever topic are not incentivized to contribute -- their out making money on their consultation or service businesses. Why should they contribute to a firm that is going to resell their knowledge?

I propose a solution:

• Select your niche. Know what you're going to talk about and what type of a person would be interested. The smaller the niche, the better and easier it will be.
• Find experts in that niche.
• Ask yourself what those experts want. Fame? Money? Create an incentive structure that gives them what they want.
• Your audience will follow. Make it easy for them to navigate your site.
• You've got attention of experts and those looking to consume media. Find the best way to monetize that attention (advertising, ecommerce storefront.....get creative here, lots of opportunities).

For those who think that Google has won everything, I would argue that this is a business model that Google would have a lot of trouble competing with. In order for this to work, the human touch is needed. Google sucks at the human touch. Yahoo's not so hot at it either. And Microsoft is stuck in the '90s (for now, at least -- I don't think you can ever really count them out).

So the opportunity is there. And it's really, really, really big.

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