…it doesn’t matter how clever the opportunities are.

This is a simple point about the economics of local advertising, but it’s very important. I wish I’d understood it two years ago.

When I started a publishing business, I was told that you should generally not sell ad contracts for less than $100. At the time, I thought that was because ad salespeople priced their time more highly than I was willing to, and that I could bootstrap my way up by underpricing my time, like any respectable scab.

But here’s the thing: My time is only half of what’s at stake. The actual reason you shouldn’t sell for less than $100 is that if your product is worth less than $100, it will not be rational for advertisers to spend time buying your product.

I’m talking about the time required to evaluate an advertising opportunity, to run it past business partners, to obtain and transmit the graphical files, to settle on the message, to write the copy. These tasks sound piddly because they are. They’re obnoxious and time-consuming. That means that no business owner is going to do them unless there’s more than $100 in value at stake.

It doesn’t matter if the advertiser has no affordable alternatives. It doesn’t matter how great your product is. You know your product is great, but your advertiser doesn’t, and your advertisers have the right to evaluate your product. If you’ve designed a product that is so small that evaluating its worth is a losing proposition, then you have just deprived your advertiser of his or her rights.

Now, I’m not arguing that you should overprice your product. I’m arguing that you should make a product that’s worth a decent price.

Simply thinking smaller than everybody else isn’t going to work.

(Creative Commons stopwatch photo by purplemattfish.)

Using a social network isn’t rewarding until we invest time in it. More time, more reward.

What if social networks were TV channels circa 1948? The appearance of ABC doesn’t make me enjoy CBS or NBC less. But broadcast TV is capital intensive, so all 3 channels made money by delivering identical goods to a mass audience. Homogeny: road map to a vast wasteland.

Online social networks are built on a different type of capital — the aggregated time investments of their users. Google+, Twitter and Facebook are all trying to maximize that investment by offering identical functions to a general audience. User time investment has replaced airwave frequencies as the source of scarcity. The effect is homogeny.

“More time, more reward,” the cardinal rule of these early social media giants, is a broadcast mentality, even though the delivery system is digital.

This new ABC looks fine to me. But the next social networks that really matter — the ones that disrupt CBS and NBC rather than competing with them — will be the ones that figure out how to offer different sorts of rewards while demanding less capital from users: TNT, AMC, ESPN.

Lots of changes, and more on the way.

Your startup will only thrive if things are changing; if nothing’s been changing, somebody already tried it. So, how is today’s news market different from yesterday’s?

Here are four principles for today’s media market, each of them with a commandment for aspiring entrepreneurs to keep in mind. They’re the guiding assumptions of this blog.

I’ll discuss each in a coming series of posts, and each of these will eventually get a landing page of its own that includes the latest news on the subject.

• relevance is mandatory, so pick a niche
• talk is cheap, so be useful
• tomorrow’s audience is watching, so make work last
• small works, so outsource everything

That’s exactly what Perez-Pena does today. He quotes the right people, including Jeff Jarvis, who has the emerging conventional wisdom:

The death of a newspaper should result in an explosion of much smaller news sources online, producing at least as much coverage as the paper did, says Jeff Jarvis, director of interactive journalism at the City University of New York’s graduate journalism school. Those sources might be less polished, Mr. Jarvis said, but they would be competitive.

That’s where things are going, and that’s where this blog is going, too.