The Digital Skeptic: Mongolia Is a Better Media Customer Than U.S.

NEW YORK ( TheStreet) -- Before investors watch digital music services such as Spotify burn through another hundred million dollars figuring out how to sell music worldwide, they might want to insist that company execs jet over to Freising, Germany -- just north of Munich -- for a beer and a brat with Matthias Wurfl.

Wurfl knows something supposed new-media geniuses such as Ed Sheeran or Spotify's Daniel Ek and Chris Maples -- and maybe Microsoft's ( MSFT) Steve Ballmer -- don't: how to actually get paid in the global digital content game.

Remarkably, Wurfl pulls off this money-making trick without the benefit of modern digital tricks such as social media, machine learning or mobile devices. And he didn't burn through the gross domestic product of the Falkland Islands to get launched as Spotify did.

His eight-person, bootstrapped shop uses basic digital tools such as a website and email. But Wurfl's business is solidly old school. His firm, The Interview People, acts like a sort of on-demand, by-piece global newswire. He secures the rights to top-flight celeb interviews and photo sessions. His vendors include England's The Guardian, Germany's Suddeutsche Zeitung and France's Le Monde, as well as freelancers and other outlets around the globe. Chats and photos with the likes of Michelle Obama or Johnny Depp usually sell best. He then markets these pieces to media outlets in 70 territories, carefully finding the countries where larger newswires do not have footholds. He finesses the translations of his pieces, manages the relationship with his editor customers and delivers the story.

He then splits the proceeds -- usually 50/50 -- with his suppliers.

"Everyone we deal with loves what we do because we give them extra revenue," Wurfl says. The trick he explained is in carefully selecting the stories that are unique and finding the territories around the world that are a new market for that story -- all without killing the original value of the piece in the market where it was created.

When I asked him why other content companies -- particularly those here in the U.S. -- can't seem to master this trick, his explanation is sadly familiar in these dark digital days.

"U.S. budgets are on a third-world level," Wurfl says. "This is not an insult from me. I can tell you as a fact, Mongolia and Vietnam now pay more than many U.S. media outlets."

Wurfl believes the U.S. media market has become a universe unto itself where people work for almost nothing. And clients know it. He is not talking just about blogs, indie creators or new-media wannabes. Significant fashion publications, good-sized digital news outlets and even regional and national publications simply refuse to pay anything close to global scale for content.

"There is usually some back and forth with American editors," Wurfl says. "But when the subject of price comes up, they simply disappear."

Wurfl claims he is not demanding Tiffany retail prices. Basic interviews can run for as low as $100, though they can go as high as roughly $3,000. But even the low end, he says, is more than many U.S. outlets are willing to pay.

"They expect journalistic quality for $40 a story," he says. "It is hard to get a foot on the ground in a market like that."

Spotify no exception to the rule
Wurfl's world view, then, is a crucial investor reminder on the perils Spotify faces. He is certain basic items -- including news -- are essentially valueless commodities in the digital age. About the only place he finds customers willing paying is in commentary, analysis and access to high-profile newsmakers.

That means anybody peddling anything anybody can get -- including music -- faces as tough a road to profits as possible.

"Good quality content will always survive," he says. "But talent alone is probably not enough. You have to sell your stuff these days."

Until Spotify faces the music -- and finds something unique to sell besides music -- it will find itself in one tough spot.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.