JPG Magazine is dead. That’s a bummer because, as TechCrunch wrote this morning, it was a radical idea in publishing: one that used crowd-sourced data to serve the magazine’s readers.

There were a few problems here:

1. They never got a large enough following to make a business viable. That’s because book stores are going away and the ones that are left are not willing to increase the shelf space to magazines. Tim O’Reilly talked about this in the interview I did with him a couple weeks back for FastCompanyTV. To make it in media you’ve gotta be where there’s increasing shelf space. Today what’s increasing? Newspapers? Nope. Magazines? Nope. iPhone apps? Yes! Facebook apps? Yes!
2. Photography is a tough place to make money off of advertising. Look at Flickr itself. Why haven’t you seen many ads there? Because advertisers haven’t figured out how to sell stuff by putting their messages next to photography. If they can’t figure that out online there’s no way they’ll figure that out in a magazine.
3. The web overwhelmed the model. Flickr has a really cool page called “most interesting over past seven days.” Look at it. I’ll wait. Now, why would I wait eight weeks to get those same photos sent to me on paper? Hint: I’m not. If you can’t answer the question of why I would change my behavior from what already exists, your business will be in trouble.

But, there’s something deeper here. If you’re going to go after advertiser dollars, you’ve got to have a pitch for how they are going to sell more stuff. This is why Engadget is such a great advertising play. Everyone visits Engadget to look at gadgets. People who look at gadgets probably buy 300x more than people who don’t. Right now Microsoft is advertising on Engadget. Why? Because they know that the audience that both cares about, influences other people about, and buys gadgets is there. Now, go back to JPG. What kind of audience is there? One that likes old photos from Flickr? Can you see the advertising sales problem there?

Many companies are making the same mistakes that JPG did. Thinking they are in a hot space just because they are associating themselves with the power of the crowds, and social software, and all that hot hooey. Me too! This is why Arrington and Calacanis, when they tell me to get back to blogging thoughtfully instead of spending all my time over on Twitter and friendfeed, are right!

You’re advertising-funded business is next after JPG if you:

1. Rely just on the geeky audiences that read Techcrunch. Or me. (Which is why I spent time getting to know other networks the past year).
2. Don’t have a well defined audience that you can present to advertisers. Facebook, for instance, goes in saying “we can introduce you to very specific demographics. You want to reach every 22-year-old woman who skiis, is Republican, likes Daft Punk, lives in New York, and who posts at least one video a month? We can do that.” What could JPG present to its advertisers? “We have a bunch of people who care about photography.” Not nearly as effective a pitch.
3. Are not gathering transactional people. Why does Popular Photography (a magazine that’s been around for a long time) do so well? It gathers people who are transactionally-oriented. What do I mean by that? Walk by a magazine rack. Most of the best photography magazines do NOT display photography on their covers. What do they do? They have EQUIPMENT on their covers! Why do they do that? Because they really don’t care if you are into photography. They care about gathering people who are into buying equipment. Why? Because that’s who advertisers want to reach. So, are you gathering transactionally-oriented audiences? If you aren’t, you’ll be swimming up stream. This is why Flickr itself is a tough business.
4. Aren’t giving advertisers a good way to talk to customers. This is why, I believe, Flickr recently added video. Why? Photography just isn’t a very good way anymore to reach customers, especially in today’s real-time-web environment. What is? A place that has a mixture of video, text, photography, and interactivity. What does that look like? Well, it isn’t printed on paper anymore.
5. Aren’t getting “shelf space.” Or, distribution. You might be the best community in the world, best blogger, best videographer, or best social network, but if you can’t get people to see it, use it, try it, you’ll be toast. JPG just wasn’t able to get the shelf space necessary to attract the audiences it needed to attract advertisers. I never saw it on the news stand. So, now, if you are an iPhone app and you can’t break into the top apps, you better figure it out or you’ll be toast.

Here’s hoping that we all avoid the problems JPG is having. Good luck out there! If you’re an advertising focused business, how are you closing deals and getting revenues? Any good ideas? Love to hear them, leave a link to your blog here.

UPDATE: JPG should have called SmugMug’s CEO. He wants to help save the magazine. Funny, because SmugMug doesn’t live off of advertising revenues. They have hundreds of thousands of users who pay money to use SmugMug.