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June 27 2013

15:17

The newsonomics of Advance’s advancing strategy and its Achilles’ heel

Another city. Another melange of limited information, confused storytelling, and an unsuccessful attempt to put on a happy face to mask a huge change in newspapering and civic life.

Last week, Oregon’s dominant paper, The Oregonian, followed in the footsteps of other Advance papers and announced it would be delivering to homes only four days a week come fall. It will be greatly slimming down staff, including dozens in the newsrooms, formally going digital-first, reorganizing into two companies, and producing newsstand editions on the days it won’t home deliver. It’s Advance’s Slim-Fast, Phase 2, tweaked after its torturous New Orleans rollout last year (“The newsonomics of Advance’s New Orleans strategy”).

That’s the new Advance playbook, as the company — a top 10 newspaper company by revenue in the U.S. — proceeds with a revolutionary restructuring of the local news business. It’s a play that serves at this point as a contrarian example. Most publishers believe the Newhouse family, owners of the very private Advance, is downsizing its own business, and about to give away the local market dominance in readership and commerce monopoly regional dailies have long had in the United States.

Within Advance, you hear that its strategy isn’t just on plan — it’s ahead of it. How do we put together what’s really happening and figure out what to make of it?

It’s not easy. Working with sources up and down in Advance cities is one way, gathering lots of partial views. While top editors are willing to talk, Advance’s business leaders are mum. That’s just silly: Newspapers have a special responsibility to the public, one that although further tested by Advance’s new strategy, is universal. Newspapers are citizens of their community — leading ones, we’d hope — and clamming up about changes of this significance is contrary to the values of the trade.

Just as curiously, Advance isn’t sharing much with its peers in the industry. If Advance has really developed the new secret sauce, why not share it with other newspaper publishers nationally and globally? After all, they’re not the competition. Yet Advance’s omerta-light DNA is a sideshow here. What we care about is the Advance strategy and what it means to the readers, to the journalists, and to the business of news going forward.

So let’s look at the updated newsonomics of the Advance strategy, Phase 2, as it rolls out in Portland in October, two months after Cleveland’s Plain Dealer takes the same plunge. Let’s look the strategy — which has a fair amount of smarts built into it — and its challenges, pitfalls and, likely, its Achilles’ heel.

Planning for print decline

As a strategy, think shock therapy and you’d be close. For decades, the Advance papers had been the epitome of corporate paternalism. The no-layoff pledge, generous health benefits, and good salaries all said job-for-life. Advance’s separation of its local digital sites (OregonLive.com in Portland, for instance) from the newsroom — literally 10 blocks away and reporting to corporate, not the publisher or editor — greatly hampered a singular reader focus.

As other companies struggled mightily with the digital transition, the huge staffs of the Advance dailies found themselves too often sitting on the sidelines. Individual editors, with great variability, tried to innovate. Overall, though, Advance dailies were falling behind the peers in trying to meet the digital revolution.

After years of waiting, waiting, and waiting, the company is now in a mad rush to change. When it came time to acknowledge basic truths about newspapering, Advance management reached for the hand grenade rather than the scalpel.

Reading the same tea leaves of print decline as their brethren, they decided that blowing up the enterprise (reassembling it in two pieces) and downsizing their operations, their home delivery, and their community service was the answer.

Their analysis, curiously, parallels that of iconoclast John Paton, the mastermind behind Digital First Media, as Journal Register and now MediaNews properties experience their own more evolutionary revolution. The in-common belief: As print ad revenues show accelerated decline, companies must greatly reduce their legacy costs and concentrate on the digital future. In fact, Paton has somewhat endorsed Advance’s efforts.

While the experiments began in Michigan in 2009, it was the the New Orleans Times-Picayune downsizing that riveted public and industry attention. In fact, 60 Minutes, which had sought the one moment for years to finally talk about the decline of the U.S. press, used the Times-Picayune’s réduction des effectifs as Exhibit A.

Everyone acknowledges that Advance publicly handled the New Orleans changeover as poorly as it could. Marketing. Messaging. Engagement. All subpar.

The T-P seemed to be at odds with the community that went into the streets to demand its very pulp-based existence. The community’s clamor for a seven-day paper went unheeded — until Monday, when the street edition of The Times-Picayune hit pavement, in 60 glorious tab pages. The New Orleans paper had borrowed a page from its northern cousin, the Post-Standard, which cut back home delivery Feb. 1, publishing a print edition even on days that it no longer offered home delivery. The changeover, Phase 2.

Now The Plain Dealer, which just announced a set of layoffs last week, and The Oregonian are following the same five-point model:

  • Massively cut expenses: At The Oregonian, about a sixth of the 650 staffers will lose their jobs. At Syracuse, the number was closer to 30 percent of about 400. Overall, I’ve extrapolated that Advance is aiming for an about 25 percent expense reduction (mainly in staff, printing, and distribution); I’ve been told that is close to the mark.
  • Pixelate the remaining ink-stained wretches: As Oregonian editor Peter Bhatia made (solely, he says) the layoff decisions that eliminated the jobs of about four dozen journalist staffers — about a quarter of the newsroom — he’s been quite clear that digital skills played a part in his decision-making. “How well [people] will work in the new world order” is key, he told me this week. (For the depth of the tumult within The Oregonian, check out Willamette Week’s takeout here.)
  • Separate out the old business from the new: In all its restructured cities, two separate companies have emerged to replace the old print. In Portland, it’s the Oregonian Media Group (yes, the already much-satirized OMG) that will now employ the content and sales people. As I’ve argued over the years, it is content and sales, quite simply, that are the foundation of the new business. The Advance strategy recognizes that and takes it to an operational level. The other new company Advance Central Services Oregon houses “support” of OMG. So it’s mainly made up of the print-oriented parts of the business — production, printing and distribution — along with HR, finance, and technology.
  • Provide seven-day print, but not home delivery: In New Orleans, and at Advance’s two Alabama dailies, the end of seven-day print was cold-turkey. One day: seven days a week of print; after the changeover, only three days. Then, Advance learned something from the Syracuse model. Pushed to continue (at least for a while) the semblance of seven-day print, the Post-Standard found that a by-product of daily print — the durable, seemingly vestigial e-edition — achieved a market purpose. Today in Syracuse, with a daily circulation of about 75,000, about one in ten readers downloads that daily e-edition. E-editions have been around for 15 years; essentially, they’re replicas of the final edition of the printed paper, ones that can be updated during the next day, but often aren’t.

    Why would anyone want to read a static copy of yesterday’s news? Think older readers. They own computers, but are more comfortable with the format of the newspaper they’ve read for decades. This is an interim market, to be sure, but serving it is a subscriber retention must. To publish an e-edition, you need a print edition. If, like the Oregonian, you’re making substantial revenue printing other publishers’ papers, adding a short run of single-copy papers can be done very cheaply. Hence, single copy editions.

    In Portland, there will be four days of home delivery. The Wednesday, Friday, and Sunday editions are clearly full papers. The content emphasis of a Saturday paper — first called a “bonus” in its announcement — is still taking shape, says Bhatia. Consistent with Advance’s marketing and messaging faux pas, it has also named its daily e-edition, “My Digital O,” to the guffaws of many. Talk about service journalism.

    This single-copy story may get more interesting. Whereas Syracuse has stuck to a 16-page edition, with a single ad — to facilitate that e-edition — New Orleans’ TP Street debuted with 60 pages and a good run of ads, adding three to its print team to produce it. Both cities’ papers are delivered to hundreds of newsstands. An ironic question: What would Advance have to charge to restart seven-day home delivery, coming full-circle in its digital-first, cost-cutting exercise?

  • Keep digital access free — at least for now: Most puzzling in Advance’s strategy is its reliance on advertising, which continues to go south for the whole industry — including Advance. As more than 500 dailies in the U.S. move to charging for digital access, including all of Advance’s peer chains, Advance eschews paywalls. Why? Well, given the tight lips, we’re not sure.

    The lack of an All-Access model, I believe, looks like the Achilles heel of the Advance strategy, even if that strategy works in other ways. Why? Advance depends and will depend much more on ad revenue than its peers. Many of those peers believe that reader revenue may reach 50 percent of total revenue within two to five years. They believe that print advertising’s fade looks near-irreversible. Further, they’ve learned that the sharp growth curve upward in digital ad revenue has hit a wall. Some struggle for growth at all; most are in single-digits, well below the 15 percent growth of digital ad revenue overall. Sure, The Oregonian, The Post-Standard, or The Harrisburg Patriot-News could institute a paywall. It would likely, though, yield much less than it could have.

    Getting the order of things right on a paywall is important: Much better to improve the seven-day print product, add usable mobile apps, and then price up, even if you have a mind to cut home delivery. That way, you’ve established a new, higher price — and the monetary value of digital. Instead, Advance maintains what now seems like a nonsensical approach to paid print and free digital, and that bodes ill for holding on to current print subscribers, much less convincing many people to pay much for all-access down the road.

    If other publishers believes half of their 2016 revenue will come from digitally oriented readers, how will Advance newspapers deal with the lack of that revenue? It will have two major choices: find currently unknown large sources of revenue — or keep cutting expenses, including newsroom staff.

Stand back from this audacious strategy — with all its staff-cutting pain, its inducing of reader pain, and the promise of its digital-first, future-is-now thinking — and it’s hard to get past the point of its missing digital reader revenue strategy.

That said, Advance’s more immediate bet is that it can radically reduce its costs and maintain its dominating presence in local news and commerce.

It’s too early to assess the local advertising challenge. It’s a hyper-competitive marketplace, and Advance seems to succeeded in corralling seven-day advertisers into three days. (I’d projected it would hold on to 85 percent of its print advertising revenue in New Orleans; the number appears to be closer to 90 percent.) It still faces, though, a fast-declining (high single digits loss in metro markets) print market. Further, its ability innovate fast enough in the digital ad marketplace is unproven.

As one observer put it to me today, does the new Oregonian plan to make its future on display banner ads? I’m sure execs would answer that no. But its work in newer forms of digital advertising, from content marketing to marketing services to a major video presence, all seem relatively nascent. Is it ready for prime time as a digital-heavy company? Not yet, certainly, and the clock shows two more big Advance dailies going digital-first within 90 days or so. As it fights for digital ad revenue, it faces many competitors from Google and Facebook nationally to lots of local players.

New competition

In news impact, so far, there is mixed evidence.

Observers in both New Orleans and Syracuse tell me it is a crazy-quilt. Yes, with time-stamping on the website, more stories and posts are being pumped out of the newsroom.

The new operations break their share of news, and some second-day stories do a great job of summing up major news events. Sometimes, though — more than they used to — both papers drop the ball on breaking news. Other news players, from NewsChannel 9 WSYR in Syracuse to The Lens and the just-launched Baton Rouge Advocate’s greatly energized New Orleans play (“The New Orleans Advocate”), are competing more consistently. The Advance papers are still the biggest dog in town, but the dog park is now more diverse. Come fall, The Plain Dealer and The Oregonian will wake up to find their traditional alpha status more challenged day by day.

Times-Picayune editor Jim Amoss believes he is already seeing the dividends from the wrenching change the newsroom has seen. His staff is thinking news, not the next day’s paper.

“We’ve had eight months of having the news gatherers and editors separate, physically separate, from the print team and not having to think about the print product. The new rhythms have been inculcated in everybody,” says Amoss. “The total number of people in news went from 181 pre-change to 160 now. We’re still in the process of filling some of those positions. That total includes 91 reporters (including metro area news, sports, entertainment, Baton Rouge, and Washington correspondent). The number of reporters pre-change was roughly the same.”

Digital audience has grown, as we would expect given the print stoppage. Overall pageviews are up 15 percent, and “eyes on content” — meaning views of articles, videos, and photos across the site — are up 35 percent. A significant part of that is huge photo growth, up 150 percent year over year; photos represent 16 percent of the site’s traffic.

With the changeover, editors and ad directors have more direction of their own digital presentations and business. Advance Digital, to whom the separate sites used to report, still provides digital product development, sales strategy, news and information content product development, and centralized technology for the digital products.

Oregonian editor Peter Bhatia echoed Amoss’ newsgathering point to me this week: The Oregonian newsroom today has about 90 reporters and will have about the same in the fall. The newsroom cutting has fallen disproportionately in middle editor and copy editing ranks in all the Advance cities, a strategy well-employed by others over, including the Star Tribune, over the past several years in making cuts.

The big questions, of course, are who those reporters are, how much experience they have and what beats they cover. In any newsroom restructuring, newsroom managers can use the opportunity to make changes they long wanted to make, but found inconvenient. In this great shuffle, some areas, like environmental beat experience, have been wiped out at the Oregonian.

Further digital skills may have trumped journalistic skills in such Sophie’s Choice decision-making. Finally, The Oregonian — as keenly aware of its newsroom dollar budget as of its actual headcount — cut many high-salaried people, as well as some younger staffers, weighing, I’m sure, one more factor: exposure to age discrimination suits, as any employer in such a situation would do.

All of that change means The Oregonian, come fall, will find new areas in which to excel — and will leave its flanks more open to competition. In Portland, there’s a lot of it. Pulitzer Prize-winning Willamette Week provides city-smart, well-established news coverage. Oregon Public Broadcasting has been adding coverage area after coverage area. Add in a strong TV news presence and several niche print players, and The Oregonian may find what its sister papers in New Orleans and Syracuse have found: breaking news and analysis becomes more of a multi-horse race.

It’s not just news-gathering and writing that matters on the web, of course. A digital-first news operation should be the go-to news aggregator for the region; The Oregonian isn’t. It should have the best tablet and smartphone apps — news and entertainment — and its offerings so far are nothing special, open to competition. It could leverage community, user-generated content far better, borrowing a page from its Northwest neighbor, The Seattle Times, but hasn’t moved in that direction.

Broadly, let’s say the strategy — at least parts of it — may be right. Then the question becomes: Is the Oregonian ready to execute on it?

There’s little doubt that most of Advance’s employees — whose work will make or break the strategy — have little confidence in the “the plan.” It’s paternalism gone awry, and the sense of abandonment is clear. The lurch in strategy is offering little comfort, as Advance and its publisher largely keep the staff in the dark about how the new business is going to create successful products and long-term employment.

What Advance has done is buy some time. In radically cutting its cost base, it may have given itself a couple of extra years to get its new strategy right. It will need that time, at least, to work the prodigious to-do list it has handed itself.

Photo by Josh Bancroft used under a Creative Commons license.

June 20 2013

14:02

The newsonomics of Spies vs. Spies

So who do you root for in this coming battle, as Google petitions the feds? Are you on the side of Big Brother or Little Brother — and remind me, which is which? It’s a 50-year-update on Mad Magazine’s iconic Spy vs. Spy.

The Surveillance State is — at least for this month — in front of the public. The Guardian’s rolling revelations of National Security Agency phone and web spying have again raised the bogeyman of Big Data — not the Big Data that all the airport billboards offer software to tame, but the Big Data that the unseen state can use against us. We’ve always had a love/hate relationship with big technology and disaster, consuming it madly as Hollywood churns out mad entertainments. We like our dystopia delivered hot and consumable within two hours. What we don’t like is the ooky feeling we are being watched, or that we have to make some kind unknowable choice between preventing the next act of terror and preserving basic Constitutional liberties.

Americans’ reactions to the stories is predictable. Undifferentiated outrage: “I knew they were watching us.” Outrageous indifference: “What do you expect given the state of the world?” That’s not surprising. Americans and Europeans have had the same problem thinking about the enveloping spider’s web of non-governmental digital knowledge. (See The Onion headline: “Area Man Outraged His Private Information Being Collected By Someone Other Than Advertisers.”)

While top global media, including The Guardian, The Washington Post, and The New York Times, dig into the widening government spying questions, let’s look at the ferment in the issues of commercial surveillance. There’s a lot of it, and it would take several advanced degrees and decoder rings to understand all of it. No, it’s not the same thing as the issues surrounding PRISM. But it will be conflated with national security, and indeed the overlapping social and political questions are profound. Let’s look at some recent developments and some of the diverse players in this unfolding drama and see where publishers do — and could — fit in.

The commercial surveillance culture is ubiquitous, perhaps even less hemmed in by government policy than the NSA, and growing greatly day by day. While Google asks the FISA court to allow it to release more detail about the nature of federal data demands, its growing knowledge of us seems to have no bounds. From our daily searches, to the pictures (street to sky) taken of our homes, to the whereabouts relayed by Google Maps, and on and on.

It’s not just Google, of course. Facebook, whose users spend an average of seven hours per month online disclosing everything, is challenging Google for king of the data hill. A typical news site might have 30 to 40 cookies — many of them from ad-oriented “third parties” — dropped from it. That explains why those “abandoned” shopping carts, would-be shoe purchases, and fantasy vacation ads now go with us seemingly everywhere we move on the web. It’s another love/hate relationship: We’re enamored of what Google and Facebook and others can do for us, but we’re disquieted by their long reach into our lives. It’s a different flavor of ooky.

We are targeted. We are retargeted. Who we are, what we shop for, and what we read is known by untold number of companies out there. Though we are subject to so much invisible, involuntary, and uncompensated crowdsourcing, the outrage is minimal. It’s not that it hasn’t been written about. Among others, The Wall Street Journal has done great work on it, including its multi-prize-winning three-year series on “What They Know.”

Jim Spanfeller, now CEO of Spanfeller Media Group and the builder of Forbes.com, related the PRISM NSA disclosures to commercial tracking in a well-noticed column (“At What Price Safety? At What Price Targeted Advertising?”) last week. His point: We’re all essentially ignorant of what’s being collected about us, and how it is being used. As we find out more, we’re not going to be happy.

His warning to those in the digital ad ecosystem: Government will ham-handedly regulate tracking of consumer clicks if the industry doesn’t become more “honest and transparent.”

Spanfeller outlined for me the current browser “Do Not Track” wars, which saw its latest foray yesterday. Mozilla, parent of Firefox, the third most-popular browser by most measures, said it will move forward with tech that automatically blocks third-party cookies in its browser. Presumably, users will be able to turn back on such cookies, but most will go with the defaults in the browsers they use.

The Mozilla move, much contested and long in the works, follows a similar decision by Microsoft with its release of the latest Internet Explorer. Microsoft is using a “pro-privacy” stance as a competitive weapon against Google, advancing both Bing search and IE. Spanfeller notes that Microsoft’s move hasn’t had much effect, at least yet, because “sites aren’t honoring it.”

These browser wars are one front, and much decried by forces like the Interactive Ad Bureau, the Digital Ad Alliance, and its “Ad Choices” program — which prefer consumer opt-out. Another front is an attempt at industry consensus through the World Wide Web Consortium, or W3C. Observers of that process believe it is winding its way to failure. Finally, also announced yesterday was the just-baked Cookie Clearinghouse, housed at the Stanford Center for Internet and Society. The driving notion, to be fleshed out: creating whitelists and blacklists of cookies allowed and blocked. (Good summaries by both Ad Age’s Kate Kaye and ZDNet’s Ed Bott.)

Never too far from the action, serial entrepreneur John Taysom was in Palo Alto this week as well. Taysom, a current senior fellow at Harvard’s Advanced Leadership Initiative, is an early digital hothouse pioneer, having led Reuters’ Greenhouse project way back in the mid-’90s. His list of web startups imagined and sold is impressive, and now he’s trying to put all that experience to use around privacy issues. As a student of history, old and modern, his belief is this: “When they invented the Internet, they didn’t add a privacy layer.”

“We need a Underwriters Laboratory for our time,” he told me Wednesday. UL served a great purpose at a time (1894) of another tech revolution: electricity. Electricity, like computer tech these days, seemed exciting, but the public was wary. It wasn’t afraid of behind-the-scenes chicanery — it literally was concerned about playing with fire. So UL, as a “global independent safety science company” — a kind of neutral, Switzerland-like enterprise — was set up to assure the public that electrical appliances were indeed tested and safe.

Could we do the same with the Internet?

He’s now working on a model, colloquially named “Three’s A Crowd,” to reinsert a “translucent” privacy layer in the tech stack. His model is based on a lot of current thinking on how to both better protect individual privacy and actually improve the targeting of messages by business and others. It draws on k-anonymity and Privacy by Design principles, among others.

In brief, Taysom’s Harvard project is around creating a modern UL. It would be a central trusted place, or really set of places, that institutions and businesses (and presumably governments) could draw from, but which protect individual identification. He calls it an I.D. DMZ, or demilitarized zone.

He makes the point that the whole purpose of data mining is to get to large enough groups of people with similar characteristics — not to find the perfect solution or offer for each individual. “Go up one level above the person,” to a small, but meaningfully sized, crowd. The idea: increase anonymity, giving people the comfort of knowing they are not being individually targeted.

Further, the levels of anonymity could differ depending on the kind of information associated with anyone. ”I don’t really mind that much about people knowing my taste in shirts. If it’s about the location of my kids, I want six sigmas” of anonymity, he says. Taysom, who filed a 2007 U.K. patent, now approved, on the idea, is now putting together both his boards of advisors and trustees.

Then there are emerging marketplace solutions to privacy. What havoc the digital marketplace hath wrought may be solved by…the digital marketplace. D.C.-based Personal.com is one of the leading players in that emerging group. Yes, this may be the coming personal data economy. Offering personal data lockers starting at $29.99 a year, Personal.com is worth a quick tour. What if you could store all your info in a digital vault, it asks? Among the kinds of “vaults”: passwords, memberships and rewards programs, credit and debit card info, health insurance, and lots more.

It’s a consumer play that’s also a business play. The company is now targeting insurance, finance, and education companies and institutions, who would then offer consumers the opportunity to ingest their customer information and keep it in vault and auto-fill features then let consumers re-use such information once it is banked. Think Mint.com, but broader.

Importantly, while Personal.com deals potentially with lots of kinds of digital data, its business doesn’t touch on the behavioral clickstream data that is at the heart of the Do Not Track fracas.

Do consumer want such a service? Personal.com won’t release any numbers on customers or business partners. Getting early traction may be tough.

Embedded in the strategy: a pro-consumer tilt. Personal.com offers an “owner data agreement,” basically certifying that it is the consumer, not Personal.com, that owns the data. It is a tantalizing idea: What if we individually could control our own digital data, setting parameters on who could use what and how? What if we as consumers could monetize our own data?

Neither Personal.com nor John Taysom’s project nor the various Do Not Track initiatives envision that kind of individually driven marketplace, and I’ve been told there are a whole bunch of technical reasons why it would be difficult to achieve. Yet, wouldn’t that be the ultimate capitalist, Adam Smith solution to this problem of runaway digital connectedness — a huge exchange that would facilitate the buying and selling of our own data?

For publishers, all this stuff is headache-producing. News publishers from Manhattan to Munich complain about all the third-party cookies feeding low-price exchanges, part of the reason their digital ad businesses are struggling. But there is a wide range of divergent opinion about how content-creating publishers will fare in Do Not Track world. They may benefit from diminished competition, but would they be able to adequately target for advertisers? Will Google and Facebook do even better in that world?

So, for publishers, these privacy times demand three things:

  • Upscale their own data mining businesses. “There’s a big difference between collecting and using data,” says Jonathan Mendez, CEO of Yieldbot, that works with publishers to provide selling alternatives to Google search. That’s a huge point. Many publishers don’t yet do enough with their first-party data to adequately serve advertiser needs.
  • Take a privacy-by-design approach to emerging business. How you treat consumers in product design and presentation is key here, with some tips from Inc. magazine.
  • Adopt a pro-privacy position. Who better than traditionally civic-minded newspaper companies than to help lead in asserting a sense of ownership of individual data? If news companies are to re-assert themselves as central to the next generation of their communities and of businesses, what better position than pro-privacy — and then helping individuals manage that privacy better?

It’s a position that fits with publishers’ own interests, and first-party data gathering (publisher/reader) makes more intuitive sense to citzen readers. For subscribers — those now being romanced into all-access member/subscribers — the relationship may make even more sense. Such an advocacy position could also help re-establish a local publisher as a commercial hub.

News and magazine publishers won’t have to create the technology here — certainly not their strong suits — but they can be early partners as consortia and companies emerge in the marketplace.

Photo by Fire Monkey Fire used under a Creative Commons license.

June 13 2013

07:02

The newsonomics of Hearst Magazines’ one million new customers

Take this quiz. The era of paying for digital access (a.k.a. digital circulation or paywalls) is about:

  1. Getting more money out of core subscribers;
  2. Getting new money out of new subscribers; or
  3. Getting money any way you can.

Okay, 3 is a gimme. But 1 and 2 are very different strategies. While most newspaper publishers are leaning heavily on their long-time core bases by promising and delivering all-access, Hearst Magazines is taking a contrarian turn in the market. It’s a strategy that is largely at odds with peers Condé Nast, Time Inc., and Meredith, as well as most newspaper publishers. It’s betting almost wholly on new customers.

“We want unique paying digital customers,” says Chris Wilkes, VP for audience development and digital editions for Hearst Magazines. “We’re not interested in people reading print and digital together. We want people who are engaging with our digital products, and we’re attracting people who want to read in the digital format.” The company has experimented with a little bundling — at “fair” (higher) and not “ride-along” prices — Wilkes says, but that’s a minor part of the business.

He can now offer up one big seven-digit number to back up that strategy: One million paid digital subscribers. That’s the number of new subscribers Hearst Magazines was able to announce in May. Hearst Magazines president David Carey met that magic number just a few months behind his target. At one million, it’s still only about 3-4 percent of Hearst’s total print circulation — but it’s a milestone. The company is aiming to make 10 percent of its total circulation digital by 2016.

It’s not that Hearst is saying it won’t do all-access ever. But its reason for zagging while other zig is clear.

“It’s easier for us to pivot out of a paid model to authenticated than it would be for others to go the other way,” Carey explained to me earlier this year. In other words, Hearst can go all-access, but would do it at higher prices, reflecting dual value.

Those million subscribers are spread unevenly among 21 digital magazines. The biggest title is Cosmopolitan, with 175,000 paying digital subscribers, or 6 percent of its total circ. O, Oprah’s mag, is second at 108,000. The Food Network’s is third.

Carey’s big digital push encompasses a lot more than digital editions. The Hearst Tower is seeing lots of shake ups, new hires, and new projects. At the top, longtime COO Steve Swartz has finally moved into the CEO’s suite as Frank Bennack’s remarkable three-decade tenure has drawn to a close. He now heads a well-diversified private media company reaching into magazines, TV, newspapers and business media.

Hearst just hired digital native Troy Young as president of Hearst Magazines Digital Media. Young’s digital business associations — xoJane, ReadWrite, Refinery29, Spinmedia, and CrowdSurge — lead to this job where he’ll be responsible for “digital content, technology, operations, revenue, product, and business development strategies.” The company has now made it possible for advertisers to buy across its digital titles through Totally Global Media. Its two-year-old App Lab is home to 40 staffers. Its embrace of native advertising is recent, warm, and wide; it has just announced five new products in the field, and raised some editorial eyebrows as its magazine staff is writing commercial copy as part of their jobs.

Hearst’s strategy here is one to watch. There are good reasons (more on that below) why daily newspapers have opted to go for door number one and get more money from long-time subscribers while making new subs a largely second priority. But they know that’s a two- to three-year strategy. As 10,000 baby boomers turn 65 every single day through 2031, the older-reader market inevitably winnows and must be refreshed with new, paying customers. For daily newspapers, getting younger (yes, younger means under 55) readers to pay is mostly phase two.

So let’s see what Hearst learning, as it leads both newspaper companies in that quest and its fellow magazine chains as well.

There’s a lot to like about the demographics of the digital audience. According to the company’s data, the readers are 10-20 percent more affluent, 10 years younger, and more educated. Wilkes acknowledges that those good demographics may be skewed by early tablet demographics themselves, but they are directionally vital.

Make no mistake: The tablet is the linchpin here. How much of the reading of these magazines happens on the tablet? An amazing 98 percent. For many, the tablet is a truly becoming a replacement for the print magazine.

Wide distribution is key to gaining numbers; subscriber growth is now moving at about 10 percent a month. Hearst uses all the platforms out there, from the Apple, Amazon, and Android stores and beyond. It is also testing magazine aggregation: It’s an owner of Next Issue (“The newsonomics of Next Issue magazine future”), which offers dozens of titles at two price points, and it partners with Zinio (which just debuted its first multi-title offer).

The tablet, of course, has become the lifeline of the magazine, a bequest of Steve Jobs, soon to be refreshed by the changes coming in iOS 7. While the horizontal web page always proved an awkward fit for vertical magazines, the tablet is oh-so magazine like.

“It was a small novelty business [on the pre-tablet web],” Wilkes says. “We knew when the iPad came out, we would finally be able to build our business.” The iPad revolution completely changed the magazine industry’s potential trajectory.

Newsstand sales continue to crash — down 8.2 percent in the second half of 2012, in part, of course, because of the millions of tablets that readers are carrying into airports and on trains. (And soon, when the FAA finally relaxes tablet reading on takeoff and landing, the necessity of having a print piece packed away will lessen further.)

Hearst, while arguably leading the magazine pack, certainly has its own challenges. Its single copy sales lost 1.9 percent in 2012, even though its 2.3 percent overall circulation increase to 30.7 million stands out among its peers.

For the first quarter, print ad pages were down 4.9 percent for U.S. consumer magazines, though only 0.1 percent in revenue due to price increases. Hearst Magazines was up 6.6 percent.

Given the across-the-spectrum drop in print advertising, both Time Inc. and Meredith have recently laid hundreds of employees. Time Inc. is, of course, in turnaround — yet again. First up for sale and now to be spun off from Time Warner, it let CEO Laura Lang go after but a year of ongoing strategic review and seems significantly behind Hearst in digital innovation. It is now playing catch-up with notable hires for Time.com, but is climbing out of its indecisive recent past; ad pages were down 12.2 percent in 2012, though up 0.6 percent for Q1 2013.

It’s intriguing that Hearst has — so far — embraced a double-edged bundling philosophy. While it won’t, largely, bundle print and digital subscriptions, advertising is mostly bundled. If you buy an ad in House Beautiful or HGTV Magazine, you are paying for the whole rate base, including that three percent of the readership that’s tablet, says Wilkes. At this point, a buy is a buy, though, Hearst, like so many others, is going to town on all the new possibilities of customizing advertising for top brands. It’s not just those latest buzzwords, content marketing. It’s interactive ad creation. Advertisers who buy print can tweak their tablet ad to use its capabilities.

Wilkes notes a real movement in the ad creation business. Last year, he says, 85 percent of the ad customization done for the e-edition ads were done by his App Labs staff, with only 15 percent of advertisers, or their agencies, doing the tweaking. This year, brands or their agencies have assumed the work in about 40 percent of the cases, with the Apps Labbers doing the rest.

Wilkes anticipates the work will continue to migrate back to the advertiser. That’s a big lesson for all the publishers jumping into the agency business: As traditional agencies step up, increasingly fearing their own obsolescence, the custom/content marketing units of publishers will get more competition. Many inevitably will fall back to doing what they’ve long done: sell space. Those — nationally or locally — who see riches in becoming agencies — may find the going a lot tougher than it may be in 2013.

The pricing of the digital magazines is a big question and still a work in progress.

Magazines, which long used token reader payments just to print hundreds of pages of lucrative advertising, have a price problem. As John Loughlin, GM of Hearst Magazines, recently put it at MPA Swipe 2.0, “a magazine subscription needs to be valued at more than two venti cappuccinos.” Magazine publishers realize, just as their newspaper brethren do, that the challenges of digital advertising will only grow, as print ad pages decline — and that readers must pay more of the freight going forward.

On average, Hearst’s digital mags cost 30 percent more than their print equivalents, Typically, they are $19.99 for a year, $1.99 for a month. Buyers can pay for a single issue or per year, depending on the title. A majority opt for the annual sub.

“It’s not pricing up — it’s pricing back,” says Wilkes, meaning magazines need to regain value lost in the heavily discounted print subscriptions that can now be found in seconds simply by Googling.

It’s true that most of that 30 percent in higher prices never reaches Hearst, as it deals with Apple and others of its more than a dozen distribution points, many of whom take cuts in the 15-30 percent range as commission. Wilkes says that’s not the reason for the 30 percent upcharge — it’s meant to convey a new value for the tablet age.

Might the price go higher? Early data says it could. A magazine’s price isn’t among the top reasons readers buy — or don’t. As Hearst interacts with consumers and reads app reviews, it sees that customer satisfaction with the product is by far the key driver in gaining and keeping subscribers. “We’re not seeing much price sensitivity,” says Wilkes.

The pricing conundrum is at least two-sided. Magazines have a greater ability to draw in new subscribers. Getting someone to one-click for $20 is one thing. Getting them to commit — after cheap trial subs — to $200 to $300 for a year’s newspaper subscription is another.

So here magazines may have an edge at gaining new customers — unless newspapers can figure out cheaper subset products that may provide more saleable price points. The Wall Street Journal’s test with Pulse, on three cheaper products, may not be producing big results, but expect to see more such tests; The New York Times’ first-quarter earnings announcement about new niche paid products is one to watch here.

Yet newspapers’ weakness is also their strength. Their all-access plans have been front and center for a reason. On average, those putting all-access plans into place have increased subscription prices 40 percent, according to Press+, the leading supplier of paywall technology to the U.S. industry. Forty percent of $250 is $100. Newspaper publishers will tell you they’d rather increase rates for readers across the board than expect “onesie or twosie” new sales to propel their businesses and make up for ad loss.

The New York Times, now getting close to 700,000 digital subscribers and offering all-access to print readers is the best example of a daily having it both ways.

The bigger money that newspaper publishers are taking in makes magazine publishers envious. It’s important to acknowledge the differing cost bases of the newspaper and magazine industries — but still, the ability to yield significant new reader revenue has largely been a newspaper advantage.

Hearst Magazines, in reaching the golden million number, is the leader in new consumer magazine reader revenue. It has added, we can extrapolate, about three to four percent of new reader revenue to the mix. That’s impressive, but not world-beating. Literally, at $20 price points, or even $30 prices, they need millions of new readers — which is David Carey’s plan — to fundamentally alter publisher economics.

One further hope may be niche paid products. Hearst Magazines’ own experience with those may be cautionary. It has produced numerous standalone apps out of its shelter, food, and health properties, but is now de-emphasizing that development. Why? Too much noise in the marketplace, so too little return for the investment. Rather, it will concentrate on improving its digital editions.

There’s one more long-term business strategy playing out here. It’s hard to see in 2013, but it will enjoy high visibility by 2020. Hearst’s cost in printing and distributing magazines are 30-40 percent of its overall cost base, on a par with newspapers. As its readers cross over (“The newsonomics of crossover”), paying as much or more for digital as they do for print, profit increases markedly. At three percent of circulation today, or 10 percent in 2016, Hearst won’t be at crossover. Expect, though, that crossover to move more quickly for Hearst than for other publishers.

As it reaches 50 percent and more, it’s a new business, and strategies, like Hearst’s, may make even more sense in the rear-view mirror.

May 30 2013

11:36

The newsonomics of climbing the ad food chain

The numbers are sobering.

While digital advertising has been growing at a 15 percent pace annually in the United States, the digital ad sales of news companies have largely plateaued, struggling to find any growth year over year. The New York Times Company reported digital ad sales down 4 percent for the 1st quarter, while McClatchy managed a 1.5 percent increase in the first quarter. Most news-based companies are significantly underperforming that 15 percent average — in the low single digits, either positive or negative. Meanwhile, the top five digital ad companies, led by Google, increase their share of ad revenue year after year and soon will hold two-thirds of it.

Why are publishers lagging?

Publishers describe their digital ad woe with these terms: “price compression,” “bargain-basement ad networks,” and “death of the banner ad.” Each describes a world of hyper-competition in digital advertising — a world of almost infinite ad possibility and unyielding downward pricing pressure.

Not long ago, news companies believed that their premium-pricing models would withstand the competitive onslaught. Now they’re retooling, trying to speed their adaptation to the new nature of the digital ad beast.

It’s a matter of survival. For some, all-access circulation revenues are a good positive (pushing overall circ revenue up 5 percent in the U.S. last year). All, though, find themselves running as fast as they can to make up both for the freefall of print ad loss and that overall digital ad pricing downturn. “The ground is falling away under you” is how FT.com managing director Rob Grimshaw describes it.

Let’s look at what some of the leading digital ad innovators among publishers are doing to regroup. Let’s look at the newsonomics of climbing the ad food chain, checking in with two global publishers, The New York Times and the Financial Times, and two regional ones, the Minneapolis Star Tribune and Digital First Media. They provide a snapshot of a world in ever-spinning change.

Their strategies are all fairly similar: employ a range of new techniques that will justify premium prices. Let Facebook, which controls as much as a quarter of all web ad inventory, sell at 80-cent CPM and make money on scale. Publishers know they will never win that game. They want rates *20 to 50* times that, offering increasingly better targeting of their affluent readers.

Climbing the ad food chain is mainly about three things: technology, creativity, and sales relationships. It is also, overall, about differentiation, the roar of a lion in a crowded landscape.

Grimshaw, a former ad guy, says simply: “You’ve got to be doing something unique.”

Let’s look at each of the areas:

Technology

Digital advertising is all about technology in 2013, and you’ll see lots of talk of the ad-tech stack, and who owns it. Google, of course, owns much of it, through its successive AdWords/Doubleclick/AdMob and more creations, acquisitions and integrations. Its stack is so efficient that many publishers feel compelled to use it, though they are wary of getting their businesses tied ever more directly to Google — or the Google “Death Star,” as some critics call it.

For most publishers, Google is the classic frenemy. They work with it when they think the advantages outweigh the hazards, even as top publishers build their own programs. In fact, expect to soon see U.S. news publishers transition their Newspaper Consortium partnership with Yahoo into something intended to be broader, something that allows publishers to opt into and out of the ad programs of multiple portals — not just Yahoo — harnessing the ad tech of the day.

Six-month-old Smart Match is one of the FT’s latest innovations to stay “premium.” In brief, the content of an advertisement is matched, dynamically, to that of an article. The technology: semantic targeting of both article content and the FT’s current “ad library” for the best matches on the fly, as compared to standard keyword targeting.

Advertisers commit specific budgets for specific time periods, and the FT does the matching. The FT says it gets a major lift in ad engagement with the technology, an average of 9x over its average clickthrough. Ten clients are now live in Smart Match’s soft launch period.

Ad effectiveness isn’t a one-time process; breakthroughs like Smart Match require ongoing engagement with marketers, as publishers work with them to figure out what works and what doesn’t — and to tweak constantly. “Ads can’t be a fire-and-forget enterprise” any longer, says Grimshaw.

The FT is setting floors on pricing and better controlling inventory, testing small “private exchanges” with select ad buyers and agencies, working with Google in the U.S. and Rubicon in Europe. Exchanges have caused publishers lots of headaches, as too much of their inventory — mixed and matched with lots of “lower quality” inventory — helped drive down pricing and deflated the meaning of “premium.” So many have pulled back from exchanges in general; a few are starting to harness the exchange concept, but in a members-only approach.

“We are constantly evolving our approach to the programmatic marketplace, and private exchange activity is one part,” says Todd Haskell, the New York Times Co. group vice president for advertising. “We’ve been using private exchanges for a series of single-client buys executed using private exchange technology, and are now exploring several single buyer/multiple brand programs.”

One big notion here: minimize channel conflict, so that a publisher isn’t competing with itself, making its inventory available at variable prices here and there. Private exchanges are proceeding cautiously. Buyers get more flexibility, but within the control of publishers.

Such private exchange testing follows the adoption of RTB (real-time-bidding), which publishers are honing to get better rates for the ad inventory they can’t sell locally. “We moved away from a remnant inventory model a few years ago with the adoption of RTB and actively manage all of the programmatic demand that we see through the ad exchanges,” says Jeff Griffing, the Star Tribune’s chief revenue officer. “As a single-entity, local site publisher, our strategy is to make sure as many bidders/buyers as possible can transact on their audience impressions that we fulfill on our site.”

Similarly, Digital First Media is moving to add new data — including third-party data from traditonal sources like Experian — into its own systems. “As we move more into the programatic world, with our own Trading Desk and all our own inventory in our private exchange, we keep adding data to all that traffic and match it in a way that enhances the ROI for the small and medium advertisers,” says Digital First Ventures managing director Arturo Duran.

Ad tech is also allowing publishers to do things they couldn’t previously do. The Times is using new brand new ad formats to help marketers gain interactivity. One new program will allow for coupon delivery within an app.

The idea of delivering more experiences within experiences — rather than alongside — can be seen in another recent announcement. Twitter Amplify allows advertisers to deliver videos in-stream — part of a slew of ad-friendly moves, well described by Ingrid Lunden at TechCrunch. Among the early partners to sign on: BBC America, Fox, Fuse, and The Weather Channel. The goals here: make ads both more experiential and more lead-generating.

Yield optimization is a term now part of everyone’s vocabulary. Optimization — the better use of data through adjustment of the digital pulleys and levers that adjust what’s offered, at which price points when — has always been a part of the advertising game. Cycle time, and sophistication, though, have markedly moved up. Where the Times used to adjust in 24-month cycles, says Haskell, it now makes significant moves in three-month periods.

There are lots of moving pieces to optimization. The Star Tribune’s chief revenue officer Jeff Griffing describes how his company does it: “The push to premium help us drive our effective yield on pageviews; we’ve established baselines that our different pageviews should meet or exceed and factor in our directly sold campaigns with those indirectly or programmatically filled. We have an optimal formula for how will fill inventory and have set up systems that make sure we’re delivering maximum revenue across all ad units.”

Of course, publishers have long adjusted based on supply and demand. Today, though, the complex external development — various sales partners, through networks, private exchanges and more — requires fine tuning to get the highest possible price for fleeting inventory.

If this all seems like four-dimensional chess, mobile adds a fifth dimension. Haskell recalls the boom in second-screen tablet usage found on election night last November. That development provides a new place for the text-, numbers-, and analysis-driven Times to play in what is usually an immediate TV story. Consequently, it opens up new ways for the Times to exploit the tablet as a second-screen, timely ad vehicle.

The tablet (and mobile, generally) is quickly moving from niche to main play for the Times and others. Of its 43.6 million U.S. unique users in March, 18.3 million arrived via mobile devices, the Times says.

There’s targeting — and then there’s super-targeting. So the Times is selling what Todd Haskell calls “super premium.” It is able to target, through its growing audience database, readers with certain job titles, reading certain sections of content. That kind of targeting drives higher rates, and it’s part of the Times’ plan to move up on the food chain, just as the middle and bottom of that chain widens infinitely.

Creativity

Over the past year, publishers have reawakened to the notion of commercial storytelling. They now see it — a cousin to editorial storytelling — as a core competence, and one that many marketers envy.

“Agencies and many advertisers don’t know how to do it,” says Grimshaw. “There’s a constant need for fresh [marketing] content.”

Enter content marketing, which I recent covered in depth in “The newsonomics of recylcling journalism.” The Star Tribune’s Griffing points to his company’s first big foray into the field, a Kids Health site. Sold to a single sponsor for one year, Children’s Hospital, the new content was produced by Star Tribune staff and is a prototype for products to come. Griffing says the company’s innovations, overall, have pushed year-over-year digital ad growth into the teens.

2013 is the year of content marketing, from New York to D.C. to Minneapolis to Dallas to San Francisco. The creative spark comes from a combination of old-fashioned journalism skills, both editorial and marketing. Sums up Rob Grimshaw: “Publishers have tremendous assets that have never been exploited.”

Now, often, the creation and placement of “native advertising” are inextricably tied. As with the Times’ IdeaLab, the Washington Post’s Brand Connect, and Atlantic Media Strategies, global publishers have asserted their high-end editorial skills, applied to other people’s storytelling, and are packaging that skill with an ad buy. Haskell points out that the creative costs can be built into the ad buy itself, if the buy is big enough. “We’re not looking to make money on the creative,” he says.

That combination of the creative and the buy shows the newness of it all, and the early flux in the content marketing craft. Over time, we’ll likely see a greater cross-title placement of above-average creative, saving on creation costs. How then will the various content marketing works of a Times, an FT, a BuzzFeed, or an Atlantic Media compare? Which will become go-to creative companies, and which will return to the old comfort area of selling placement?

Video creation has also unearthed new creativity among the formerly ink-based wretches. In fact, most companies tell me that video ad demand, at anywhere from $25 to $75 cost per thousand rates (many multiples beyond display ads), is still outstripping supply.

The Star Tribune’s Griffing puts it this way: “This one is simple. We are selling as much video inventory as we have; 1.2 million plays per month, which is significantly more than the next closest competitor, a local TV station. That said, until we’re doing 10M plays a month, revenue for video will be relatively small.”

In a nutshell, that describes the dilemma. The New York Times recently hired Rebecca Howard, late of AOL/HuffPo, to expand its sold-out video inventory.

For Digital First Media, a pioneer in local news video through the Journal Register Company, new video formats offer premium possibilities. It’s going short, and long. “For short format we just closed a deal with Tout.com, and we are deploying their player in all our sites.” DFM journalists will take videos, through Tout (“The newsonomics of leapfrog news video”) and place them quickly on the sites, says Digital First’s Arturo Duran. “Some of those ‘Touts’ are embedded inside the articles. This is following what the consumers are doing, and the tests by WSJ and BBC. They have created snippets of 15 seconds of information that feed their sites with real time information on events. For end users, it’s a faster, easier way to watch it. There is a big play in the mobile arena, specially smartphones, as end users are watching more video in this [short] format than any other.”

Longer-format video is still in the planning stages for DFM, says Duran, pointing to the potential of live events, interviews with personalities, direct chats with readers, and more. It’s noteworthy that despite the success of video advertising, text-based sites still haven’t mastered greater quality production of greater scale and aren’t well-using third-party, “higher quality” video to satisfy ad needs.

Sales relationships

In an age of self-service, spawned by Google’s paid search products, the sales channel is still multi-tiered. Self-service works profoundly for some products, but telesales and in-person, feet-on-the-ground sales forces are finding new life.

Blame complexity. The choices advertisers now have are endless. Top-tier advertisers are served by such specialized teams as the FT’s “strategic sales” unit. The group works matches the complexity of FT’s analytics-fueled approaches to marketing with advertiser needs.

At the other end of the spectrum, the burgeoning marketing services business (“The newsonomics of selling Main Street”) is bringing these new approaches to smaller, local businesses. The Star Tribune’s Jeff Grilling, a major proponent of the marketing services business, has already learned some lessons from his company’s Radius marketing services foray.

“I’m finding more similarities than less, to our traditional sales approach. I’m finding that we are only as good as our sales people and the relationship they create, and that many small business customers have been approached by some sort of digital solutions vendor in the last few years. Make no mistake, there is no easy money in the SMB digital solutions business — it is very competitive and customers have are typically skeptical because of weak solutions they’ve experienced by other vendors in previous years. So if it’s a quick and easy revenue stream that a media company is looking for, I would look at options other than SMB digital solutions. I do still believe, however, that if your intention is to genuinely help local businesses grow, and you have the stomach for investment, strategy, execution, and patience, SMB digital solutions can be a viable product line.”

That tells you how long a haul this digital transition remains, and how many twists and turns even the innovators must endure.

Photo by NJR ZA used under a Creative Commons license.

May 29 2013

14:00

Scott Lewis: Learning from social platforms to build a better news site

About four years ago, I nervously sat on a roundtable between Madeline Albright and Alberto Ibargüen, CEO of the Knight Foundation. Next to Ibarguen was Marissa Mayer, then an executive at Google. She was co-chair of a commission Knight put together to study the information needs of communities at the height of what seemed like a crisis for news and civics.

During the discussion, Mayer described her vision of a hyper-personalized news stream. News publishers, she said, needed to learn from what social media and YouTube were doing. Here’s how a writeup of the gathering later paraphrased her remarks about a new type of news publishing:

Users could get a constant stream of content based on their interests, on what is good for them or on the popular ethos. They could also introduce serendipity. These streams could be available by subscription. They could also involve hyper-personalized, well-targeted advertising that would be engaging.

While Mayer spoke, Ibarguen leaned over to me. He quietly said I should do that on the Voice of San Diego’s website. He would help if I gave it a go.

And that’s when I got the old same feeling I’ve gotten for years: dread. Once again, I would have to reveal how truly far behind on technology we were. We were almost imposters. Counterparts and leaders in our industry across the nation had called Voice of San Diego digital pioneers. Yet we knew next to nothing about technology and had put a paltry amount of resources into it.

Four years later, Mayer runs Yahoo and now Tumblr. I’d like to think she is heading furiously toward her vision of a hyper-personalized news and content experience. I’d like to think I finally am, too. I just couldn’t afford Tumblr. Or anything.

A mission to educate

Because of how Voice of San Diego started and how we’ve grown, we’ve never built up the kind of capital to make a major investment in technology. If we added resources, it was always writers. Then, the focus was on sustainability, and diversifying the money coming in to make the organization stronger and, frankly, to make payroll.

In fact, resource strain has defined us, and in some ways has been an asset. To do cool things, we needed partners. We created innovative relationships that became national standards. Our paucity obligated us to focus. A focused reporting staff distinguished Voice of San Diego for its investigative work.

Thrift, however, also pushed us to use an affordable content management system to run our website. It was Blox, the main product of the well-run, customer service-oriented TownNews.com in Moline, Ill.

I love TownNews.com. Without TownNews.com, we would not have achieved anything we did. The team there truly made the barrier to entry low and we turned the opportunity it provided us into a local institution. But we were only one of a couple of web-native clients for TownNews.com, which mainly services many hundreds of newspapers. Those newspaper publishers are still focused on one primary mission for their websites: Display daily posts and sell advertising next to them.

That’s not Voice of San Diego’s mission. Our mission is to help people get information. It is an educational mission. That’s why we have the nonprofit status we do.

If your job is to help people get educated, you can’t just display stories. Imagine a university that simply invited students into a room with huge posters and pictures and expected them to find everything they needed. Everywhere I look, news sites remain committed to simply displaying their stories and images. At the same time, social sites keep working on how to serve users.

And we’re watching social media eat news sites’ lunch. We’re gawking at an act of bullying taking place right before our eyes. When newspapers write about Mayer’s dream of well-targeted, engaging advertising and her visions for Tumblr, do they realize that’s money newspapers are not going to get?

Falling short

We’ve fallen many years behind social media platforms in serving users. Some news publishers have ceded the ground completely. They let Facebook run their social layer or rely on YouTube for their video sharing.

I’ve been watching this develop for years. Two years ago, I was positively despondent. I went so far as to dream that Facebook itself would create a content management system for news publishers. I’d be the first to sign up.

How far are we from actual Facebook or Tumblr-based news organization? Are you a news publisher? Ask yourself what your CMS does that Tumblr doesn’t. Mayer’s vision of a hyper-personalized news stream isn’t just something she thinks should happen. It is something that will happen. Are news organizations going to be a part of it?

If so, we have to stop working solely to display our content well and start working to serve our users well. Those are not mutually exclusive, but they are different.

Let me rephrase: If we think our community is going to pay for our services (as many, including Voice of San Diego, The New York Times, and Andrew Sullivan do), then we absolutely have to learn how to serve users.

It doesn’t mean that we compete with social media platforms. That ship has sailed. But social is as much about a way of doing things as it is a technology. Social platforms, for instance, have taught us a few things that users now expect. Here are three:

  • You should expect to be notified if something you “follow” is updated.
  • Anyone should be allowed to submit content. It should be easy to do and its success is dependent on the community.
  • You should be able to relentlessly tailor your feed of information, bringing it closer and closer to what Mayer might call a “hyper-personalized” experience.

So you can see why I was despondent. I was nowhere near being able to be part of this. The best I could hope for was to continue displaying content. Then maybe I could master social media, somehow weaving it all together to serve our users and build a loyal, grateful community.

Making the switch

This is where I was last year when I met Kelly Abbott, who runs Realtidbits, a company that provides the commenting and social layer for sites like ESPN, Cleveland.com, the Irish Times and even Lady Gaga. Abbott went from not knowing about us to one of our most loyal readers and donating members. And then he decided he wanted to help more.

He recommended we switch content management systems. The thought made me nauseous. Anyone who knows CMS transitions knows why. But Abbott persisted. He had the same vision I did and he wanted to tackle it. Voice of San Diego was lucky enough to be a part of a great discussion in this country about the future of local news. We had an obligation to bring our technology up to speed.

Abbott created what he called an “engineer-free zone” for me. We would first solve basic website frustrations I had about mobile, search engine optimization, and commenting. But then we would dream. What would I create if I could?

I wanted to switch from an effort to display content well to one focused on serving users. Sure, our stories, photographs, and images needed to look good but my mission was to get people educated and to raise money to make the service stronger. A local foundation, Price Charities, came aboard to help us with the initiative. Then, we brought along another partner: Idea Melt, a company working to help publishers “imagine and thread beautiful, holistic, and engaging social experiences for your community.” And we chose to switch to WordPress.

Finally, last week we launched. Our stories and images look better. Our search engine indexing is much improved and our mobile experience is improved with a new responsive design. We also added three new features.

  • Notifications: Users can now follow storylines, or “narratives,” on the site. If there’s a new update, they don’t need to search for a section heading, they should see a notification.
  • Peer-to-peer and reader-to-author following: They can also follow individual writers, or even their peers.
  • The Plaza: Here, users can submit text, photos, links or video and their peers can vote on it to buoy it above other submissions. Yes, it’s a lot like Reddit.

All of these features need work and we’re moving furiously on a massive to-do list. But I look at everything with different eyes now. Soon, we’ll begin building our membership system into the site. Our 1,600 members will be able to check their status, learn about events they might want to attend, and get special alerts.

What we have is a new future. We can spend it constantly evolving to serve the community more in line with our mission and our business model.

We’re a long way from the vision Mayer described. But at least we started walking.

Scott Lewis is the CEO of Voice of San Diego. You can reach him at scott.lewis@voiceofsandiego.org or on Twitter at @vosdscott.

May 23 2013

16:33

The newsonomics of value exchange and Google Surveys

whittier-daily-news-google-survey-paywall

What happens when a reader hits the paywall?

Only a small percentage slap their foreheads, say “Why didn’t I subscribe earlier?” and pay up. Most go away; some will come back next month when the meter resets. A few will then subscribe; others just go elsewhere.

So what if there were a way to capture some value from those non-subscribing paywall hitters — people who plainly have some affinity for a certain news site but aren’t willing to pay?

Welcome to the emerging world of value exchange. It’s not a new idea; value exchange has been used in the gaming world for a long time. As the Zyngas have figured out, only a small percentage of people will pay to play games. So they’ve long used interactive ads, quizzes, surveys, and more as ways to wring some revenue out of those non-payers.

It’s a variation on the an old saw that says much of life boils down to two things: money and time. It also brings to mind the classic Jack Benny radio routine, “Your Money or Your Life.” If people won’t pay for media with currency, many are willing to trade their time.

Now the idea is arriving at publishers’ doorsteps. It is being tested mainly, but not exclusively, as a paywall alternative. Yet, as we’ll see it, there may be many other innovative uses of time-based payment.

In part, this is part of the digital generational shift we might call “beyond the banner.” Static, smaller-display advertising is increasingly out of favor, with both prices and clickthrough rates moving deeper into the bargain basement. But marketers want to market, readers want to read, and viewers want to watch, so new methods that combine the marketing of brands and offers and the go-button on media consumption are au courant.

That’s where value exchange fits. Publishers are seeing double-digit, $10-$19 CPM rates from value exchange, and that’s more than many average for their online advertising. Annual revenues in the significant six figures are now flowing in to the companies that have gotten in early on the business.

The big player in publisher-oriented value exchange is Google Consumer Surveys (GCS), a year-old brainchild born out of the Google’s 20-percent-free-time-for-employees program (and first written about here at Nieman Lab). GCS now claims more than 200 publisher partners, including the L.A. Times, Bloomberg, and McClatchy properties. It says it has so far exposed some 500 million survey “prompts” to readers.

GCS will soon have more company in the value exchange game. Companies like Berlin-based SponsorPay, which offers interactive ad experiences in exchange for access mainly to games, is beginning to pursue publisher possibilities, both in Europe and the U.S, where half of its current clients are based. SponsorPay emphasizes mobile and social in its business.

L.A.-based SocialVibe, newly headed by hard-charging CEO Joe Marchese, is an ad tech company. It’s mainly oriented to non-newspaper media, especially TV companies.

How does this value exchange exactly work? Typical is the implementation at one smaller paper, the Whittier Daily News in the L.A. area., one of some 35 Digital First Media papers (both MediaNews and Journal Register brands) that have deployed GCS almost since its inception. Upon reading their 10th, and last, free metered article of the month, readers get a choice: buy a sub for 99 cents for the first month — or take a survey. “Do you own a cat?” for instance.

Publishers get a nickel for each completed response. Response rates tend to fall between 10 and 20 percent. “Completion rates” improve by targeting specific questions to specific audiences. The nickels add up.

For publishers, then, we have a new acronym: PAM, Paywall Alternative Monetization.

Consider the innovation a by-product of the paywall revolution. If you haven’t created a barrier to free access, you have less leverage to force wannabe readers to choose the lesser of two choices to proceed with their reading. Now, publishers can say, pay me for access with money — or with time. The time is short — measured in seconds or maybe minutes, depending on a video’s length or a survey’s questions.

What does the consumer get for answering a question? It varies. Respondents can get as little as a single “free” article, or an hour, or a day of access.

These programs can offer side-by-side offers. For instance, someone like a Press+ (which now powers some 380 newspaper sites) may power a subscription offer in one box, and Google Surveys or a SocialVibe can offer up an alternative in a neighboring one.

Digital First Media, long a public skeptic of paywalls, is using value exchange as an adjunct to its paywalls, many of which were deployed before DFM took over management of the MediaNews papers. While it is using it successfully as a paywall alternative, says Digital First Ventures managing director Arturo Duran, it’s also finding a couple of other ways to wring money out of surveys.

At many of its digital properties, including The Denver Post, its photo- and video-heavy Media Center hub offers Google surveys as speed bumps for continued access. Readers perceive value; enough of them are willing to pay with a few seconds of time to keep getting access to visuals. Similarly, Boston.com’s The Big Picture “news stories in photographs” uses GCS.

This approach, putting up a speed bump — in the form of a survey — instead of paywall explores the nuances of differing consumer valuation of differing parts of news sites. The Texas Tribune has offered a similar approach, having used Google surveys on its extensive data section. How often a survey is deployed can be adjusted by the publisher, working with Google, to maximize both revenue and reduce traffic lost. The search here is for the magic sweet spots.

The Christian Science Monitor is also an earlier surveys adopter. “We don’t have a paywall,” says online director David Clark Scott. “So we tried an experimental speed bump.” Those bumps were installed first on a single section, and now have grown, popping up on much of the site. One CSM twist: If you come to the site directly, you won’t see the surveys. If you come via some search, social, or other referrals, you will.

Digital First is also testing survey deployment for a group notoriously hard for the news industry to monetize: international readers. “We can’t sell [ads] in Kenya, Japan, and India,” says Duran. Instead of fetching bottom-of-the-ad-network prices, as low as 25 cents, surveys can return money in the whole dollars. One lesson so far: “It’s a much better experience than an ad,” for many readers, says Duran.

Publishers are also finding other ways to get readers to “pay.” At the Newton (Iowa) Daily News, the paywall also provides these two alternatives: answer a survey question or a share an article (via Twitter, Facebook, or Google+) in exchange for continued passage.

“It wasn’t about market research at all — it was about trading time for content,” says Paul McDonald, head of Google Consumer Surveys. McDonald, who developed the product along with engineer Brett Slatkin, says they tested out what people would most likely be willing to do, in exchange for some good. They tested a million impressions at The Huffington Post and found that question-answering was the most likable activity. Hence, Google Consumer Surveys.

“Most research is stuck in old ways — paper, email, and phone. It’s a stagnant industry, ” McDonald says. The industry, of course, has responded, offering its own critique of GCS’ rapid-fire — surveys can be commissioned and deployed within a day, with complete results, broken down by customized demographics (at an extra cost to survey buyers) within 48 hours — disruption of the market survey space. Still, industry reaction is more than mixed, with the positives of Google’s new technique winning adherents among bigger brands and smaller businesses. It’s a self-service buying technique, borrowing from Google’s flagship AdWords model.

Interestingly, Google itself is using Surveys to obtain consumer insight. Yes, the company that derives more data from our clicks than anyone still finds asking a human being a question can yield unexpected learning — which, of course, can be combined with clickstream analytics. YouTube is among the many GCS deployers.

It’s a new frontier, and one that I think offers a number of curious potentials.

  • At scale, if there is scale to the business, it’s about significant new sources of revenue.
  • As a paywall alternative, it may be a detour that leads back to the road to subscription. If a reader is engaged enough with a news brand over time — kept engaged in part through value exchange — maybe he or she will eventually subscribe. Does a value exchange-using customer have a higher likelihood of subscribing in the future? It’s too early to know, but we may have soon have sufficient data to see.
  • Value exchange could expand the ability to gain customer data. Each time someone trades some time for reading, she or he could be asked for an additional piece of profiling information. Essentially “registered,” that new customer becomes more targetable for subscription offers or advertising.
  • We can start to widen the idea of trading time for access. Remember the idea of the “reverse paywall,” espoused by then-Washington Post managing editor Raju Narisetti and Jeff Jarvis? Spend enough time with a news product, and get rewarded, they proposed. Value exchange begins to structure that kind of relationship, providing value both to readers and publishers. Rough equalization of value would be a painful process, but it may be doable through much experimentation.
  • Let’s combine two things: the rise of mobile traffic and value exchange. Mobile may not be ad-friendly, but customers might be far more willing to watch a video or touch through a quick questionnaire on a cell phone — and that can ring a different key on the digital cash register. “Mobile is already more diversified,” says SponsorPay CEO Andreas Bodczek, explaining that it is moving beyond gaming companies for value exchange and will soon include publishers.
  • GCS is an easily deployable tool for small- and medium-sized businesses. As such, it could be an interesting add-on for publishers’ emerging marketing services businesses (“The newsonomics of selling Main Street”). That’s a line Google could allow newspaper companies to resell, just as many resell Google paid search.

May 22 2013

15:00

Objectivity and the decades-long shift from “just the facts” to “what does it mean?”

1960S ART

If I had only one short sentence to describe it, I’d say that journalism is factual reports of current events. At least, that’s what I used to say, and I think it’s what most people imagine journalism is. But reports of events have been a shrinking part of American journalism for more than 100 years, as stories have shifted from facts to interpretation.

Interpretation: analysis, explanation, context, or “in-depth” reporting. Journalists are increasingly in the business of supplying meaning and narrative. It no longer makes sense to say that the press only publishes facts.

New research shows this change very clearly. In 1955, stories about events outnumbered other types of front page stories nearly 9 to 1. Now, about half of all stories are something else: a report that tries to explain why, not just what.

rise-of-context-over-events-chart

This chart is from a paper by Katharine Fink and Michael Schudson of Columbia University, which calls these types of stories “contextual journalism.” (The paper includes an extensive and readable history of all sorts of changes in journalism in the 20th century; recommended for news nerds.) The authors sampled front-page articles from The New York Times, The Washington Post, and the Milwaukee Journal Sentinel in five different years from 1955 to 2003, and handcoded each of 1,891 stories into one of four categories:

  • conventional: a simple report of an event which happened in the last 24 hours
  • contextual: a story containing significant analysis, interpretation, or explanation
  • investigative: extensive accountability or “watchdog” reporting
  • social empathy: a story about the lives of people unfamiliar to the reader

Investigative journalism picks up after the 1960s but is still only a small percentage of all front-page stories. Meanwhile, contextual journalism increases from under 10 percent to nearly half of all articles. The loser is classic “straight” news: event-centered, inverted-pyramid, who-what-when-how-but-not-so-much-why stories, which have become steadily less popular. All this in the decades before the modern Internet. In fact, previous work showed that the transition away from events began at the dawn of the 20th century.

Investigative journalism may have pride of place within the mythology of American news, but that’s not really what journalists have been up to, by and large. Instead, newspaper journalists have been producing ever more of a kind a work that is so little discussed it doesn’t really have a name. Fink and Schudson write:

…there is no standard terminology for this kind of journalism. It has been called interpretative reporting, depth reporting, long-form journalism, explanatory reporting, and analytical reporting. In his extensive interviewing of Washington journalists in the late 1970s, Stephen Hess called it ‘social science journalism’, a mode of reporting with ‘the accent on greater interpretation’ and a clear intention of focusing on causes, not on events as such. Although this category is, in quantitative terms, easily the most important change in reporting in the past half century, it is a form of journalism with no settled name and no hallowed, or even standardized, place in journalism’s understanding of its own recent past.

From this historical look, fast forward to the web era. The last several years have seen a broad conversation about “context” in news. From Matt Thompson’s key observation that a series of chronological updates don’t really inform, to Studio 20′s Explainer project, to a whole series of experiments and speculations around story form, context has been a hot topic for those trying to rethink Internet-era journalism.

I believe this type of contextual journalism is important, and I hope we will get better at understanding and teaching it. The Internet has solved the basic distribution of event-based facts in a variety of ways; no one needs a news organization to know what the White House is saying when all press briefings are posted on YouTube. What we do need is someone to tell us what it means. In other words, journalism must move up the information food chain — as, in fact, it has steadily been doing for five decades!

Why does this type of journalism not even have a name?

I have a suspicion. I think part of the problem is the professional code of “objectivity.” This a value system for journalism that has many parts: truth seeking, neutrality, ethics, credibility. But all of these things are different when the journalist’s job moves from describing events to creating interpretations.

There are usually multiple plausible ways to interpret any event, so what are our standards for saying which interpretations are right? Journalism has a long, sorry history of professional pundits whose analyses of politics and economics turn out to be no better than guessing. In concrete fields such as election forecasting, it may later be obvious who was right. In other cases, there may not be a “right” answer in the traditional, positivist sense of science. These are the classic problems of framing: Is a 0.3 percent drop in unemployment “small” or is it “better than expected”? True neutrality becomes impossible in such cases, because if something has been politicized, you’re going to piss someone off no matter how you interpret it. (See also: hostile media effect.) There may not be an objectively correct or currently knowable meaning for any particular set of factual events, but that won’t stop the fighting over the narrative.

This seems to be a tricky place for truth in journalism. Much easier to say that there are objective facts, knowably correct facts, and that that is all journalism reports. The messy complexity of providing real narratives in a real world is much less authoritative ground. Nonetheless, we all crave interpretation along with our facts. Explanation and analysis and storytelling have become prevalent in practice. We as audiences continue to demand certain types of experts, even when we can’t tell if what they’re saying is any good. We demand reasons why, even if there can be no singular truth. We demand narrative.

What this latest research says to me is that journalism has added interpretation to its core practice, but we’re not really talking about it. The profession still operates with a “just the facts, ma’am” disclaimer that no longer describes what it actually does. Perhaps this is part of why media credibility has been falling for decades.

Photo of Sol LeWitt’s “Objectivity” (1962) via AP/National Gallery of Art.

May 15 2013

12:20

The newsonomics of where NewsRight went wrong

newsright-wide

Quietly, very quietly, NewsRight — once touted as the American newspaper industry’s bid to protect its content and make more money from it — has closed its doors.

Yesterday, it conducted a concluding board meeting, aimed at tying up loose ends. That meeting follows the issuing of a put-your-best-face-on-it press release two weeks ago. Though the news has been out there, hardly a whimper was heard.

Why?

Chalk it up, first, to how few people are really still covering the $38.6 billion U.S. newspaper industry. Then add in the fact that the world is changing rapidly. Piracy protection has declined as a top publisher concern. Google’s snippetization of the news universe is bothersome, but less of a central issue. The declining relative value of the desktop web — where NewsRight was primarily aimed — in the mobile age played a part. Non-industry-owned players like NewsCred (“The newsonomics of recycling journalism”) have been born, offering publishers revenue streams similar to those that NewsRight itself was intended to create.

Further, new ways to value news content — through all-access subscriptions and app-based delivery, content marketing, marketing services, innovative niching and more — have all emerged in the last couple of years.

Put a positive spin on it, and the U.S. newspaper industry is looking forward, rather than backward, as it seeks to find new ways to grow reader and ad revenues.

That’s all true. But it’s also instructive to consider the failure of NewsRight.

It’s easy to deride it as NewsWrong. It’s one of those enterprises that may just have been born under a bad sign. Instead of the stars converging, they collided.

NewsRight emerged as an Associated Press incubator project. If you recall the old AP News Registry and its “beacon,” NewsRight became its next iteration. It was intended to track news content as it traversed the web, detecting piracy along the way (“Remember the beacon”). It was an ambitious databasing project, at its peak taking in feeds from more than 900 news sites. The idea: create the largest database of current news content in the country, both categorized by topic and increasingly trackable as it was used (or misused) on the web.

AP initially incentivized member newspapers to contribute to the News Registry by discounting some of their annual fees. Then a bigger initiative emerged, first called the News Licensing Group (NLG). The strategy: harness the power of the growing registry to better monetize newspaper content through smart licensing.

NLG grew into a separate company, with AP contributing the registry’s intellectual property and becoming one of 29 partners. The other 28: U.S. daily newspaper companies and the leading European newspaper and magazine publisher Axel Springer. Those partners collectively committed more than $20 million — though they ended up spending only something more than half of that before locking up the premises.

Renamed NewsRight, it was an industry consortium, and here a truism applies: It’s tougher for a consortium — as much aimed at defense than offense — to innovate and adjust quickly. Or, to put it in vaudevillian terms: Dying is easy — making decisions among 29 newspaper companies can be torture.

It formally launched just more than a year ago, in January 2012 (“NewsRight’s potential: New content packages, niche audiences, and revenue”), and the issues surfaced immediately. Let’s count the top three:

  • Its strategy was muddled. Was it primarily a content-protection play, bent on challenging piracy and misuse? Or was it a way to license one of the largest collections of categorized news content? Which way did it want to go? Instead of deciding between the two, it straddled both.
  • In May 2011, seven months before the launch, the board had picked TV veteran David Westin as its first CEO. Formerly head of ABC News, he seemed an odd fit from the beginning. A TV guy in a text world. An analog guy in a digital world. Then friction between Westin and those who had hired him — including then-AP CEO Tom Curley — only complicated the strategic indecision. Westin was let go in July, which I noted then, was the beginning of the end.
  • Publishers’ own interests were too tough to balance with the common good. Though both The New York Times Company and AP were owners, it was problematic to include feeds of the Times and AP in the main NewsRight “catalog.” The partners tried to find prices suitable for the high-value national content (including the Times and AP) and the somewhat lesser-valued regional content, but that exercise proved difficult, the difficulty of execution exacerbated by anti-trust laws. Potential customers, of course, wanted the Times and AP as part of any deal, so dealmaking was hampered.

Further, all publishers take in steady revenue streams — collectively in the tens of millions — from enterprise licensors, like LexisNexis, Factiva, and Thomson Reuters, as well as education and copyright markets. NewsRight’s owners (the newspaper companies) didn’t want NewsRight to get in the way of those revenue streams — and those were the only licensing streams that had proven lucrative over time.

Long story short, NewsRight was hobbled from the beginning, and in its brief life, was able to announce only two significant customer, Moreover and Cision, and several smaller ones.

How could it have been so difficult?

It’s understandable on one level. Publishers have seethed with rage as they’ve seen their substantial investment in newsrooms harvested — for nothing — by many aggregators from Google to the tens of thousands of websites that actually steal full-text content. Those sites all monetize the content with advertising, and, save a few licensing agreements (notably with AP itself), they share little in the way of ad revenue.

But rage — whether seething or public — isn’t a business model.

Anti-piracy, itself, has also proven not to be much of a business model. Witness the tribulations of Attributor, an AP-invested-in content-tracking service that used some pretty good technology to track pirated content. It couldn’t get the big ad providers to act on piracy, though. Last year, after pointing its business in the direction of book industry digital rights management, it was sold for a meager $5.6 million to Digimarc.

So if anti-piracy couldn’t wasn’t much of a business model, then the question turned to who would pay to license NewsRight’s feed of all that content, or subsets of it?

Given that owner-publishers wanted to protect their existing licensing streams, NewsRight turned its sights to an area that had not well-monetized: media monitoring.

Media monitoring is a storied field. When I did content syndication for Knight Ridder at the turn of the century, I was lucky enough to visit Burrelles (now BurrellesLuce) in Livingston, New Jersey. In addition to a great auto tour of Tony Soprano country, I got to visit the company in the midst of transition.

In one office, older men with actual green eyeshades meticulously clipped periodicals (with scissors), monitoring company mentions in the press. The company then took the clips and mailed them. That’s a business that sustained many a press agent for many a decade: “Look, see the press we got ya!”

In Burrelles’ back rooms, the new digital monitoring of press mention was beginning to take form. Today, media monitoring is a good, if mature, industry segment, dominated by companies like Cision, BurrellesLuce, and Vocus, as social media monitoring and sentiment analysis both widen and complicate the field. Figure there are more than a hundred media monitoring companies of note.

Yet even within the relatively slim segment of the media monitoring space, NewsRight couldn’t get enough traction fast enough. Its ability to grow revenues there — and then to pivot into newer areas like mobile aggregation and content marketing — ran into the frustrations of the owner-newspapers. So they pulled the plug, spending less than they had actually committed. They decided to cut their losses, and move on.

Moving on meant making NewsRight’s last deal. The company — which has let go its fewer than 10 employees — announced that it had “joined forces” with BurrellesLuce and Moreover. It’s a face-saver — and maybe more.

Those two companies will try to extend media monitoring contracts for newspaper companies. BurrellesLuce (handling licensing and aggregation) and Moreover (handling billing and tracking) will make content available under the NewsRight name. The partnership’s new CAP (Compliant Article Program) seeks to further contracting for digital media monitoring rights, a murky legal area. If CAP works, publishers, Moreover, and BurrellesLuce will share in the new revenue.

What about NewsRight’s anti-piracy mandate? That advocacy position transitions over to the Newspaper Association of America.

NAA is itself in the process of being restyled into a new industry hub (with its merger and more) under new CEO Caroline Little. “As both guardian and evangelist for the newspaper industry, the NAA feels a tremendous responsibility to protect original content generated by its members,” noted Little in the NewsRight release.

What about the 1,000-title content database, the former AP registry that had formed the nucleus of NewsRight? It’s in limbo, and isn’t part of the BurrellesLuce/Moreover turnover. Its categorization technology has had stumbles and overall the system needs an upgrade.

There’s a big irony here.

In 2013, we’re seeing more innovative use of news content than we have in a long time. From NewsCred’s innovative aggregation model to Flipboard’s DIY news magazines, from new content marketing initiatives at The New York Times, Washington Post, Buzzfeed, and Forbes to regional agency businesses like The Dallas Morning News’ Speakeasy, there are many new ways news content is being monetized.

We’re really in the midst of a new content re-evaluation. No one makes the mistake this time around of calling news content king, but its value is being reproven amid these fledgling strategies.

Maybe the advent of a NewsCred — which plainly better understood and better built technology to value a new kind of content aggregation — makes NewsRight redundant. That’s in a sense what the partners decided: let the staffs of BurrellesLuce and Moreover and smarts of the NewsCreds make sense of whatever newer licensing markets are out there. Let them give the would-be buyers what they want: a licensing process to be as simple as it can be. One-stop, one-click, or as close as you can manage to that. While the disbanding of NewsRight seems to take the news industry in the opposite, more atomized, direction, in one way, it may be the third-party players who succeed here.

So is it that NewsRight is ending with a whimper, or maybe a sigh of relief? Both, plainly. It’s telling that no one at NewsRight was either willing or able to talk about the shutdown.

Thumbs down to content consortia. Thumbs up to letting the freer market of entrepreneurs make sense of the content landscape, with publishers getting paid something for what the companies still know how to do: produce highly valued content.

May 09 2013

14:54

The newsonomics of influentials, from D.C. to Singapore to Raleigh

singapore-skyline-cc

It’s a season of new product launches, but you have to roam around the country and the world to find them. You have to look for the niches they’re trying to serve. These launches tell us a lot about the emerging digital news economy and the new building blocks that form its foundation.

Our journey takes us from Washington, D.C. to Singapore to Raleigh and back again to D.C. Publishers — and broadcasters — are basing these new businesses on a set of surprisingly similar features.

In D.C., Atlantic Media — in the beehive of activity that is its headquarters in the Watergate Building, overlooking the Potomac — is putting the finishing touches on its latest launch: Defense One. The new digital-just-about-only product will debut this summer, Atlantic Media president Justin Smith told me last week.

Defense One aims to disrupt a set of incumbent defense-oriented publications: Jane’s, Gannett-owned Defense News, and Breaking Defense, among them. Atlantic Media believes it’s found an opening — a wide one — to exploit.

“We saw a gap,” says Tim Hartman, president of the Government Executive Media Group, the Atlantic Media brand under which Defense One will take flight. The company believes It may offer a market as much as three to seven times greater than Government Executive itself, a 40-year-old title that has largely made the transition to digital.

Hartman says the understanding of the opportunity popped out of strategic planning that began two and a half years ago. Quartz, the business site launched last fall (“The Newsonomics of Quartz’ business launch”) was the first new product to come out of the work. Defense One is the second. A third one will likely launch within the next two years, says Hartman.

If analytics derived from Government Executive’s audience and usage provided the notion, in-depth interviews with 40 defense sector players filled in a roadmap. The company conducted initial hours-long interviews with them, and then returned to a number of them for second or third talks as plans solidified.

Over time, Hartman says Defense One’s staff size will be similar to that of Quartz — about 18-20 in content creation and production. While the company is looking for a top editor, Hartman says its editorial mandate is clear: “an orientation for the future.” That’s what industry leaders want, a sense of what is more likely than not to happen tomorrow, and why.

Much of Atlantic Media’s sales, marketing, analytics and financial functions can be leveraged to support the new product, minimizing what would be similar expense for a one-off start-up. Also like Quartz, it is going free, looking to marketers to make it profitable. It isn’t just an ad play. Rather, it looks to an emerging model of higher-end sponsorship and content marketing — with the important adjunct of events marketing — to propel it forward.

Its offer to marketers will follow the playbook of what Atlantic Media’s half-dozen other publications (The Atlantic, The Atlantic Wire, The Atlantic Cities, Quartz, National Journal, Government Executive) now offers. It’s on-site sponsorship/share-of-voice placement, content marketing, and marketing services aid and placements and sponsorship of physical events.

That events business rides right alongside inclusion on its websites, providing marketers with a brand association that fluidly moves from online to off and back. It’s a strategy now well-employed in D.C. — also exploited by Politico and The Washington Post — and among events leaders like The Texas Tribune. Atlantic Media has turned events into a potent, higher-margin revenue source, now accounting for around 16 percent of revenues.

Even before Defense One’s product launch, it is well along in lining up speakers for its first event in November.

Atlantic Media targets influentials. It is a term you hear often in conversation with the company’s president, Justin Smith. Quartz targets business influentials. Government Executive and National Journal target government influentials. Now Defense One targets national security influentials. It’s a spin on the Meredith marketing positioning I noted a couple of weeks ago, as that company morphed from a women’s magazine company to a company expert at marketing to women.

“It’s really a B2B model,” says Smith, explaining in a few words much of Atlantic Media owner and chairman David Bradley’s plan to double company revenues and profits within five years. The best B2B companies deeply know their audiences and then plan numerous touchpoints to yield revenue. If they are number one in their field, they reap the benefits.

There are a lot of influentials in this world. The trick is in picking the right targets.

Seeking influentials across Asia

That’s who HT Media, publisher of a leading national Indian daily (the Hindustan Times) is targeting in Singapore. Mint is HT Media’s business newspaper, now six years old and published in eight Indian cities. The paper was cofounded by Raju Narisetti, who has since done stints at The Washington Post and The Wall Street Journal and was recently named senior vice president and deputy head of strategy for the emerging, separate News Corp.

For Mint and its digital Livemint, a highly readable, authoritative business news source, finding growth included finding influentials abroad and expanding upon its mission to be “a fair and clear-minded chronicler of the Indian dream.”

One month ago, it launched MintAsia in Singapore. Its targets: the large Indian expat business community. There are 4,500 Indian-owned companies in Singapore, which is fast becoming the multinational business center for its region. MintAsia is also aimed at those multinationals, for whom better knowledge of India, its economy, and its policies are central to their own growth plans.

The new MintAsia is both a weekly newspaper published on Fridays and a website. About a quarter of the weekly content is originated for the Singapore market — largely produced by Mint’s India-based staff of 140, with stories like “Top 10 Indian Health Startups” targeted for the strong health care business sector of Singapore. The rest of MintAsia’s content is chosen from Mint’s stream of web-first and daily print content. HT is sending a former head of ad sales to head up the MintAsia operation, and has employed a handful of Singapore locals to deal with circulation and logistics.

“The whole idea is to leverage our strength,” Sukumar Ranganathan, Mint’s editor, told me in Delhi. “For Singapore, it’s marginal costing.”

So, its costs are small, and its potential gain — in revenue, in branding, and in influence — is large.

Its business model is au courant. MintAsia is an all-access, print + digital product. It’s printing 3,000 copies to start, with a goal of reaching 10,000 within a few years. By branching out of its home market, it is not only testing a pay strategy; it’s a pay strategy that greatly exceeds what it can charge in its home market. India is just about the only major nation not suffering from the worldwide newspaper turndown. Advertising is growing robustly, and circulation is holding as well. That’s what adding millions of literate, better educated, striving-into-the-middle-class citizens a year will do for you.

But Indian dailies are among the cheapest in the world. Mint daily costs four rupees per copy — seven cents American! An annual subscription will set you back 500 rupees, or about $9.26.

In Singapore, Mint Asia costs six Singapore dollars, or US$4.87. Buy a year of print with access to the LiveMintAsia, and the price is 180 Singapore dollars or US$146. (Its paywall is now a hard one, but will go metered, powered by Press+, next month).

So we see minimal costs, good ramping all-access circulation money, and two other familiar streams of revenue: advertising targeting the financial and other needs of Singapore-based Indian influentials and events. MintAsia’s formal launch comes on May 28, when it hosts a conference in Singapore that includes the head of the Indian equivalent of the U.S. Securities and Exchange Commission. That event already has two paying sponsors; more sponsored events are in the works.

As with Atlantic Media, the niche strategy is more than a one-off. Hong Kong may be the next logical market, with other Asian markets farther down the list. If Mint moves into those markets, it will likely proceed much as it has in Singapore — checking its data for critical masses of likely readers and then following up with in-person visits to new cities, talking to to the influentials about influential publication potential.

Seeking influentials in North Carolina

Back in Raleigh, North Carolina, the WRAL’s TechWire product isn’t new, but its paywall is. It is certainly one of the first paywalls put up by a broadcaster, though in this case, Research Triangle (Raleigh/Durham/Chapel Hill) digital market leader WRAL isn’t putting one up on its main site — it erected its paywall on its technology vertical about a month ago. It follows the paywall paradigm, with a couple of twists.

TechWire charges $24.99 for an Insider annual membership, which includes numerous industry events and other discounts. Until May 16, the annual price is discounted by half. It also offers monthly passes for $2.49 and day passes for 99 cents.

So far, WRAL general manager John Conway says he happy with the early results. Most subscribers are opting for the annual plan; unique visitor and pageview loss has been minimal for the site that’s recently averaged 125,000 unique visitors a month, the majority of whom are local. His goal: get 5-10 percent of those uniques paying for something.

The paywall is powered by Amsterdam-based Cleeng, a paywall provider whose clients include Epicurious, DailyMotion, and now, TEDMED, and which offers an architecture that works well with video content access control.

TechWire offers a hard paywall, with first paragraph offering for free on staff-written stories. (AP, Bloomberg and other non-local content makes up 50-60 percent of the site, and that remains accessible.)

Seeking influentials in D.C. politics

Up the road and back in D.C., Politico continues to build on its impressive Pro line of products (“Politico Pro grows into 1,000 organizations, moves into print”) — following the influential methodology. Roy Schwartz, the company’s chief revenue officer, now counts seven Pro products. Three of these — finance, tax and, interestingly, defense — debuted last September. They followed energy, health care, and technology, all launched in February, 2011, and transportation, which followed a year later.

These Pro products, too, borrow from the same marketplace understandings that drive Atlantic Media and Mint. In Politico’s case, it’s working richer veins of revenue. Politico Pro now claims more than 7,000 users, across more than 1,000 organizations.

Politico sells institutional subscriptions, on a largely per-seat basis, to groups within each niche that want an insider’s time and knowledgable view. Politico takes in mid-four digits a year for each subscriber, with pricing variable by niche and what the market will bear. It also sells sponsorships into the Pro products, the same kinds of marketing that funds its free Politico site. Then those sponsors’ reach is further extended — at an additional price, of course — into events. Last year, Politico hosted 90 events. On its roadmap, it makes sure that each of the Pro verticals will host an event a quarter. It’s sponsorship-fueled, value-added-to-membership relationship marketing.

Schwartz says the events are free to attendees and strive to match the allure of the Pro coverage. “It’s about convening thought leadership. What we find interesting, our audience finds interesting.”

So what do you do when you’ve bound together targetable groups of influentials? You put together an Influencer Upfront. On Wednesday, Politico hosted its first Influencer Upfront.

The upfront was a day of presentations, editorial and advertising, to significant advertisers. Politico is borrowing a page from the long-standing TV network upfronts, events held to showcase shows and sell fall ad campaigns in the spring. Digital upfronts are becoming all the rage, as this spring saw several in New York City’s, including one sponsored by Digiday.

Lessons learned

It’s no accident that each of these four newer products all touch business audiences and markets. The truism hold: It’s easiest to make money where money is changing hands. Make yourself an effective intermediary, and you can grab a little of it as it moves. It’s easiest to see these opportunities, clearly, in and around business. It’s an in-the-know kind of market, and it’s one — because of scale — that national publishers are now tending to exploit first.

Can it work regionally? Can regional newspapers find big enough niches to replicate this model? If I were a regional publisher, I’d be doing a whiteboard exercise bouncing off these emerging influentials models.

Among these four newer products, we can see the emerging new rules of publishing creation. Among them:

  • Critical mass enables growth. Niche product creation that builds on existing company infrastructure, knowledge and marketplace learnings is the cost-effective way to go. Each of these companies adapted what they learned to these new launches. Politico’s seven Pro products illustrate this most clearly; Atlantic Media’s cousin-by-cousin launches put a parallel spin on the notion. (Intriguing side note: Politico owner Robert Allbritton put his once-core TV station holdings on the market last week, saying he wanted to further invest in and around Politico. The “around” could include replicating the Politico business model in a new coverage niche.) This is a new power of incumbency. It’s not the ownership of a printing press, as it was for newspaper publishers in the old days.
  • Analytics leads the way; in-person follow-up seal the deal. You may have an intuition about a new market, but checking it out — doubly — is essential.
  • Help your audience deal with future and present shock. Covering a sector is one thing; covering in a way that embraces — and tries bring a bit of order to — the multiple change issues of any audience is another. That’s an aspirational and competitive editorial positioning, but we can see ongoing examples of it in the work that Mint, Quartz, and Politico already produce.
  • Events are emerging as both a vital new revenue source and an almost counterintuitive high-touch part of the mostly digital business mix. HuffPost Live, Google Hangouts, and assorted other ways to assemble online community are great experiments and promising tools, but old-fashioned in-person events are gaining strength as we all go more digital. That’s an important learning about the value of relationship, and how to reinforce it, even in the age of MOOCs.
  • It’s not print or digital. It’s digital and print, suited to audience reading habits — which of course are a moving target. Influentials, like all of us, toggle between the two.

Photo of Singapore skyline by Thibault Houspic used under a Creative Commons license.

April 04 2013

16:58

Jeff Israely: Don’t you call me subsidized — people are paying for news

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Editor’s Note: Jeff Israely, a former Time magazine foreign correspondent in Europe, has launched a news startup called Worldcrunch. For the past three years, he’s been describing and commenting on the process here at Nieman Lab. Read his past installments here.

Three years ago, when I was taking my first baby steps from reporter to would-be newsbiz guy, the idea of making people pay for journalism online was all but dead and buried. Various experiments had failed over the years — freemium, premium, micropayments? Nada. Even as digital ad rates were already beginning to plummet, “free” was it: what the readers wanted, what the writers wanted, and even reputedly what the information itself wanted to be. News companies big and small were left to figure out how to develop their businesses accordingly.

Alongside this reality was an idea taking root that, truth be told, no one had ever really paid for news. Even back in the pre-Internet days, news had always been paid by someone else than the person actually consuming it. Whether advertisers, public funding sources, the draw of popular crossword puzzles and movie listings, or maybe just a truckload of cash from a billionaire — there was always someone or something else footing the bill for the poor slugs on the city hall beat or the over-fed foreign bureau.

News, we were told, has always been subsidized. Yes, that was (and still is) the word, the meme, the received wisdom and proverbial final nail for anyone who was still dreaming that paid models can give new life to news online.

With the help of his students and readers, NYU journalism professor and new media sage Jay Rosen compiled a running list of all the sources of news subsidies. This wasn’t just about whether or not some big news brand should or shouldn’t put up a paywall — the fact that news had always been “subsidized” was fundamental to understanding our work and our industry as we moved deeper into a disaggregated digital world of information production and consumption. Each individual piece of content could no longer rest on its laurels or flaunt its importance — the emperor was naked and the sports columnists and classifieds weren’t gonna be picking up the tab any longer.

I understood the point, I told myself, but was still puzzled by the argument — maybe even slightly offended by the word choice. After 18 years of earning what I thought had been honest paychecks, I was now being told I’d been “subsidized” all along. Hmmm…doesn’t sound so good. Like something Mitt Romney would say about welfare mothers.

But still new to the future-of-news debate, who was I to question? Looking around, virtually nobody was paying (or charging) for digital news, the old print model was dying, foreign bureaus were shuttering…and well, Jay Rosen was a pretty smart dude.

So, quietly, I accepted this foundational new media fact…embraced the meme. One late night I even sent in my own contribution to the running online list of subsidies, pointing out how a journalist about to launch a news startup might be subsidized by his wife’s good job in the public sector.

Though that last part was true, turns out the rest was not. The irony is that we needed to see people coughing up hard cash for digital content to remind ourselves that we have in fact been paying for news all along. Of course, we pay for other stuff, and every reader has his own mix of reasons for being there — but if there were no news, there’d be no there there — and ultimately, nothing to sell.

Whatever else it may offer, from wherever else the revenue may flow, The Dallas Morning News cannot exist — cannot be sold to readers or advertisers — if it doesn’t provide News about Dallas each Morning. You may declare that you “love Mario’s Place for the cannoli, but you wouldn’t go there if they didn’t also have good pasta and a nice wine list. It’s dinner, in a restaurant — not a pastry shop.

None of this is to minimize the scale of change in how we produce and distribute and consume news, or the challenge for the Dallas Morning News to reinvent both the menu and economics of the restaurant. But from where I sit in Paris, reliable daily (and hourly!) meals are still its best hope.

As always, it’s both more and less than a question of paywall or no paywall. Anyone charging for news must understand how to maximize the free digital circulation of information. BuzzFeed is not investing in top-shelf journalists because it wants to subsidize anything. Even Google, in the deal it recently struck with the French government to set up a fund for established news brands, acknowledges the value of professional journalistic enterprises. Of course, some might call that a subsidy, just as others in the newspaper industry have long accused Google of being subsidized by the news business. But both sides in this fight lose the forest for the trees.

More useful is to focus on the information ecosystem, a buzzword of its own from three years ago that I still think about all the time. Lots of people arrive at The Dallas Morning News or The New York Times or our little global startup thanks to Google. And though a relatively small portion of Google’s overall business, the traffic that comes from people who went online looking for news and journalism has the kind of value that you can neither measure, nor create any other way. Even such operations as the news services of Thomson-Reuters and Bloomberg, which in pure numbers are most surely fed (subsidized!) by the financial services arms of the parent companies, are nevertheless so “baked into” and integral to the overall operation that it is difficult to separate out the precise source of value for the brand and its various products.

And yet, even with the initial modest success of online subscriptions, the “news must always be subsidized” concept keeps popping up in influential places from smart people, often cited as the starting point for understanding where the industry is going. David Carr even used it recently to make the case for a paid model. Again, I think I know what he’s saying — but subsidy is not what we should call it. It’s the wrong word, an insidious word and a false premise. It’s also a recipe for defeat.

For those who think there’s something to be preserved in the professional production of journalism, who are betting on the evolution not annihilation of the news industry, there are some recent signs for cautious optimism. That people are paying directly for news is not just a welcome new revenue stream, but a confirmation that there is real hard value in our industry’s core product. It is by no means the end-all solution — but perhaps a new starting point.

Okay, enough pontificating — back to my day job: PLOTTING!

This post is meant to be the last in a three-part mini series on how a digital news startup addresses some of the big either-or choices. We’ve gone through B2B vs. B2C and quantity vs. quality. Here, it’s paid vs. free — and as you may have guessed, the answer for us is a resounding both!

Even after we knew we would be implementing a payment system, we never stopped obsessing over how to best live in the free space — how to make our stuff circulate, how to give it away. Needless to say, it is a learning experience…and a moving target. It’s hard to imagine a day when this won’t be amongst our top two or three priorities as a company. The open Internet is here to stay, and it will be the axis for most of the marketing and circulation, customer relations — not to mention the place where much of the actual journalistic production will happen.

There may be a few models out there — like the French current affairs site Mediapart — where a pure all-or-nothing offer can work. But right now, at least, it looks like you pass up too many opportunities in the free space when the wall is tall and thick.

Like much bigger players, we have opted for a metered model, which allows you to be both a free and paid site at the same time and to adjust the dial as you see fit. Powered by Tinypass (the same folk bringing Andrew Sullivan across the paid-for threshold), we have just recently launched our version.

Of course, a young startup’s approach to paid content will necessarily be different than both what Sullivan and the large news organizations are doing. They’re all busy calculating how many of their loyal, longtime readers will commit to a subscription. We’re still very much at the beginning of introducing ourselves to the world. Thus the meter can work for us to let people discover our product, and build our subscription base in step with a growth in overall audience. To launch, we have turned our meter on at 15 stories a month. Needless to say, we’ll monitor it closely.

But perhaps more interesting for us in the short term is that a paid system can help support other revenue streams beyond the direct paying individual. It’s useful for us as we begin a B2B business with the New York Times Syndicate. There is also the potential, as demonstrated by the Financial Times, of selling bundled access directly to institutions. Hopefully, the general news sector won’t fall into the same old trap of saying only the economic press can explore these kinds of paid content opportunities!

Walls worked in the past, and they’re showing signs of working now. They used to be fixed and impermeable and even occasionally monopolistic; now they’re retractable and porous — and forced to compete, compete, compete. Not only does The New York Times allow for 10 articles a month, it also can lift the wall when a hurricane strikes. One can imagine The Washington Post already asking itself if they will do something similar for the mid-term elections. (Side note: in these cases, news outlets usually present the temporary lifting of its paywall as a public service. Of course, it’s fundamentally a business decision — both in the immediate traffic surges, and in the long-term loyalty earned by presenting it as a public service. Ours is an industry full of wicked contradictions!)

Just as important as the cash, the walls also help rebuild lasting relationships with the readers who pay to be on the inside. If I’ve paid for something, if I’ve committed to it, I will use it more — and value it more. And that will make me more valuable as a customer. (This is why “subsidy” is also the wrong word for advertising.)

Ultimately, the real long play of paid-content strategies is that they may actually help change people’s news consumption habits. Together with lean-back tablet devices and a more general information fatigue, paywalls might help swing the pendulum back to both fewer clicks and fewer sources in a daily news diet.

Or maybe not! Part will depend on how the information is produced, filtered and distributed; can newspapers transform themselves into news portals? Will the Nate Silver free-agent “hosting” model expand? Will different sources be bundled together, à la cable TV? It will also depend on how the Facebook generation changes or doesn’t change once they have careers, kids, and homes of their own — not to mention what the Facebook/Google/Apples of the world themselves have in store for us.

It may seem like a contradiction, but a news organization must know how to simultaneously do all it can to keep people’s attention locked on its wares, while also being equipped to move in the open Internet’s constant comings and goings. For the kind of startup we are, there’s an extra potential in finding new network effects amongst both big and small outlets: It’s the ecosystem, baby! In the meantime, we’ll do our best each day to keep turning out fresh plates of pasta — and some cannoli too.

Photo by Bradley Stabler used under a Creative Commons license.

April 03 2013

18:50

The newsonomics of the Orange County Register’s contrarian paywall

angel-stadium-cc

Get your hot dogs. Get your beer. Get your newspaper. Step right up.

As Opening Day comes to the Big A in Anaheim on Tuesday, you can now expect to hear that barker’s call in Orange County. In what is fast becoming one of the most-watched experiments in newspapering (to use a quaint term), the Orange County Register innovates in a new way, aligning one hallowed American pastime with another.

Hundreds of newspapers have announced paywalls, as the Register is doing and a smaller subset is embracing “membership” as a way of redefining subscription. The Register, though, is making membership more meaningful with a just-completed deal with the many-named Los Angeles Angels of Anaheim. Starting tomorrow, “Register Connect” members — that is, seven-day subscribers — get a perk unlike any other in the newspaper world: free tickets to Angels games. That may be an actual game-changer — giving new meaning to the idea of “all-access.”

The new offer is just part of the Register’s aggressive, contrarian approach to paywalls, which is a central piece of its readers-first, invest-in-content staffing strategy (“The newsonomics of Aaron Kushner’s virtuous circles”). It’s a strategy that reaches beyond the groupthink that has long characterized much of the industry. Let’s look at its approach, including the ticket giveaway — its pros and the cons, its potential brilliance and what could dull the strategy. Let’s look at the newsonomics of the Register’s new paywall, one run by younger, sure-of-themselves non-newspaper people. Let’s also consider how much the Register’s new approach reminds us how first-generation, how 1.0 the current pay systems in fact are. Over 2013, we’ll see twists, turns, and nuances, as even paywall stalwarts like the Columbus Dispatch and Dallas Morning News tell us about previously unannounced changes in their own paywalls.

Aaron Kushner and Eric Spitz, CEO and president respectively of Freedom Communications, which they bought out of bankruptcy last year, have diverse business backgrounds. You’ll find a smattering of greeting cards, beer, unfast food, horse-racing technology, and moving services on their resumes, and they bring that experience to the problems and opportunities of the modern newspaper company. You get the sense that they love to zag when others are zigging — which helps explain their pride in announcing their paywall.

“We’re doing four things that are totally unique,” Spitz told me this week. Those four are interesting, certainly, but they bury the Register paywall lead. The Register is doing two things that others have done, but are doing differently — putting up a hard paywall and making much more of the membership idea than peer pioneers have yet done with it. First, though, a quick run-through of Spitz’s four unique forays:

1. A paywall without discounted digital access

The Register will charge one price — a dollar a day or $365 a year. Get digital or print or both. “We are truly agnostic. It’s our job to get you the content anyway you want. It’s kind of like HBO GO.” Why one price? “You are not paying for the paper — you are paying for the content.”

Most papers charge less for digital-only access, often 50 to 70 percent of the print price. Many have found that non-print readers won’t pay print-like prices for digital-only; some, like The Dallas Morning News, have actually lowered their digital-only prices, as they’ve found low incidence of fully paid print readers “trading down” to digital-only.

In the abstract, the Register’s reasoning makes sense. In practice, expect that few non-print readers will fork over that much money, initially, for tablet and smartphone reading. In the long term, of course, publishers want readers to pay for the content, not the package. In the long term — with production, printing, and distribution costs largely gone and subscription rates close to what they were in print — news publishers would be greatly more profitable. That’s the long term, though, and the path there is foggy. Yes, The Wall Street Journal can charge 83 percent of its print price for digital, and the Financial Times 87 percent (or 113 percent), but those are business-specific anomalies in the print trade.

2. Time-based digital access

If you pay $2.40 for Sunday print only, you get digital access only on Sundays. The Register, true to its agnosticism, is literally matching print and digital access. (You can also buy Thursday-Sunday for $5.60 a week, with matching digital access.) It’s agnostic — and it’s literal. One could argue that The New York Times’ scheme — cheaper for Sunday print + digital access seven days a week — better meets its business needs and consumer psychology. But the Register’s approach is a great test to watch.

3. Day passes

For any 24-hour period, you can pay $2 for access — access that gets you, in effect, two days worth of Register stories. The daypass idea is one that hasn’t much been tested in the U.S., with the Memphis Commercial Appeal trying but apparently dropping it. TinyPass, the company powering Andrew Sullivan’s Dish paywall, says daily access is more popular overseas and for video, selling live events and sports videos. The idea: sampling. Potential upside: day-passers move to full subscriptions. Potential downside: Comparing a $365 commitment to a $2 commitment, many readers opt into day passes.

4. All archives open to the public

The last 90 days of the Register’s content is considered current and covered by the paywall. Any content older than that is open to the full public. Why? “It’s the current content that readers most value,” says Spitz. Undoubtedly true, but it seems to me that archives — a continually undervalued asset by most news companies — have more value that can be exploited.

But it’s the membership program — one that’s not unique in the industry — that will catch the headlines.

Most newspaper membership programs offer free ebooks (The Boston Globe), coupons (The Day in New London, CT) and retail discounts (Los Angeles Times). Some invite members to community events or to visit the editorial staff. The Register wants to go bigger. It approached the Angels, located 10 minutes away, with the idea of better using the empty seats the Angels couldn’t sell. The Angels found themselves sitting on almost 600,000 empty seats last year over 81 games. Put another 7,000 butts in those seats each night, even without getting paid for the ticket, and the club is pulling in another 10 bucks or so on Chronic Tacos, garlic fries, and overpriced Corona.

The perk is available on a first-signed-up, first-served basis to the Register’s 124,000 seven-day subscribers, beginning 72 hours before each game. Forty-eight hours before the game, the Angels, through Ticketmaster, release available seats. Register Connect buyers can nab four tickets, for a service charge of $5. Within a year — subject to going to the end of the electronic queue after landing some tickets — fans can claim as many as 96 tickets a season.

“We’re looking to execute at scale,” Spitz explains, noting that lots of membership perks are good, but few are likely to move the needle of buying and retention. The Angels’ ticket program is that touch of likely brilliance. It is a scale play — and one I’ve been looking for as I’ve heard about the various membership initiatives rolled out over the last two years.

Further, it acts on the power of media. The Register, though shrunken in circulation like the rest of its metro brethren, still throws a lot of weight around town. It retains the power to pull off a big deal with the local baseball franchise — and one that comes at relatively low cost to the newspaper. (The high value/low cost here parallels the Register’s precedent-setting “golden envelope” program, in which it gave those same seven-day subscribers a $100 “check” for “free advertising,” a check they could endorse over to their favorite charity. That program will now be offered “at least twice a year” as well.) A couple of decades after airlines embraced variable pricing — selling off commodities whose value was destroyed by time — the practice is getting to be standard in lots of industries. Newspapers, with their market power, then are well positioned to create a variable pricing marketplace — with their member-subscribers at the center — and the Angels deal leads the way there.

“For your $400 a year, we’re going to deliver you far more than $400 in value,” says Spitz, underlining the allure of “membership.” To make membership more than a card-in-the-wallet afterthought, Spitz says Register Connect will include a key fob — a literal “key to the city” — to facilitate greater use.

Finally, there’s that hard paywall. It’s the biggest enigma of the Register plan. Come to the Register site, and you can get any non-staff-written story — wires and syndicated content, which makes up 40 percent of the content overall — but you won’t get more than “a headline and a sentence” of local stories.

It’s been the meter — with its flexibility and open site sensibility — that has fueled the paywall movement. Yet the Register, two years into modern paywall history, is going with the hard wall. Why?

Spitz says the Register wants to be clear that paying customers get everything — all access on all devices — and that others don’t. You are a customer — or you’re not. You’re on the Register bus, or you’re off it. There’s a certain purity to the thinking; it certainly slams shut that loophole we’ll come to see as plain weird — readers paying several hundred dollars for print or nothing for online. The metered model has largely closed off that stark choice for real readers of any publication. The Register, though, wants to make it even clearer: Pay your $365 a year — either for print or digital or both — and you get the content. It wants to reinforce its buyers’ smart choice.

The move means that the Register will surely lose more pageviews than if it went with a meter. Figure that it will lose 20-30 percent of them, where new metered paywalls lose about half as much. “We don’t care about monetizing eyeballs,” says Spitz, talking about the small incremental ad value newspaper sites get from marginal readers.

I asked Spitz if he had talked with The Dallas Morning News, one of the few U.S. sites to go hard paywall, and he said he had. “The number one thing we take away from them is the most significant value of the paywall is that if someone signs up — a print subscriber who signs up for the paywall — they become 50 percent less likely to attrite [drop their subscription]. The most important value of a paywall as it turns out is you are telling your customer that they are not stupid for buying something their neighbor is getting for free.”

Ironically, publisher Jim Moroney of the Dallas Morning News tells me that his paper is likely moving to a metered model: “We’re pretty certain that’s part of our strategy. How do it is the question.” Today, the Morning News does what the Register is about to do, offering for free access all the non-staff content, but making local stuff inaccessible to non-payers. Why the likely change? In a word, sampling. Moroney believes that he’s secured his core readers — at a high price of $36.95 a month for seven-day print + digital — but knows he needs to crack a code to bring in new, and younger, readers. The hard paywall is a barrier to sampling.

Phil Pikelny, the Columbus Dispatch’s CMO (“The newsonomics of pressing innovation”) is even blunter about the need for a meter:

Pre-2006, we had a hard wall at Dispatch.com. “It was an unmitigated disaster. While other news sites offered all free content, we [who only offered a free home page, free classifieds and free obits] were only able to attract 6,000 paying subs at the height of our ‘success.’ I’d say that thinking retarded our digital growth by three years. No matter what ‘we wish would happen,’ the simple fact is that people only pay for the value they perceive in a product. A website visitor looking at eight pages a month obviously derives little value from the site visited that infrequently. Obviously no pay scheme will win them over. I personally think a hard wall is so restrictive that the website immediately falls into the no-perceived value pile for too many people in the market.

Pikelny, like Moroney, is among those now looking at second-gen paywall notions: “We’re working on a dynamic paywall. Our thought is to eventually move to five free pages a month [from 10]. However, on those webpages where we have the heaviest revenue from advertising (and some of our most robust traffic) we are considering dropping the paywall altogether during certain dayparts. In other words, our home page and OSU sports pages might be without metering from 8 a.m.-10 a.m. and again from noon-2 p.m. The rest of the website would stay metered at all times. When we lower the meter to five pages a month, we might not lose those who don’t see ‘value’ in paying for our site since they will turn to us for headline or breaking stories without hitting a paywall.”

(At the Newspaper Association of America’s April 15 “Strength of Digital Subscriptions” session, Pikelny, the Star Tribune’s Mike Klingensmith, Gannett’s Laura Hollingsworth, and Press+’s Gordon Crovitz will join me for a session I’m moderating.)

Spitz says he, too, believes, in sampling, and that the Register will do that three ways: (1) the $2 day pass; (2) by providing seven days of free access with any fresh email signup; and (3) by pushing five to ten local stories in front of the wall at any one time.

Maybe, that will work. I’m dubious. Hard paywalls, no matter their intent, create a psychological barrier for readers, as The New York Times’ TimesSelect proved years ago. It doesn’t matter how clever you are; readers don’t like running into walls. That’s going to be especially true as news publishers confront the next challenge of paid digital readership. Properly, they’ve focused on their core print readers, extending them into higher-priced all-access.

That makes sense, but doesn’t provide enough growth, and those readers are averaging almost 60 years old. How are they going to convince younger, not-habituated-to-paying readers to join the paywall revolution?

For the Register, that’s a huge question. It’s down to 124,000 seven-day subscribers, with its official audited reporting pointing to 160,000 daily circulation. On Sunday, that number is 280,000, but it’s unclear how many of those are fully paid. Kushner and Spitz inherited a crazy-quilt of pricing when they took over the Register in June 2012. Their ability to weave a new rational pricing structure will make or break their out-of-the-box strategies.

Their all-in approach is refreshing, and as long as they’re prepared to quickly fix the moving parts that squeak, their model has a chance of success.

Photo of Angel Stadium by socaltimes used under a Creative Commons license.

August 30 2012

15:02

The newsonomics of leapfrog news video

Our political conventions reminds us that this is not the summer of love. But it may be the season we’ll remember as the summer of video.

Certainly, video’s — news video’s — growth has been noteworthy for awhile. But now there’s a bursting of new news video forms, a hothouse of experimentation that is both refreshing and intriguing. The blossoming has implications far and wide, not just for “news,” but for tech companies like Facebook and television brands from Ellen to Piers to The View. Within it, we see the capability of non-TV companies to leapfrog the TV people.

Just Monday, both The Wall Street Journal (“The Wall Street Journal wants its reporters filing microvideo updates for its new WorldStream”) and The New York Times made video announcements. A couple of weeks ago, the ambitious Huffington Post Live launched, hiring the almost unbelievable number of 104 staffers. In these three forays, and in the thinking in and around them, we see the boundaries of old media being slowly broken. We’re on the edge, finally, of new ways to both create and present news — and how to talk about the news.

It’s funny: “Video,” as a term, as a category, barely defines what we’re seeing. All video means is moving pictures, and we’ve had those since George Méliès (as Martin Scorcese reinterpreted in Hugo). We’ve known broadcast news and then cable news, witnessed their triumphs and now the declines of both. Because of twin technologies — all the iGadgets reintroducing us to the world as we know it and the behind-the-scenes digital pipes making content creation and distribution increasingly seamless — we’re seeing what creative people can do with moving pictures.

While this week’s Journal’s announcement focused on WorldStream, that semi-raw feed (all staff contributions are okayed one-by-one for public view) is but one of the full handful of Journal experiments with video.

Watch video now better embedded into stories (as the Times also has done with QuickLinks). Get appointment programs on WSJ Live (“The newsonomics of WSJ Live”). Watch on demand, in a variety of formats. Go directly to a video page, where all of the video output is categorized. And now, WorldStream, that rawish feed the Journal is doing, because it can — and because such video becomes great bait for the social web. Pick up the url, tweet it, and the Journal has happened on a social video strategy that is curiously akin to Upworthy’s.

It’s a multi-point access world for video producers. The Times will tell you that its viewing is roughly divided in thirds among its video center, its homepage video player and embedded-within-stories video. The Journal says more than half its views are now coming from embedded videos, with less than five percent of its views come from its video page. It makes sense that “video center” usage will decrease over time; these are transitional pages. Convergence is now becoming real, and we expect to see the content, text, voice, and pictures delivered in context. Finally. We don’t go to a place on sites called “Words.”

What’s most important about we’re seeing flickering before our eyes? Try these, as we look at the newsonomics of leapfrog news video.

  • It’s about money. Video advertising rates are holding up far better than display-around-text rates. “Give me inventory” is a cry heard from the salespeople, who find agencies and top advertisers’ pre-roll appetites nowhere near satiated. For top premium brands, $45-60 CPM (cost per thousand views) are still available, as display rates fetch as little as a tenth and as much as one-half of those numbers. In addition, companies are selling video packages and sponsored tile ads in addition to pre-rolls to sweeten their take. So production of video makes financial sense — even as news companies cut back, lay off, and pinch, pinch, pinch. The smarter companies are investing in video — staffers, training, technologies — even as they make those cuts, while other companies find themselves just stuck. Video is the second-fastest growing ad category in the U.S., according to IAB, up 29 percent year-over-year. It will be worth about $2 billion this year.
  • It’s about platforms. The Journal’s Alan Murray, who heads digital news efforts, says the company’s video traffic has doubled in six months. Why? It’s not mainly because of more use on Journal platforms, even though it’s been an innovator on the tablet. Most of that growth comes from the deals the Journal has done with an astonishing 26 “platforms.” They range from the ubiquitous iPad and Kindle to lesser known 5Min and LiveStation.1 By way of comparison, The New York Times is currently using three (Hulu, Google TV, YouTube).
  • It’s about technologies. The Times and the Washington Post have been using Google + Hangout, to facilitate conversation, and we’ve seen the fruits this week at the Republican Convention. As well-described by The Daily Beast’s Lauren Ashburn, Google Hangouts are a major, disruptive force; “no longer needed are satellite trucks or underground cables to beam talking heads to people’s living rooms. A simple Internet connection and a camera are rendering expensive gadgets obsolete.” The Journal is touting Tout, a Silicon Valley start-up that has taken much of the “friction” out of the business of video production. “Make it drop dead simple,” CEO Michael Downing says is his goal. That means taking the background tasks of uploading smartphone video from the field, “transcoding” it and then translating it to work in all the various formats (devices, screen sizes, operating sizes). That removes the work from media companies, and lets them focus on content and audience. In addition to the Journal, broadcasters including CNN, CBS, and ESPN have become customers.
  • It’s apparently not about appointment TV. HuffPo’s Live is the most interesting here. While it has 10 telegenic anchor/producer/hosts, those hosts don’t have standard daily program times. Segments will last between 12 and 35 minutes (most average 20-25), HuffPost Live president Roy Sekoff told me this week. Yet, they are fluid, with segment length adjustable on the fly. Readers pick topics — before, during, and after “Live” — from a reader-activated conveyor belt at the top of the page. “It’s the Internet,” says Sekoff pointedly, meaning it’s a flow, not a TV Guide-like grid in how readers/viewers use it. The Journal agrees. Even with on-the-hour blocks of News Hub programs, the majority of its viewing is on demand. Even for HuffPo, all of that live programming is then chunked into segments, and Sekoff estimates that he’ll have about 10,000 of them archived and ready for long-tail viewing by year’s end. We want what we want when we want it — and expect it to be there. Thus, findability becomes the issue, and the multiple points of access now being offered are very much a live test of consumer behavior and want.
  • It’s about simplicity. The Times’ announcement basically said this: You’ve proven you like video. Now we’re cleaning it up and making it more pleasurable to watch and easier to find. In the cleanup, the Times moved to 11 “navigation items” from 25, says Peter Anderson, director of video product. We see that translation in more uniform positioning of video panels on NYTimes.com pages, and a more elegant 16 × 9 video player format, replacing the oh-so-20th century 4 × 3.
  • It’s about the news — and talk about the news. In the approaches of the Times and the Journal on the one hand, and of HuffPo on the other, we see two quite different philosophies and strategies, but ones that may find meeting points. Both the Journal and the Times see their reporters as the foundation of the video process; Murray calls Dow Jones’ 2,000 journalists “the core asset.” So both are putting cameras into the hands of journalists, or enabling them to better use smartphones, thereby creating more impactful, multi-dimensional, multi-platform journalism. HuffPo, from its early days of being mainly a curator/aggregator, has had its pulse on what its progressive audience is wondering and talking about. Those topics, mostly off the news (Marissa Mayer’s pregnancy, veterans and poverty), are the ones front and center in its Live pages. Some, of course, derive from its journalists’ work, and now staffers like Howard Fineman are suggesting video segments as they prepare stories. By and large, though, the talk-about-news drives the 12-hours-a-day site (5 days a week), with actual news supplementing. Sekoff says some 1,300 HuffPo community members have “raised their hands” and been featured as talking contributors on its segments. They’re unpolished and a far more diverse (for all the good and bad that implies) lot than we see among the too familiar faces of cable TV. For the Journal and the Times, traditional stories drive the video, and then, as Peter Anderson describes it, “The New York Times starts the conversation.” (Here, the Times brings civilians more prominently into its Opinion pages.) How these somewhat opposite approaches come together will be something to watch.

Maybe, most intriguingly, this video revolution may be morphing into a social revolution.

Watch a few of the HuffPo Live segments. Call them semi-slick. The technology works. The production values are okay, even if blogger/contributors faces seem a bit low-def, as TV itself moves moves from HD to Ultra. Some raise interesting, unorthodox issues and views; some are deadly boring. They are not, though, the lookalike programming of traditional news outlets. In their socialness, they cross lines.

Here’s what I find fascinating as I watch those, and smaller steps toward engagement taken by the Times, Journal, and others. As we all watch more video, where will the minutes come from? They may come from other news, text news. They may also come from Facebook. Compare HuffPo Live to Facebook and we see lots of social/sharing commonalities — but in picture form. Discussions — less in linear words than with in-motion video. They may come from morning talk shows like “Ellen” or “The View,” or compete with The Young Turks.The minutes will come from somewhere, as these technologies are more universally adopted and the world of competition only gets more complicated. This is the world in which news companies now compete.

For the news industry specifically, we see that legacy lines are written in disappearing ink, as the Journal, for instance, out-innovates ABC. One dirty little secret of broadcasting is being revealed, as technologies like Google+ Hangouts even the playing field for the print guys: it’s a game of numbers. The number of journalists in newspaper newsrooms still far outnumber those in broadcast ones. In addition, traditional TV has demanded many staffers to do the technical work of creating the broadcast. So, newspapers — if they can rapidly connect their workforces with the new technologies — have a chance to do what seems illogical: leapfrog broadcast and outflank them in the move to fully available, multi-platform news video.

Notes
  1. The full list: YouTube, iPad, iPhone, Apple TV, Google TV, Boxee, Roku, Hulu, Ustream, DailyMotion, Panasonic Internet-connected TVs, Samsung Internet-connected TVs, Sony Internet-connected TVs, Vizio Internet-connect TVs, Yahoo Internet-connected TVs, Windows Phone, Xbox (announced, not yet launched), Kindle Fire, Google Nexus 7, Pulse, 5Min, TouchTV, Flud, WatchUp, LiveStation, Tout, Etisalat.

August 23 2012

15:46

The newsonomics of a New York Times + CNN combination

Mark Thompson faces a defining and daunting challenge: Lead The New York Times on that thin tightrope to a new stability, one tethered to the digital world. We’ve seen lots of good ideas already freely offered to the incoming NYT CEO. Let me offer a new one.

Let’s imagine what a New York Times/CNN combination would look like — and what it could do for both companies. Combination? Yes, a purposely squishy word. I’m not talking about a merger of the companies. I’m thinking about what each company offers the other strategically, at this point in media history, and how each could see its business advanced. We’ll leave the messy details of corporate development, of partnership, of joint venture, for a later day.

So why put these two entities closer together? Two big reasons provide some logic.

First, the marketplace is pushing companies toward convergence. The worlds of completely separate TV (video), newspapers/magazines (text), and radio (audio) have simply been overwhelmed by the reality of consumption devices that bring all three together for us — the iPad being the current crown of creation. But the legacy roots of each medium has made it really tough to either (re-)build truly multi-platform companies or forge newspaper/TV alliances (Tampa, Chicago, etc.) that work. Logic compels greater multi-platform creation; inevitably that will mean new combinations of legacy companies, even as legacy companies try to remake themselves internally.

Second, both CNN and The New York Times fill in numerous of the other’s weaknesses. At this digital moment when “mobile” and the tablet are tossing old habits up in the air and forcing consumers to re-form new ones, it’s a great time for both the Times and CNN to double down on their native advantages, and make their products no-brainer top-three places to go in the news everywhere-and-anywhere world.

For CNN, a partnership could be part of a strategy to reclaim its mojo after seeing TV ratings drop to 21-year lows. For the Times, having turned small corners in the last year, it’s a way to increase its sense of momentum, separating itself from the pack of other top news sources.

The timing is near-perfect. Mark Thompson, after all, comes to the Times as a broadcaster. With a 33-year TV career, he knows TV, and he knows the Times is just beginning to escape its print roots. Scaling the wall of video/TV, where huge revenues still exist, is one of his daunting challenges. He is one of the few people who could have taken the job who brings both a broadcast background and one of airtight news credibility, given the BBC’s standards. He is the perfect person to imagine a strong video/TV presence for the next-gen Times. The Times is looking currently at what a major investment in video would look like; how does it climb the incremental mountain with the next generations of TimesCasts?

CNN is searching for recently resigned president Jim Walton’s successor. While the 32-year-old network’s staff debates the realities and fantasies, and CNN-directed truths, of Aaron Sorkin’s “The Newsroom,” the once top-of-the-heap TV news source faces a fundamental identity crisis and big strategic moment. It has wavered along hard/soft news lines and in programming choices, spun into a dither by Fox News’ Roger Ailes and MSNBC’s Phil Griffin.

Now the next CNN president must renew brand purpose and internal pride. Focus on news — especially adding to its forte of who, what, and where the why and how aspects of news as it has been edging into (The Freedom Project, an award-winning series on human trafficking, and Saving Aesha, for example) — or play with more entertainment/personality positioning? Worry about the Foxes and the MSNBCs, or grab the moment of the greatest potential global news reach technology and literacy has ever made possible?

There are smaller plays for both, to be sure. CNN’s been around the block with CBS News, talking news merger, but those talks foundered on issues of control and culture. The Times has tried all manner of tests, from longer-standing ones with Google to newer ones with Flipboard.

What both need is a game changer: a move that will simultaneously do three things:

  • Rocket it ahead of the news competition, as consumers decide those handful of must-go-to news sources they’ll visit each day, across their many screens.
  • Add a large new dimension of content to its current brand. While both the Times and CNN have lots of content, both — as is the case of all news companies — can use more to satisfy insatiable digital reading appetites.
  • Create a strong, new revenue line, as both see traditional lines weakened by market change.

Before I get to how a game-changer may work, let’s try this as a simplified chart to compare the two companies:

The New York Times CNN Brand Ascendant; mobile apps have now separated NYT from other “newspapers”; digital circulation has newly marked NYT as innovator Ubiquitous in U.S. and worldwide; its image — what it stands for — is unclear Top leadership CEO Mark Thompson begins in November Search on for replacement for President Jim Walton Audience Top-five web site; newspaper circulation flat Top-three web site; TV ratings at 21-year low Revenue Reader revenue, newly revived and growing, with all-access digital circulation programs; online advertising under pricing pressure, and by ad marketplace change; print advertising in 5-10 percent annual decline. Net loss of $39.7 million (2011) Cable/satellite fees, increasingly threatened by low ratings and the potential unbundling of forced consumer packages; advertising, on air and online, both under pricing pressure by ad marketplace change. Profit of $600 million (est. 2012) Global Times moving that way, with ~10 percent of paying digital-only customers outside U.S.; new China site By definition, global and recognized globally. Great worldwide distribution and name recognition TV culture/experience Experimenting, unevenly, with “video” It’s a TV company Text culture/experience It’s a newspaper company Experimenting, unevenly, with “text” Content Deep, authoritative, agenda-setting; fairly good breadth, but the deep web is exposing its areas of weakness Immediate, wide, truly global, largely authoritative; good breadth, and worldwide, though subpar to AP Access to TV platforms Minimal Ubiquitous Revenue sources Readers, advertisers Cable/satellite cos., advertisers Aggregator chops Little developed; a powerful potential for adding breadth to its brand Little developed, but it bought top-three tablet aggregator Zite Community-generated content Fledgling efforts have gone awry CNN’s iReport is a prototype for user-generated reporting; if those CNN/Mashable talks work their way to completion, CNN would have a leg up on social media journalism Wire Longstanding NYT wire and syndicate are mature Newer CNN wire fighting for place in market

There’s clearly a complementarity here that makes sense — on paper. How might it work in reality?

It’s easiest to see how the two might exploit two green fields, areas so new neither has as much ego or business invested.

If we look at the coming five screens of access, it is the emerging two — connected TV and connected car — that are most virgin, while laptop/desktop, smartphone and tablet are already deeply competitive. Both connected TV and connected car offer many new product opportunities and access to new revenue. A partnership could focus on those two, as the least threatening way to combine smarts and assets.

More immediately, we could see a new focus on tablet and smartphone products. For starters:

  • Next-generation news video products for the tablet: The Wall Street Journal has burst out of its word box this year with a major emphasis on video. It has just begun to leverage its deep journalistic expertise, though the presentation is still more talking head than “TV.” Combining the beat expertise of New York Times journalists with CNN TV smarts — and its own formidable behind-the-scenes journalistic workforce — offers breakout potential for tablet video news. CNN’s journalist workforce numbers is a hard number to compare to the Times’ 1,150 journalists; how do you count those who provide the technology to present the journalism? Yet CNN’s journalists often get short shrift in the press, which favors endless Wolf Blitzer and Anderson Cooper stories. Here’s one area where print is superior: In the breadth of The New York Times’ Sunday edition, for instance, you can see the great stretch of its journalistic talent. With the flat screen of the TV or the computer or tablet, you can’t see the rich CNN reporting behind its facade.
  • The leading global news product: Everyone from Bloomberg to the FT and BBC and from the Journal to the Times and the Guardian, is now moving on the vast global opportunity (English-speaking and otherwise). No longer must the Brits be satisfied with their one percent of the world market, or Americans with five percent. Here both CNN and the Times are among the top contenders. With 32 journalists outside the U.S. and 24 foreign bureaus, the Times has maintained a global presence, when most of its print brethren have severely cut back. CNN’s 33 foreign bureaus and vast carriage across the world lay continued claim to its birthright. If you are overseas and watch CNN International, it’s a night-and-day different product than CNN U.S.; adding the Times to the mix would lengthen its international lead.
  • Reinventing the “wire”: CNN’s wire, launched in 2009, marked its emergence from AP. The goal: compete with AP, leveraging its substantial journalistic investment with syndication, selling the same content to many, many others. That wire, like many competitors to AP and Reuters, has found tough going against the incumbents. Meanwhile, The New York Times’ wire and syndicate face the same struggles of most in that niche wire business: maturity at best, holding on to as much of the old, dwindling print world as they can. A combined “wire,” focusing on those next-generation syndicatable digital/mobile products, could harvest joint assets well.

Then, there’s the web in general and TV, the former where both engage in head-to-head combat and the latter in which CNN, though struggling, is the incumbent and NYT the wannabe. The hurdles to cooperation, there, are highest, though the payoff may be the greatest.

For CNN, the questions would be: How could TV people harness the added depth of The New York Times’ report and intelligence? How could it marry its video and text in new state-of-the-art ways?

While CNN is now much more profitable than the Times, the fragmentation and disruption of TV business models is happening quickly (see “The newsonomics of breakthrough digital TV, from Aereo to Dyle and MundoFox to Google Fiber TV”). A Times partnership could help CNN find ways to create new news and information products that consumers will pay for, as the Times has now nimbly done, with its digital circulation initiative.

For The New York Times, the questions would be: How could text-based journalists move into the next generation of multimedia storytelling, bringing over their craft and standards, but learning new skills? How could video be graft onto the Times DNA, make the Times the company it needs to be in the next age?

How could the Times tap into the revenue stream of TV access, either through programming that cable and satellite companies would pay then for, as they pay Time Warner/CNN? It isn’t as if Times reporters haven’t been well-used on broadcast. NPR does a masterful job of that, but the Times gets no revenue out of the relationship. That’s the key: wringing TV money out of a deal.

For both, the tasty intangible: Would a combination of two of the best brands in news world reinforce and heighten each side’s? Of course, there are lots of reasons why it wouldn’t, couldn’t or shouldn’t work. Yet, it if did, it would give real meaning to convergence — finally — as the old demarcations of print and TV fast erode.

It’s easy to tick off the numerous factors that make it difficult: control, valuation and culture top the list. It’s at least, though, a whiteboard exercise that allocates strengths and deficits, opportunities and challenges over a five-year time span. That’s the level of thinking, and timespan, that Mark Thompson will need to bring to the Times, as will CNN’s new chief when she or he arrives in Atlanta.

August 17 2012

16:07

Metrics, metrics everywhere: How do we measure the impact of journalism?

If democracy would be poorer without journalism, then journalism must have some effect. Can we measure those effects in some way? While most news organizations already watch the numbers that translate into money (such as audience size and pageviews), the profession is just beginning to consider metrics for the real value of its work.

That’s why the recent announcement of a Knight-Mozilla Fellowship at The New York Times on “finding the right metric for news” is an exciting moment. A major newsroom is publicly asking the question: How do we measure the impact of our work? Not the economic value, but the democratic value. The Times’ Aaron Pilhofer writes:

The metrics newsrooms have traditionally used tended to be fairly imprecise: Did a law change? Did the bad guy go to jail? Were dangers revealed? Were lives saved? Or least significant of all, did it win an award?

But the math changes in the digital environment. We are awash in metrics, and we have the ability to engage with readers at scale in ways that would have been impossible (or impossibly expensive) in an analog world.

The problem now is figuring out which data to pay attention to and which to ignore.

Evaluating the impact of journalism is a maddeningly difficult task. To begin with, there’s no single definition of what journalism is. It’s also very hard to track what happens to a story once it is released into the wild, and even harder to know for sure if any particular change was really caused by that story. It may not even be possible to find a quantifiable something to count, because each story might be its own special case. But it’s almost certainly possible to do better than nothing.

The idea of tracking the effects of journalism is old, beginning in discussions of the newly professionalized press in the early 20th century and flowering in the “agenda-setting” research of the 1970s. What is new is the possibility of cheap, widespread, data-driven analysis down to the level of the individual user and story, and the idea of using this data for managing a newsroom. The challenge, as Pilhofer put it so well, is figuring out which data, and how a newsroom could use that data in a meaningful way.

What are we trying to measure and why?

Metrics are powerful tools for insight and decision-making. But they are not ends in themselves because they will never exactly represent what is important. That’s why the first step in choosing metrics is to articulate what you want to measure, regardless of whether or not there’s an easy way to measure it. Choosing metrics poorly, or misunderstanding their limitations, can make things worse. Metrics are just proxies for our real goals — sometimes quite poor proxies.

An analytics product such as Chartbeat produces reams of data: pageviews, unique users, and more. News organizations reliant on advertising or user subscriptions must pay attention to these numbers because they’re tied to revenue — but it’s less clear how they might be relevant editorially.

Consider pageviews. That single number is a combination of many causes and effects: promotional success, headline clickability, viral spread, audience demand for the information, and finally, the number of people who might be slightly better informed after viewing a story. Each of these components might be used to make better editorial choices — such as increasing promotion of an important story, choosing what to report on next, or evaluating whether a story really changed anything. But it can be hard to disentangle the factors. The number of times a story is viewed is a complex, mixed signal.

It’s also possible to try to get at impact through “engagement” metrics, perhaps derived from social media data such as the number of times a story is shared. Josh Stearns has a good summary of recent reports on measuring engagement. But though it’s certainly related, engagement isn’t the same as impact. Again, the question comes down to: Why would we want to see this number increase? What would it say about the ultimate effects of your journalism on the world?

As a profession, journalism rarely considers its impact directly. There’s a good recent exception: a series of public media “impact summits” held in 2010, which identified five key needs for journalistic impact measurement. The last of these needs nails the problem with almost all existing analytics tools:

While many Summit attendees are using commercial tools and services to track reach, engagement and relevance, the usefulness of these tools in this arena is limited by their focus on delivering audiences to advertisers. Public interest media makers want to know how users are applying news and information in their personal and civic lives, not just whether they’re purchasing something as a result of exposure to a product.

Or as Ethan Zuckerman puts it in his own smart post on metrics and civic impact, ”measuring how many people read a story is something any web administrator should be able to do. Audience doesn’t necessarily equal impact.” Not only that, but it might not always be the case that a larger audience is better. For some stories, getting them in front of particular people at particular times might be more important.

Measuring audience knowledge

Pre-Internet, there was usually no way to know what happened to a story after it was published, and the question seems to have been mostly ignored for a very long time. Asking about impact gets us to the idea that the journalistic task might not be complete until a story changes something in the thoughts or actions of the user.

If journalism is supposed to inform, then one simple impact metric would ask: Does the audience know the things that are in this story? This is an answerable question. A survey during the 2010 U.S. mid-term elections showed that a large fraction of voters were misinformed about basic issues, such as expert consensus on climate change or the predicted costs of the recently passed healthcare bill. Though coverage of the study focused on the fact that Fox News viewers scored worse than others, that missed the point: No news source came out particularly well.

In one of the most limited, narrow senses of what journalism is supposed to do — inform voters about key election issues — American journalism failed in 2010. Or perhaps it actually did better than in 2008 — without comparable metrics, we’ll never know.

While newsrooms typically see themselves in the business of story creation, an organization committed to informing, not just publishing, would have to operate somewhat differently. Having an audience means having the ability to direct attention, and an editor might choose to continue to direct attention to something important even it’s “old news”; if someone doesn’t know it, it’s still new news to them. Journalists will also have to understand how and when people change their beliefs, because information doesn’t necessarily change minds.

I’m not arguing that every news organization should get into the business of monitoring the state of public knowledge. This is only one of many possible ways to define impact; it might only make sense for certain stories, and to do it routinely we’d need good and cheap substitutes for large public surveys. But I find it instructive to work through what would be required. The point is to define journalistic success based on what the user does, not the publisher.

Other fields have impact metrics too

Measuring impact is hard. The ultimate effects on belief and action will mostly be invisible to the newsroom, and so tangled in the web of society that it will be impossible to say for sure that it was journalism that caused any particular effect. But neither is the situation hopeless, because we really can learn things from the numbers we can get. Several other fields have been grappling with the tricky problems of diverse, indirect, not-necessarily-quantifiable impact for quite some time.

Academics wish to know the effect of their publications, just as journalists do, and the academic publishing field has long had metrics such citation count and journal impact factor. But the Internet has upset the traditional scheme of things, leading to attempts to formulate wider ranging, web-inclusive measures of impact such as Altmetrics or the article-level metrics of the Public Library of Science. Both combine a variety of data, including social media.

Social science researchers are interested not only in the academic influence of their work, but its effects on policy and practice. They face many of the same difficulties as journalists do in evaluating their work: unobservable effects, long timelines, complicated causality. Helpfully, lots of smart people have been working on the problem of understanding when social research changes social reality. Recent work includes the payback framework which looks at benefits from every stage in the lifecycle of research, from intangibles such as increasing the human store of knowledge, to concrete changes in what users do after they’ve been informed.

NGOs and philanthropic organizations of all types also use effectiveness metrics, from soup kitchens to international aid. A research project at Stanford University is looking at the use and diversity of metrics in this sector. We are also seeing new types of ventures designed to produce both social change and financial return, such as social impact bonds. The payout on a social impact bond is contractually tied to an impact metric, sometimes measured as a “social return on investment.”

Data beyond numbers

Counting the countable because the countable can be easily counted renders impact illegitimate.

- John Brewer, “The impact of impact

Numbers are helpful because they allow standard comparisons and comparative experiments. (Did writing that explainer increase the demand for the spot stories? Did investigating how the zoning issue is tied to developer profits spark a social media conversation?) Numbers can be also compared at different times, which gives us a way to tell if we’re doing better or worse than before, and by how much. Dividing impact by cost gives measures of efficiency, which can lead to better use of journalistic resources.

But not everything can be counted. Some events are just too rare to provide reliable comparisons — how many times last month did your newsroom get a corrupt official fired? Some effects are maddeningly hard to pin down, such as “increased awareness” or “political pressure.” And very often, attributing cause is hopeless. Did a company change its tune because of an informed and vocal public, or did an internal report influence key decision makers?

Fortunately, not all data is numbers. Do you think that story contributed to better legislation? Write a note explaining why! Did you get a flood of positive comments on a particular article? Save them! Not every effect needs to be expressed in numbers, and a variety of fields are coming to the conclusion that narrative descriptions are equally valuable. This is still data, but it’s qualitative (stories) instead of quantitative (numbers). It includes comments, reactions, repercussions, later developments on the story, unique events, related interviews, and many other things that are potentially significant but not easily categorizable. The important thing is to collect this information reliably and systematically, or you won’t be able to make comparisons in the future. (My fellow geeks may here be interested in the various flavors of qualitative data analysis.)

Qualitative data is particularly important when you’re not quite sure what you should be looking for. With the right kind, you can start to look for the patterns that might tell you what you should be counting,

Metrics for better journalism

Can the use of metrics make journalism better? If we can find metrics that show us when “better” happens, then yes, almost by definition. But in truth we know almost nothing about how to do this.

The first challenge may be a shift in thinking, as measuring the effect of journalism is a radical idea. The dominant professional ethos has often been uncomfortable with the idea of having any effect at all, fearing “advocacy” or “activism.” While it’s sometimes relevant to ask about the political choices in an act of journalism, the idea of complete neutrality is a blatant contradiction if journalism is important to democracy. Then there is the assumption, long invisible, that news organizations have done their job when a story is published. That stops far short of the user, and confuses output with effect.

The practical challenges are equally daunting. Some data, like web analytics, is easy to collect but doesn’t necessarily coincide with what a news organization ultimately values. And some things can’t really be counted. But they can still be considered. Ideally, a newsroom would have an integrated database connecting each story to both quantitative and qualitative indicators of impact: notes on what happened after the story was published, plus automatically collected analytics, comments, inbound links, social media discussion, and other reactions. With that sort of extensive data set, we stand a chance of figuring out not only what the journalism did, but how best to evaluate it in the future. But nothing so elaborate is necessary to get started. Every newsroom has some sort of content analytics, and qualitative effects can be tracked with nothing more than notes in a spreadsheet.

Most importantly, we need to keep asking: Why are we doing this? Sometimes, as I pass someone on the street, I ask myself if the work I am doing will ever have any effect on their life — and if so, what? It’s impossible to evaluate impact if you don’t know what you want to accomplish.

August 15 2012

20:28

The newsonomics of breakthrough digital TV, from Aereo to Dyle and MundoFox to Google Fiber

In 1998, when Rupert Murdoch’s News Corp. bought the Los Angeles Dodgers, the storied franchise was worth $380 million. News Corp. sold the team in 2003 for $430 million. After winning the ability to negotiate a new multi-billion sports TV contract this fall, they sold earlier this year for $2 billion, blowing the lid off sports property values.

In 1994, the San Diego Padres were worth $80 million. After recently signing a 20-year deal with Fox Sports for $1.2 billion, they sold (pending league approval) for $800 million.

Meanwhile, in 2000, the Los Angeles Times was worth at least $1.5 billion when it was sold as part of Times Mirror to Tribune Company. Today, as it is newly readied for market out of the Tribune bankruptcy, it would go for something less than $250 million. The San Diego Union-Tribune, once valued near a billion dollars, sold for about $35 million in 2009 and about $110 million in 2011.

It’s a reversal of fortune: Newspaper franchises that once outvalued baseball teams by 3-1 or 5-1 or 10-1 now see the inverse of that ratio. Why?

Two letters: TV.

Those numbers tell us a lot about the continuing power of television, in worth, in value creation, and in the news business itself. If we look just at recent events in the ongoing transformation of broadcast and cable to digital, we now see multiple breakthroughs on their path to digital. They give us indications of what the news business, video and text, will look like in the coming years. While we can argue endlessly about the relative virtues and vices of print and TV news, we must acknowledge the relative ascendance of TV and think about what that means for the news business overall.

TV’s revenues are holding up far better than newspaper companies’, and TV is better positioned to survive the great digital disruption.

TV has continued to have great audience. Nearly three in four Americans tune in to local TV news at least weekly, surpassing newspaper penetration, even as Pew Research points out they mainly do it for three topics: breaking news, weather, and traffic. Further, it retains great ad strength — 42 percent of national ad spending, matching the actual number of minutes Americans spend with the medium and making it the only medium still ahead of digital spending as digital has surpassed print (newspapers + magazines this year, both in the U.S. and globally). Yes, TV remains a gorilla. While Netflix won headlines when it announced it had streamed one billion hours of TV and movies in a single month, that huge number compared to about 43 billion hours of U.S. TV consumption, according to Nielsen’s 4Q 2011 Cross-Platform report.

In a nutshell, that’s the difference between TV and video, circa 2012. Video is the next wave — incorporating TV perhaps, but still the very young kid on the block.

Today, TV is no longer a box. Sure, even with all the Rokus, Boxees, and Apple TVs, it seems like TV isn’t yet an out-of-the-box experience. But with Hulu, Netflix, and Comcast’s Xfinity, it’s emerging quickly, escaping our fixed idea of what it once was — the boob tube in the living room. If it’s not just a box anymore, it’s a platform. From that platform, we see both the disruptors and the incumbents doubling down their bets. As in most things digital, few of these launches will be huge winners — but some will drive big breakthroughs. Some of the iconic legacy companies we’ve long known will be absorbed in the woodwork as new brands supplant them. Consider the spate of recent innovation, as we quickly assess the newsonomics going forward:

  • NBC, bashed up and down Twitter, nonetheless proved out a new business model with its multi-platform approach to Olympics coverage. Whatever you think of the tape delays or the suspended reality of Bob Costas’ gaze, NBC made the economics work, surprising itself and others. Its live streaming has ratified the development of cable- and satellite-authenticated, all-access digital delivery. That reinforces cable/satellite value. Further, it whetted prime-time viewing appetites, boosting ratings and earning NBC more ad revenue than it had projected. That’s icing on the cake for NBC, which, under Comcast ownership, has rocketed forward in digital strategy. The network has made a number of moves to transform itself into a global, video-forward, digital news company, joining the Digital Dozen global news pack. Recently, it bought out Microsoft’s share of msnbc.com, a leading Internet news portal. It immediately rechristened it NBCNews.com. In short order, it appointed Patricia Fili-Krushel as the new head of NBCUniversal News Group, an entity made up of NBC News, CNBC, MSNBC, and the Weather Channel. A former president of ABC, with 10 years of experience at Time Warner, she heads a growing news operation. Earlier this year, NBC combined its sports properties into a unified NBC Sports Group, merging NBC’s broadcast sports unit and Comcast’s regional sports networks. NBC is growing out of its digital adolescence. (See “One year after she was hired, Vivian Schiller’s ‘wild ride’ at NBC is just beginning.”)
  • Aereo, the TV startup funded by media magnate Barry Diller, is expanding its footprint from its current New York City base, and starting to offer multiple promotional deals. Diller’s in-your-face challenge to over-the-air broadcasters (CBS, NBC, Fox, ABC, CW, PBS) takes their signals and delivers that programming via the Internet. It charges consumers $12 a month, or as little as a dollar a day. They can then watch those TV stations on up to five devices; in addition, they can deliver these signals to a TV via Apple TV or Roku. Aereo also offers DVR capability, with 40 hours of storage. It’s classic disruption, with Aereo upping the pressure on the cable bundle and messing with the “retrans” fees that broadcasters get from cable companies to run their programming. Is it really legal, as a court recently found? It may be as legal as Google presenting snippets from every publisher and directory provider.
  • Local broadcasters — representing a broad swath of ownership groups organized in a newer company called Pearl — are bringing local TV to our mobile devices themselves. Just a week ago, Metro PCS started selling a Samsung Galaxy S phone with a TV receiver chip in 12 markets. That’s just the first push of Mobile Content Ventures, a collection of Pearl, NBC, Fox, and others. Expect mobile TV, marketed as Dyle, to be available for other phones and tablets, either with built-in chips or after-market accessories — although price points are an issue, with $100-plus premiums likely over the next year. So what does this innovation mean? Simply, that broadcasters are going direct to mobile consumers — no Internet needed, no data charges applying, and maybe providing more consistent video connectivity — with live programming; whatever is on TV at that moment is also on your phone or tablet. Broadcasters just use part of their digital signal to, uh, broadcast to us on our phones. It’s that antenna, and its cost, that’s the issue. Business questions abound. Given the timing of the launch, Dyle seems like an aspiring Aereo killer, and certainly broadcasters would like to see it do that, if further court action doesn’t. More deeply, though, broadcasters want to maintain their direct-to-consumer brand identity as they do a balancing act and try to keep those retrans fees from cable and satellite companies. They don’t want to be left out of the digital party.
  • Social TV pulls up a chair. First it was startup Second Screen, matching tablet ads to real-time TV viewing. Now ConnecTV, partnered with Pearl, is trying to corner the activity as it takes off. Its promise: “synchronization of local news, weather, sports, and entertainment programming along with social polls.” Ah, synchronicity, a Holy Grail of our digital aspirations. Last week, Cory Bergman (a man of at least three full-time digital lives, with MSNBC, Next Door Media, and Lost Remote) sold his Last Remote social-TV site to Mediabistro.
  • Then there’s the disruptor of everything on planet Earth, Google. The company recently announced it is putting another $200 million into YouTube Channels, building on its initial $150 million investment. The move emphasizes how quickly YouTube is growing beyond its homegrown, user-generated roots. Now partnering with dozens of prime video producers, creating more than 100 new channels, it is trying to establish itself in viewers’ lives as a go-to video aggregation source. Major video producers are still wary of Google getting between them and their customers, both ad and viewer, but many others are signed on. Meanwhile, in Kansas City, Google Fiber TV (TV that’s healthier for you?) launches. It’s a rocket shot at the cable, telco, and satellite incumbents. It’s also a demonstration project: providing more, cheaper. The more: interactive search for TV that combs your DVR and third-party services such as Netflix. (Yes, The Singularity ["The newsonomics of Google ad singularity"] marches on.) Google Fiber TV combines DVR and third-party (Netflix-plus) search. Its DVR holds 500 hours of storage of shows in 1080p and the ability to record eight TV shows simultaneously. Bandwidthpalooza. Google’s goal: Toss a hand grenade among the TV-as-usual business models, and pick up some of the pieces, adding new significant revenue lines.
  • CNN moves to break out of its identity funk, figuring out what that powerful global brand means in this fast-changing digital news world. CNN President Jim Walton recently stepped down, clearly acknowledging that his 10-year run had reached an end. “CNN needs new thinking,” he said in a farewell note. On TV, CNN has been beaten up badly both both Fox News and MSNBC. In 2Q, CNN showed its worst numbers in 20 years, down 35 percent year-over-year. On the web, it’a a top-three news player. But overall, it’s become the Rodney Dangerfield of news entities, getting little respect. Its cable fees — the strength of its revenues — could be challenged by low ratings. Going forward and competing against other global news brands — many of which are transitioning their own businesses to gain far greater digital reader revenue — it is, at this moment, caught betwixt and between. How it brings together a single — and global — digital/TV identity is at the core of its continuing journalistic importance and financial performance.

That’s a short list. We could easily add HuffPo’s streaming initiative and The Wall Street Journal’s wider video embrace. Or Les Moonves’ digital moves at CBS. And Fox’s new MundoFox, Spanish-language TV network, taking on Telemundo and Impremedia. The new network, at birth, offers a strong digital component, working at launch with advertisers along those lines. Let’s note some quick takeaways here, all of which we’ll be talking about in 2013:

  • Note how much you see the names News Corp. and Fox here. While segregating its text assets (and liabilities), News Corp. is investing greatly in the video future.
  • Cable bundling’s longevity is uncertain. There’s a lot of residual power here, but we know how quickly that can fade in legacy media. Yes, the unbundling of cable and satellite has been overestimated by some, as Peter Kafka pointed out recently. Yet, these multiple digital strategies may still push a tipping point. Clearly, legacy TV media, despite their public protestations, sees that potential and is acting in multiple ways to prepare for it.
  • Though broadcasters are making major digital pushes, they start from a lowly digital position. Many broadcasters can count no more than 5 percent of their total revenues coming from digital. That compares to 15-20 percent or more for newspaper companies. While there are other sources of revenue have been more stable than those of newspapers, they need to grow digital revenues quickly to make up for inevitable erosion of older money streams.
  • TV ≠ newspapers. Much of broadcasters’ revenues are made on non-news programming, as much as one-half to two-thirds for most local broadcasters. While learning from TV experience here is useful, given lots of differences, the learnings must be smartly applied. As news consumers and advertisers move increasingly digital, though, that thick line that separate local TV from local newspapers thins by the day.

The all-access, news-anywhere, entertainment-everywhere era has created a new massive business competition. Which brands will be top of mind? Who will consumers pay? How valuable is news itself in this contest?

Comcast, Time Warner, Verizon, AT&T — pipes companies — are in one corner. CNN, NBC, CBS, ABC, Fox, HBO, Showtime, and other known-to-consumer brands in another. Aggregators like Netflix and Hulu over there. Media marketers like Amazon and Apple holding court. Google. The local broadcasters fighting for their place in this digital ring. This new battle of brands, in and around “TV,” is now joined.

August 02 2012

15:04

The newsonomics of syndication 3.0, from NewsCred and NewsLook to Ok.com and Upworthy

Of the many failed digital news dreams, digital syndication is one of the greatest enigmas. We’ve seen companies like Contentville, Screaming Media, and iSyndicate (Syndication 1.0) followed by companies like Mochila (Syndication 2.0), all believing the same thing: In the endless world of digital content, there must be a big business in gathering together some of the world’s best, creating a marketplace, and selling stream upon stream.

In the abstract, the idea makes lot of sense. Producers of content — AP, Reuters, Bloomberg, The Street, Al Jazeera, Getty Images, Global Post, and many more — want all the new revenue they can get. They want to see the content they produced used and reused, over and over again, helping offset the high cost of news creation. The enduring problem is the buy side. We’ve gone oh-so-quickly from Content is King to a content glut. In a world of endless ad inventory and plummeting ad rates, why take syndicated content just to create a greater glut of news, information, and ad spots? That dilemma still hangs in the wind, and has bedeviled news industry consortium startup NewsRight, as it tries to find a future. Yet I’ve been surprised by a new wave of news syndication that’s been developing, here and there. It’s worth paying attention to, because it tells us a lot about how the digital news world is developing.

In part, it’s about new niches being found and exploited. In part, it’s about responding to deep staff cuts at many newspapers. In part, it’s about a slow-dawning wave of new product creation, aided by the tablet. Each of the newer efforts sees the world a little differently, and that’s instructive, though technology and video (see The Onion’s “Onion Special Report: Blood-Drenched, Berserk CEO Demands More Web Videos”) play increasingly key roles. So let’s look at the newsonomics of Syndication 3.0, and a few of the newer entrepreneurs behind it.

NewsCred

As 31-year-old CEO Shafqat Islam notes cheerily, finding investors for his startup was complicated by the fact that “there are a lot of dead bodies in this space.” With 100 fairly top-drawer sources and a staff of 50 (35 of them in tech), NewsCred is the big new mover in text and still image syndication, launched earlier this year (“NewsCred wants to be the AP newswire for the 21st century”). Its 50-plus customers divide roughly equally into two groups: media and big brands.

Media, says Islam, are using NewsCred for two reasons. One is to build new products, as the New York Daily News has done with its March-launched India news site, recognizing a locally under-served audience. Skift, Rafat Ali’s new travel B2B start-up, is getting 30 to 40 percent of its content through NewsCred. The other is the emergence of the paywall: Charging for digital access, he says, has meant some news companies are wanting to bulk up, offering a better value pitch to would-be digital subscribers. The Chicago Tribune launched a biz/tech “members only” product, powered by NewsCred, at the end of June.

The brand use of news content has a bigger potential. Check out several case histories, showing the use Pepsi, Orange Telecom, and Lenovo has made of NewsCred-distributed entertainment and tech content. Brands are publishers and want an easy, one-source way to populate their sites. Islam says his seven sales people are working as consultants of a sort, especially with such brands. Figuring out how to create content experiences for brands-turned-publishers is one part of the syndication puzzle.

Lessons Learned:

  • In a sense, this is syndication meets marketing services: As news companies both produce content and try to act as regional ad agencies, the synergies between the two are becoming more evident.
  • Timing is everything: We’ve seen a maturation in curation technologies, as metatagging gets easier and cheaper, allowing niched feeds. Then, an increased emphasis on niche product creation is combining with brand need for news content, creating new potential markets.

NewsLook

With 70-plus top video news sources and 35 clients, the three-year-old NewsLook also hopes to build on the archeology of syndication ruin. Like NewsCred, it positions itself as a technology and curation company, adding value to a mass of content. For CEO Fred Silverman, the technology means, importantly, better integration of text and video content.

“We see an awful lot of guys with a video page, or a video way down at the bottom — it’s not integrated. Our push with the publishers we work with is to fluidly integrate it into a news page. You are eleven times more likely to watch that video if it is integrated into a story.” That seems like common sense — put the words and pictures together — but Silverman’s experience resonates way too deeply if you journey through news websites. For his part, he’s been working on improving both NewsLook’s own video metatagging and the ability to match that with text. Now he’s got to convince more customers to make the integration.

Using a license model — “we’re not really an ad company” — NewsLook has found its customers in three segments. He sells to content aggregators like LexisNexis and Cengage, and he sells to news companies. It’s the third area, though, vertical sites, that represent the biggest growth opportunity, especially in the tech area. NewsLook, with its video emphasis, is now partnering with text-centric NewsCred, looking for joint opportunities.

Lessons Learned:

  • Think niche. Think video. Both have audiences that may be paying ones; video ad rates are still holding up far better than text.

Deseret News Service and Ok.com

Clark Gilbert caused quite a stir when he took the reins at Utah’s largest newspaper company two years ago (“Out of the Western Sky, It’s a Hyperlocal, Worldwide Mormon Vertical”). Combining Harvard Business smarts, wide media knowledge, and traditional religious values, Gilbert promised to reshape the LDS-owned media Utah media properties in a way no one else could. Now, midway through that Utah transformation, he’s also moving on a wider world of syndication.

Ok.com has launched. It’s a movie guide like no other. Less Rotten Tomatoes and more wholesome salad, it is a “family media guide.” It’s social (Facebook login) with user-generated comments and ratings, and it offers many of the features (trailers, photos, theater times, online ticketing) that you’d expect. It’s also just the beginning. Ok.com will add TV listings, books, music, and other media to its site. Just syndicated, it so far has signed up a half-dozen customers.

“We want to own the family brand,” Gilbert says, citing his own commissioned research to indicate that it could be a large market. His segmentation of faith-based readers finds not only great dissatisfaction with the perceived amorality of Hollywood, but also questioning of the values of mainstream media.

To address the latter market: the new Deseret News Service, a “values-oriented syndication service.” That service, available for both print and digital, now reaches five markets, with a couple of dozen more on the horizon.

Business models, like cars.com, Gilbert notes, include both straightforward license fees and revenue share models, with Deseret selling advertising.

Gilbert, ever the modeler, believes Deseret is creating one for the industry.

“If you look at the product strategy, we started with the newspaper. We knew we couldn’t be good at everything…..For the Deseret News, that meant our six areas of emphasis [Family, Financial Responsibility, Values in Media, Education, Faith, and Care for the Poor]. For other newspapers, that can be something else. For Washington Post, it is politics. For Sarasota, it is retirement. What I’ve seen in the failure of the newspaper industry is that we’ve lost half our resources, but we’re going to cover it all rather than having the rigor to say, ‘What are we the best at?’

“The web rewards deep expertise. You have a lot of newspapers with high cost structures, producing average commodity news. [We looked] at what can can be the best in the country at. That led to a national edition in print and now syndication.”

Lessons Learned:

  • Combine your values — editorial, religious, or whatever — with the best web tools of the day to satisfy currently unsatisfied audiences. Then scale.

The AllMedia Platform

Critical Media CEO Sean Morgan may be the last man standing whose career has spanned syndication from 1.0 through 3.0. A founder of Screaming Media, circa 1995, his Critical Media company has been building syndication and other products (media monitor Critical Mention, video capture and creation platform Syndicaster, news video licensor Clip Syndicate) since 2002. Now, his company has produced AllMedia. Its primary function: a platform allowing clients “to collect and curate user-generated video content from their online communities.” It’s another component of its analytics-based enterprise business.

Morgan’s play here is wider than syndication, but syndication plays a key role. Critical Media’s technologies offer publishers (and others) value. In return, Critical gets the right to license news video assets, and it has amassed three million of them, and 100,000 are being added monthly; 350 (200 newspaper; 150 broadcast) local media companies are participating in Critical products. Clip Syndicate, its news video product, isn’t yet well promoted, but when it is, it could be powerful. It already enables “grab a channel” functionality for licensees. Clip Syndicate operates on a 50/50 revenue share model, with Morgan saying he is getting $21.40 CPM rates. The goal: monetize the “the biggest news video archive.”

Lessons Learned:

  • Syndication may be a long-term proposition, taking years of building infrastructure, or partnering with those who do.
  • It’s not the content — it’s the metadata about the content that unlocks its value, allowing niching and enabling product creators and editors to find what they need.

California Watch

Now incorporating content from its Bay Citizen merger, California Watch continues to expand out its syndication business. Executive director Robert Rosenthal estimates the news startup will take in about $750,000 this year in licensing money, funding about 10 percent of its budget (“The newsonomics of the death and life of California news”). California Watch offers yearly, monthly, and à la carte sales.

Its model really is the old-fashioned media wire, vastly updated with multimedia at the core and a strong enterprise journalism emphasis. With 16 significant media partners throughout California, just adding NBC Bay Area and including big TV stations and newspapers, it has been able to double some of the prices it charges over time. Further, it’s on the verge of syndicating to a major national/global news player. “Don’t silo potential audience by geography. A good story from a neighborhood in San Francisco may be the top story on the Internet one day,” Rosenthal says.

Like a traditional wire, its value is in more than its stories. It also acts as a news budget or tipsheet for subscribing news editors. With one of the largest news contingents in the state capital, Sacramento, for instance, it helps drive coverage overall.

Lessons Learned:

  • Collaboration with customers creates utility as well as content itself — and cements financial relationships.
  • Syndicated content, here, works on the older concept of scale: Do it once and distribute to many, without the burden of legacy costs and constraints.

Upworthy

Upworthy is like Hollywood Squares for progressives. No Whoopi Goldberg, but nine rectangles of meaningful video, well described by the Times’ David Carr.

Launched in March. It’s an on-ramp for Facebook, feeding the kinds of videos it prizes into the social sphere with headlining that would make a tabloid editor proud. Founder Eli Pariser (of Moveon.org and author of The Filter Bubble) says he borrowed headlining techniques from Slate, which he says writes “the best headlines on the web,” without slavishly pointing at Google search engine optimization. (Examples: “Donald Trump Has Pissed Off Scotland” and “How a 6-Year-Old With Ignorant Parents Just Became the Best Republican Presidential Candidate“).

Its declaration defines its would-be audience: “At best, things online are usually either awesome or meaningful, but everything on Upworthy.com has a little of both. Sensational and substantial. Entertaining and enlightening. Shocking and significant. That’s what you can expect here: No empty calories. No pageview-juking slideshows. No right-column sleaze. Just a steady stream of the most irresistibly shareable stuff you can click on without feeling bad about yourself afterwards.”

Upworthy is really syndication simplified. It uses the social sphere to see content re-used. Its currency isn’t licensing fees; no money changes hands in its viral promotion of content. Currently, its single revenue source is referral fees it gets from progressive organizations that pay it on a cost-per-acquisition basis for traffic.

Lessons Learned:

  • People — many, many people — will do the syndication for you if you learn the tricks and trades of headlining, SEO, and the social rumble. While Upworthy’s referral-fee business model may have limited extension, its use of social to extend syndication (perhaps with sponsorships) can be used by others.

Consider Syndication 3.0 a puzzle, with more of the parts found but the full picture still incomplete. Technology, as in all things digital, plays a midwife role, but understanding customer use — and helping would-be customers imagine use — is fundamental. Let’s face it: Costly content creation must be paid for somehow, as ad revenues falter and reader revenues build slowly. Making more use of the content that has been created makes basic sense, and the basics of that business are being built out anew.

July 26 2012

14:00

The newsonomics of Amazon vs. Main Street

Order it on Amazon. Then run to your front door and have it handed to you. The news of Amazon’s same-day delivery blitzkrieg — first explained in depth in an excellent Financial Times piece — elicited a near-maniacal laugh among newspaper companies: What next?

Of course, the impact of Amazon’s move extends well beyond the further toll it may take on the ever-shrinking newspaper business — but that crater-creating possibility may well be the biggest news of a big news summer. Advertising — in Amazon-contested markets — will never be the same.

We’ve known that newspaper advertising revenues are in a deep, downward spiral — higher single digits this year, with early budget guesses showing the same for 2013. In the U.S., overall ad revenues are half what they were five years ago, down $25 billion a year from 2007.

Here’s what most hurts most about the new Amazon threat: It aims directly at the one category of newspaper advertising that has fared the best, retail.

Classifieds has decimated by interactive databases. National has migrated strongly digital. Retail, which made up of just 47 percent of newspaper ad revenues 10 years ago, is now up to 57 percent of newspaper totals. Now that advertising, albeit in just a few markets initially, will have to compete with Amazon-forced marketplace change.

Amazon, of course, isn’t targeting newspaper revenues. It’s targeting customers — selling more to current ones and engaging new ones. Further hits to newspaper revenue are just another unintended consequence of accelerating disruption of all business as usual.

The same-day push is built on strategies long in the making. Amazon knew its day of reckoning on its sales tax exemption would come. Like all big, smart companies with legions of lawyers and lobbyists, it delayed the inevitable, and with each delay, built market strength and cash.

Now the jig is finally up. Combine revenue-starved states and the late-arriving sense that Internet business no longer needs a societal jumpstart, and Amazon is being forced to charge sales taxes, though it negotiated their arrival with great agility. The exemption allowed Amazon an incredible price advantage, and many of us have been glad to take advantage of it. Not having to charge customers four to nine percent in sales in taxes (which land-based merchants couldn’t avoid) allowed it to provide lower prices.

Amazon knew this day would come. What the market didn’t know was that sales tax settlements would lead to Amazon quickly flipping its model. It had paid sales taxes in a few states, forced to do that in places it had warehouses. So it placed those warehouses close enough to customers (Nevada for Californians, for instance) to make two-day shipping a snap. Now, with the tax changes underway (it’s estimated that Amazon will be on the hook for sales taxes for half the U.S. population) , it no longer needs to selectively place vast warehouses in only a few states — it can place them everywhere and much closer to customers.

Today, if you’re in Baltimore, Boston, Chicago, Indianapolis, New York City, Philly, Seattle or D.C. , you can place an order and it the same day through Local Express Delivery. That becomes Amazon’s base program. It is now building out that simple concept with 7-Eleven distribution lockers and much more, city by dense city. Behind that new delivery service stands an array of back-end technologies, analytics, and logistics that far surpass what anyone else possesses. Even now, to get a sense, of what’s behind the evolving system, just check out the left-hand navigation on this page.

The program builds on the smarts of Amazon Prime, whereby 10 million Amazon customers pay $79 a year and get “free” two-day shipping. Same-day is just the next logical step, both for delivery of goods and deepening of customer relationships and selling opportunities — which, remember, increasingly include media (“The newsonomics of Amazon’s Prime/Subscription Moves”).

The unintended impacts of Amazon’s same-day push will be as intriguing as the ones we can foresee. Just for starters:

  • Will local advertising expand or retract? Retailing will be more intensely competitive, and anti-Amazon appeals need to be transmitted somehow, via smartphone, websites, print, community events, and more. Was SoLoMo just a dream, or is it now a counter-strategy? (Newspaper companies efforts to become regional ad agencies, ironically, may get a boost from the Amazon move.) Preprints, which may total as much as 40 percent of the $11 billion or so U.S. dailies take in as “retail,” will be a prime front here, one way or the other. While retail advertising impacts could be substantial, brand advertising may well become more important, as online buyers decide among brands in different ways.
  • Will newspapers be forced to accept still another death blow to their fortunes, as retail ads are further disrupted? The impact on print is up in the air. Further, Find ‘n Save, a fledgling newspaper-consortium-owned Amazon competitor finds itself even more outmatched as same-day delivery further trumps one of its key differentiations.
  • Will Google, with all its eggs in the ad basket, find unexpected competition, as Amazon further disintermediates advertising itself, becoming the first and only stop between “I want this” and delivery of the good? Will advertising itself be replaced to larger degree as manufacturers are forced to differentiate themselves within Amazon, maybe moving marketing spend there?
  • What will cityscapes and shopping centers of all kinds look like if Amazon’s plans succeed? Imagine a cityscape without big box stores, Walmart, Best Buy, and Bed Bath & Beyond? Impossible, you say? How about one without Borders, Tower Records, and Blockbuster Video, all of which have left hulking holes in the American suburban landscape. Nothing is safe from digital disruption; nothing, holy or commercial, is sacred. Optimistically, a couple of dozen communities are creating next-generation uses for these eyesores, as the big box reuse movement (good rundown and reuse wiki via Slate) has been unexpectedly spawned. Will big boxes, the spirit-sapping, wallet-supporting icons of our age of disenchantment, take the brunt of Amazon’s assault, or will it be smaller stores?
  • What might it do to employment? Will CVS checkers be replaced by more truck drivers and order fillers? Or is the future simply more robotic, as Amazon’s purchase of warehouse-product-picking Kiva Systems changes the supply chain? No, it’s not sci-fi, though it appears to be the year of the “robots,” as computers do everything from local “reporting” (Journatic) to filling our orders for toothpaste and printer ink.

Let’s take a first look at the competition, as we look at the newsonomics of Amazon vs. Main Street.

In one corner, there’s Amazon. Its strengths:

  • Quick findability, in your living room.
  • Delivery to your door, or near it, now “same day.”
  • Wide selection, often more than is available locally (but sometimes less).
  • Wide-ranging and increasingly deep user reviews.
  • Guaranteed satisfaction or easy return.

In the other corner, it’s Main Street. Its appeals:

  • Buy it now. Pick it up. See, buy, use. Ad veteran Randy Novak says that more than 80 percent of retail sales now come from areas within 15 minutes of a stores’ location.
  • The visual and tactile shopping experience; NAA’s Randy Bennett points to retailers’ role as “showcasers.” Then, there’s shopping as entertainment, plainly as much heaven for some as hell for others.
  • Habit.
  • Getting out of the house once in a while.
  • Support of the local guy.

Proximity here is fascinating. The local edge has long been proximity, that 15-minutes-away appeal. Now, Amazon counters that with 12 inches away (your nearest screen) and some number of hours, as Americans do their new arithmetic on buying.

Beyond proximity, there’s price. Yes, Amazon is acknowledging that the 20-year-long sales tax furlough it got is finally ending. It knows it will have to add that 4-9 percent of sales tax to its prices across the country within several years. So where will that tacked-on pricing put it?

Let’s remember that its world-class algorithms track competitors’ pricing in real time. After all, that’s been — often to Amazon investors’ chagrin — CEO Jeff Bezos’ strategy from the beginning: sacrifice profit margin for market share and growth. Its last quarterly report showed 1 percent net profit — on $13 billion of sales. Expect it to match or beat on many items, absorbing low margins, and maybe loss leaders to win market share from Main Street.

How much room, with tight margins, will Amazon have to maneuver? That could tell the tale here. Squeezing margins — lowering prices — will have one at least near-term consumer impact. If you’re selling the same vitamins, shoes, or dog food as Amazon, you’ll have to lower some prices to compete. The cautionary tales of bookstores and music stores, and now Best Buy, show that consumers don’t find a lot of sense in paying more locally than through the web.

As we consider price, the shipping fee comes clearly into view. With Prime, the innovation that paved this road, members don’t worry about each shipping cost. Pay once — that $79 annual fee that’s been remarkably stable — you get shipping “free.” Look for Amazon to embed free same-day shipping into another similar program, Prime Same-Day, for $99 or $139, or include it for anyone spending more than $500 a year, for example; we believe that Prime members may average $1,500 in annual purchases already. As with Prime and with Amazon overall, again, build market share for the long term, even at the risks of low profitability or even loss.

There’s a lot of nuance we’ll miss in the first passes on the topic, of which Farhad Manjoo had the best. This commercial initiative is aimed of course at goods, not services. It’s the goods-selling competitive and geographic landscape — think Amazon categories like drugs, clothes, toys, and electronics — that could be transformed. Services, like those that we use today — health care, restaurants, fitness centers, and, of course, coffee shops — would be unaffected. In an ideal world, we may have less time for mundane shopping and more for more fruitful activity. Or we may have big empty buildings, fewer community jobs, and less socializing. And, maybe people will have more time to read. We’ll probably see all these things happening at once.

Amazon, of course, just wants to make money. Yet, it has already, in part, disintermediated shopping itself. Expect it to be extend its Subscribe (interesting choice of words, right?) and Save program, wherein you get small discounts for getting regular deliveries of goods, like detergent, that you reorder over and over again. Expect it to try to change our mindsets from shopping to deciding and then letting it go, and getting it delivered without a second thought — changing the very notion of shopping.

With price differentiation now driven by algorithm, with ad offers driven by those with the biggest data, and now with delivery of our daily goods newly rationalized, it looks like those that prize news creation best continue to look elsewhere for revenue. That’s one of the reasons I’ve become increasingly enthusiastic about reader revenue. Yes, newspapers could repurpose their daily delivery systems here, to actually aid Amazon, but that seems like a real longshot. The technocrats of commerce, Amazon, Google, Facebook and Apple, are the biggest game in town — and increasingly, they want to be the only one.

Photo by Stephen Woods used under a Creative Commons license.

July 25 2012

15:12

Who should see what when? Three principles for personalized news

I really don’t know how a news editor should choose what stories to put in front of people, because I don’t think it’s possible to cram the entire world into headlines. The publisher of a major international newspaper once told me that he delivers “the five or six things I absolutely have to know this morning.” But there was always a fundamental problem with that idea, which the Internet has made starkly obvious: There is far more that matters than any one of us can follow. In most cases, the limiting factor in journalism is not what was reported but the attention we can pay to it.

Yet we still need news. Something’s got to give. So what if we abandon the idea that everyone sees the same stories? That was a pre-Internet technological limitation, and maybe we’ve let what was possible become what is right. I want to recognize that each person not only has unique interests, but is uniquely affected by larger events, and has a unique capacity to act.

If not every person sees the same news at the same time, then the question becomes: Who should see what when? It’s a hard question. It’s a question of editorial choice, of filter design, of what kind of civic discussion we will have. It’s the basic question we face as we embrace the network’s ability to deliver individually tailored information. I propose three simple answers. You should see a story if:

  1. You specifically go looking for it.
  2. It affects you or any of your communities.
  3. There is something you might be able to do about it.

Interest, effects, agency. These are three ways that a story might intersect with you, and they are reasons you might need to see it.

But turn them around and they say: if a story doesn’t interest me, doesn’t affect me, and there’s nothing I could do anyway, then I don’t need to see it. What about broadening our horizons? What about a shared view of unfolding history? The idea that we will each have an individualized view on the world can be somewhat unsettling, but insisting on a single news agenda has its own disadvantages. Before getting into detailed design principles for personalized news, I want to look at how bad the information overload problem actually is, and how we came to believe in mass media.

Too much that matters

A solid daily newspaper might run a couple hundred items per day, just barely readable from cover to cover. Meanwhile, The Associated Press produces about 15,000 original text stories every day (and syndicates many times that number) — far more than one person can consume. But the giants of journalism are dwarfed by the collaborative authorship of the Internet. There are currently 72 hours of video uploaded to YouTube every minute, which now houses more video than was produced during the entire 20th century. There are 400 million tweets per day, meaning that if only one tweet in a million was worthwhile you could still spend your entire day on Twitter. There are several times more web pages than people in the world.

All of this available information is a tiny fraction of everything that could be reported. It’s impossible to estimate what fraction of stories go “unreported,” because there is no way to count stories before they’re written; stories do not exist in nature. Yet from the point of view of the consumer, there is still far, far too much available. Ethan Zuckerman has argued that the limiting factor in foreign reporting is not journalistic resources, but the attention of the consumer. I suspect this applies to most other kinds of journalism as well; raise your hand if you’ve been carefully following what your city council is up to.

Compared to the news, there is simply very little attention available.

For the single-issue activist, the goal is attention at any cost. But editors have a different mission: They must choose from all issues. There is a huge number of potentially important stories, but only a tiny fraction can be “headlines.” Most stories must languish in obscurity, because you or I cannot hope to read a thousandth of the journalism produced each day. But even the flood of global journalism is a tragically narrow view on the world, compared to everything on the Internet.

How, then, should an editor choose what tiny part of the world to show us? Sometimes there is an event so massive, so universal, it demands attention. Natural disasters and revolutions come to mind. For all other stories, I don’t think there is an answer. We can’t even agree on what problems are important. No single set of headlines can faithfully represent all that matters in the world.

There is more than one public

The Internet is not like broadcast technology — print, radio, TV. But the routines and assumptions of journalism were formed under the technical constraints of the mass media era. I wonder if we have mistaken what was possible for what is desirable.

The first technical limitation I want to consider was this: Everyone had to see the same thing. This surely reinforced the seductive idea that there is only one “public.” It’s an especially seductive idea for those who have the ability to choose the message. But there’s something here for the rest of us too. There’s the idea that if you pay attention to the broadcast or read the daily paper, you’re informed. You know all there is to know — or at least everything that’s important, and everything everyone else knows. Whatever else it may be, this is a comforting idea.

Media theorists also love the idea of a unified public. Marshall McLuhan was enamored with the idea of the global village where the tribal drums of mass media informed all of us at the same time. Jürgen Habermas articulated the idea of the public sphere as the place where people could collectively discuss what mattered to them, but he doesn’t like the Internet, calling it “millions of fragmented chat rooms.”

But the idea of a unified public never really made sense. Who is “us”? A town? A political party? The “business community”? The whole world? It depends on the publication and the story, and a few 20th-century figures recognized this. In The Public and Its Problems, written in 1927, John Dewey provided an amazing definition of “a public”: a group of people united by an issue that affects them. In fact, for Dewey a public doesn’t really exist until something affects the group interest, such as a proposed law that might seriously affect the residents of a town.

We can update this definition a little bit and say that each person can belong to many different publics simultaneously. You can simultaneously be a student, Moroccan, gay, a mother, conservative, and an astronomer. These many identities won’t necessarily align with political boundaries, but each can be activated if threatened by external events. Such affiliations are fluid and overlapping, and in many cases, we can actually visualize the communities built around them.

The news isn’t just what’s new

There was another serious technical limitation of 20th-century media: There was no way to go back to what was reported before. You could look at yesterday’s paper if you hadn’t thrown it out, or even go to the library and look up last year on microfilm. Similarly, there were radio and television archives. But it was so hard to rewind that most people never did.

Each story was meant to be viewed only once, on the day of its publication or broadcast. The news media were not, and could not be, reference media. The emphasis was therefore on what was new, and journalists still speak of “advancing the story” and the “top” versus “context” or “background” material. This makes sense for a story you can never go back to, about a topic that you can’t look up. But somehow this limitation of the medium became enshrined, and journalism came to believe that only new events deserved attention, and that consuming small, daily, incremental updates is the best way to stay informed about the world.

It’s not. Piecemeal updates don’t work for complex stories. Wikipedia rapidly filled the explanatory gap, and the journalism profession is now rediscovering the explainer and figuring out how to give people the context they need to understand the news.

I want to go one step further and ask what happens if journalism frees itself from (only) giving people stories about “what just happened.” Whole worlds open up: We can talk about long-term issues, or keep something on the front page as long as it is still relevant, or decide not to deliver that hot story until the user is at a point where they might want to know. Journalism could be a reference guide to the present, not just a stream of real-time events.

Design principles for personalized news

If we let go of the idea of single set of headlines for everyone based around current events, we get personalized news feeds which can address timescales longer than the breaking news cycle. Not everyone can afford to hire a personal editor, so we’ll need a combination of human curators, social media, and sophisticated filtering algorithms to make personalized feeds possible for everyone.

Yet the people working on news personalization systems have mostly been technologists who have viewed story selection as a sort of clickthrough-optimization problem. If we believe that news has a civic role — that it is something at least somewhat distinct from entertainment and has purposes other than making money — then we need more principled answers to the question of who should see what when. Here again are my three:

Interest. Anyone who wants to know should be able to know. From a product point of view, this translates into good search and subscription features. Search is particularly important because it makes it easy to satisfy your curiosity, closing the gap between wondering and knowing. But search has proven difficult for news organizations because it inverts the editorial process of story selection and timing, putting control entirely in the hands of users — who may not be looking for the latest breaking tidbit. Journalism is still about the present, but we can’t assume that every reader has been following every story, or that the “present” means “what just happened” as opposed to “what has been happening for the last decade.” But for users who do decide they want to keep up to date on a particular topic, the ability to “follow” a single story would be very helpful.

Effects. I should know about things that will affect me. Local news organizations always did this, by covering what was of interest to their particular geographic community. But each of us is a member of many different communities now, mostly defined by identity or interest and not geography. Each way of seeing communities gives us a different way of understanding who might be affected by something happening in the world. Making sure that the affected people know is also a prerequisite for creating “publics,” in Dewey’s sense of a group of people who act together in their common interest. Journalism could use the targeting techniques pioneered by marketers to find these publics, and determine who might care about each story.

Agency. Ultimately, I believe journalism must facilitate change. Otherwise, what’s the point? This translates to the idea of agency, the idea that someone can be empowered by knowing. But not every person can affect every thing, because people differ in position, capability, and authority. So my third principle is this: Anyone who might be able to act on a story should see it. This applies regardless of whether or not that person is directly affected, which makes it the most social and empathetic of these principles. For example, a politician needs to know about the effects of a factory being built in a city they do not live in, and if disaster recovery efforts can benefit from random donations then everyone has agency and everyone should know. Further, the right time for me to see a story is not necessarily when the story happens, but when I might be able to act.

These are not the only reasons anyone should ever see a story. Beyond these principles, there is a whole world of cultural awareness and expanded horizons, the vast other. There are ways to bring more diversity into our filters, but the criteria are much less clear because this is fundamentally an aesthetic choice; there is no right path through culture. At least we can say that a personalized news feed designed according to the above principles will keep each of us informed about the parts of the world that might affect us, or where we might have a chance to affect others.

Photo of zebras in Tanzania by Angela Sevin used under a Creative Commons license.

May 03 2012

14:55

The newsonomics of Pricing 101

When the price of your digital product is zero, that’s about how much you learn about customer pricing. Now, both the pricing and the learning is on the upswing.

The pay-for-digital content revolution is now fully upon us. Five years ago, only the music business had seen much rationalization, with Apple’s iTunes having bulled ahead with its new 99-cent order. Now, movies, TV shows, newspapers, and magazines are all embracing paid digital models, charging for single copies, pay-per-views, and subscriptions. From Hulu Plus to Netflix to Next Issue Media to Ongo to Press+ to The New York Times to Google Play to Amazon to Apple to Microsoft (buying into Nook this week), the move to paid media content is profound. The imperative to charge is clear, especially as legacy news and magazines see their share of the rapidly growing digital advertising pie (with that industry growing another 20 percent this year) actually decline.

Yes, it’s in part a 99-cent new world order as I wrote about last week (“The newsonomics of 99-cent media”), but there are wider lessons — some curiously counterintuitive — to be learned in the publishing world. Let’s call it the newsonomics of Pricing 101. The lessons here, gleaned from many conversations, are not definitive ones. In fact, they’re just pointers — with rich “how to” lessons found deeper in each.

Let’s not make any mistake this week, as the Audit Bureau of Circulation’s new numbers rolled out and confounded most everyone. Those ABC numbers wowed some with their high percentage growth rates. Let’s keep in mind that those growth numbers come on the heels of some of the worst newspaper quarterly reports issued in awhile. Not only is print advertising in a deepening tailspin, but digital advertising growth is stalled. Take all the ABC numbers you want and tell the world “We have astounding reach” — but if the audience can’t be monetized both with advertising and significant new circulation revenues, the numbers will be meaningless.

When it comes to dollars and sense, pricing matters a lot.

Let’s start with this basic principle: People won’t pay you for content if you don’t ask them to. That’s an inside-the-industry joke, but one with too much reality to sustain much laughter. It took the industry a long time to start testing offers and price points, as The Wall Street Journal and Walter Hussman’s Arkansas Democrat-Gazette provided lone wolf examples.

The corollary to that principle? If you don’t start to charge consumers — Warren Buffett on newspaper pricing: “You shouldn’t be giving away a product that you’re trying to sell.” — then you can’t learn how consumers respond to pricing. Once you start pricing, you can start learning, and adjust.

We can pick out at least nine emerging data points:

  • 33-45 percent of consumers who pay for digital subscriptions click to buy before they ever run into a paywall. That’s right — a third to a half of buyers just need to be told they will have to pay for continuing access, and they’re sold. As economists note that price is a signal of value, consumers understand the linkage. Assign what seems to be a fair price, and some readers pay up, especially if they are exposed to a “warning” screen, letting them know they’ve used up of critical number of “free” views. Maybe they want to avoid the bumping inconvenience — or maybe they just acknowledge the jig’s up.
  • If print readers are charged something extra for digital access, then non-print subscribers are more likely to buy a digital-only sub. Why pay for digital access is the other guys (the print subscribers) are getting it thrown in for “free”? Typically, Press+ sees a 20-percent-plus increase in signups on sites that charge print subscribers something extra. That extra may be just a third or so of the price digital-only subscribers pay (say, $2.95 instead of $6.95), but it makes a difference. Consequently, Press+ says 80-90 percent of its sites charge print subscribers for digital access. The company now powers 323 sites and thus has more access to collective data than any other news-selling source.
  • You can reverse the river, or at least channel it. The New York Times took a year, but figured it out righter than anyone expected. It bundled its Sunday print paper (still an ad behemoth) with digital, making that package $60 or so a year cheaper than digital alone. The result, of course, is that Sunday Times home delivery is up for first time since 2006. It’s not just NYT or the L.A. Times which have embraced Sunday/digital combos. In Minneapolis, the Star Tribune began a similar push in November. Now, of its 18,000 digital-only subscribers, 28 percent have agreed to an add on the Sunday paper, for just 30 cents a week, says CEO Mike Klingensmith (“A Twin Cities turnaround?”). So we see that consumers may well be more agnostic about platform than we thought. Given them an easy one-click way of buying even musty old print, and they will. Irony: If you hadn’t charged them for digital access, you probably wouldn’t have sold them on print.
  • New products create new markets. 70 percent of The Economist‘s digital subscribers are not former print subscribers, says Paul Rossi, managing director and executive vice president for the Americas. That’s surprising in one sense, but not in another. Newspaper company digital VPs will tell you that they’re surprised to see how little overlap there is between their print audience customer bases and their digital ones. The downside here: Many print customers seem not to value digital access that much. The Star Tribune is finding a low take rate of 3 percent of its Sunday-only print subscribers willing to take its digital-access upsell. One lesson: The building of a new digital-mainly audience won’t be easy and will require new product thinking; it’s not that easy just to port over established customers.
  • The all-access bundle must contain multiple consumer hooks. Sure, readers like to get mobile access as well as desktop and print, and maybe some video. Yet some may especially prize the special events or membership perks they are offered, as the L.A. Times is banking on (and start-ups Texas Tribune, MinnPost, and Global Post have applied outside the paywall model). Some will like the extras, like The Boston Globe telling its new 18,000 digital subscribers, as well as its print ones, that they now get “free” Sunday Supper ebooks (“The newsonomics of 100 products a year”). Sports fanatics or business data lovers will find other niches to value — and ones that make the whole bundle worthwhile. Archives — and the research riches they offer — will prove irresistible to some. In 2012, a bundle may offer a half dozen reasons to buy, casting a wide net, with the hope that at least one shiny lure will reel in the customers. By 2013, expect “dynamic, customized offers,” targeting would-be buyers by their specific interests to be more widely in use.
  • While pageviews may drop 10-15 percent with a paywall, unique visitors remain fairly constant. We see the phenomenon of those who do hit a paywall one month coming back in subsequent months, rather than fleeing forever. “It may be the second, third, or fourth month before someone says, ‘I guess I am a frequent visitor here, and I’ll play,’” says Press+’s Gordon Crovitz.
  • Archives find new life. Archives have lived in a corner of news and magazine websites for a long time. They’ve been used, but not highly used or highly monetized. Now, courtesy of the tablet, and a new way to charge, The Economist is finding that 20 percent of its single copy sales are of past issues. Readers will pay for the old in new wrappers, whether back e-issues, or niched ebooks. The all-access offer can be much wider than cross-platform, or multi-device. It can extend across time, from a century of yesterdays to alerts for tomorrow.
  • News media is probably underpriced. Take the high-end Economist. CEO Andrew Rashbass — speaking to MediaGuardian’s Changing Media Summit 2012, in a recommended video — said that a survey of its subscribers showed that a majority didn’t know how much they were paying for the Economist. When pressed to guess, most over-estimated the price. At the Columbia (Missouri) Daily Tribune, an early paywall leader in the middle of America, a recent price increase to $8.99 from $7.99 has so far resulted in no material loss of subscribers. At Europe’s Piano Media, early experience in Slovakia and Slovenia is that price isn’t a big factor, says Piano’s David Brauchli. “Payment for news on the web is really more a philosophical mindset rather than economic. People who are opposed to paying will always opposed to paying and those who see the value of paying don’t mind paying no matter what the price is.” That suggests pricing power. It makes sense that publishers, new to the pricing trade, have approached it gingerly. Yet the circulation revenue upside may well be substantial.
  • Bundle or unbundle — what’s the right way? Mainly, we don’t know yet, and the answer may be different for differing audience segments. The Economist started with print being a higher price than a separate digital sub. Then it raised the digital price to match that of print — to assert digital value. It now offers all-access: one price gets you both. Next up: You can buy either print or digital for the same price, but if you want both, you’ll pay more. It’s an evolution of testing, and so far, it’s been an upward one.

Overall, this is a revolution in more than pricing. It’s a revolution in thinking and, really, publisher identity.

The Boston Globe’s Jeff Moriarty sums it up well, as his company aims (as has the Financial Times before it: “The newsonomics of the FT as an internet retailer”) to emulate a little digital-first company called Amazon:

I think overall publishers have to start thinking more like e-commerce companies. More like Amazon. You can’t just throw up a wall or an app and expect it to just sell itself. We’re still building that muscle here at the Globe, and some of our colleagues in the industry are even farther along. We have extensive real-time and daily analytics and are employing multivariate testing to try offers and designs to refine the experience that works best for each type of user.

Photo by Jessica Wilson used under a Creative Commons license.

April 26 2012

13:30
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