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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.

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.

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.

January 19 2012

15:00

The newsonomics of signature content

What’s your signature content?

Quick: If somebody buttonholed you in an elevator, a school play, or a bar, and said, “Why should I pay you for that?” — what do you tell them?

Each passing week, it seems we’re further into the age of signature content. That only makes sense: If the death of distance is now old news, if everything is available everywhere at the touch of button or the swipe of a finger, then what makes any news or entertainment brand stand out amid this plague of plenty?

Closed systems — from three or four TV networks to less than a dozen big movie studios to a half-dozen major magazine publishers to geographically dominant newspapers — made signature content less important. Sure, big shows and big names have always driven media to some extent, but now, media without big names or big shows are going to get lost in the ether. Take Hulu’s announcement last week about Hulu Originals. You do have to wonder if Hulu’s fictional 13-episode “Battleground,” about a dysfunctional political campaign, will be bested by the Republican reality show in progress when the show debuts next month. Hulu is also bringing a Morgan Spurlock series for a second run, and probably will feature one other new program. The Hulu announcement joins Netflix’s own foray into signature content. Three years ago, would the thought of Netflix signing up Little Steven to do an original comedy series have crossed anyone’s imagination?

Hulu and Netflix both need to distinguish themselves in the market — not only from each other, but from Comcast, DirecTV, and Time Warner, among others. They need to buy protection as supposed masses consider cutting the cord on packaged services, Roku-ing and Apple-enabling Internet video onto their living-room screens. In movies and TV, we’re quickly morphing from a world of news and entertainment anywhere — get all of these things, somewhat haphazardly (Comcast Xfinity, for instance) on all of our devices — to one in which consumers ask, “What special do you have for me, in addition to my all access? Yes, All-Access, the cool feature of 2011, will quickly graduate from a wow to an expectation.

Why as consumers should we pay $7.99 (down from an initial $9.99) to Hulu Plus, when the same stuff (kinda sorta) is available through Boxee, or Apple TV, or Netflix, if I can find it? Why am I paying $7.99 a month (apparently the magic price of the moment) to Netflix for a catalog of films that is both voluminous and too often lacking what I want? Consumers are going to be asking that question a lot more.

Publishers, distributors, aggregators, and networks all want more money, and they’ve seen — courtesy of tablets and All-Access — that consumers are now more ready to pay for digital content than ever before.

Forget “content wants to be free.” Now content wants a fee. And everyone from Time Inc to The New York Times to the Memphis Commercial Appeal to Hulu’s co-owners (Fox, Disney, and Comcast) see gold. They see another digital revenue stream, in addition to advertising or to cable subscription fees. Yet they are increasingly believing they’ve got to up the ante (and Hulu is raising new funds to buy original programming) to compete and to win those consumer dollars.

News companies — at least one in ten U.S. daily newspapers and many consumer magazines — are rapidly embracing digital circulation revenue and All-Access. Yet results have been quite uneven. That makes sense: Consumers will pay for digital news, feature, and entertainment content, but they don’t want to overpay, and they’ll increasingly be forced to make choices. Buy this; let that go.

Let’s be clear. Paid media is paid media, and the original-programming pushes of the video companies have great meaning for news and magazine companies, global to local. For them, the calculus is similar. News and magazine brands can launch new products, though that’s out-of-their-DNA-tough for many. So they’ve focused primarily on sub-brands, many of which are people. These are the faces of news and magazines; many of these have become hot commodities over the last several years (“The newsonomics of journalistic star power“) as companies try to distinguish themselves — and give readers and viewers a reason to pick them out of the crowd.

How, though, can media companies afford to pay a premium for branded, promotable talent, talent that may open consumers’ pocketbooks? That’s easy: spend less on other content. So we’ve got the rise of user-generated content, obtainable free or cheap, and all kinds of new syndicate action from Demand Media to startup Ebyline (and maybe NewsRight), all trying to make it cheap and easy to get more medium- and higher-quality content more cheaply. What’s old is new again — as a young features editor, I got regular visits from syndicate and wire salesman, ranging from high-quality to the Copley News Service, that sold its stuff by the pound.

Another prominent model no news or magazine company can afford to ignore: The Huffington Post. Back to the early days when Betsy Morgan first teamed up with Arianna, HuffPost has worked this evolving content pyramid. At the top, a few highly paid site faces, many opinionated faces (some paid, most not), and then low-cost aggregation, much of it AP, headlined with the site’s recognizable swagger.

Then, of course, there’s the old standby: staff cutting. We’ve seen lots of staff cutting. In fact, these days, while we see some announcements like Media General’s big Tampa cut, most of the bloodletting is less public, but no less real. If you need to pay more to stars, and ad revenues are still declining, staff cuts of less than premium content (and those that produce it) make economic sense (“The newsonomics of the new news cost pyramid“). It’s the new news math.

These newsonomics of signature content are getting clearer. Netflix is planning to spend 5 percent of its expenses — or $100 million a year — on original, Netflix-defining content. Hulu is spending about a quarter what Netflix’s total, or $500 million in total, on all content licensing this year. We don’t know how much of that is for original content, but observers believe “Battleground” will cost $15-20 million for its 13 episodes. With its other forays, it will probably spend closer to 10 percent of its content budget on original content.

Curiously, many newspaper newsrooms constitute only 10-20 percent of the overall expenses of a daily newspaper company. So we’re starting to see some new, and old, arithmetic play out here.

Simply, Andy Forssell, Hulu’s SVP of content, explained the cost/benefit ratio to Variety: “…having an original scripted series that hasn’t been seen anywhere else yet is considered the best tool for standing out with either advertisers or viewers.”

As usual, we see the bifurcation of the bigger national brands — those with more audience to gain and more money to spend — and local news brands. While many local newspapers have cut to the bone, with too much of the tissue in the form of experienced, name-brand metro and sports columnists cajoled or drummed into “early retirement,” we see increased branding of stars at places like Time, The New York Times, Fox News, and ESPN. The sports network may be the classic business model of our age, and in its anchors and top analysts — many initially lured from daily newspapers — it has shown the way for many years now.

At the Times, consider business editor Larry Ingrassia’s build-up of business columnists, from veterans Gretchen Morgenson and Floyd Norris to new(er)bies Andrew Ross Sorkin, Brian Stelter, David Carr, Ron Lieber, and David Pogue. And the Times more recently picked up James Stewart from archrival Dow Jones.

At Fox News, Roger Ailes has cannily built the most successful cable news operation not on the interchangeable blondes that provide so much fodder for Jon Stewart and Stephen Colbert, but on O’Reilly and Hannity.

At NBC, the news franchise is so built around Brian Williams that his well received newsmagazine “Rock Center with Brian Williams” is synonymous with its host.

At Time Warner’s CNN and Time, we see the building of a worldly franchise on Fareed Zakaria’s clear-eyed, no-nonsense view of our times.

And then there’s the more local and regional press. Newspapers have long believed that it wasn’t any one or a half-dozen names that sold the paper. They’ve believed the news itself was the star, and the daily information report was the brand. That may be still be true of the Times, the Journal, the Financial Times, the Guardian, and a handful of other national/global news organizations — all of which have substantial, multi-hundred newsrooms that produce branded, unique products. It’s less true of regional and local dailies, many of which still present too much commoditized news in national, business, entertainment, and sports coverage, and have bid goodbye to many faces familiar to readers. Those that have retained familiar faces must do what they can to keep them; all need to recruiting more.

Then they may have a good answer to the question, in one form or another, consumers and advertisers will increasingly ask: What’s your signature content?

September 14 2011

07:51

Newspaper video: Time to reconsider your video strategy?

A few issues have popped up in my reading round the web that make me think that if online video has fallen off your agenda then it may be worth thinking again. A few things make me think that.

Engagement with HTML5 by publishers means that the idea of cross platform (web, tablet etc) video becomes a reality. The recent announcement by FT that they were moving away from the apple fold to deliver their apps from a web base shows a certain maturity in that area. It may not be universal but those publishers who engaged with apps with half an eye to html5 and associated tech are starting to see the benefit. They also have an exit route from Apple’s walled garden.

The announcement that the WSJ is upping it’s online video would, on the surface, seem to be a simple illustration of the point. But theres a bit more to it:

The Journal has expanded its video content in spite of its contract with CNBC, the leading business news network on television, and in spite of the fact that The Journal’s parent has its own business network, Fox Business.  The CNBC contract expires in about 15 months, but already Journal reporters tend to appear more often on Fox than on CNBC.

The shifting approaches of print in particular to the challenge of keeping your voice in a spreading market, often rests on the idea of impartiality. An alignment to Fox is as blunt a move to prove the point as you can get. But if you want to establish a ‘voice’ then video can be a key part of that changing ‘brand’.

Newsless broadcast

But there is also a shift on the other side of that relationship. There is a very clear by broadcasters towards product and not a service focus. That will leave a gap that print will have to backfill. Yes there is a big investment in online delivery services but the commercial driver is very much a product proposition. Most of the large broadcasters are seeing a real benefit in exclusive and value-added programming online. The ‘watch again’ of the iplayer-like channels, the webisodes and web exclusive episodes are all examples of how broadcast has ‘finally’ found its feet online.

I think that news is low on the agenda in a broadcasters strategy. For broadcasters, news is very much a service. It’s often something they have to do as a requirement to a license or a sop to public service. It’s easier to advertise around the x-factor than it is news at ten and that’s where the money will go. Non-broadcast providers will pay the price for that.

If you buy in your video from a third party, expect the prices to go up and the quality, range and relevance to go down. 

LocalTV

Here in the UK, we also have the looming Spector of localTV. There is obviously a new market to explore there. I’m skeptical about the range, depth and return that market will have for journalism but, hey, it never hurts to consider it.

So video gives you a good opportunity to extend your identity and cut free those ties with an increasingly newsless broadcast sector. Just invest a little in understanding the technology underlying the new platforms.In the long run it might be a better investment than simply paying to be on those platforms.

 

June 30 2011

14:00

The newsonomics of the British invasion

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

With the United Kingdom one of the countries suffering the economic doldrums more than the U.S., maybe it’s no surprise that we’re witnessing a British online invasion. In short order, the Guardian, Mail Online, and the BBC, among others, are targeting American eyeballs and wallets in the urgent search for growth.

With Independence Day (from you know who) upon us, and memories of the Beatles’ assault on America rapidly fading into history, let’s look at the newsonomics of this new invasion. It tells us reams about the precarious states of news companies. As they scrape for revenue in the traditional home markets, and transition from print or broadcast to digital, they’re looking for new digital revenue building blocks.

The arithmetical imperative is crystal clear: The huge audiences that the distance-defying Internet has given UK news companies has not yet, largely, been accompanied by huge, even significant, pots of revenue.

Companies like the Guardian have seen this phenomenon: A third of its traffic comes from the U.S., a third from the UK, and a third from elsewhere. I’ve heard that tale widely, from the pre-wall Times, the Telegraph, and the FT, among others. When we first spotted big numbers for UK publishers among U.S. audiences, a lot of people attributed it to George W. Bush, whose cowboy policies alienated some Americans from American media, the idea went, delivering them into the hands of the more trustworthy Brits. But the big U.S. population — a population five times greater than the UK’s — is, W or no W, is still embracing non-national news sites. Maybe the math is fairly simple: We’ve got about a third of the English-reading people in the world, so serving up a third of the audience makes some sense.

While America provides the audience, it doesn’t provide much revenue for most UK news companies. The Guardian derives all but a couple of points of digital revenue from its home market — leaving two-thirds of its audience, in the U.S. and elsewhere, effectively un-monetized. That’s largely true of the other UK-based general news dailies, with the Financial Times much more effective at driving print and digital revenue in the U.S., and the Wall Street Journal, conversely, having figured out how to drive non-U.S. revenue as well. Both, in addition to The New York Times’ long-established sales operations in Europe, are the exceptions that prove the rule about foreign market digital monetization.

As the Guardian, BBC, and Daily Mail plan new offense, each reacts to its woes back home.

The Guardian is in danger of running out of cash within three to five years, at its current trajectory, Guardian CEO Andrew Miller said plainly in mid-June. So he’s leading a top-to-bottom reappraisal of the outfit’s 190-year-old enterprise. On the examination table: a restructuring of the entire company, reducing the number of pages in the six-day-a-week print paper; rethinking (under digital innovator and Guardian editor Alan Rusbridger‘s leadership) what readers expect in print and what online; upping its re-commitment to its open platform strategy led by Matt McAlister; doubling its digital revenue (which currently stands at 17 percent of its total revenue); and getting more money out of the U.S. market.

The Guardian’s U.S. plan includes the deployment of a revitalized editorial staff under Guardian vet Janine Gibson, and a re-strategizing of ad sales in the States. The Guardian’s new plan follows on a failed one, the Guardian America plan, tried and abandoned over several years. The new idea: Don’t put an American face on the trusty Guardian; keep the British face, but offer more British perspective on and from the U.S. The thinking: The Guardian’s very Britishness is why American readers come to its site.

For the Daily Mail, it’s about finding growth in a national news business (Associated Newspapers) that struggled toward revenue break — even last year, even as its parent, the diversified, global DMGT (events, B2B publishing, and institutional investment products), produced £320M in profits.

Mail Online, of course, is the new darling of those who religiously follow Big Numbers. It has surpassed HuffPo to claim the #2 unique visitor trophy globally, behind the New York Times, and a few days ago claimed 77 million global uniques, about a third of those from the U.S. The outlet’s rocket fuel is a heady mix of tabloid gossip fodder, great SEO, aggressive mobile productization, and, now, expanded commercial and editorial staffs in New York and L.A.

The BBC, funded by household TV licenses back home, has seen significant public funding cutbacks and staff reductions, buffeted both by UK politics and by the deep recession. While in the UK, the BBC can’t sell advertising, it can do so outside its home territory. Consequently, it has placed a first big target on the U.S., where it now claims about 18 million uniques.

The BBC’s American build-up is well underway. Herb Scannell, ex of Viacom, and Ann Sarnoff, ex of Dow Jones, joined to head up BBC Worldwide America as president and COO, respectively, last year. Seven weeks ago, Nick Ascheim, ex of the AP and The New York Times, became senior vice president for digital media. Back in 2008, ad veteran Mark Gall began building out the BBC Worldwide America ad sales team, focusing on multi-platform (BBC America TV  + BBC.com) revenue.

Ascheim identifies two major initiatives, as BBC.com — the BBC’s first separate-from-the-mothership website — tries to leverage and build on its found audience. One is video — a core strength of broadcaster BBC, which dominates much of online news video in Britain with its iPlayer — and the other is feature verticals, building beyond the Travel section that BBC built out, with its Lonely Planet acquisition, last year.

Let’s take a quick look at what it will take for the new invasion to be successful, doing a little handicapping of these three entrants:

  • Ad revenue: All the newbies face hyper-competition in the world’s most competitive digital marketing marketplace, one built both on the seemingly paradoxical tricks of leveraging long-term buyer/seller relationships and satisfying the dreaded “23-year-old” media buyer, one who may never have heard much about these foreign brands. Here, give a big lead to the BBC. It’s got a couple of years’ head-start on U.S. sales, and the brand that is most recognizable — and it can sell multi-platform, TV, and digital. Mail Online has a tough effort here, with comparatively little brand recognition and the suspicion that its pageviews are less-than-premium, more TMZ than NYT. The Guardian has a good story, but a history of failed ad attempts, including a Reuters network deal that fizzled. For all three of them, breaking through the noise — and providing more actionable audience analytics — is key.

    Beyond the sales infrastructure, these companies have different experiences monetizing their UK traffic, and that informs what may happen in the U.S. Compare the digital ad revenue per unique visitor for the Guardian and the Mail Online, and we see a differential of four-to-one, in the Guardian’s favor. (The BBC doesn’t break out digital ad revenue well enough for comparison.)

    The Guardian took in £37.5 million in digital revenue in 2010. Using the December ABCe number of 39 million uniques, each unique is worth about £.96, or $1.53 at today’s exchange rates.

    For the Mail, I extrapolate about £16 million in digital revenue for last year. Using the March (aligning with its reporting period) ABCe unique number of 66 million, I figure each unique visitor is worth about £.24, or 38 American cents, to the Mail.

    That’s a 4x greater yield for the Guardian than Mail Online, relating to some combination of brand, sales packaging, and engagement beyond simple unique visitor metrics. How much would/could that differential carry across the sea?

  • Brand: It’s clear that both the BBC and the Guardian have real brand meaning among certain news followers, but it ‘s not clear how growable the brands are. Are they second or third reads, or can they break through top-of-mind? Yes, they may both believe that Americans want a Brit take on things, but just how much of one do they want? Mail? Online? Wasn’t that the one with Meg Ryan? Does having a dot.com domain make a big difference? BBC and Mail have them; the Guardian doesn’t.
  • Digital circulation: That’s a big N/A — not applicable. The Guardian has been one of the most outspoken proponents of “open,” and while that doesn’t equate with free, it’s a close cousin. As the outlet moves away from print, it faces a huge question of where it is going to get “circulation” money. In the short-term, in the U.S., look for Guardian to try app or niche vertical reader revenue streams. The BBC’s news play is high-end mass and free, while Mail Online plies the pop free market.
  • Video: Hands down, the BBC has the edge here. Ascheim talks about adding new original U.S.-produced video to the riches of what BBC produces daily. In a coming 4G world, video may be BBC.com’s major point of differentiation in the States.
  • Mobile: Consider this the wild card. As mobile, especially the tablet, reshapes what we think is true about news reading “The newsonomics of the missing link“), it re-levels the field. So newer entrants, like all three of these invaders, can establish new habits for readers. Mail Online is already attributing 15 percent of its UK uniques to its new iPhone app. Guardian’s Eyewitness iPad app has seen a half million downloads and good sponsorship money from Canon. BBC has seen more than two million downloads of its BBC.com iPad app. As new habits form for iPad news reading, listening, and watching, these new contenders all have new shots at the American audience.

It could well be we’re reaching the end of the line for a much-cited quote often attributed to Churchill: ”England and America are two countries separated by the same language.” Well, he or G.B. Shaw may have said it, but marketers believe the differences are becoming more minor. It’s not just news people who grok the revolutionary economics in re-using and redistributing the same content you’ve already paid for; both Netflix and Hulu are moving to license more Brit TV for the same reason. In strong part, the new Brit invasion is just a re-stating of the produce-once, distribute-many core digital principle. In this case, though, it’s produce-once, (profitably) distribute overseas as well.

Image by Andy Helsby used under a Creative Commons license.

June 17 2011

12:55

Impressing 100,000 downloads - FT's web app strategy

Folio :: Launched last week, the FT app is currently only optimized for iOS products (iPhone, iPad); the Android market is next for apps.FT.com. In its first week, the app had 100,000 downloads. MB Christie, head of product development for the FT, notes that that development for different platforms (Android, etc.) will be quick, as testing the product in different browsing environments is the only step before FT can hit all platforms.

Closer look at the strategy - continue to read Stefanie Botelho, www.foliomag.com

January 13 2011

15:30

The Newsonomics of 2011 news metrics to watch

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

In the digital business, the old aphorism — “If you can’t measure it, it doesn’t exist” — is rapidly moving from article of faith to fundamental operating principle. Measurement systems are just getting better and better.

Yes, there are still quite a few naysayers in the digital news business, those who believe that editorial discretion is superior to any metric the digital combines can kick out. They’ll say you can’t measure the quality of journalism created — and, of course, they are partly right. The truth of the moment is that good (to great) editors, armed with good (to great) analytics, will be in the winners in the next web wars. The same is true for digital marketers working for news companies. Unless they combine their knowledge of markets, customers, and advertisers with often real-time numbers about performance, they’ll lose business to those who do.

The counting of numbers, though, is tricky. So many numbers, so little time, as 24/7 digital keystrokes stoke endless reams of data. Which ones to count, and which to pay closest attention? Meaningful numbers, of course, are called metrics, and meaningful interpretation of those numbers we now call analytics. These analytics, discovered or undiscovered, then drive the business, and they are particularly important in great times of change, when whole industries move profoundly digital. As that old investigative reporter Sherlock Holmes said, “Data. Data. Data. I can’t make bricks without clay.”

In the spirit of the new year, let me suggest some of the more valuable emerging metrics for those in the news business in 2011. Further, in that spirit, let’s pick 11 of them. These aren’t intended to be the most important ones — the mundane price of newsprint, trending up recently, still is a hugely influential number — but ones that are moving center stage in 2011.

1. How much are news companies getting for tablet advertising? Or, in more numerical terms, what’s the effective CPM, or cost-per-thousand readers? In 2010, those with tablet news products reaped a small windfall, gaining rates as high as $150 per thousand readers, which would be 20 times what many of them get for their website ads. Much of that business was “sponsorship,” meaning that advertisers paid simply for placement, not actually based on number of readers. It was the blush of the new, and the association with it, that drove that kind of money. While early 2011 pricing is still very good, as the tablet market goes mass, what will happen to the rates news companies can charge advertisers? This is a huge question, especially if tablet news reading does hasten movement from ad-rich newsprint (see “The Newsonomics of tablets replacing newspapers“).

2. What percentage of unique visitors will actually pay for online access? It’s going to be a tiny percentage — maybe one to five percent of all those uniques, the majority tossed onto sites by search. If it’s less than one percent, paid metered models may be of little consequence. At two percent, especially for the big guys, like The New York Times with its imminent launch, the numbers gets meaningful and model-setting.

3. Where are the news reading minutes going? The Pew study showing that Americans are reading news 13 minutes a day more, probably given smartphone usage, was a thunderbolt — a potential sign of growth for a news industry that has felt itself melting away. With tablet news reading joining even more smartphone reading (only 20 percent of cellphones are “smart” right now), each news company will have to look at its logs to see which readers are reading what with what kind of device — which will tell where reading is increasing and where (let’s guess, print) it is decreasing. Then comes the job to adjust products accordingly.

4. How good are the margins in the fast-developing marketing services business? Tribune’s 435 Digital, GannettLocal, and Advance Internet are among the leaders selling everything from search engine marketing and optimization to mobile and social to local merchants. It’s a big shift for big newspaper companies used to selling larger ticket ads to relatively few customers. There is no doubt that local merchants want help in digital marketing. The number to watch for the newspaper companies is their margin on sales — after paying off technology partners from Google to Bing to WebVisible. Once we see how those margins settle in, we’ll know whether marketing services is a big, or small, play to find local news company profit growth.

5. How much of digital revenue is being driven by digital-only ad sales? McClatchy has been a leader in unbundling print/online sales, with digital-only now approaching 50 percent. That’s a big number for all media companies to watch. Not only is the market pushing them to offer unbundled products, but the sooner they sell digital separately on its own merits, the faster they grasp the growing business and slowly cut the cord to the declining one.

6. How much of news traffic is now being driven by Facebook and Twitter? A few companies, including The Washington Post, know daily how much of their traffic is driven by social media; many others have little clue. Those that do watch the number know that Facebook and Twitter are the number one growth driver for news “referral” traffic, and that social traffic (friends don’t let friends read bad news) converts better to more regular readership than does search traffic. This metric then pushes newsrooms to more greatly, and more quickly, participate in the social whirl.

7. How much will membership grow at the highest-quality, online-only local news start-ups? MinnPost just hit 2,300, an impressive number, but it’s been a three-year road to get there. It is hiring a membership director and trying to better convert regular readers to members. The Texas Tribune is pushing toward 2,000 and Bay Citizen 1,500. Can membership be a significant, and ramping, piece of the new news business model, or will it have to look elsewhere — advertising, syndication, events, more grants — to find sustainable futures?

8. How many titles — and readers — is Journalism Online able to bring into its Press+ network? Journalism Online has moved from a question mark to a well-situated player in the iPad-fueled universe of paid content. Its Press+ network offers the promise of that elusive “network effect” — but only if it gets real scale.

9. How much “extra” do news companies charge for digital access? Okay, every publisher wants to be paid for news content. But as they test out pricing, they’re all over the board in how much to charge. Some want to charge as much for digital as for print; others are willing to throw in digital access for “free” if readers maintain print. The number to watch is one probably about 10-20 percent higher than print alone — as an opt-out upsell — and see how much that sticks with print readers. If that works, new “circulation” revenue helps replaces some of that disappearing ad money — and provide a route to a time of mainly digital, partially paid access.

10. What’s your cost of content? No journalist likes to be thought of as a widget producer, but news is a manufacturing trade, as the Demand Media model has shown us. How can news companies lower the cost of content while creating more? That’s why we see new Reuters America deals, Demand partnerships, more user-gen, more staff blogging. Editors are more needed than ever to make quality judgments about new content, but they and their business leaders must understand what content — high-end and low — really costs to produce.

11. How much do you spend on analytics? Ultimately, investing in the collection and interpretation of data is a big test of news companies’ ability to play digital. I’ve noted (“The Newsonomics of the FT as an Internet retailer“) how the Financial Times has set the pace for the industry in establishing a new team of (non-newspaper) people to run its analytics arm. That operation now numbers 11, up from nine last year. A good beginning metric for any news company to ask: How much money are we investing in understanding our business with the tools of the day?

December 16 2010

15:00

The Newsonomics of all-access — and Apple

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Don’t wait for the white smoke to waft over America’s tech consumer Vatican, the Cupertino headquarters of Apple. The electronic elves are too busy shipping Christmas iPads, and figuring stock-option payouts based on 2011-12 sales projections. Those projections, newly minted by eMarketer, call for another 50 million iPads to be sold in the U.S. alone over the next two years, atop the eight million they think will sell by year’s end. (Other manufacturers would only sell another 20 million tablets in the U.S. over the same period.)

The white smoke? That would be the signal to news and magazine publishers of how Apple is going to allow access to the tablet kingdom. We’ve seen lots of debate, quasi-information, and mixed signals out of Apple about how digital subscriptions will work, including who will keep which revenue and who will partake of user data, the new digital gold. Apple execs talk regularly to publishers, under threat of severe NDA. Those discussions and the back and forth of dealing with Apple on how apps must be configured to get approved are described as an exercise in Kremlinology — trying to divine how things are really working and will work, without actually being told.

After talking with numerous people in and around the tablet/apps industry, I think we can divine the 2011 policy and clear away the smoke and mirrors. Simply put, this is what the de facto Apple policy on digital news subscriptions appears to be:

  • Publishers can charge their digital readers for tablet — and smartphone — subscriptions, and keep the generated revenue stream.
  • Publishers can offer “free” apps in the Apple store — iTunes for now, iNewsstand maybe not too far away.
  • Publishers must — and here’s the rub — restrict browser access is some form. In other words, you can’t simply charge for digital content on the tablet and the smartphone and let it run freely wild through a browser. The pay models may not have to be the same, tablet to smartphone to browser (that’s unclear), but publishers can’t two use two opposite approaches and use the iTunes stores an initial access point to gain customers and keep all the resulting revenue.
  • Publishers must do their own authentication of users and their own e-commerce outside the Apple interface, to make the program work.

Importantly, numerous news players are acting on the belief that the above will be the policy, given their conversations with Apple. If that seemingly de facto policy becomes formal — with the announcement of the iPad 2? — it will have far-reaching implications. In fact, it gives a rocket boost to the “paid content” (meaning new streams of digital reader revenue) revolution now in front of us. Why? It marks the convergence — maybe the ratification — of three big things happening as we enter 2011. Put them together, and you have the Newsonomics of all-access.

Number one: The tablet. It’s a reader’s product, and therefore a news publishers’ dream. Longer session times. Longer reading forms embraced. A greater willingness among consumers to pay. Print-like advertising experiences — and rates. All of those results, reported privately by the big news companies that are first to market with tablet products and also in a user survey just released by the University of Missouri’s Reynolds Journalism Institute here, are preliminary. (More on the recent Roger Fidler-led Digital Publishing Alliance conference, at which I spoke, here.)

As the iPad moves from Apple lovers to mass market, those numbers should moderate. Yet the very nature of the tablet is telling us that digital news reading isn’t what we thought it was — only a Kibbles ‘n Bits, check-in-on-the-briefs-and-scoot reading experience. It looks like a lot of what we thought were huge changes in news reading behavior may have had as much to do with what the nature of a computer (desktop, laptop) reading experience, and not with a change in the nature of humans themselves. We’ll see, but meanwhile, it looks like a good fifth of the country will have a tablet by 2014.

Number two: That paid content push. 2010 has been prologue, as The New York Times took the year to lay extensive plans, connecting pivotal technology, and Journalism Online traversed the country (and lately other continents) preaching from the pulpit of the Holy Church of Freemium and the practice of metering. Don’t erect a paywall, like News Corp. did in London with the Times; start the meter, track it, and charge accordingly. That’s the Financial Times model, and the one The New York Times and Journalism Online cite as a bible, along with learnings from The Wall Street Journal’s freemium experience, a pivotal education for JO principal Gordon Crovitz, who served as WSJ publisher. The digital reader revenue payment was born out of abject frustration, as publishers concluded that digital advertising itself would never support the large news enterprises they wanted to maintain. They were tired of unicycling into the future; digital reader revenue restores the “circulation” leg of the business, providing (in the abstract) two strong legs to stand out going forward.

Number three: The arrival — finally, o Lord — of the news-anywhere, multi-platform, multi-device world that we’ve been envisioning for more than a decade. For more than a decade, it was a print/online world, in the minds of publishers. Now it’s a print/online (desktop, laptop), smartphone, tablet — and soon Apple TV for news — world. That changes everything in how product is thought out, created, presented and sold.

Put these three phenomena together — a multi-platform world in which the tablet becomes a prime part of daily news reading, reading that will be partly charged for — and you have the shiny new business model of 2011: all-access. I’ve written about all-access and exhorted those publishers with high-quality, differentiated news products to embrace it (see The Newsonomics of the fading 80/20 rule, on Time Warner moves). Now, the forces of the times seem to have conspired to bring it forward and make it dominant.

No, there has been no announcement of a warm all-access embrace, but consider:

  • It’s the model used by the paid-content champ FT (“The Newsonomics of FT as an Internet Retailer“) and The Economist.
  • It’s the model just embraced, without fanfare, by The Wall Street Journal, which had throughout the year priced each new digital platform separately. In its recent announcement of an Android tablet product, it said: “A full digital subscription is available for $3.99 per week, which provides access to WSJ Tablet Edition for Android and iPad, WSJ.com, and WSJ Mobile Reader for BlackBerry and iPhone. Current Journal subscribers receive full access to the WSJ Tablet Edition for free for a limited time.”
  • The New York Times model will follow the same across-platform approach when it launches metered pricing early next year.
  • And, it’s not just the big guys. Take Morris’ Augusta Chronicle, a new Journalism Online customer, which just went metered– and all-access, including its upcoming tablet product in the subscription bundle. Expect to see other Journalism Online customers — a few dozen to start — follow this model next year, along with a number of other dailies that tell me they are planning a similar approach.

The big idea? Cement the relationship with those readers who really want your news, delivered by your brand, global, national or local. Say simply: We’ll make it easy for you to read the news however, wherever, on whatever you want and offer it at a single bundled price. Expect three basic offers: Everything (Print + all digital forms), Print Only and the Digital Bundle (probably including the odd cousin of the digital group, the e-edition), plus some by-the-device (iPhone, iPad, Blackberry, etc.) pricing. It’s certainly not a news-only idea, as Netflix, HBO, and Comcast build out the same model.

It’s a tablet-fed, Apple-polished tablet do-over, and for many news publishers, really a do-or-die effort to reassert brand and product value, reassembling a new business model and building what will sooner-than-later be a digital-mainly business. Will they succeed? Some — those with substantial product offerings that are not commoditized — who move the meter dials smartly, picking off the top five percent or so of their mostly digital visitors for payment will. In a twist on the now-legendary Jarvisism: Charge the best. Market ads to the rest. (And don’t scare them off with a paywall.) Other legacy publishers have cut too much to make the new math work, and still other newer publishers will find all-access works for them as well.

There are many more twists, turns, issues — many of them requiring technology lacking among many publishers — and obstacles yet to work through, but we’ll get to those into the new year. Apple’s own role certainly won’t be to remove itself from the new equation, but to find numerous ways — iAds anyone? — to harvest value.

For now, consider all-access the model to be tested in 2011.

August 24 2010

13:06

The New Online Journalists #10: Deborah Bonello

As part of an ongoing series, Deborah Bonello talks about a career that has taken her from business journalism in London to video journalism in South America, and a current role producing video at the FT.

What education and professional experience led to your current job?

After I graduated from Bristol University in 1998 (I wrote for my student newspaper Epigram for most of my time there), I moved up to London and started working for Newsline, an online news service run as part of the media database product Mediatel.

A year later I was taken on by New Media Age as a reporter, where I got to watch the dot com boom become the dot com crash and work with the then-editor, Mike Butcher, now the editor of TechCrunch Europe.

From there I moved to Campaign to edit their Campaign-i section, and when that got cut because of budgets after a year I spent the next few years freelancing on media business magazines (Campaign, Media Week, NMA, FT Creative Business) and watching how the traditional publishing industry took on the internet.

By then, I was fed up of London and business journalism, so I headed off to Latin America. After a year in Argentina as a print only journo, I moved to Mexico to launch NewCorrespondent.com, an experiment in digital journalism, with help from Mike Butcher.

The idea was to use free online tools – YouTube, WordPress, Twitter, Facebook, BlipTv and more – to publish multimedia journalistic content. NewCorrespondent.com became MexicoReporter.com and three months became three years. After my first six months of running the site in Mexico, I got taken on by the Mexico bureau of the Los Angeles Times, started shooting video and got trained in it by some of the best in the business (Scott Anger and Tim French). I contributed daily written and video dispatches to their Latin America blog, La Plaza, as well as latimes.com and the newspaper.

MexicoReporter.com became a go-to for English-speakers living in Mexico, as well as people around the world, and it was through the site that I also got commissioned to produce video pieces for the Guardian and Al Jazeera, amongst others, as well as for radio comment on breaking news such as the swine flu epidemic, violence against journalists and escalating drug-related violence in the country. The video caught the attention of the FT, and as the Los Angeles Times took their foot of the video pedal, it seemed like a good moment to move. I am currently working as a video producer and journalist in the FT’s London office.

What does your job involve?

I film, produce and edit video news, features and interviews for the Financial Times website, sometimes working as a one-man-band shooting operation, sometimes working with in-house camera operators and our correspondents around the UK and abroad.

Where do you see your career/job developing in future?

That all depends on how video journalism develops, but I am very excited about the potential of online journalism and video. TV and video are converging, which means new program formats and genres are emerging all the time, and everyone is experimenting with different styles of telling stories in video and multimedia.

I am especially interested in how the costs of technology have come down so dramatically that we should see a new generation of visual and text storytellers base themselves abroad at a fraction of the cost, tapping into the need for reduced costs in foreign reporting that the traditional media so desperately needs to survive to keep that content strand going.

Right now, if you’re a journalist that isn’t using new technologies to tell stories, you’re edging yourself out of the job market. Rather than the end of journalism as we know it, I think multimedia signifies a brave new world where our old disciplines still count but can manifest themselves across so many different platforms and media that your work is as creative and innovative as you want it to be. We just have to make sure we keep our eyes on the journalistic disciplines, and use technology as a means to an end rather than just for the sake of it.

In the long-term, I see myself based out in the Spanish-speaking world as a multimedia foreign correspondent.

August 20 2010

15:14

Nieman: How the FT’s business model is more online retailer than publisher

Fascinating article on Nieman Journalism Lab from Ken Doctor, author of Newsonomics, looking at how the Financial Times, its website and its business model take inspiration from internet retail and not publishing.

Internet retailing — think Amazon — seems like a very different business than publishing. In the endlessly measurable digital age, though, the parallels are striking. It’s not in what you are selling – books, electronics, or news stories – it’s what you know about your customers, their habits and wants.

(…) In addition, analytics support the FT’s eight-member strategic sales team as it customises marketing approaches for firms and their agencies. Grimshaw says that by early 2011, advertisers themselves will get some access to FT audience data.

Full post on Nieman Journalism Lab at this link…Similar Posts:



August 19 2010

13:30

The Newsonomics of the FT as an Internet retailer

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Back in 2002, the Financial Times took a radically different path than most of its news publishing peers: It decided to charge its online readers to access its content. Flash forward eight years, and the FT model — a metered model — is the one many publishers are eying and beginning to test. The New York Times plans on debuting its metered model early next year; the Times Company-owned Worcester Telegram went metered this past week. Journalism Online is now powering MediaNews’ metering tests in York, Pennsylvania and Chico, California.

We can see the FT lineage in the Journalism Online Press+ pay solution. “The FT pioneered use of the meter as an elegant approach to freemium for news publishers — letting casual visitors continue to sample a selected number of articles per month while asking the most engaged readers to pay for unlimited access,” Journalism Online co-founder Gordon Crovitz explains. “In this way, the FT has been a pioneer.”

In the eight years since 2002, the FT has persevered through thicker and thinner markets. Now, it is one of the few companies showing advertising and circulation revenue growth and building a seemingly stable and successful model for the next decade. Its recent financial performance, most of which was released as part of its parent Pearson’s half-yearly report:

  • The FT group, responsible for about 8 percent of Pearson’s ongoing revenue and home of the Financial Times newspaper and digital products, showed an operating profit of £14 million, double last year’s profit. Revenue at the FT Group moved into positive territory, up 7 percent year over year, with advertising showing growth as well as readership revenue.
  • Overall ad revenue now makes up 45 percent or less of the FT’s revenue, down from 74 percent in 2000.
  • Digital readership increased by 27 percent, while the number of registered users — spurred by a no-unregistered views policy (with exception of home page and section pages) — saw a 77 percent increase to 2.5 million during that period.
  • Digital subscriptions grew by 27 percent to 149,000.
  • The FT raised its subscription rates by about 10 percent recently, with standard subscriptions now costing $225 or £190 and premium subscriptions going for $330 or £299.

That’s an impressive report. It contrasts with the experience of most news publishers, who are struggling to stave off continuing year-over-year losses in both ad and circulation revenue — and are finding themselves too dependent on ad revenue as the ad marketplace morphs away from traditional media.

We can parse a number of reasons for the FT’s upward trajectory. In the end, though, I think that FT.com managing director Rob Grimshaw sums it up best, and in a way that should make all news publishers pause and re-think.

“Where we’ve found inspiration is Internet retail, not publishing,” he told me last week. “We’re becoming a direct Internet retailer and we have to have expertise to do that. When you do that with publishing, it looks like a different business.”

Internet retailing — think Amazon — seems like a very different business than publishing. In the endlessly measurable digital age, though, the parallels are striking. It’s not in what you are selling — books, electronics, or news stories — it’s what you know about your customers, their habits and wants.

In February, I produced a report for Outsell, a global publishing industry research and advisory company, about the FT. I called it “Five Things to Learn from FT.com,” and my greatest learning was that analytics, the smart gaining of knowledge from data, was at the heart of the company’s successes and plans. If we look at the emerging newsonomics under the FT business, we see how analytics are driving both of the FT’s two basic business lines, reader revenue and advertising revenue.

Reader revenue now accounts for more than half of the publisher’s income. While there are many moving parts under it, the FT’s pricing of its subscriptions, its targeting of markets, its tweaking of offers, and its valuing of paying customers are all increasingly done on the basis of analytics — not on the gut calls that have long fueled news company decision-making.

Much of it is “propensity modeling,” fancy words to say: What’s the likely reaction of what percentage of people if we offer them this, that way? The modeling grows out of the analytics, now put together by a team of nine people at the FT — up two from a year ago. The group is relatively new, and it’s one that Grimshaw says has produced a night-and-day difference for an outlet that, like most of its fellow news companies, used to “hold and manage” data, rather than using it to drive the business.

The FT has been able to gauge consumer behavior well enough that its subscriber volume and pricing have risen. Even though the site allows fewer unregistered clicks than it did a year ago, Grimshaw says page views overall have gone up — the result of the paying customers using the product more.

In addition, the FT has taken a new tack in the enterprise licensing of its content. Two years ago, it began to reclaim its syndication business. It still works with third parties to deliver the contract, but directly contracts and licenses more than 1,000 companies for its usage. The direct licensing does help a bit in pricing and margin, says the FT’s Caspar de Bono, who directs the B2B business, but the direct pipeline of customer-usage data it provides is the bigger win. Analyzing that data helps the FT improve its products and its delivery — and increasingly gives the content licensees themselves a view into the content’s usage and value for their workforces.

Advertising, too, is benefiting from the research work. The more knowledge the FT can share about its audiences, their habits and preferences, the better advertisers can target their messages. In addition, analytics support the FT’s eight-member Strategic Sales team as it customizes marketing approaches for firms and their agencies. Grimshaw says that by early 2011, advertisers themselves will get some access to FT audience data.

It’s all a work in progress, but one that is coming closer to offering a virtuous circle of business results. It’s a model — an Amazon model for the news world — that bears attention from months-old online news start-ups and venerable, nineteenth century brands alike.

August 18 2010

14:44

THE SUGAR KING OF HAVANA AND HOW TO WRITE A TERRIFIC BOOK

julio-lobo

John Paul Rathbone, FT’s Latin America editor, has written one of these books that you can not leave until you end reading the last page.

This is a terrific book, written about a fascinating Cuban tycoon, Julio Lobo, “The Sugar King of Havana“.

51MXqGROM-L._SL500_AA300_

The book is like a 290-page New Yorker article.

A work of love.

A fascinating masterpiece.

One day somebody will write a similar kind of book about Pepin Bosch, “The Bacardi Rum King of Havana”.

July 13 2010

10:42

FT begins search for journalists to staff new online service

A new online service from the Financial Times is advertising for editors and writers to join them from across the globe.

FT Tilt, which will launch later this year, says on its landing page that it will provide “a similar blend of lively news and analysis for a specialist audience of finance professionals”.

The FT won’t discuss the project publicly just yet, but confirmed they are currently recruiting journalists as well as user interface engineers to work on the new site.

The project is being led by the same team that developed FT Alphaville, the company’s successful financial blog.

See more here…Similar Posts:



June 21 2010

08:00

May 21 2010

09:08

Brand Republic: FT withdraws from ABCe audits for web traffic

In the same month that it launched its own metric for measuring readers across print, online and other media, the Financial Times has officially withdrawn from the monthly audit of UK newspapers’ web traffic conducted by the Audit Bureau of Circulations Electronic (ABCe). It’s been some time since the FT website’s figures were included in the monthly stats – listed as N/A below a print circulation figure in the monthly multi-platform reports issued by the auditor.

Says a spokesperson:

The FT no longer participates in ABCes as volume traffic measures have become less relevant to our advertisers and clients. We do not intend to compete on volume, rather the quality of our registered and subscriber readership.

Full story at this link…

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April 16 2010

06:33

UK GENERAL ELECTIONS: WHEN COMPARING MANIFESTOS IS NOT ENOUGH

2010-04-16_0721

This FT’s interactive guide is simple, clear and well done.

The summary of the three Manifestos is another example of how newspapers need to go much more further.

Yes, we need to know the programs of each party.

But more important, we need to know:

What’s realistic.

What’s just propaganda.

So the facts plus the critical analysis.

The news behind the news.

Beyond the news, intelligence.

April 01 2010

18:16

The Newsonomics of iPads and tablets, floor by floor

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

AppleMania meets Rummy’s oft-noted trilogy of known knowns, known unknowns and unknown unknowns this week. The iPad is finally here.

Predictably, opinion is widely split on the impact of the tablet on future of news publishing. We don’t know enough, in truth, to ground any certainties. We can, though, start pecking away at it. Here’s a start. One way to assess the new is to connect it to the old.

So let’s build on the traditional cost-and-revenue structures of newspaper operations. I recall the floor-by-floor layout of the Pioneer Press, in Saint Paul, in the ’90s, a time our staff still filled almost all the floor space.

Bottom floor: HR and Finance. 2nd floor: Circulation. 3rd: Production. 4th: Marketing. 5th floor, advertising. 6th and 7th, newsroom. 8th, Exec suite.

So in a tablet world, what’s the impact on the major cost and revenue divisions of the news enterprise, knowing that HR, finance, marketing and executive suites have already seen their own slimming-downs and won’t be much affected?

Let’s start with the newsroom and with “production.” The traditional newsroom provides the meat-and-potatoes of the tablet experience, the text-reading experience. Yes, the iPad should turn “e-readers” and “e-editions” into trivia game answers. Most publishers look at their first tablet products as lite versions of what’s to come, incorporating a few gee-whiz features to salute the innovation. In those first versions, content production doesn’t need to change much.

Soon, though, it will. News companies will need to hire up and skill up — designing, creating and presenting reader-pleasing content. That’s enough of a challenge for monthly and weekly magazines; for dailies, it’s truly a transformative process. Dozens of newsrooms have incorporated videographers, design-savvy producers, and social net masters into workflow, but even in those newsrooms, the resources aren’t sufficient to create the truly new product the tablet enables — a product worth consumers paying for. Then, there are the hundreds of newsrooms who have relatively few of the skills they need at all. Newsroom (and Production) Net: The tablet demands new investment, mainly in new hires, somewhat in new training. With papers still in cutting mode, where will the money come from?

Circulation: It’s an accident of timing that the tablet launch coincides with the Year of Experimenting (Perhaps Dangerously) with paid content. Journalism Online’s Press+ system will soon test niche play from prep sports to obits to metering schemes of several kinds. The New York Times is neck-deep in its begin-metering-in-early-2011 plan. News Corp is erecting walls, the latest around the Times of London, as it just announced a paywall there to go up in June. Yet the timing of the iPad launch means that tablet economics will inevitably color – and may drive – paid content plans.

The Apple model, in a sense, just sets a new cost-of-distribution. While web distribution has been free-plus, the cost of Apple distribution — if you charge for news products — is a predictable, and seemingly stable 30 percent. Just give me 30 percent off the top, says Steve Jobs. Ironically, that 30 percent isn’t far off from the costs of physical distribution for newspapers.

With many news publishers planning on charging for iPad apps (though free, lite apps-as-teasers will probably be near-universal), we see the model of tablet “circ” emerging. Publishers look at the Guardian example (charging about $3.75 one time for its iPhone app), and have two reactions:

— Wow! They got 100,000 people to pay in just a couple of months!

— One-time sales are peanuts. We’re going to charge ongoing subscription rates for our apps/news products. Right now, each edition of a magazine is a separate app, as the Apple store is architected.

So, almost overnight, we’ve got a new model of paid content and supplier/distributor business model. The content company gets 70 percent; the distributor (Apple, first at least and foremost at least for now), gets 30 percent. That’s the inverse of the detested, standard Amazon model, 70 cents to Amazon and 30 to the publisher.

What might be the impact of such a split? Well, let’s estimate that The New York Times serves about 75,000 customers with its Kindle product, a nice little niche. The price is $13.99 a month. That’s $168 a year. With the standard split (the Times may do better), that would be $50 a year to the Times and $118 to Amazon. That would be $3.75 million a year for the Times (and $8.85 million to Amazon).

If the split were 70/30, the numbers would be reversed, netting the publisher another $5 million a year. That’s not huge money, but we can see how it would scale over time, as is clearly the intent with Wall Street Journal’s new $17.99 iPad product.

Now, Apple-delivered apps will not be the only way to monetize content, but expect to see the approximate 70/30 split become a model, a good starting point.

Circulation Net: News and magazine publishers now see a second digital revenue line. It’s 70 percent of X (the retail price) multiplied by Y (volume of sales). As news companies reinvent not only products, but new business arrangements with the distributors of the day — from Google/Amazon/Yahoo to Comcast/AT&T/Verizon — expect to see the Apple model invoked as “fair.”

Advertising: Early returns have been blockbusters — big advertisers like Chase supporting the New York Times iPad launch and watchmaker Hublot subsidizing two months of the FT product, for instance — and that buoys hope. At launch, iPad advertising is like Triple A office space in the city; it’s the new shiny, slick must place to be.

As the shine wears off a bit, it’s likely to become a great test ground for a new merger of brand and performance advertising. Brands love the idea of owning their own tablet experience, directly embedding themselves into customer experience, given the multitouch capabilities, video, and social upfront natures of this new platform. Connect that to direct-response advertising (glossy magazine with built-in wifi), and you’ve got all kinds of opportunities for engaging customers and watching the resulting metrics, minute by minute. Branded premium pricing may mate with AdWords performance-based pricing; who knows what the offspring will look like?

The first advertisers are the big national ones, and they in turn will want to associate with products that best use the new medium — the better to attract the kind of customer they want: leading edge, willing to try something new.

Ad Net: Tablet-based advertising should add, unexpectedly, to top line revenues in the second half of 2010 and more strongly in 2011. Expect though, a big split here: those companies I call the Digital Dozen, the 12-15 companies with national and global publishing reach and resources, will be the ones to create the best out-of-the-box news and magazine products – and they’ll be rewarded with a small surge in ad revenue. Those unable to play at a significant level will in turn reap few rewards.

March 31 2010

08:36

Talking Biz News: FT promotes Twitter as newspaper alternative in ads

Good spot by Talking Biz News (via Martin Stabe) – a new ad for the Financial Times directs readers towards the title’s Twitter feeds.

Hear first and act fast with Twitter feeds.

Get the news you need as it happens, with FT Twitter feeds. Delivering breaking FT news, features, blogs and multimedia, they’ll alert you to the developments that matter.

Image of ad at this link…

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March 30 2010

08:47

paidContent:UK: iPad plans from Spectator and FT

paidContent:UK looks at plans from two UK publishers readying their iPad editions ahead of the device’s US launch this weekend.

Digital editions provider Exact Editions is involved with The Spectator’s iPad launch, which will adopt a freemium model, Exact’s co-founder told pC:UK.

Elsewhere the Financial Times is preparing a sponsored FT iPad app. Launch sponsor Hublot will subsidise a two-month free access period. After this, the app will revert to the same model as the FT’s iPhone app, which is feel to download, but charges for access to more than 10 articles.

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