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July 13 2011

05:56

September 30 2010

17:00

The Newsonomics of journalistic star power

[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.]

Maybe it’s a trend, or maybe it’s a bubble, but Jim Romenesko’s blog is chockablock with high-level journalist movement. The Newsweek Six are on the auction block, sought by eager bidders, as Time Warner solidifies its relationship with Fareed Zakaria, making him a wholly owned, cross-platform phenomenon, and Howard Fineman gets tapped on the shoulder by The Huffington Post, soon after it hired away The New York Times’ Peter Goodman.

Daniel Gross jumps from his long-time Slate home to Yahoo Finance. The National Journal makes acquisition after acquisition, this week reeling in Dave Beard, the well-respected editor of Boston.com, where he joins numerous other veterans (AP’s Ron Fournier, Newsweek’s Michael Hirsh, The Atlantic’s Marc Ambinder, Fox’s Major Garrett, among them) who’ve recently made a switch. After an apparent flirtation with AOL, Kara Swisher and Walt Mossberg stay safely in the News Corp bosom, while AOL spends its bonus dough on TechCrunch, buying a brand and an established news operation.

Other well known journalists are also suddenly fielding calls of interest — and often moving on to new adventures. Bloomberg’s been hiring pedigreed journalists by the dozens, for Bloomberg Government and other initiatives. Patch is snatching many of its regional editors from daily newspaper ranks.

What we’re seeing is a market develop. This is market that newly prizes talent, but a certain kind of talent. Most of the hiring is at the minor star level, though the lumens emitted vary. How do you measure — critical to digital success — the light?

First off, the hiring companies believe they know sustainable models of building businesses on higher-quality content. That may seem basic, but when we look at the much of the newspaper, broadcast, and consumer magazine worlds, that belief is flagging. They look at well salaried, professional staffs and see high “cost structures,” which are harder to justify, given current levels of advertising and the lack of successful digital revenue models.

We know that Yahoo and AOL, increasingly competitive with each other, believe they’ve found a working formula to make good content pay profitably. Tim Armstrong, AOL’s CEO, talks about “sparking a content revolution.” His formula, and Yahoo’s, is fairly straightforward, and borrows its commandments from the Demand Media bible. It’s all about the efficient ad monetization of content, with analytics — know the nature of the content, target the reader and align the advertiser — that seem to grow better week by week (see The Newsonomics of content arbitrage).

(AOL, ironically, is milking its online access business — yes, lots of people still think of AOL and Internet service as the same thing — drawing 43 percent of its revenue from it. That’s similar to newspapers milking the print business for as long as possible, as they can make the inevitable digital transition. By that comparison, AOL’s lifeline is much shorter, with a 25-percent 2Q drop in customers paying for that access, while most newspaper companies’ circulation revenue down only in low single digits.)

The newsonomics of the star hires is intriguing. Think of these “star” hires as individual SKUs, “products” whose value can be estimated against the customers they bring in the door. Those conversion customer metrics are evolving. Counting pageviews is the simplest way. Take those views at whatever (premium?) rate you can sell them, and you’ve got a first number. The intangibles are how many new unique visitors the Zakarias, Finemans, and Grosses bring with them from their old haunts. How many of those new customers become regular customers of the outlet? That gets you to some annual and/or lifetime value metrics. As metrics are collected and tested, we’ll see some more science brought to what is now a star-search art form.

There certainly are other intangibles. What is Yahoo News exactly? What is HuffPo? What is AOL? As they define themselves as legitimate news companies, the new stars bring cred — and legitimacy. In addition, they are magnets to other, lesser-known talent, signaling, “it’s okay to come here.” There’s economic value in that, too.

Notably, few established legacy brands are hiring new top-end talent; Time’s Zakaria hire is a smart, though unusual one, enabled by the Newsweek uncertainty and Time/CNN linkage. For the most part, legacy news companies’ growth scenarios are borrowed, curiously, from those now hiring those stars: multiplying the amount of content available under their brands, harnessing amateur and lower-cost stuff from local bloggers, licensing from Demand Media and aggregating content through FWIX, Outside.in, and OneSpot. They’re the ones paying heed, at least indirectly, to Wikipedia’s Jimmy Wales’ observation that hiring six-figure columnists in this time is silly: “The best of the political bloggers are easily the equal of the opinion columnists at the New York Times. I don’t see the added value there and question whether a newspaper should be paying large sums of money for that any more.”

The hirings at the National Journal and Bloomberg point to a different kind of business model. Those companies have found niche models involving significant reader and/or enterprise payment, and now are building out, and around, those businesses. They, too, believe they can make a new business out of superior content.

It’s complicated, and there are more than two phenomena happening here. Yes, some players that have built successful enterprises — think Yahoo, AOL, Huffington Post — on non-professional staff content (through aggregation, pro-am sites, and more) are now adding the pros at the top, to reinforce brands and put faces on them. At the same the high-cost, pro-based enterprises are going the other way.

It’s not an equilibrium, nor will these models meet in some neat middle, but there’s some sense of coming at a similar solution from two ends of the spectrum. It’s a blend of old and new, expensive and cheap, and no one yet knows the best formula.

Arianna Huffington explains it as a maturation, and indicates the hiring of pros was part of the original Huffington Post plan: “From the day we launched, it was our belief that the mission of The Huffington Post should be to bring together the best of the old and the best of the new. Bringing in the best of the old involved more money than we had when we launched. But now that our website is growing, we’re able to bring in the best of the old.”

The likely result of these moves? By 2015, news companies will pay top dollar, and pound, euro and yen, for top-end talent, and they’ll pay as little as possible for good-enough newsy content that fills many topical and local niches. Over the next several years, the most successful media brands will have mastered better the economics of pro-am journalism.

Infrared image of a star cloud courtesy of NASA.

September 24 2010

14:00

This Week in Review: Apple’s subscription plan, the exodus from objectivity, and startup guides galore

[Every Friday, Mark Coddington sums up the week's top stories about the future of news and the debates that grew up around them. —Josh]

Is Apple giving publishers a raw deal?: The San Jose Mercury News’ report that Apple is moving toward a newspaper and magazine subscription plan via its App Store didn’t immediately generate much talk when it was published last week, but the story picked up quite a bit of steam this week. Bloomberg and The Wall Street Journal both confirmed the story over the weekend, reporting that Apple may introduce the service early next year along with a new iPad. The service, they said, will be similar to Apple’s iBook store, and Bloomberg reported that it will be separate from the App Store.

Those reports were met with near-universal skepticism — not of their accuracy, but of Apple’s motivations and trustworthiness within such a venture. Former journalist Steve Yelvington sounded the alarm most clearly: “Journalists and publishers, Apple is not your friend.” It’s a corporation, Yelvington said, and like all corporations, it will do anything — including ripping you apart — to pursue its own self-interest.

Several other observers fleshed out some of the details of Yelvington’s concern: EMarketer’s Paul Verna compared the situation to Apple’s treatment of the music industry with iTunes, and GigaOM’s Mathew Ingram and TechCrunch’s MG Siegler wondered whether publishers would balk at giving up data about their subscribers to Apple or at Apple’s reported plans to take a 30% share of subscription revenue. Ingram predicted that publishers would play ball with Apple, but warned that they might wind up “sitting in a corner counting their digital pennies, while Apple builds the business that they should have built themselves.” Dovetailing with their worries was another story of Apple’s control over news content on its platform, as Network World reported that Apple was threatening to remove Newsday’s iPad app over a (quite innocuous) commercial by the newspaper that Apple allegedly found offensive.

Media analyst Ken Doctor broke down publishers’ potential reactions to Apple’s initiative, looking at the plan’s appeal to them (“It offers a do-over, the chance to redraw the pay/free lines of the open web”) and their possible responses (accept, negotiate with Apple, or look into “anti-competitive inquiries”). In a post at the Lab, Doctor also took a quick look at Apple’s potential subscription revenue through this arrangement, an amount he said could be “mind-bending.”

All Things Digital’s Peter Kafka noted one indicator that publishers are in serious need of a subscription service on the iPad, pointing out that Time Inc.’s Sports Illustrated can’t pay for the designers to make its iPad app viewable in two directions because, according to its digital head, it doesn’t have the money without an iPad subscription program. Gizmodo’s Matt Buchanan used the same situation to explain why iPad subscriptions would be so critical for publishers and readers.

A coup for journalism with a point of view: It hasn’t been unusual over the past year to read about big-name journalists jumping from legacy-media organizations to web-journalism outfits, but two of those moves this week seemed to mark a tipping point for a lot of the observers of the future-of-journalism world. Both were made by The Huffington Post, as it nabbed longtime Newsweek correspondent Howard Fineman and top New York Times business writer Peter Goodman.

The Wrap’s Dylan Stableford looked at what Fineman’s departure means for Newsweek (he’s one of at least 10 Newsweek editorial staffers to leave since the magazine’s sale was announced last month), but what got most people talking was Goodman’s explanation of why he was leaving: “It’s a chance to write with a point of view,” he said. “With the dysfunctional political system, old conventional notions of fairness make it hard to tell readers directly what’s going on. This is a chance for me to explore solutions in my economic reporting.”

That kind of reporting (as opposed to, as Goodman called it, “laundering my own views” by getting someone from a thinktank to express them in an article) is exactly what many new-media folks have been advocating, and hearing someone from The New York Times express it so clearly felt to them like a turning point. The tone of centrist detachment of mainstream journalism “has become a liability in keeping newsroom talent,” declared NYU professor Jay Rosen on Twitter. Others echoed that thought: Gawker’s Hamilton Nolan extolled the virtues of being “able to call bullshit bullshit,” and former Salon editor Scott Rosenberg said legacy news orgs like The Times need to find a way to allow its reporters more freedom to voice their perspective while maintaining their standards. Salon’s Dan Gillmor agreed with Rosenberg on the centrality of human voice within journalism and noted that this exodus to new media is also a sign of those sites’ financial strength.

Former McClatchy exec Howard Weaver countered that while transparency and clear voice is preferable to traditional “objectivity,” freeing traditional journalists isn’t as simple as just spilling their biases. Advocacy journalism is not just giving an opinion, he said, it’s a “disciplined, ethical posture that tries to build truth out of evidence, regardless of the outcome.”

Getting journalism startups off the ground: If you’re interested in the journalism startup scene — for-profit or nonprofit — you got a gold mine of observations and insights this week. Over at PBS’ Idea Lab, Brad Flora, founder of the Chicago blog network Windy Citizen, examined five mistakes that kill local news blogs. Here’s how he summed his advice up: “You are not starting a blog, you are launching a small business. You are no different from the guy opening a bar up the road. … You need to know something about blogging and social media, yes, but what you really need to bone up on is what it takes to run a small business.” The post has some fantastic comments, including a great set of advice from The Batavian’s Howard Owens. On his own blog, Owens also gave some pretty thorough tips on developing advertising revenue at a local news startup.

On the nonprofit side, the Knight Citizen News Network went even deeper into startup how-to, providing a comprehensive 12-step guide to launching a nonprofit news organization. It may be the single best resource on the web for the practical work of starting a nonprofit news site. Voice of San Diego is one of the most successful examples of those sites, and its CEO, Scott Lewis told the story of his organization and the flame-out of the for-profit San Diego News Network as an example of the importance of what he calls “revenue promiscuity.”

David Cohn, founder of another nonprofit news startup, Spot.Us, also looked at six new journalism startups, leading off with Kommons, a question-answering site built around Twitter and co-founded by NYU Local founder Cody Brown. Rachel Sklar of Mediaite gave it a glowing review, describing it as “a community that seeks smart, conversation-furthering answers prompted by smart, probing questions — publicly.” She also said it sneakily lures users into giving it free content, though Brown responded that anyone who’s ever asked you to interview has been trying to do the same thing — only without giving you any control over how your words get used. (Kommons isn’t being sneaky, he said. You know you’re not getting paid going in.)

Three more future-oriented j-school programs: After last week’s discussion about the role of journalism schools in innovation, news of new j-school projects continued to roll in this week. City University of New York announced it’s expanding its graduate course in entrepreneurial journalism into the United States’ first master’s degree in that area. New-media guru Jeff Jarvis, who will direct the program, wrote that he wants CUNY to lead a movement to combine journalism and entrepreneurship skills at schools across the country.

Two nationwide news organizations are also developing new programs in partnership with j-schools: Journalism.co.uk reported that CNN is working on a mentoring initiative with journalism students called iReport University and has signed up City University London, and AOL announced that its large-scale hyperlocal project, Patch, is teaming up with 13 U.S. j-schools for a program called PatchU that will give students college credit for working on a local Patch site under the supervision of a Patch editor. Of course, using college students is a nice way to get content for cheap, something Ken Doctor noted as he also wondered what the extent of Patch’s mentoring would be.

Reading roundup: As always, there’s plenty of good stuff to get to. Here’s a quick glance:

— Former Washington Post executive editor Len Downie gave a lecture in the U.K. Wednesday night that was, for the most part, a pretty standard rundown of what the U.S. journalism ecosystem looks like from a traditional-media perspective. What got the headlines, though, was Downie’s dismissal of online aggregators as “parasites living off journalism produced by others.” Gawker’s Hamilton Nolan gave it an eye-roll, and Terry Heaton pushed back at Downie, too. Earlier in the week, media analyst Frederic Filloux broke down the differences between the good guys and bad guys in online aggregation.

— The New York Times published an interesting story on the social news site Digg and its redesign to move some power out of the hands of its cadre of “power” users. The Next Web noted that Digg’s traffic has been dropping pretty significantly, and Drury University j-prof Jonathan Groves wondered whether Digg is still relevant.

— A couple of hyperlocal tidbits: A new Missouri j-school survey found that community news site users are more satisfied with those sites than their local mainstream media counterparts, and Poynter’s Rick Edmonds posited that speed is less important than news orgs might think with hyperlocal news.

— Finally, a couple of follow-ups to Dean Starkman’s critique of the journalism “hamster wheel” last week: Here at the Lab, Nikki Usher looked at five ways newsrooms can encourage creativity despite increasing demands, and in a very smart response to Starkman, Reuters’ Felix Salmon argued that one of the biggest keys to finding meaning in an information-saturated online journalism landscape is teaching journalists to do more critical reading and curating.

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