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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.

May 27 2010

14:00

The Newsonomics of wilting flowers

[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.]

Ah, the Dream of the Wilting Flowers. Like many web dreams, premature, premature, premature…and then, maybe soon, pop. A sensation, with lots of dollars involved. Our best current example: Steve Jobs’ “invention” of the iPad, which of course was dreamed up in quite similar forms, decades before, in the fancies of Alan Kay and Roger Fidler, among others.

It’s all timing, right?

So it’s a good time to get a sense of what’s happening in local mobile commerce among news companies.

A friend visiting the exhibition hall at the NAA Orlando convention in April told me he’d been besieged by mobile commerce vendors. Then there’s the group (mobile commerce) grope, symbolized by the Groupon craze. Get a whopping good deal — but only if you can get enough of the crowd to go along with it as well. Of course, iAds are on the horizon, with Apple offering a sweet-smelling twist on walled-garden marketing pitches. Google’s AdMob — the leading mobile ad network — just got the thumbs-up from the FTC and has launched AdWhirl, its open-source (take that, Apple) “mediation layer” to facilitate mobile commerce. You can’t stay on top of all the mobile-marketing plays these days, no matter how much you try.

Let’s look at newspaper companies and what they’re doing with mobile commerce. Talk about timing: When Dan Finnigan ran Knight Ridder Digital a decade ago, one of his favorite mantras was the Dream of the Wilting Flowers. As in: It’s 4:30. You’re driving down the street. Your phone knows where you are, of course, and coming up, on the right is a florist…with a perishable commodity, flowers that will be worthless within 24 hours. Your “smart” phone, knowing where you are, who you are, your flower-buying habits, and maybe your spending proclivities, sends you the florist’s coupon for half-off, if you stop by within the half-hour. Satisfied merchant, satisfied customer, a perfecting of supply and demand.

It’s still a great vision, with a new generation chasing it, and getting closer. Talk to newspaper companies, though, and you’ll hear the answer is “we’re not yet there.” Closer, but not quite there.

Bill Ganon sees that wilting-flower dream, but he’s drilling down into something more basic: mobile sales training and the establishment of mobile pricing standards and analytics. Then, maybe by the end of the year, he says, the location-aware capabilities of smartphones may start to smell the daisies.

Ganon is the general manager for local market development for Verve Wireless, and Verve is the newspaper industry’s biggest mobile play. Spurred first by AP investment and partnership in summer 2008, many newspaper companies have turned to Verve for mobile content and, now, ad solutions. Verve now powers more than 400 mobile news sites for newspaper and broadcast companies including MediaNews, Hearst, Belo, McClatchy, Freedom, and Lee.

Verve is making a new ad push, after seeing its first forays fall flat locally. That push is predicated on scale. Its network — the Blackberry has just been added to the iPhone, with Android and iPad applications on the way, says Ganon — has grown dramatically. Year over year, for April, it has grown to 8.9 million uniques (from 2.9) and 130 million page views (from 51 million).

When Ganon — a veteran of old media sales at Newsweek and Sunset, as well as eight years with Qualcomm — took over local sales eight months ago, he found a ragtag group of local mobile efforts. Now, as Ganon describes his work, we can see the emerging newsonomics of local mobile pricing. As the mobile commerce world explodes, Ganon is focusing on the basics. He says Verve can now count 75 local sites beginning to make consistent sales, up from around 20 when he came on board. The basics of the push:

  • Training: Verve’s local market sales team of four is spending lots of time training newspaper and broadcast sales staffs on how to sell mobile. That’s reminiscent of the ongoing training done by Lem Lloyd’s merry band through the Yahoo-powered Newspaper Consortium. (In fact, with all the Yahoo, Verve, and marketing-services training ongoing, I’d wager that newspaper sales people have gotten more training in the last two years than in the previous two decades.) Verve’s training focuses on taking the mystique out of mobile: “Advertisers don’t like stealth solutions. They like to know what’s behind the curtain,” says Ganon.
  • Pricing: Ganon urges a $15 CPM (cost per thousand) floor for selling mobile. With that guideline, he says Verve-powered sites are averaging $19 CPMs, which would be about twice the average of what news sites on getting on the desktop web. Says Ganon: “This is your time to define metrics.” In other words, try to establish a price, not allowing prices to fall to low single digits as inventory is sold by middlemen, as has happened in the main digital business. Right now, most newspaper companies can count no more than five percent of their digital revenue, coming from mobile. Most of that total — maybe $100 million — is going to bigger, national brands like The Wall Street Journal and The New York Times. That’s out of maybe $500 million involved in mobile advertising overall in the U.S.
  • The Pizza Sale: Salespeople are being trained to sell the crust (a banner ad), the sauce (a landing page, tailored to action off the ad), and the toppings (call-to-actions, whether “click to call” or map directions). Pricing is still impression-based, though, Verve sees cost-per-click and cost-per-acquisition offers down the road.

What’s apparent is how early we are in local mobile selling — and how far away it is today from adding appreciably to news site revenues. The deals are small, and even the best-performing sites can count no more than 20 advertisers, with most having far fewer on their sites at any one time.

And the Dream of the Wilting Flowers? Ganon says Verve should be able to add in location-aware selling, maybe by the end of the year, but he believes that it “will be a major breakthrough.” So, 2011, maybe. When that breakthrough comes, the big question is who will benefit most: the local newspaper and broadcast companies, or Apple, or Google, or Yahoo, or maybe Verizon or AT&T?

Ask Walter Sanchez, publisher of BQE Media in Brooklyn and Queens and a Verve client, and he’ll tell you it’s an uphill climb. I met Walter at a recent New York Press Association conference, and his marketing efforts were way ahead of the curve, among publishers. He’s busy selling social sites, SEO, SEM, and mobile sites, he’s proud of getting such small businesses as Beach Bum Tanning sold on mobile ($500 a year for a landing page and 3,000 short-text messages). But he’ll tell you that most local merchants are indeed still mystified by the web, and they’re slow adopters: “When those 21-, 22- and 23-year-olds start buying their own businesses, in a few years, then, we’ll see real adoption.”

January 12 2010

02:26

Video: Knight Ridder tried building tablet e-reader

Knight Ridder may be gone now, but it was ahead of the curve when, 16 years ago, Roger Fidler worked on a tablet e-reader and even built a prototype. Bryan Monroe, who used to work for Knight Ridder, wonders in this Huffington Post piece whether the newspaper industry would be in such dire straights had the tablet succeeded. Check out the promotional video for the tablet below…

“All forms of media that we know today will be transformed over the next 10-15 years,” said a promotional video for the device. “An important part of this revolution is the emergence of the electronic tablet….Tablets will be a whole new class of computer. They’ll weigh under two pounds. They’ll be totally portable and have a clarity of screen display comparable to ink on paper. They’ll be able to blend text, video, audio and graphics together. And they’ll be part of our daily lives around the turn of the century.”

January 10 2010

14:24

MY THIRD POST IN MY BLOG ABOUT THE APPLE TABLET 20-DAY COUNTDOWN

dia 3 Roger

Today’s post is about the visionary Roger Fidler, and how he saw the Apple Tablet before than anybidy else,

January 04 2010

14:50

ROGER FIDLER AND HIS EARLY VISION OF THE NEWSPAPER TABLET

fidler_iLiad-Newsbook_lg

Now that the Apple iTablet is coming, we must give the proper credit to the early vision of our friend Roger Fidler.

I meet Roger in the late 1980’s and since then we have shared the same hope: that one day, print newspaper will migrate to new digital platforms.

My “rubber newspaper” idea was inspired by his concepts and prototypes.

Roger was our host in New York’s Columbia University and at the Boulder’s Knight Ridder Information Design Laboratory, where one of my former students, Alvaro Moncada, had a fantastic summer internship.

Roger Fidler was a journalist and newspaper designer for 34 years and has been on the leading edge of online and digital publishing development since the late 1970s.

As program director for digital publishing at the Donald W. Reynolds Journalism Institute (RJI), he coordinates digital publishing research projects and the Digital Publishing Alliance (DPA).

Here you can watch a 1994 video with his first Newspaper Tablet prototype.

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