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June 27 2013

15:17

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

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

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

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

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

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

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

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

Planning for print decline

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New competition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Photo by Josh Bancroft used under a Creative Commons license.

June 20 2013

14:02

The newsonomics of Spies vs. Spies

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Could we do the same with the Internet?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

May 30 2013

11:36

The newsonomics of climbing the ad food chain

The numbers are sobering.

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

Why are publishers lagging?

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

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

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

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

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

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

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

Let’s look at each of the areas:

Technology

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Creativity

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

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

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

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

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

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

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

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

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

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

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

Sales relationships

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

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

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

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

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

Photo by NJR ZA used under a Creative Commons license.

May 29 2013

21:39

The scariest chart in Mary Meeker’s slide deck for newspapers

I linked earlier to Mary Meeker’s new slide deck. For those who don’t know it, Meeker — formerly of Morgan Stanley, at VC firm Kleiner Perkins since late 2010 — each year produces a curated set of data reflecting what she sees as the major trends in Internet usage and growth. It may be the only slide deck that qualifies as an event unto itself.

Last year’s deck had one slide that I liked to cite when talking about the print advertising prospects for newspapers going forward. It’s this one:

mary-meeker-adshare-2011

The basic idea here is to compare the share of attention in various media to the share of ad spend. (This is U.S. data.) In other words: 43 percent of the time Americans spend consuming media is spent watching television. And 42 percent of the advertising dollars spent in America go towards television advertising. It’s a pretty good balance.

While there’s no ironclad law that ad dollars will always perfectly follow attention, it seems like a pretty good working assumption. And the main takeaways from that slide are (a) that print still gets a wildly disproportionate share of ad spend (25 percent) when compared with time spent (7 percent), and that (b) mobile is in the opposite situation — lots of attention (10 percent) but not many dollars (1 percent).

If you think that, all else equal, ad dollars will tend toward equilibrium with attention, that’s (a) a really scary thought for print — newspapers and magazines both — and (b) a sign that news organizations had better be putting a lot of effort into monetizing mobile.

That was last year’s slide. This is this year’s:

mary-meeker-adshare-2012

This picture isn’t any prettier. Print attention is down one percentage point; print advertising is down two. But the gap between them still yawns. Any time you hear someone be optimistic about the return of print advertising dollars, think about this slide and realize print ad dollars still have a long way to go down.

Meanwhile, mobile is continuing its move in the opposite direction: up 2 percentage points in time spent, and up the same in dollars. Mobile advertising went from a $1.6 billion business to a $4 billion business in a single year. Not much of that went to newspapers.

May 23 2013

16:33

The newsonomics of value exchange and Google Surveys

whittier-daily-news-google-survey-paywall

What happens when a reader hits the paywall?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

May 09 2013

14:54

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

singapore-skyline-cc

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seeking influentials across Asia

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

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

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

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

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

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

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

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

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

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

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

Seeking influentials in North Carolina

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

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

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

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

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

Seeking influentials in D.C. politics

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

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

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

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

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

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

Lessons learned

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

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

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

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

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

April 03 2013

18:50

The newsonomics of the Orange County Register’s contrarian paywall

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

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

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

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

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

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

1. A paywall without discounted digital access

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

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

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

2. Time-based digital access

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

3. Day passes

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

4. All archives open to the public

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10:33

What's Holding Back Responsive Web Design? Advertising

Responsive web design -- where "one design fits all devices" -- continues to gain momentum. Dozens of responsive sites have popped up, and a recent post on Idea Lab from Journalism Accelerator outlined how and why media sites should go responsive.

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But hold your horses. Despite the mounting hype, responsive websites are still far from becoming ubiquitous, and for good reason.

As much as responsive web design improves user experience and makes it easier for publishers to go cross-platform, the industry's struggle with delivering profitable ads during the first big shift from print to web is still happening. And in this second big shift to a responsive web, that struggle is magnified.

It Has To Look Different

The surface-level problem that a responsive-designed website poses for advertising is that ads are typically delivered in fixed dimensions (not proportional to the size of their container) and typically sold based on exact position. Initial solutions to this issue largely focus on making ads as flexible as the web page, i.e., selling ads in packages that include different sizes to fit all sorts of devices, rather than the traditional fixed-width slots, or making ads that are themselves responsive. Ad firm ResponsiveAds, for example, has come up with various strategies for making ads adjust to different screen sizes.

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These diagrams from ResponsiveAds show how display ads themselves can respond to different screen sizes.

But these approaches are not yet ideal. For example, when the Boston Globe went responsive in 2011, the site used just a few fixed-sized ads, placed in highly controlled positions that could then move around the page.

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Andrés Max, a software engineer and user experience designer at Mashable, told me via email: "In the end technology (and screen resolutions) will keep evolving, so we must create ads and websites that are more adaptive than responsive."

Here, he means that ads should adapt to the medium and device instead of just responding to set resolution break-points. After all, we might also need to scale up ads for websites accessed on smart TVs.

Miranda Mulligan, the executive director of the Knight Lab at Northwestern University and part of the team that helped the Globe transition to responsive, agrees. She told me via email, "We need a smarter ad serving system that can detect viewport sizes, device capability, and they should be set up to be highly structured, with tons of associated metadata to maximize flexibility for display."

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Moreover, many web ads today are rich media ads -- i.e., takeovers, video, pop-overs, etc. -- so incorporating these interactive rich ads goes beyond a flexibility in sizes. A lot of pressure is resting on designers and developers to innovate ad experiences for the future, but evolving tech tools can help clear a path for making interactive ads flexible and fluid. The arrival of HTML5 brought many helpful additions that aid in creating responsive sites in general.

"HTML5 does provide lots of room for innovation not only for responsive but for richer websites and online experiences," Max said. "For example, we will see a lot of use of the canvas concept for creating great online games and interactions."

Display Advertising Is Still Broken

In the iceberg of web advertising problems, what ads will look like on responsive sites is just the tip. According to Mulligan, a major underlying problem is still the lack of communication between publishing and advertising. The ad creation and delivery environment is infinitely complex. Publishers range from small to very large, and much of the web development code and creative visuals are made outside of the core web publishing team.

One of the problems is that there are so many moving parts and parties involved: ad networks that publishers subscribe to; ad servers that publishers own themselves; ad servers that publishers license from other companies; sales teams within large publishers; the Interactive Advertising Bureau (IAB); and more. The obligatory silos make it very hard for good communication and flexible results to transpire.

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The challenge of mobile advertising on responsive sites, Mulligan later said via phone, "has very little to do with the web design technique and has a lot to do with the fact that we have really complicated ways of getting revenue attached to our websites."

In other words, the display ad system is still broken. And now, the same old problem is more pronounced in responsive mobile sites, where another layer of complication is introduced.

"We have to go and talk to seven different places and say, 'you know how you used to give us creative that would've been fixed-width? What we need from you now is flexible-width,'" Mulligan said.

While responsive web design inherently may not be the source of advertising difficulties, the fact that it amplifies the existing problems is a good reason for web publishers to be cautious about going responsive. In the meantime, a paradigm shift in how web content generates revenue is still desperately needed. Instead of plunging into using responsive ads for responsive sites, perhaps everyone can get in the same room and prototype alternatives to display ads altogether.

The Boston Globe screenshots above were captured by the BuySellAds blog.

Jenny Xie is the PBS MediaShift editorial intern. Jenny is a senior at Massachusetts Institute of Technology studying architecture and management. She is a digital-media junkie fascinated by the intersection of media, design, and technology. Jenny can be found blogging for MIT Admissions, tweeting @canonind, and sharing her latest work and interests here.

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September 05 2012

18:04

Journal Register Co. declares bankruptcy…again: Is this the industry’s first real reboot?

It was just three years ago that the Journal Register Co. filed for bankruptcy, its collection of small local newspapers hit hard by the economic crisis and the secular decline of the newspaper industry.

But it came out of bankruptcy in only six months, and the changes started coming quickly: bringing in John Paton as CEO, committing to growing digital revenue, hiring away top talent, experimenting with open-source software and open-to-the-community newsrooms…it’s been hard to keep up with its one-new-initiative-a-week pace. They’ve been on the move, in a way that frankly hasn’t been the norm in the American newspaper business.

Through it all, Paton emerged as the industry’s most vocal cheerleader for a digital-first culture — and that was even before “digital first” went from a mantra to the name of a new parent company that would also run the much larger MediaNews chain of newspapers. JRC reported digital revenue growth as strong or stronger than their peers and seemed to be making good progress towards a company-wide culture change.

So today, JRC announced…it was declaring bankruptcy again. Here’s Paton:

The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that are now unsustainable and threaten the Company’s efforts for a successful digital transformation.

From 2009 through 2011, digital revenue grew 235% and digital audience more than doubled at Journal Register Company. So far this year, digital revenue is up 32.5%. Expenses by year’s end will be down more than 9.7% compared to 2009.

At the same time, as total expenses were down overall, the Company has invested heavily in digital with digital expenses up 151% since 2009. Journal Register Company has and will continue to invest in the future.

Journal Register expects to emerge from bankruptcy in around 90 days; operations will continue uninterrupted during the process.

Since JRC is as watched as any newspaper company outside The New York Times Co., here are three quick thoughts on today’s move, based on Paton’s post, the company’s press release, and our previous reporting.

I. Room for further consolidation?

JRC is owned by Alden Global Capital, a hedge fund that has investments across much of the publicly traded U.S. newspaper industry. Those investments, combined with its merger-without-merging with MediaNews last year, has led some, like our own Martin Langeveld, to posit that Alden is pushing for a major consolidation of the newspaper industry.

It’s easy to imagine how some of JRC’s recent moves — like its outsourcing of national business news and its chain-wide aggregation project Project Thunderdome — could scale well across a broader swath of the industry.

JRC will apparently enter bankruptcy with a buyer at the ready — something called 21st CMH Acquisition Co., “an affiliate of funds managed by Alden Global Capital LLC,” which has submitted a signed stalking horse bid. So it appears that, in the end, Alden will still be in control, with Paton continuing as CEO.

(I’m not sure how much to read into the creation of something called an acquisition company — is it just to acquire JRC, or is it a staging area for further acquisitions and consolidation, a sort of decades-later echo to what Gannett did buying up family-owned papers? Does 21st CMH stand for “21st Century Media Holdings”? Just a guess.)

Newspaper valuations have for the most part stopped plummeting — if only because there’s only so far for a still-profit-making company to fall. (Year-to-date, some are actually up in stock price: The New York Times Co. is up 21.5 percent, Gannett’s 13.5 percent.) But it’s reasonable to think there are still any number of companies that would be happy to find an exit to scale. By re-buying, in effect, a slimmed-down JRC, Alden seems to be showing it’s still interested in that model.

(Although it’s more than a little crappy that JRC’s employee FAQ says decisions about everyone’s job status will be “made by the ultimate purchaser” — when that ultimate purchaser is apparently just another arm of the current owner. It’s theoretically possible that, at a bankruptcy auction, someone could outbid Alden for JRC, but it seems highly unlikely; Alden’s one of the few folks wanting to put money into newspapers rather than pull it out.)

II. A second shot at shaving debt

It’s worth noting that Paton didn’t become CEO until after the last bankruptcy was concluded. (Paton joined JRC’s board in August 2009 when the company came out of bankruptcy; he became CEO in early 2010.) Paton is arguing now that the terms of the previous bankruptcy were built on higher hopes for print than has since proven justified — that the company didn’t shave enough off its debt and contractual obligations to hack it in today’s business.

We’re on the right track with digital revenue, he’s saying, but we’re still handcuffed by fiscal decisions made from a print-is-healthy mindset:

All of the digital initiatives and expense efforts are consistent with the Company’s Digital First strategy and while the Journal Register Company cannot afford to halt its investments in its digital future it can now no longer afford the legacy obligations incurred in the past.

Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable. Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.

Timing is, truly, everything. The newspaper companies that made terrible-in-hindsight decisions to bet on print at peak valuations — McClatchy buying Knight Ridder, for instance — were stuck with crippling debt obligations. But if you just stuck around long enough, that major metro that cost $562 million in 2006 could be had for $55 million in 2012. Alden, as a fund, focuses on distressed assets, those available at market values below their true value. (You can see why they’d be interested in newspapers.)

JRC seems to suffer from an analogous problem: It went through its bankruptcy at a time when some executives still thought the downturn was cyclical and not permanent. That left it with obligations that likely can’t be sustainable in the primarily-digital-revenue model Paton is building toward. One imagines that Paton won’t make that same mistake this go-round. (Sister company MediaNews already had its strategic, debt-trimming bankruptcy.)

That’s little comfort if you’re owed a share of those pension benefits now deemed “no longer sustainable,” of course. But the reality is that most newspaper companies are still not close to a footing that’s sustainable for the long term. Anyone who thought the cuts were over is going to be disappointed for, at a minimum, several more years.

III. It’s put-up-or-shut-up time

Paton’s been the industry’s most effective evangelist for a digital future. (It helps that he took over a newspaper chain not known for quality or tradition beforehand; he has a free hand that Arthur Sulzberger or Don Graham don’t to do deep institutional surgery.) JRC and Digital First have been great at putting forward an innovative face, from its heavy-hitter advisory board to small demonstration projects (Ben Franklin Project) and more substantial rethinkings of workflows (Project Thunderdome).

And they’ve done so in a way that is both open (they’re happy to tell you about the amazing things they’re doing) and closed (not reporting financial results, as publicly traded companies must).

But it’s been harder to be certain how Paton’s optimism has translated into results. Digital revenues are growing, but from an unspectacular base. Many of the company’s initiatives seem, while interesting, unlikely to move the revenue needle much. Print revenues are a problem, just as they are at its peers. Today’s release illustrates that JRC hasn’t yet found the magic formula.

But could Paton’s plan be a model for the local and regional newspaper industry as a whole, as some have dearly hoped?

Paton now will have his chance to prove it. In around 90 days, he’ll have had his chance to shed the costs he wants to shed. No longer will “we were built for print” be a good excuse; if two bankruptcies can’t clear out all those cobwebs, I’m not sure what could. “Digital first” will move from a slogan to a corporate name to a foundation of the company’s business structure.

The newspaper industry’s problem today is not that its leaders don’t know how to make money in media. Lots and lots of money still flows through newspaper offices every day. It’s that they can no longer make that money at the scale they could 10 years ago — but their cost structures are still tied to that old scale. That’s why the past half-decade has been a seemingly endless string of layoffs and cutbacks, shaving dollars and people to keep up with revenue declines, while still being stuck in a fundamentally print-driven structure.

Meanwhile, as newspapers were busy writing press releases about layoffs, their nimble online-native competitors have been able to start from a blank sheet of paper and build for a digital scale of revenue.

This bankruptcy will allow JRC to have get the closest thing the newspaper business has seen to a true reboot.

Now all Paton has to do is deliver.

August 30 2012

15:02

The newsonomics of leapfrog news video

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

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

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

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

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

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

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

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

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

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

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

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

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

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

August 16 2012

16:00

Plaza Pública aims to challenge and improve Guatemala’s journalistic culture

It’s not uncommon for news sites in the United States to evolve into a series of verticals: technology, politics, celebrity news, sports, and the like.

In Guatemala, Plaza Pública is also built around a series of verticals. But here, they’re equity, environment, social cohesion, cultural diversity, and corruption.

“We audit the private sector as part of our mandate,” site director Martín Rodríguez-Pellecer told me. “Traditional media does not cover these issues because they’re afraid companies would remove ads.”

Plaza Pública stands out for a few other reasons. It’s a digital native, but reluctant to set its pace against the 24-hour news cycle. It’s mainly funded by a private university, but it’s seeking a national audience.

The site’s name and concept were inspired by Jürgen Habermas’ idea of the public sphere, where private citizens come together to discuss matters of public relevance. Plaza Pública, which translates to “Public Square” in English, wants to be the place where such conversations not only take place (it has 80 blogs) but where they’re provoked by news stories.

In January, for example, it published an investigation that revealed minors were working on sugar plantations owned by the Guatemalan president’s Chamber of Agriculture. “In Guatemala, as in many other countries in Latin America, media orgs restrain the ‘public interest’ to public officials and public institutions, when it really goes beyond them,” Rodríguez-Pellecer said. “It also includes the links between businessmen and policy-makers, the media-politicians relations and controversial social issues.”

Rodríguez-Pellecer says traditional media have ignored those dynamics. So when it comes to political coverage, Plaza Pública doesn’t just report how an elected official votes. The site also features data visualizations meant to help identify voting patterns between leaders, parties, and around certain topics.

Investigative data journalism is a big part of what Plaza Pública does, though its editors prefer to call it in-depth precision journalism. There’s a reason for that distinction: “During the past 20 years, any sensationalism is considered ‘investigative reporting.’ We try to do a less incendiary journalism,” Rodríguez-Pellecer said.

His team is a group of 15 reporters, coders, designers, and photojournalists. “We all have been in traditional media, but we got tired of not being able to do the journalism that we wanted,” said Rodríguez-Pellecer, who worked seven years as a reporter for Prensa Libre, Guatemala’s most influential newspaper. The newsroom also gets help from 10 students from different universities and in disciplines ranging from archeology to political science and journalism.

Two-thirds of Plaza Pública’s $300,000 annual budget comes from Universidad Rafael Landívar, a private university administered by the Society of Jesus, the Christian religious order. The funding model raises questions about editorial independence: How can a news organization promise autonomy when its main funder is an institution with very clear stances about so many controversial topics?

“Since we started, we [have made it] clear that we were not going to report on the university, the Pope, or the Society of Jesus,” Rodríguez-Pellecer said. “That doesn’t mean that we’re not critics of some of the bishops’ points of views on topics like sexuality and gay rights, for example.” In turn, the university does not get involved in the editorial process: “We pick the topics we cover,” he said. But the institution does have the editorial board’s ear. “Always, those differences are discussed after the publication, not before. We appreciate very much the independence they gave us.”

Plaza Pública, which has 65,000 monthly visitors, in part borrows its model from projects like News21 at Arizona State University, and The Bureau of Investigative Journalism at City University London, on-campus newsrooms with access to university resources.

Like News21 and TBIJ, Plaza Pública is a nonprofit. It cannot sell ads because of universities’ tax-exempt status in Guatemala, but the goal is to eventually — at least three years from now — operate within a legal framework that would allow the sale of ads and maybe even data. “We also want to sell services related with the databases we’re building,” he said. Rodríguez-Pellecer says it’s almost impossible for a digital news outlet in Latin America to rely solely on ad revenue. Even successful ventures like El Faro in El Salvador and La Silla Vacía in Colombia have had to diversify their revenue streams. Plaza Pública has ruled out a paywall, but it’s actively thinking about ways to add more revenue channels. (It also receives grant money from groups like Open Society Foundations and Friederich Ebert Stiftung.)

“We think citizens should contribute voluntarily, too, if they want to get journalism that is on the people’s interests side,” Rodríguez-Pellecer said.

Photo of the Palace of the Captains-General in Antigua, Guatemala, by Ray Metzen used under a Creative Commons license.

August 15 2012

20:28

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

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

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

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

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

Two letters: TV.

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

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

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

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

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

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

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

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

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

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

15:42

13 ways of looking at Medium, the new blogging/sharing/discovery platform from @ev and Obvious

[With apologies to Wallace Stevens, the finest poet to ever serve as vice president of the Hartford Livestock Insurance Company.]

I.

Medium is a new online publishing platform from Obvious Corp. It launched yesterday. Obvious is the most recent iteration of the company that created Blogger, Odeo, and Twitter. Blogger was the outfit that, until it was bought up by Google, did the most to enable the early-2000s blogging boom. Odeo was a podcasting service that never really took off — 20 percent ahead of its time, 80 percent outflanked by Apple. Twitter — well, you’ve heard of Twitter.

Ev Williams, the key figure at every stage, tweeted about Medium yesterday in a way that slotted it right into the evolutionary personal-publishing chain he and his colleagues have enabled: Let’s try this again!

II.

Medium has been described as “a cross between Tumblr and Pinterest.” There’s some truth to that, in terms of presentation. Like Tumblr, it relies on artfully constructed templates for its structural power; like Pinterest, it’s designed to be image-heavy. But those surface issues, while interesting, are less consequential than the underlying structure of Medium, which upends much of how we think about personal publishing online.

III.

When the Internet first blossomed, its initial promise to media was the devolution of power from the institution to the individual. Before the web, reaching an audience meant owning a printing press or a broadcast tower. It was resource-intensive, and those resources tended to congeal around companies — organizations that had newsrooms, yes, but also human resource departments, advertising sales staffs, and people to man the phones when your paper was thrown into the bushes (we’re very sorry about that, Mrs. Johnson, we’ll be happy to credit your account).

The web, by reducing potential worldwide access to basic knowledge of [1996: Unix and <table> tags; 1999: how to input FTP credentials; 2005: how to come up with a unique login and password; 2010: how to stay under 140 characters], eliminated, at least in theory, the need for organizations. (Vide Shirky.)

IV.

In theory. In reality, organization still had some enormous advantages. Organizations are sustainable; they outlive the vagaries of human attention. Some individuals flourished in the newly democratic blogosphere. But over time, people got bored, got new jobs, found new interests, or otherwise reached the limits of what people-driven, individual-driven publishing could accomplish for them. The political blogosphere — the cacophony of individual voices on both left and right circa, say, 2004 — evolved toward institutions, toward Politico and TPM and The Blaze and HuffPo and the like.

Personal publishing is like voting. In theory, it’s the very definition of empowerment. In reality, it’s an excellent way for your personal shout to be cancelled out by someone else’s shout.

V.

That was when a few smart people realized that there was a balance to be found between the organization and the individual. The individual sought self-expression and an audience; the organization sought sustainability and cash money. Louie, I think this is the beginning of a beautiful friendship.

So Facebook built a way for people to express themselves (by providing free content) to an audience (through their self-defined network of friends), while selling ads around it all. It’s a pretty good business.

So Twitter (Ev, Jack, and crew) build a way for people to express themselves, in a format that was genius in its limitations and in its old-media model of subscribe-and-follow — again, transformed from institutions to individuals. It’s not as good of a business as Facebook, probably, but it’s still a pretty good business.

So Tumblr, Path, Foursquare, and a gazillion others have tried to pull off the same trick: Serve users by helping them find an outlet for personal expression, then build a business around those users’ collective outputs. It’s publishing-as-platform, and it’s the business model du jour in this unbundled, rebundled world.

VI.

What’s most radical about Medium is that it denies authorship.

Okay, maybe not denies authorship — people’s names are right next to their work, after all. But it degrades authorship, renders it secondary, knocks it off its pedestal.

The shift to blogging created a wave of new individual media stars, but in a sense it just shifted traditional media brands to a new, personal level. Instead of reading The Miami Herald or Newsweek, you read Jason Kottke or John Gruber. So long, U.S. News; hello, Anil Dash. They were brands in the sense that your attraction to their work was tied to authorship — you wanted to see what Lance Arthur or Dean Allen or Josh Marshall or Ezra Klein was going to write next. The value was tied to the work’s origin, its creator.

And while social networks allowed that value to be spread, algorithmically, much wider, the proposition was much the same. You were interested in your Facebook news feed because it was produced by your friends. You were interested in your Twitter stream because you’d clicked “Follow” next to every single person appearing in it.

VII.

Degrading authorship is something the web already does spectacularly well. Work gets chopped and sliced and repurposed. That last animated GIF you saw — do you know who made it? Probably not. That infonugget you saw on Gawker or The Atlantic — did it start there? Probably not. Sites like Buzzfeed are built largely on reshuffling the Internet, rearranging work into streams and slideshows.

It’s been a while since auteur theory made sense as an explanation of the web. And you know what? We’re better for it. In a world of functionally infinite content, relying on authorship doesn’t scale. We need people to mash things up, to point things out, to sample, to remix.

VIII.

Where Medium zags is in structuring its content around what it calls “collections.” Here’s Ev:

Posting on Medium (not yet open to everyone) is elegant and easy, and you can do so without the burden of becoming a blogger or worrying about developing an audience. All posts are organized into “collections,” which are defined by a theme and a template.

The burden of becoming a blogger or worrying about developing an audience. That’s a real issue, right? I’ve talked to lots of journalists who want to have some outlet for their work that doesn’t flow through an assigning editor. But when I suggest starting a blog, The Resistance begins. I don’t know how to start a blog. If I did, it’d be ugly. Or: I’d have to post all the time to keep readers coming back. I don’t want to do that. Starting a blog means, for most, committing to something — to building a media brand, to the caring and feeding of an audience, to doing lots of stuff you don’t want to do. That’s why ease of use — the promise of Facebook, the promise of Twitter, the promise of Tumblr — has been such a wonderful selling point to people who want to create media without hassle. Every single-serving Tumblr, every Twitter account updated sporadically, every Facebook account closed to only a few friends speaks the same message: You can do this, it’s simple, don’t stress, you’ll be fine.

IX.

So Medium is built around collections, not authors. When you click on an author’s byline on a Medium post, it goes to their Twitter feed (Ev synergy!), not to their author archive — which is what you’d expect on just about any other content management system on the Internet. (The fact we call them content management systems alone tells you the structural weight that comes from even the lightest personal publishing systems.) The author is there as a reference point to an identity layer — Twitter — not as an organizing principle.

As Dave Winer noted, Medium does content categorization upside down: “Instead of adding a category to a post, you add a post to a category.” He means collection in Medium-speak, but you get the idea: Topic triumphs over author. Medium doesn’t want you to read something because of who wrote it; Medium wants you to read something because of what it’s about. And because of the implicit promise that Medium = quality.

(This just happens to be promising from a business-model perspective. Who needs silly content contributors asserting authorial privilege when the money starts to flow? Demoting the author privileges the platform, which is nice if you own the platform.)

X.

At one level, Medium is just another publishing platform (join the crowd): You type in a title, some text, maybe a photo if you want, hit “Publish” and out comes a “post,” whatever that means that days, on a unique URL that you can share with your friends. (And let me just say, as a Blogger O.G. from the Class of ’99, that Medium’s posting interface brought back super-pleasant memories of Blogger’s old two-pane interface. Felt like the Clinton years again.)

XI.

Ev writes that a prime objective of Medium is increased quality: “Lots of services have successfully lowered the bar for sharing information, but there’s been less progress toward raising the quality of what’s produced.” That’s probably true: There are orders of magnitude more content published every day than was the case in 1999, when Blogger launched as a Pyra side project. The mass of quality content is much higher too, of course, but it’s surrounded by an even-faster-growing mass of not-so-great (or at least not-so-great-to-you) content.

Medium takes a significant step in that direction by violating perhaps the oldest blogging norm: that content appears in reverse-chronological order, newest stuff up top, flowing forever downward into the archives. Reverse chron has been key to blogging since Peter Merholz made up the word. (Older than that, actually — back to the original “What’s New” page at NCSA in 1993.) For the pleasure centers in the brain that respond to “New!,” reverse chron was a godsend — even if traditional news organizations were never quite comfortable with it, preferring to curate their own homepages through old-fashioned ideas like, you know, editorial judgment.

Medium believes in editorial judgment — but everyone’s an editor. Like the great social aggregators (Digg is dead, long live Digg), Medium relies on user voting to determine what floats to the top of a collection and what gets dugg down the bottom. (A reverse chron view is available, but not the default.) It’ll be interesting to see how that works once Medium is really a working site: Will a high-rated story stick to the top of a collection for weeks, months, or years, forever pushing new stuff down? Will there be any way for someone visiting a collection to see what’s new since she was last there? The tension between what’s good and what’s new is a long-standing one for online media, and privileging either comes with drawbacks — new material never reaching an audience, or good stuff being buried beneath something inconsequential posted 20 minutes later.

Considering Obvious Corp.’s heritage in Blogger and Twitter — both of which privilege reverse chron, Twitter existentially so — it’s interesting to see Ev & Co. thinking that a push for quality might entail a retreat from the valorization of newness.

XII.

There’s been a lot of movement in the past few months toward alternative, “quality” platforms for content on the web. Branch is based on the idea that web comments are shit and that you have to create a separate universe where smart people can have smart conversations. App.net, the just-funded paid Twitter alternative, is attractive to at least some folks because it promises a reboot of the social web without the “cockroaches” — you know, stupid people. Svbtle, an invite-only blogging platform, is aimed only at those who “strive to produce great content. We focus on the writing, the news, and the ideas. Everything else is a distraction.”

This new class of publishing platforms, like Medium, is beautiful — they share a stripped-down aesthetic that evokes the best of the early web (post-<blink> tag, pre-MySpace) modernized with nice typography, lovely textures, and generous white space. (Medium, in particular, seems to be luxuriate in giant FF Tisa, evocative of Jeffrey Zeldman’s huge-type redesign back in May.)

This new class has also been criticized with a variation on the white flight argument — the idea that the privileged flee common spaces and platforms once they stop being solely the realm of an elite and become too popular. (Vide danah boyd. Also vide your favorite indie band, the first time you heard them on the radio.)

For (just) a moment, strip away the political implications of that critique: What each of these sites argues, implicitly, is that the web norms that we’ve evolved over the past decade err toward crassness and ugliness. That advertising — which all these sites lack, and which is proving to be less-than-sufficiently-remunerative for lots of “quality” online media — is an uninvited guest in our reading experiences. That the free-for-all of a comments thread creates broken-windows-style chaos. That the madness of the web might be tamed through better tools and better platforms. That the web’s pressure to Always Keep Posting New Stuff leads to a lot of dumb stuff being posted. It’s a critique of pageview chasing, a critique of linkbait, a critique of content farms, a critique of SEO’d headlines — a yearning for something more authentic, whatever the hell that means.

I think we’d all like to know what that means. And how to get there.

XIII.

Is Medium the route there? I’m skeptical.

I’m unclear who, beyond an initial crowd of try-anything-once types, will want to publish via Medium, as lovely as it is. Or at least I’m unclear on how many of them there are. The space Medium, er, mediates is between two poles. On one side you’ve got people who want to hang out a shingle online and own their work in every possible sense. On the other, you’ve got people who are happy in the friendly confines of Facebook and Twitter, places where they can reach their friends effortlessly and not worry about writing elegant prose. Is there an audience between those two poles that’s big enough to build something lasting? Is this Blogger or Twitter, or is it Odeo?

But even if Medium isn’t a hit, however that gets defined these days, I think Ev & Co. are onto something here. There are seeds of a backlash against the beautiful chaos the web hath wrought, the desire for a flight to quality. There will be new ways beyond ease of use to harness the creative powers of the audience. And there will be new ways to structure content discovery that go beyond branding authorship and recommendation engines. Those trends are real, and whatever happens to Medium, they’ll impact everyone who publishes online.

Blackbird photo by Duncan Brown used under a Creative Commons license.

August 02 2012

15:04

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

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

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

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

NewsCred

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

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

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

Lessons Learned:

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

NewsLook

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

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

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

Lessons Learned:

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

Deseret News Service and Ok.com

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

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

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

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

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

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

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

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

Lessons Learned:

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

The AllMedia Platform

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

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

Lessons Learned:

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

California Watch

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

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

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

Lessons Learned:

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

Upworthy

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

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

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

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

Lessons Learned:

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

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

14:00

6 Questions for Rafat Ali on Skift.com, His New Travel Startup

Rafat Ali is one of those rare people in the media industry who understands the power he wields with his written words, yet can be so humble and friendly in person. I was struck by that quality in him when we first met probably 10+ years ago when he was first starting the paidContent blog as a one-man operation focused on digital media.

What he accomplished with that site was a lesson for all of us who are running small media ventures, taking a one-man operation and expanding it into a full-fledged online business. Ali received venture funding, expanded staff and built more sites, and eventually sold the site to the Guardian (which later sold it to GigaOm).

rafat mongolia.jpeg

After selling his baby, Ali decided to take time off to travel the world and disconnect from the intense 24-hour news cycle that consumes everyone who lives on Internet time for breaking news. And now that he has resurfaced, his new baby is Skift.com, billed as a "travel intelligence media company."

As he has described the startup on various Mediatwits podcasts (we co-host the show together for MediaShift), Skift will put a laser-sharp focus on the business of travel, the travel business and business travelers, disrupting the current incumbents who cover the industry in a less intense fashion.

We recently connected by email, and he answered my six burning questions about Skift and his plans for the site.

6 Questions for Rafat Ali

1. Why did you decide to target the travel business with Skift? From all your trips abroad?

Rafat Ali: It is in the travel sector, but not really built upon my own travels over the last two years. The cliche is: A startup guy sells his company, goes off to travel the world, and through his experiences during his travel, hits a brainwave in the middle of Mongolia on how to solve all the travel woes in the world. Thankfully, mine isn't that.

My travels inform my worldview on how we want to build Skift, how broadly we look at travel, but the genesis of Skift is more prosaic: We saw a big white space in the travel information industry, and we're attacking it.

2. What lessons did you learn from paidContent, and how did you apply them to Skift?

For one, we're bringing the same energy of the saturation coverage of the digital media industry that we did for years at paidContent, and now bringing it to the world's largest sector: travel. We'll be a digital native, 24/7, breaking news, analysis, opinion, somewhat similar to what we did with paidContent.

Also pC, back when it started in 2002, brought together then disparate silos of the larger media-information-entertainment industries, and with Skift, we're attempting the same with the very large silos of aviation, hospitality, destinations, cruises, technology and others, and bringing them together. The underlying assumption, that these silos will collapse, is the same as paidContent. We'll see if they're borne out.

3. Who are your first investors, and how did you find them?

A long list of 17 angels, 14 disclosed: Chris Ahearn, Luke Beatty, Gordon Crovitz,
Craig Forman, Jim Friedlich, Tom Glocer, Vishal Gondal, Jason Hirschhorn, Peter Horan, Alan Meckler, Mohamed Nanabhay, Sanjay Parthasarathy, Amol Sarva, Chris Schroeder.

These are all very accomplished business execs in the media-tech industry that I've known for years, covered them at paidContent, they spoke at pC conferences, and I have developed relationships with.

So they're betting on us, the team, to build a large media+information+data business in a very large sector.

rafat medillin.jpeg

4. How is it different starting a site in 2012 vs. when you started paidContent?

We realize trying to scale just using media/content will not cut it; we're trying to build a very large travel intelligence company, and that means we have to go beyond what we did at pC.

For us, that means building the company at the intersection of travel and data, and that means first pulling in that data, and then building services on top, all of which we hope the industry will pay for.

Also unlike paidContent, where we tried in small ways to do some crossover stories, with Skift we really will attempt it, aimed on the consumer side at business travelers. While paidContent helped define the digital media industry as it exists now, our ambition was to go deeper into the vertical, not go broad and consumer.

Skift hopes to redefine a new generation of data- and information-heavy media companies, built to break out of the vertical media ghettos and scale.

5. Tell me more about the "studio model" and how much revenue you think you'll get from services vs. ads.

This for us means we'll build a slew of data services, some of which will succeed and some won't. It means we'll be quick to prototype, and quick to discard if it doesn't work -- that's what we mean by studio model. It means we'll learn what the information and services black holes are for the travel industry and professional travelers as we grow, and we'll adapt quickly to address those needs.

We think we'll get a majority of our revenues from services. Ads will be a decent part, both on B2B and especially on the business traveler side. Business travelers are a very addressable and lucrative category for all sorts of advertisers, including travel brands, financial services, luxury and others.

6. Will you ever look at travel the same way again after getting so deep in the weeds on the business side? How will things change?

Great question. I hope I don't lose my sense of wonder in travel. If I can keep traveling to the kinds of places I have over the last two years, then I surely won't, but if I just restrict myself to work and business travel, then I'll always be in work mode!

*****

What do you think about Skift.com and its "studio" business model? Can an upstart disrupt the business travel industry? Share your thoughts in the comments below.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian and fiancee Renee. You can follow him on Twitter @mediatwit. and Circle him on Google+

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July 26 2012

14:00

The newsonomics of Amazon vs. Main Street

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Photo by Stephen Woods used under a Creative Commons license.

May 03 2012

14:55

The newsonomics of Pricing 101

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

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

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

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

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

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

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

We can pick out at least nine emerging data points:

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

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

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

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

Photo by Jessica Wilson used under a Creative Commons license.

April 26 2012

13:30

March 29 2012

15:00

The newsonomics of 100 products a year

Try this: Call up your local newspaper or online news organization. Tell them you want to buy something and ask them what they can sell you? Of course, at first, they’d be non-plussed: Sell you something? Then, after giving it some thought, they’d say you can buy a newspaper or a subscription or a membership — or, maybe, an ad? Would you like one of those?

Those days — mark it — are coming to an end. We’re on the brink of news companies producing hundreds of products for sale each year. While digital technology hath taketh (the easy ability to make money on news distribution), digital technology also giveth back, with the ability to create hundreds and thousands of newsy products at small incremental costs. The bonus: News organizations will be able to satisfy groups of readers and advertisers (often disguised thinly as sponsors) better than ever before. Double bonus: The let-a-hundred-products-bloom revolution fits neatly with the all-out embrace of all-access circulation initiatives, which news companies in North America, Europe, and Asia now can’t seem to implement quickly enough.

Can we call this the ebook revolution? Maybe, but that’s probably too narrow. Delivery of new products to new audiences can take several forms. A text-only ebook, a shinier iBooks-enabled product with video, or an app with all the glorious functionality apps offer. It’s not the form; it’s the content, content that satisfies niches rather than serves masses with one-size-fits-all newspaper or magazine products.

Call it the newsonomics of 100 products a year, or just one way to envision a much bigger future.

The 100-product-a-year model is a much-needed growth model. We can see how it fits nicely with all-access subscriptions, and together we have two interconnected Lego blocks of a new sustainable news model. We have two essential parts of a crossover model (“The newsonomics of crossover”) that I detailed here a few weeks ago. The big, hairy challenges of accelerating print ad loss and onerous legacy costs remain, but at least we’ve got a couple of building blocks we didn’t have two years ago. By we, I mean those of us who care about news and great professional content.

Is it a big moneymaker? We don’t know yet, though we can extrapolate some numbers below.

It’s directionally right, though, for at least a couple of strategic reasons. The notion of 100 smaller products reminds us that so much of the new world is based on volume. Google has built a monstrous advertising business on hundreds of thousands of smaller advertisers, while daily newspapers reaped huge profits on relatively few bigger advertisers. Even as movie watching by streaming surpasses DVD watching, more money is still in the old medium. Streaming will monetize at a lower rate, but end up generating bigger dollars over time. The same thing is true in the digital music business. Selling lots of stuff to lots of people at smaller price points is something the Internet enables superbly.

Yes, there are definitely new winners and losers in movies and music, as there will be in news. Those who transition best and fastest will win.

Second, it’s in line with the strategic push to satisfy the hell out of core customers. As publishers have figured out that it’s the top 15 percent of site visitors who make the big difference in building the new digital business — perhaps paying for subscriptions, consuming many more pages than fly-by users sent by Google — core customer satisfaction is key. Ebooks deeper the relationship to that reader customer.

This 100-product-a-year model may fit as well with the new California Watch/Bay Citizen combo (“The newsonomics of the death and life of California news”), finalized Tuesday, as its does with The Wall Street Journal, The New York Times, the Charlotte Observer, GQ, or Conde Nast Traveler.

Let’s take one example. On Wednesday, the Boston Globe launched “Sunday Supper & More.” It’s a cookbook. It’s New England. And it could be the beginning of a new franchise: Expect summer, fall and winter editions each year to join this spring debut. The Globe’s staff built it with Apple’s iBooks Author tool, so it offers video within it.

Want to buy it? Not so fast. Today, Sunday Supper & More is only available to Boston Globe print, all-access, and digital subscribers. So subscription — think “membership” (the recent riff of the L.A. Times new paywall intro) — is gaining new benefits. Surprise, says the Globe, you not only get our paper, our spiffy new replica-plus edition, if that’s what you want, and our mobile apps — you also get our cool cookbooks, with more to come.

The Globe will sell the book to non-subscribers — probably at $4.99 — but will decide the timing of that sale after next week’s Globe confab at which execs and editors will plot an ebook plan for the company.

“Events and ebooks will be the two biggest perks” of the new Globe subscription push, says Jeff Moriarty, the Globe’s VP of digital products. Beyond Sunday Suppers and a new spin on the Fenway 100 historical Red Sox book, we can picture the Globe soon mining its archives in both sports and features to provide new value for customers and a new leg of revenue. It experimented early with three books on its Whitey Bulger stories, and learned some lessons in pricing, distribution, and the technical creation process along the way.

The Globe has plenty of company in this push. We see Canada’s National Post committing to a couple of dozen ebooks in the coming year, again from hard news to features (“To learn what works (quickly), Canada’s National Post dives into ebooks”). Guardian Shorts is an early innovator; Politico is churning out four campaign ebooks this year.

Magazine publishers, faster than newspaper publishers to embrace the tablet as the next-gen platform, are also ahead of most newspaper publishers in ebooks. Vanity Fair’s done more than a half dozen, and its parent Conde Nast is hosting an explosion of more single-purpose apps in the iTunes Store, some unrelated to Conde’s magazines. Hearst’s Cosmopolitan is embracing ebooks, and now partnering, along with ProPublica — an early tester of ebooks — with Open Road Integrated Technology. Open Road Integrated Technology?

Well, it’s a book company, an ebook company juiced on the possibilities of our age. Headed by former HarperCollins CEO Jane Friedman, the company is prototypical of a new group of middlemen. With book marketing savvy (cover design, marketing, distribution+), these companies are now feeding the emerging ebook marketplace. They are also partnering back for that old standby, print, as Open Road has done with book services company Ingram. In Canada, it was Harper Collins Canada that became the National Post’s partner in bringing news ebooks to market.

Just as the web has knocked many middlemen for a loop, it creates openings for new ones.

If you talk to publishers about ebooks, they are farther along in experimenting than they were a year ago. Yet some basic issues — producing the books, marrying them to commerce engines, placing them prominently in e-stores and more — are giving them headaches as they push forward. “How do we make the right offer to the right person at the right time?” one experienced exec asked.

The marketplace has been exploding (recall that Amazon announced last spring that its ebooks were now outselling its paper books), but those issues are setting the stage for a new group of companies, many staffed with graduates of the book industry, offering their help. Newspaper and magazine publishers are looking to the Open Roads for guidance.

Some are turning to their digital circulation partner, Press+. That company, which is powering more than 280 titles’ subscription commerce, says its system can handle the commerce and even help with identifying likely customers, based on tracked content usage, so its customers are just beginning to ply the ebook trade.

ProPublica general manager Dick Tofel opted for Open Road for the non-profit investigative publisher’s fifth and sixth books. He says the company will start producing a half dozen or more a year now and is now fielding calls from other publishers eager to get the benefit of his early ebook experience.

So far, ProPublica has put 90,000 ebooks into the market. The first couple were free downloads, but with the addition of new original introductions to work ProPublica had already published free online, Amazon and ProPublica agreed on test pricing of 99 cents and $1.99, and new revenue is rolling in. It’s small, but “pound for pound, it generates more than advertising,” notes Tofel, who is a Wall Street Journal veteran. And, of course, the incremental cost of creating ebooks is closer to zero, with most sales cost able to be a commissioned cost of sale.

As assistant publisher, Tofel oversaw the print books business that’s been a good Dow Jones sideline for a long time.

Those books — personal investing and more — are naturals for the ebook revolution now. Look for the Journal to experiment more with those titles, perhaps niching by life stage.

As news and magazine publishers look to this new revenue stream, here are six points to ponder:

It’s about product development: Yes, it’s editing, but fundamentally, it’s a mindset change for many publishers stuck in the one-size-fits-all world. Publishers either need staffers with new product chops or partners wanting to license publisher content and create the products for the marketplace.

Free the archives!: Digital archives have never been a big business for publishers, caught somewhere between Google and musty library connotations. Packaged archives — for specific audiences — can offer new life for older content.

Don’t think content; think problem solving: Publishers too often start with content. If we start with audience — college-planning students and parents, new mothers and fathers to be, bored cooks, and, big time, sports enthusiasts of all ages — we can see the motors of ebook publishing beginning to role. Think life stage, just for starters, and add the geo angle, and regional publishers can play.

Mining the database: As onesies and twosies, it’s fairly easy to pick content from publishers’ own databases. Think of bigger production cycle, going beyond the 100 a year, to a thousand, all niched products that could be semi-automated and templated over time. Better tagging of content for ebook usage then becomes a priority.

Ebook or app?: Early experimenters say let the content be your guide. The more multimedia, the better an app may work. Ebooks, though, can be sold through more distributors, while Apple continues to dominate the app business.

Pricing: What’s an ebook worth? If it solidifies a subscriber/member paying $300 or more a year, it’s worth a lot, even if it’s free. Think of the lifetime value of that subscriber.

To the right niche, some ebooks will be worth $1.99 and others — Retina perfect — will go for $19.99. Let’s take our 100 products a year. Let’s average 5,000 sales for each. Let’s price at $2.99 on average. That would be $1.5 million. Some books, though, could be blockbusters. We can play with this math and see where it goes.

For the ProPublicas, it’s a nice non-ad revenue stream. For other publishers, it’s at least a growing third leg of revenue (beyond ads and circulation) and one that may be nurtured into something significant. (Last fall, Will Sullivan offered a gaggle of reasons ebooks make sense for publishers.) As importantly, it can reinforce those two legs, pleasing subscribers/members with free (or discounted) perks and advertisers/sponsors who have new opportunities to represent themselves to niche audiences. That’s a pretty good combination, and one that publishers will soon embrace, just as they lately have all-access digital circulation.

January 05 2012

15:15

The newsonomics of the News Dial-o-Matic

It’s an emerging issue of our time and place. They know too much about us, and we know too little about what they know. We do know that what they know about us is increasingly determining what they choose to give us to read. We wonder: What are we missing? And just who is making those decisions?

Today, in 2012, those questions are more pressing in our age of news deluge. We’re confronted at every turn, at every finger gesture, with more to read or view or listen to. It’s not just the web: It’s also the smartphone and especially the tablet, birthing new aggregator products — Google Currents and Yahoo Livestand have joined Flipboard, Pulse, Zite, and AOL Editions — every month. Compare for a moment the “top stories” you get on each side-by-side, and you’ll be amazed. How did they get there? Why are they so different?

Was it some checkbox I checked (or didn’t?!) at sign-in? Using Facebook to sign in seemed so easy, but how is that affecting what I get? Are all those Twitterees I followed determining my story selection? (Or maybe that’s why I’m getting so many Chinese and German stories?) Did I tell the Times to give the sports section such low priority? The questions are endless, a ball of twine we’ve spun in declaring some preferences in our profiles over the years, wound ever wider by the intended or (or un-) social curation of Facebook and Twitter, and mutliplied by the unseen but all-knowing algorithms that think they know what we really want to read, more than we do. (What if they are right? Hold that thought.)

The “theys” here aren’t just the digital behemoths. Everyone in the media business — think Netflix and The New York Times as much as Pandora and People — wants to do this simple thing better: serve their customers more of what they are likely to consume so that they’ll consume more — perhaps buying digital subscriptions, services, or goods and providing very targetable eyes for advertisers. It’s not a bad goal in and of itself, but sometimes it feels like it is being done to us, rather than for us.

Our concern, and even paranoia, is growing. Take Eli Pariser’s well-viewed (500,000 times, just on YouTube) May 2011 TED presentation on “filter bubbles,” which preceded his June-published book of the same name. In the talk, Pariser talks about the fickle faces of Facebook and Google, making “invisible algorithmic editing of the web” an issue. He tells the story of how a good progressive like himself, a founder of MoveOn.org, likes to keep in touch with conservative voices and included a number in his early Facebook pages.

He then describes how Facebook, as it watched his actual reading patterns — he tended to read his progressive friends more than his conservative ones — began surfacing the conservative posts less and less over time, leaving his main choices (others, of course, are buried deeper down in his datastream, but not easily surfaced on that all-important first screen of his consciousness) those of like-minded people. Over time, he lost the diversity he’d sought.

Citing the 57 unseen filters Google uses to personalize its results for us, Pariser notes that it’s a personalization that doesn’t even seem personalized, or easily comparable: “You can’t see how different your search results are than your friends…We’re seeing a passing of the torch from human gatekeepers to algorithmic ones.”

Pariser’s worries have been echoed by a motley crew we can call algorithmic and social skeptics. Slowly, Fear of Facebook has joined vague grumbles about Google and ruminations about Amazon’s all-knowing recommendations. Ping, we’ve got a new digital problem on our bands. Big Data — now well-advertised in every airport and every business magazine as the new business problem of the digital age to pay someone to solve — has gotten very personal. We are more than the sum of our data, we shout. And why does everyone else know more more about me that I do?

The That’s My Datamine Era has arrived.

So we see Personal.com, a capitalist solution to the uber-capitalist usage of our data. I’ve been waiting for a Personal.com (and the similar Singly.com) to come along. What’s more American than having the marketplace harness the havoc that the marketplace hath wrought? So Personal comes along with the bold-but-simple notion that we should individually decide who should see our own data, own preferences, and our own clickstreams — and be paid for the privilege of granting access (with Personal taking 10 percent of whatever bounty we take in from licensing our stuff).

It’s a big, and sensible, idea in and of itself. Skeptics believe the horse has left the barn, saying that so much data about us is already freely available out there to ad marketers as to make such personal databanks obsolete before they are born. They may be forgetting the power of politics. While the FCC, FTC, and others have flailed at the supposed excesses of digital behemoths, they’ve never figured out how to rein in those excesses. Granting consumers some rights over their own data — a Consumer Data Bill of Rights — would be a populist political issue, for either Republicans or Democrats or both. But, I digress.

I think there’s a way for us to reclaim our reading choices, and I’ll call it the News Dial-o-Matic, achievable with today’s technology.

While Personal.com gives us 121 “gem” lockers — from “Address” to “Women’s Shoes”, with data lockers for golf scores, beer lists, books, house sitters, and lock combinations along the way, we want to focus on news. News, after all, is the currency of democracy. What we read, what she reads, what they read, what I read all matter. We know we have more choice than any generation in history. In this age of plenty, how do we harness it for our own good?

Let’s make it easy, and let’s use technology to solve the problem technology has created. Let’s think of three simple news reading controls that could right the balance of choice, the social whirl and technology. We can even imagine them as three dials, nicely circular ones, that we can adjust with a flick of the finger or of the mouse, changing them at our whim, or time of day.

The three dials control the three converging factors that we’d like to to determine our news diet.

Dial #1: My Sources

This is the traditional title-by-title source list, deciding which titles from global news media to local blogs I want in my news flow.

Dial #2: My Networks

Social curation is one of the coolest ideas to come along. Why should I have to rely only on myself to find what I like (within or in addition to My Sources) when lots of people like me are seeking similar content? My Facebook friends, though, will give me a very different take than those I follow on Twitter. My Gmail contact list would provide another view entirely. In fact, as Google Circles has philosophized, “You share different things with different people. But sharing the right stuff with the right people shouldn’t be a hassle.” The My Networks dial lets me tune my reading of different topics by different social groups. In addition, today’s announced NewsRight — the AP News Registry spin-off intended to market actionable intelligence about news reading in the U.S. — could even play a role here.

Dial #3: The Borg

The all-knowing, ever-smarter algorithm isn’t going away — and we don’t want it to. We just want to control it — dial it down sometimes. I like thinking of it in sci-fi terms, and The Borg from “Star Trek” well illustrates its potential maniacal drive. (I love the Wikipedia Borg definition: “The Borg manifest as cybernetically-enhanced humanoid drones of multiple species, organized as an interconnected collective, the decisions of which are made by a hive mind, linked by subspace radio frequencies. The Borg inhabit a vast region of space in the Delta Quadrant of the galaxy, possessing millions of vessels and having conquered thousands of systems. They operate solely toward the fulfilling of one purpose: to “add the biological and technological distinctiveness of other species to [their] own” in pursuit of their view of perfection“.) The Borg knows more about our habits than we’d like and we can use it well, but let’s have us be the ones doing the dialing up and down.

Three simple round dials. They could harness the power of our minds, our relationships, and our technologies. They could utilize the smarts of human gatekeepers and of algorithmic ones. And they would return power to where it belongs, to us.

Where are the dials? Who powers them? Facebook, the new home page of our time, would love to, but so would Google, Amazon, and Apple, among a legion of others. Personal.com would love to be that center, as it would any major news site (The New York Times, Zite-powered CNN, Yahoo News). We’ll leave that question to the marketplace.

Lastly, what are the newsonomics of the News Dial-o-Matic? As we perfect what we want to read, the data capturing it becomes even more valuable to anyone wanting to sell us stuff. Whether that gets monetized by us directly (through the emerging Personals of the world), or a mix of publishers, aggregators, or ad networks would be a next battleground. And then: What about the fourth wheel, as we dial up and down what we’re in the marketplace to buy right now? Wouldn’t that be worth a tidy sum?

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