Tumblelog by Soup.io
Newer posts are loading.
You are at the newest post.
Click here to check if anything new just came in.

September 16 2011

16:30

Mediatwits #20: Newspaper Special: Boston Globe Pay Wall; Guardian U.S.; Philly Tablet

CUNY-J LOGO.jpg

The Mediatwits podcast is sponsored by the CUNY Graduate School of Journalism, which offers an intensive, cutting edge, three semester Master of Arts in Journalism; a unique one semester Advanced Certificate in Entrepreneurial Journalism; and the CUNY J-Camp series of Continuing Professional Development workshops focused on emerging trends and skill sets in the industry.

Welcome to the 20th episode of "The Mediatwits," the weekly audio podcast from MediaShift. The co-hosts are MediaShift's Mark Glaser and Rafat Ali, the one and only founder of PaidContent. This week is a special edition on newspapers, newspapers and more newspapers. First up, the Boston Globe launched its new pay-walled site, BostonGlobe.com, which is free for print subscribers but costs $3.99 per week for non-print subscribers. The old Boston.com site will look more cluttered and have less content from the paper. The special guest this week is Chris Mayer, publisher of the Globe, who talks about why they went with a two-site strategy, and how people will still be able to see Globe content if they come from social media or search links.

Next up is the move by the U.K. newspaper the Guardian, with its third attempt to take on the American market. The paper launched a new site, GuardianNews.com, helmed by Janine Gibson, and will be moving over star reporter Nick Davies as well as new hire Ana Marie Cox. Can they finally get a foothold in the States? And finally the Philadelphia newspapers and Philly.com are subsidizing an Android tablet for subscribers at $99 with a two-year subscription contract. Will people take up their offer?

Check it out!

mediatwits20.mp3

Subscribe to the podcast here

Subscribe to Mediatwits via iTunes

Follow @TheMediatwits on Twitter here

Intro and outro music by 3 Feet Up; mid-podcast music by Autumn Eyes via Mevio's Music Alley.

Here are some highlighted topics from the show:

Intro

1:40: Update on Michael Arrington leaving TechCrunch

3:10: Big conflicts of interest at TechCrunch Disrupt

4:10: Rafat likes "retro" feel of print NY Times

5:15: Rundown of topics on the show

BostonGlobe.com pay wall

Chris Mayer photo.jpg

7:20: Rafat likes clean look of BostonGlobe.com

8:35: Special guest Chris Mayer, publisher of the Boston Globe

10:30: The split between two groups of Globe readers

15:40: Mayer: Readers appreciate advertising, as long as it's not disruptive

18:20: Will BostonGlobe.com do a special app or stay out of App Store?

21:10: The Globe's marketing push for its paid content

23:30: BostonGlobe.com will allow free reads of stories via social media and search without limits

25:45: Mark wonders if having two sites will really hurt the Globe

Guardian launches new U.S. site

26:20: Guardian moves Nick Davies stateside and hires Ana Marie Cox

28:20: Rafat impressed that they're hiring 20 to 30 people

Philadelphia papers subsidize Android tablets

30:35: Get a $99 tablet if you subscribe for two years at $9.99 per month

32:40: Allows many possible advertising deals

34:45: Why we're still watching moves by newspaper companies

More Reading

Four Observations (and Lots of Questions) on the Boston Globe's Lovely New Paywalled Site at Nieman Journalism Lab

Boston Globe pioneers double website strategy as it erects paywall at the Guardian

Judgement Day: Does the Boston Globe's paywall site have a chance in hell? at the Boston Phoenix

BostonGlobe.com, the pay site, now free until Oct. 1

The Guardian Launches a U.S. Homepage with a Special American U.R.L. at New York Observer

Nick Davies, Ana Marie Cox Join Guardian's New U.S. Operation at Capital New York

The Guardian Launches in America at the Next Web

GuardianNews.com, the new U.S. site

Philly papers offering subscribers $99 Android tablet at CNET

Sound Familiar? Philadelphia Newspapers Subsidize A Tablet To Sell You A Subscription at Wired

Weekly Poll

Don't forget to vote in our weekly poll, this time the best business model for metro newspapers:


What's the best business model for metro newspapers?

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. You can follow him on Twitter @mediatwit. and Circle him on Google+

CUNY-J LOGO.jpg

The Mediatwits podcast is sponsored by the CUNY Graduate School of Journalism, which offers an intensive, cutting edge, three semester Master of Arts in Journalism; a unique one semester Advanced Certificate in Entrepreneurial Journalism; and the CUNY J-Camp series of Continuing Professional Development workshops focused on emerging trends and skill sets in the industry.

This is a summary. Visit our site for the full post ».

July 20 2011

15:00

June 17 2011

12:45

Why Groupon's business model won't work

TechCrunch :: Businesses are being sold incredibly expensive advertising campaigns by Groupon that are disguised as “no risk” ways to acquire new customers. In reality, there’s a lot of risk. With a newspaper ad, the maximum you can lose is the amount you paid for the ad. With Groupon, your potential losses can increase with every Groupon customer who walks through the door and put the existence of your business at risk.

"Why Groupon Is Poised For Collapse" - continue to read Rocky Agrawal, techcrunch.com

June 11 2011

20:07

Raju Narisetti, Washington Post: news brands, get more creative, engaging and useful

Forbes :: There has never been a better time to be a journalist for The Post, writes Raju Narisetti, Managing Editor, The Washington Post. In 2010, 29.3 million readers read some 270 million pages of Post journalism each month, a record for The Washington Post. Of that, 28.1 million did so online and, while The Post brought in 4.2 million new readers on average each month compared to the previous year, they also lost some 35,000 print subscribers in 2010 alone.

[Raju Narisetti:] Revenues from online advertising too haven't really caught up. Cost cutting and trying to make online readers pay, may not be the answer. The news brands need to get creative and make their content easier, more engaging and useful.

So, what's the big deal you might ask?

 

Continue to read Raju Narisetti, www.forbes.com

April 28 2011

15:00

The newsonomics of story cost accounting

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

What’s a story worth?

Last week, I looked at a single investigative story (California Watch’s “On Shaky Ground“), and we saw the tab of half a million dollars for a 20-month-long tale of sleuthing. What about that ordinary daily story, quotidian journalism as we know it — the grinding out of less eventful articles, the kinds of things that keep us informed but don’t offer epiphanies? How much does it cost, and how much does that matter to the future of the news business?

It’s not an academic question. This week, McClatchy added to the long line of down financial reports, telling us that it was down 11 percent, year over year, in ad revenues and 9 percent in overall revenues, for the first quarter. That announcement follows on from similar reports from The New York Times Co., especially its regional properties, and Gannett. The U.S. news industry is extending its unwanted record: 21 straight quarters of revenue down quarter to quarter. That’s a lost half-decade.

Add up those down revenues and the need to maintain profitability — for public or private owners — and there’s but a single answer: cut costs. Certainly, the industry has cut out major costs in the last three years, but cost-cutting is slowing, if you look at the company reports. The New York Times’ costs were flat in the first quarter, Gannett’s down 0.9 percent and McClatchy’s down 6.5 percent. That’s in large part due to rising newsprint prices, making it harder to get costs more appreciably down. With those continuing revenue declines, though, expect more cost-cutting. It’s a given.

So, let’s ask about that daily story. What’s it cost?

Of course, we’ve never looked at it that way. We’ve hired people, told them to write, at times monitoring their production, but rarely taking a look at the cost of what they’re producing. Given the pressures of the day, given the Demand Media model and given the predilection to start counting whatever can be counted (“The newsonomics of WaPo’s reader dashboard 1.0“), story cost accounting is inevitable.

In fact, it’s already started. Let’s take a brief look at what is bound to become a bigger topic in the months ahead, the newsonomics of a single story.

Clark Gilbert, Salt Lake’s dean of disruption, is getting into the nitty-gritty of retooling editorial content production, top to bottom, and that includes getting a handle on differing costs of content. Gilbert is a key part of the team that is transforming the media properties of the daily Deseret News and leading local TV and radio stations KSL, all owned by the Church of Jesus Christ of Latter-day Saints, better known as the Mormon Church. Last August, Gilbert announced one of the most major restructurings in journalism, making major staff cuts — a prelude to the re-architecting now being done. That restructuring includes the launching of Deseret Connect, an initiative to round up pro-am user-generated content from around Utah, and around the globe.

The new CEO of Deseret Media will soon be able to tell you exactly how much articles cost him. He’ll specify the differing price points of local, proprietary content, of AP content, of a blog post written halfway around the world, and lots more.

For now, he draws upon his experience as a Harvard Business School prof and strategic consultant. From that career work, he estimates the following, general cost metrics for the content offered by news companies in print and online:

  • $250-$300 per staff-written story;
  • $100 per stringer story;
  • $25 per Associated Press story;
  • 5-12 for “remote” stories, largely written by the emerging class of bloggers

“You better know your cost per story,” he says. “That’s the kind of rigor you need.”

As focused as he is on building digital ad revenues, he makes the point directly: “You have to work both sides [revenue building, cost reduction] of this.”

“It doesn’t mean I’m not willing to pay for content,” says Gilbert. “I’m paying a boatload for stories that are a commitment to my audience.” It’s a straightforward strategy: If you are going to pay a boatload for some stuff, you better pay a lot less for other stuff.

Still, those numbers are bound to chill many a journalist. You think posting reader metrics in newsrooms is still a point of contention — wait ’til story cost accounting becomes mainstream. And it will. It’s just simple manufacturing, and like it or not, that’s what the news business has long been. Manufacturing, with lots (New York Times, Wall Street Journal) of quality added or with (insert your favorite rag here) just enough to draw ads. News creation used to be a sunk cost, with headcount a small and usually polite battle between editors and publishers. That was in stable times. In these times, knowing business drivers, down to the dollar, is going to be part of the new world.

The metrics-driven thinking may have been first demonstrated by Demand Media, with its $10, $25, and $50 stories (“The newsonomics of content arbitrage“), but once opened, that Pandora’s Box won’t be closed.

Clark Gilbert is early in the game, but others are taking a parallel cost-conscious approach.

John Paton, CEO of the new, continuous-revolution Journal Register Company, breaks it down differently, but is highly cost-aware.

“We’re not looking to save money on local, professional content,” Paton told me this week. Notice the emphasis on “local” and “professional.” Like many others, Journal Register is beginning to round up hundreds of local bloggers (as Patch joins that club), who will be largely unpaid.

What Paton emphasizes, though, in his cost-of-content analysis, is the 60 percent of JRC’s content — across print and digital — that is national. He’s done a careful counting of what’s in his products, and says that while 40 percent is local (above average for dailies, he says), 60 percent is national. So Project Thunderdome, newly headed by D.C. veteran Jim Brady, has put a bullseye on that content. The notion: Lower the cost, and where possible, raise the quality of national content. That thinking is behind JRC’s recent deal with TheStreet.com, which is now providing its national business news. It’s a revenue share, with JRC gaining national revenues. In addition, says Paton, it has increased its local business content-related revenue, given both the new inventory of ad impressions made possible and the quality of TheStreet.com content. That’s a model Paton intends to extend to other non-local content.

Further, he’s taken dead aim at the cost of getting content through the mechanics of a newsroom. Saying that about half of U.S. editorial staffs are engaged in producing content for publication — not creating it — he’s focused on changing that ratio. Instead of five of ten journalists engaged in production, he’s aiming for two of ten, to be accomplished through centralization and templating of the production functions. “Then, two or three more of the ten can create content,” he says.

Both plans will, in effect, reduce the cost of content overall. And, as with Clark Gilbert’s philosophy, the intent is to invest in unique, local, proprietary content, even though it’s far more expensive.

Let’s consider one more take on story cost accounting. As CEO of Huffington Post, Betsy Morgan pioneered the unique brand of higher-end, often personality-driven aggregation that distinguished the site’s offerings. Out of that experience, and in her new role as CEO of Glenn Beck’s The Blaze site, she’s evolved her own metrics. They divide nicely into thirds.

  • One-third original, professional content, largely reported journalism.
  • One-third voice and opinion.
  • One-third aggregation, or to use the updated term, “curation,” as editors aggregate, honing off-site story selection given their understanding of their unique audiences.

Morgan tells me that “the thirds” form both an audience strategy and a cost strategy. Clearly, as the venture-backed HuffPo began its life, it watched its dollars very carefully. That meant that curation wasn’t just an audience-pleasing idea, of course, but a cost-saving one, as bloggers (at least then!) willingly forked over content in exchange for play and recognition, not money.

Going forward, the “thirds strategy” offers another twist on Clark Gilbert’s and John Paton’s (and Arianna Huffington’s) strategies. Obviously, you don’t pay for the curation part, other than for the technologies or smaller staff to handle it. You can pay for some of the voice and opinion, but there’s a hell of a lot of it you can get for free or cheap. And, once again, you concentrate your costs of content on the high end — original, professional, largely reported journalism.

The new AOL/HuffPo’s been doing that with pro hire after pro hire. Morgan herself is doing it, as recently as this week with the hiring of former Denver Post columnist David Harsanyi.

Add it all up, and it’s a new cost structure for the craft of journalism. As with all metrics, the good or bad they inspire depends on who is using them. What’s clear is that those news outfits — local, national or global — which only concentrate on paying staff, like in the old days, will find themselves out-strategized by those who take the blended approach.

Is it all about thirds? No, but it’s a good place to start.

I think of it as a pyramid. Original content — content that distinguishes news brands — is at the top, and, yes, is the most costly. At the bottom is clearly aggregation, because as Morgan points out, “[readers] can’t easily find and read what’s of interest to them.” Then, there’s the middle third or so. For regional news companies, that includes hyperlocal bloggers and subject-specific (transportation, public health, sports) experts; for national sites, it’s non-staff “contributors” of differing skills and costs. That third is quite open to innovation.

It’s a great whiteboard exercise, at least, for anyone in the news business. Pass the marker, please, and work the pyramid.

April 21 2011

14:00

The newsonomics of a single investigative story

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

It’s a week to celebrate great investigative work. ProPublica made some history with its Pulitzer for online-only work about the financial meltdown, and the Los Angeles Times crowned its success with the larger-than-life Bell corruption tale, winning its own top prize. Both well deserved.

Meanwhile, as journalists sat around their terminals awaiting the Pulitzer bulletin, an investigative series broke across California, perhaps reaching more audience more quickly than any previous investigative piece. There were no bodies to count, nor billions or millions of ill-gotten gains to uncover.

Rather, California Watch’s “On Shaky Ground” series is aimed at preventing disaster, getting ahead of the Grim Reaper. The series took a big look at the likely safety issues in the state’s schools when (not if, right?) The Big One hits. It found, not surprisingly, that although state law mandated seismic preparations, all kinds of bureaucratic nonsense has contravened that intent. It found that about 1,100 schools had been red-flagged as in need of repair, with no work done, while tens of thousands of others were in questionable and possibly illegal shape. The so-what: Some of the very institutions providing for the kids of California have a certain likelihood of actually falling on top of them and killing them.

It’s old-fashioned, shoe-leather, box-opening, follow-the-string journalism, and it is well done.

While it’s fun to celebrate great journalism, anytime, it’s vital to look at the newsonomics of this kind of investigative journalism. What did it take to get it done? How much did it cost and who paid for it? And, to look at the plainly fundamental question: How do we get lots more of it done in the future?

The series took more than 20 months to complete. The interactive timeline, “On Shaky Ground: The story behind the story,” tells that tale with tongue in cheek; it’s a great primer for any beginning journalism class. Corey G. Johnson, freshly hired from North Carolina and part of a young reporting contingent that has been mixed and mentored well by veterans like editorial director Mark Katches, stumbles on a list of 7,500 “unsafe schools” as he’s doing a routine story on the 20th anniversary of the Loma Prieta earthquake.

Along the way, the story grows in import and paperwork. California Watch, the less-than-two-year-old offshoot of the Berkeley-based Center for Investigative Journalism (CIR), adds other staff to the effort, including reporter Erica Perez, public engagement manager Ashley Alvarado, distribution manager Meghann Farnsworth, and director of technology Chase Davis, among other reporters.

In the end, the series rolled out in three parts — with maps, databases, historical photos, its own Twitter hashtag, a “My Quake” iPhone app — and a coloring book (“California Watch finds a new consumer group, kids“), intended to reach kids, the most important subject and object of the reporting. Already, the state legislature has scheduled hearings for April 27.

The reach of the roll-out is one of the new lessons here. Six major dailies ran at least some part of the series. ABC-affiliate broadcasters took the story statewide. Public radio news leaders KQED, in the Bay Area, and KPCC, in L.A. ran with it. KQED-TV. The ethnic press signed on: La Opinion ran two seismic stories Sunday and Monday, while at least two Korean papers, one Chinese paper, and one Chinese TV station included coverage as well. More than 125 Patch sites in the state (California is major Patch turf) participated.

A number of the distributors did more than distribute. They localized, using data from California Watch, and reporting on their local schools’ shape. KQED-TV produced a 30-minute special that is scheduled to air on at least 12 PBS affiliates in the state.

San Francisco Chronicle managing editor Steve Proctor is frank about how priorities and resource use have changed in the age of downsizing. When Proctor came to the paper in 2003, he says, the paper had five to seven people assigned to a full-time investigative team. Now there’s no team per se, with the Chronicle investing investigative resources in an “investigate and publish” strategy, getting stories out to the public more quickly and then following up on public-generated leads they create. It’s an adjustment in strategy and in resource allocation — and the California Watch relationship makes it even more workable. “We’ve been pretty sympatico with them from the beginning,” he said. “We’ve used the majority of what they’ve produced.”

So let’s get deeper into some numbers, informed by this series, and see where this kind of work can go:

  • “On Shaky Ground” cost about $550,000 to produce, most of that in staff time, as the project mushroomed. That’s now a huge sum of money to a newsroom, even a metro-sized one. Ask a publisher whether he or she is willing to spend a half a million on a story, and you know the answer you’ll usually get. It’s a sum few newsrooms can or will invest. Consequently, the economics of getting a well edited, well packaged series for a hundreth of that price is an offer few newsrooms can (or probably should) refuse.
  • California Watch, not yet two years old, runs on a budget of about $2.7 million a year. That budget supports 14 journalists, whose funding takes up about 70 percent of that $2.7 million number. That’s an intriguing percentage in and of itself; most daily newspaper newsrooms make up of 20 percent or less of their company’s overall expenses. So, disproportionately, the money spent on California Watch is spent on journalists — and journalism.

The project is about midway through its funding cycles. The ubiquitous Knight Foundation (which has contributed about $15 million to a number of investigative projects nationwide through its Investigative Reporting Initiative), the Irvine Foundation, and the Hewlett Foundation, all of which have provided million-dollar-plus grants, are reviewing new proposals.

The key word, going forward here, is “sustaining.” Will foundations provide ongoing support of the “public good” of such journalism? There’s lots of talk among foundations, but no clear consensus among journalism-facing ones. “There really isn’t a foundation community that thinks with a common brain — same situation as in the news community,” Knight’s Eric Newton told me this week. “Each foundation makes its own decisions using different criteria. Some foundations see their role as launching new things and letting nature take its course.” CIR executive director Robert Rosenthal is among those trying to find a new course. Although he’s a highly experienced editor, he finds that most of his time is found fund- and friend-raising.

  • California Watch is building a syndication business, feeling its way along. Already, six larger dailies — the San Francisco Chronicle, the Sacramento Bee, the Orange County Register, the San Diego Union-Tribune, the Fresno Bee, and the Bakersfield California — are becoming clients, paying a single price for the all-you-can-eat flow of daily and enterprise stories California Watch produces. They, a number of ABC affiliates (L.A.’s KABC, the Bay Area’s KGO, 10 News San Diego, 10 News Sacramento, KSFN in Fresno), and KQED public radio and TV in the Bay Area are also annual clients pay between $3,000 and $15,000 a year each. A la carte pricing for individual projects can run from $3,000 to $10,000. The California Watch media network, just launched in January, is an important building block of the evolving business model. It is clear that while syndication can be a good support, at those rates, it’s a secondary support.
  • So, if California Watch were to be totally supported by foundation money, it would take an endowment of $54 million to throw off $2.7 million a year, at a five percent spend rate. Now $54 million raised one time isn’t an impossible sum. Consider just one gift: Joan Kroc left NPR more than $200 million eight years ago. Consider that the billionaires’ club started by Bill Gates and Warren Buffett (encouraging their peers to give away half of their wealths) is talking about newly raising a half a trillion dollars for the public good. Last summer, I suggested the group tithe a single percentage point of the club’s treasury for news-as-a-public-good. It seems to me that stories like “On Shaky Ground” make that pivotal education/health/journalism connection; send “Shaky Ground” to your favorite billionaire and urge him to sign on.
  • Let’s do some cost-benefit analysis. How much is a single child’s life worth? How about a school of 250? We could consult a liability lawyer, who undoubtedly would put assign a six- and seven-figure number per life, and then tie up the courts, post-disaster, making the math work. So if California, bereft as it is of capital, were to invest in the infrastructure, per its own laws, wouldn’t it be ultimately cost-effective? Of course it would be, and in this case we see in microcosm, the question of American infrastructure writ large. Are we a country that will let more bridges fall into mighty rivers, more schools fall onto our children and more poor roads cause preventable injury and death? You don’t need my political rant here. Rather, let us just make the point that journalism — old-fashioned journalism, newly digitally enhanced — is a key part of forcing America to face its own issues, whatever the solutions.

In this project and in California Watch generally, we see the reconfiguring of local media. An owner — whether AOL, Hearst, or private equity — can hardly reject the offer of paying one-hundreth of the cost for space-filling, audience-interesting content. Welcome to a new kind of content farm, to use that perjorative for a moment. Yes, California Watch operates on the same Demand Media-like principle of create-once-distribute-many, realizing the digital cost of the second copy is nil. Let’s consider it the organic, cage-free content farm. It makes sense for a state the size of a country (California = Canada); smaller versions of it make equal sense for Ohio, North Carolina, or Illinois.

Older media outsources journalism and in-sources (affordable) passion. There are lots of lessons here (“3 Reasons to Watch California Watch“), but that fundamental rejiggering of who does the work and how it is distributed and customized is a key one. As Mark Katches points out, “They [distributing partners] put their voices on our story.” That’s a new system in the making.

Old(er) editors can learn new tricks. For a good show-and-tell of that principle, check out Rosenthal’s talk to TEDxPresidio two weeks ago. I first saw him give the talk at NewsFoo in Phoenix in December. Amid more tech-oriented talks, his stood out and was much applauded. It’s a clarifying call for real journalism, perfected for the digital age. Share it.

March 31 2011

14:00

The newsonomics of oblivion

So, how long do newspapers have?

Two years ago, that question was on the lips of many as newspapers cut back deeply — in staff, in number of pages, in the very size of the page, and in selling their very headquarters and flagship buildings — in the depth of Deep Recession. We hear it less now. In part, that’s because many publishers and editors decided writing their own obituaries — talking about the sorry state of their enterprises and detailing the cutbacks for the public — wasn’t smart. In part, like any tired story, we’ve moved on and now occupy ourselves with digital reader payment strategems and with the discussions of how tablets and smartphones are, and aren’t, forever changing journalism.

Yet the question looms in the dark corners, in private conversations, and occasionally bursts into public view: “How long do newspapers have?”

Saturday, in Dallas, I moderated an on-stage conversation between two immoderate forces in daily journalism: The Deseret NewsClark Gilbert, aka “the baby-faced dean of disruption,” as his alternative rival, the Salt Lake City Weekly, has called him; and John Paton, the Digital First, bomb-throwing CEO of the post-bankrupt (and up from cardboard desks and leaky newsroom pipes) Journal Register Company, not long ago the bottom feeder of the industry.

Paton had tossed aside his usual JRC change presentation. Instead, he went with 10 tweets, each, in turn, well-retweeted.

The first and second: “The newspaper model is broken & can’t be fixed” and “Newspapers will disappear in less than 10 years unless their biz model is changed now.”

His point: Piecemeal change is a dead-end, given the converging downward spirals of the business. Only massive, digital-first strategies and re-organizations that scrap old structures, budgets, job descriptions — and, massively, costs — have any hope of porting today’s newspaper companies to that other side of a mainly digital news age.

He’s right, of course. No, not necessarily about the 10-year prediction. It could be five or fifteen, but that makes little difference to the notion. Today’s daily newspaper companies have little chance of surviving in anything resembling tomorrow’s form very far in the future.

In fact, as I talk, privately, to those running the companies, they, too, are largely in agreement. While they talk little publicly these days, the fact remains: You can’t find anyone who says he yet has a proven, sustainable business model for moving forward.

That’s the reason we’re seeing such significant embrace of digital reader walls and fences. The New York Times, the Dallas Morning News, and the Augusta Chronicle all share a goal: get off the road to oblivion and somehow find a new route, a life-saving detour, in uncharted territory. Fear of oblivion is becoming, finally and for more publishers, a motivator for more systematic change. If it works, a new digital reader revenue line could be one important building block of a stable new business model, though it won’t be enough by itself.

Oblivion like the once-famous “revolution” in Gil Scott-Heron’s song won’t be advertised. No one’s going to send out a press release or hold a news conference to say, “It’s over.” Newspapers have numerous fellow travelers among legacy media on the road. As we heard this week, CBS News’ ratings have been in decline since 1992. Somehow we will finally pull the plug on that format, but in the meantime, it’s a long winding-down, marked by lesser and lesser capacity to both do the work of journalism and to see its impacts.

Let’s look at several data points as we explore this notion of the newsonomics of oblivion.

How can we measure the threat of disappearance, of slipping away into history?

Let’s start with this number: 20 quarters. It has been 20 quarters since the U.S. newspaper industry experienced a quarter’s performance that was better than that same quarter a year earlier. It was way back in the second quarter of 2006 that the industry last experienced growth.

Things just keep getting worse, in deep recession, in lesser recession, in timid recovery, and now in a wider economic recovery that has lifted into positive (year-over-year, actual dollar growth) territory all other media that depend on advertising for much of their income. Broadcast and cable TV, radio and magazines have all regained a positive revenue path, as online media’s growth has shot out in the growth lead, the recession itself accelerating the movement of dollars to it.

Gannett’s recent public report, saying publishing division revenues will be down between 6 and 7 percent for the quarter now concluding, is indicative of the continuing deep malaise.

While first quarter industry numbers won’t be publicly reported ’til mid-April, look for them to be down 6 to 10 percent in ad revenue. Print advertising just isn’t recovering. Even good growth rates of 15 to 30 percent in digital — helped by more “online-only,” and fewer bundled-with-print, ad products — can’t come close to making up for print decline. “We’re now growing digital at almost 30 percent,” one CEO recently told me. “But we’d have to grow it at 80 percent or more to make up the [print] losses.”

The numbers suggest that only more cost-cutting retains profitability, which is running 5 to 10 percent currently, the black maintained only by the ongoing staff and other reductions of the past several years. (Witness the recent cuts at Gannett and McClatchy.)

The story is the same throughout the industry, with similar trends in Japan, continental Europe, and the UK; only one of London’s half-dozen quality dailies is even turning a profit these days.

We can look at the models built by Axel Springer. Not well known to Americans, the German publisher is the largest newspaper publisher in Europe, with huge reach overall in 36 countries, including 170 newspapers and magazines, over 60 online offerings for different target groups, and TV and radio properties. In print, it’s the leader in Germany, in both ad revenue and market reach, touching 53 percent of the German population annually. It says it is second only to innovator Schibsted in digital (as percentage of total) revenues.

And yet: Its own forecast future is highly problematic.

By 2020, those extended lines paint a blurry picture, says Gregor Waller, who has just left Axel Springer as vice president for strategy and innovation to start a new digital venture. Waller’s presentation at a recent World Association of Newspapers/IFRA conference is among the best I’ve seen among news publishers. It looks honestly at what’s happening now — and what’s likely to happen — and draws logical, if heart-stopping, conclusions.

Citing the familiar trends of increased advertiser choice, mobile reader migration, the social web revolution, and print decline, Waller’s “conservative” projection forecasts that, by 2020:

  • Print circulation revenue will drop by 50 percent;
  • Classifieds revenue will drop by 90 percent;
  • Display revenue will drop by 30 percent;
  • With online ad revenue, growing at a compounded maximum 11 percent rate, there will be “no way to close the revenue gap with online advertising.”

All of which results in a “huge revenue gap.”

Waller’s conclusion: “Digital advertising will play an important role, but without paid content, publishing houses with a big editorial infrastructure for daily quality news will not survive.”

Which is another way to describe oblivion for the industry as we now know it.

Axel Springer is aggressively testing paid metered models at its Berliner Morgenpost and Hamburger Abendblatt, paralleling The New York Times’ major move this week, and that of more than two dozen U.S. dailies — which have, or soon will, paid schemes.

Waller would be the first to tell you that digital reader revenue isn’t the panacea, but one important piece to creating a sustainable new business model.

John Paton will tell you that digital reader revenue is a distraction, and that the radical restructuring of newspaper companies is their own possibility of finding that future.

They’re both right.

In 2011, it’s a Rubik’s Cube that can’t be solved, with one of Hollywood’s looming, time-ticking-down deadlines. A big twist here, a little one there, and then lots more, we can only hope, will provide a solution. We can be agnostic as to whether that model comes out of the legacy companies, out of cable and broadcast, out of public media, out of for-profit start-ups, or, likely, some combination of those. But we need solutions that provide stable funding for, as Waller puts it, “big editorial infrastructure for daily quality news.”

The threat of oblivion should be a powerful motivator, and we now see — finally — after a decade of decline, its specter moving us away from incremental, “experimental” tests to a fundamental restructuring of the business of news.

Image by Thomas Hawk used under a Creative Commons license.

March 10 2011

15:00

The newsonomics of AOL/Patch buying Outside.in

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

There are two ways to be local, we’ve learned.

You can create local news, as newspapers, TV, and some radio stations — and more recently, tens of thousands of bloggers — have done. Or you can aggregate local, sorting through what those newspapers, TV and radio stations, and bloggers have created, picking up what you want, lifting a headline and quick summary and providing a link.

Over the years, the aggregators have often laughed — not publicly, of course — at those silly people who sink millions into creating local news, or content of any kind, while creators have joked — sometimes publicly — that some day those aggregators will have to turn out the lights, when all the content creators have gone bankrupt and out of business. Creation is hugely expensive, when all you have to do is build a better algorithm, scoop up what’s already there, organize it better than someone else, and sell advertising against it. That’s why the first decade of this century has been largely the decade of the aggregators, with the Googles, Yahoos, MSNs and AOLs, among the leaders in aggregation — and revenue.

So as much as AOL CEO Tim Armstrong talks about sparking a content revolution and creating lots of original content, in the background, he also needs to up his aggregation game, using more and more of other people’s content. That’s how I read the recent announcement that AOL’s Patch is buying Outside.in, a company that uses technology to roundup local content, dividing it into the categories of local news and local blogs — and which has partnered with newspaper companies in its four-year history. (Sadly, the memorable url construction, owing to an Indian .in domain, will probably fade into history.) It’s a small play, but one that may have bigger impact on the emergence of hyperlocal news — and local advertising/marketing dollars — in the years ahead. Let’s look at the newsonomics of the Outside.in deal, and what it tells us about the future of Patch itself and AOL’s play to get bigger audiences faster.

The deal — for a purchase price of less than $10 million — is small when compared to the investment ($14.4 million) put into Outside.in by some high-profile investors (Union Square Ventures, Marc Andreessen, John Borthwick, Esther Dyson, and CNN) and when compared to AOL’s $315 Huffington Post buy. It’s tiny, also, when compared to AOL’s spending of $606 million for 14 acquisitions since the beginning of 2010 — a number, of course, that itself pales against Google’s 48 purchases for $1.8 billion over roughly the same period.

Yet it parallels the HuffPo buy in a major way: It’s an attempt by AOL to get bigger faster. Look at AOL’s financials and it’s clear Armstrong is in a race against time. As one savvy newspaper veteran pointed out to me last week, AOL looks, ironically, a lot like a newspaper company. It has a legacy circulation product, in slow, but unmistakeable decline — its AOL-brand Internet access service — and a digital ad business (in turnaround mode) that isn’t growing fast enough to turn the company sustainably profitable in the future. So The Huffington Post not only pasted the face of Arianna atop the site, in hopes her followers will follow, but acts as the wished-for rocket fuel for overall company traffic growth over the next couple of years, especially as the election season, with its political interest, dawns once again.

Patch is part of that strategy for audience growth, drawing into AOL customers through the local pipeline.

The Outside.in deal aims to do a simple thing to support that growth: create more page views around local content, at a lower cost to AOL. Or putting it even more simply: bulking up Patch, on the cheap.

And isn’t that what critics of fast-growing Patch — more than 800 served up across the country, the fastest-growing news startup and hirer of journalists in the last several years — have said since Armstrong and Patch President Warren Webster announced its hypergrowth plan last summer. For all of you who have said, “I don’t get the business model, they’re paying too much for content,” Armstrong and Webster apparently agree with you.

Patch still needs to make its one editor/reporter per Patch pencil out, but it can do something about the costs of lassoing other content. Peruse the Patches around the country — mainly on the coasts, but with a growing representation in the Upper Midwest — and you see lots of vitality and lots of variable quality. At the top sites, you’ll find the site updated with posts and tweets every few hours, and that owes itself both to the hard-working Patch editors (10-plus hour days are still not uncommon) and their ability to pull in good stringers. The budget for those stringers actually varies by the month, as Patch balances budgets and getting its allocations right. Take a bigger Patch site — serving a city of 80,000, for instance — and it may get more than $2,500 a month in freelance budget, while smaller ones serving communities of 20,000 may only get $1,200.

What Outside.in offers Patch is a new tool to manage how much local content it offers through aggregation — rounding up news from other local sources, including local dailies and weeklies and blogs, and how much it decides to pay for directly. Add Outside.in to Patch pages and you may get the sense of a fuller news report, Patch+. Sure the plus requires readers to link off the site, but that’s the nature of the aggregation game. You get more readers to come to because you’ve created one of the largest centers of local content. If you do it right, you can be ahead of the game — and trim costs.

Let’s look at it on a pure cost basis. If Patch gets 1,000 sites up and going, which should happen this year, and it can trim what it spends on stringers by an average of $500 per site per month, that’s $6000 a year in savings per site. For the Patch network in general, that’s $6 million a year. With Outside.in costing no more than one and a half times that number, you’ve paid for the acquisition in less than two years. (Of course, there are also ongoing operating costs as Outside.in CEO and able web serial entrepreneur Mark Josephson and some other team members join Patch.)

The tweaking, of course, is both about the algorithm — tour Santa Cruz Outside.in today, and the top five news stories are from the local Patch!; where’s the local daily, the Sentinel? — and in the content model. What’s the mix of paid, fresh voices and local aggregation that pulls in, and retains, audience?

That question is, of course, what leading local newspaper sites have been trying to figure out as well. A number of newspaper partners of Outside.in itself have tried, without significant commercial success, to figure out the formula. Other sites like SeattlePI.com have used aggregation (SeattleTweets) and innovators from the Miami Herald to the Journal Register papers have signed up local bloggers, in distribution and ad-revenue-sharing programs. All of these are works-in-progress at getting the local original content creation/aggregation model right.

Patch could get it right, or righter, and become a more formidable challenger to local newspaper sites — especially as they go to paywalls of various kinds. (Although that also reopens the question of how findable and linkable their own local content is for the aggregating algorithms of Outside.in and others.) If it does get it righter, it could also become a more likely potential partner for media companies looking to cut their own local costs and reach audience. It’s all in getting that cost of content unit/ad yield per unit of content right, and no one’s yet minted the winning formula.

We can see the dilemma in one current market. Journal Register CEO John Paton (who talks about competing with Patch, here) has been working with Outside.in, to supply aggregated content for the planned fyi.Philadelphia site. He put that relationship on hold this week, and delayed the product launch, as he conjures the question: Is the new Patch/Outside.in a friend, a foe, or some in-between still to be figured out?

March 02 2011

00:00

John Gruber on Apple’s 30% cut: To the victor goes the pricing power

John Gruber at Daring Fireball has an extended take on the justice or injustice of Apple’s 30-percent cut of all iPhone/iPad subscriptions. (He comes down on the side of justice. Or at least a kind of it’s-fair-because-we-can justice.) If you, like many publishers, are still cranky about Apple’s decision, give it a read to get a reasoned argument for the other side. (One that’ll probably still leave you cranky — but reasoned nonetheless.)

Here are a few thoughts on some of Gruber’s arguments:

Apple doesn’t give a damn about companies with business models that can’t afford a 70/30 split. Apple’s running a competitive business; competition is cold and hard. And who exactly can’t afford a 70/30 split? Middlemen. It’s not that Apple is opposed to middlemen — it’s that Apple wants to be the middleman. It’s difficult to expect them to be sympathetic to the plights of other middlemen.

To the broad category of “middlemen” I’d add “companies whose economics are built for other platforms.”

For all the developers who’ve built native apps for the iPhone or iPad from scratch — say, game developers or productivity app developers — they’ve been able to build their business strategy from a known cost base and a known revenue scheme. If you know that you’re going to be selling 99-cent apps, you can build a business around the expectation of revenue coming in 99-cent chunks. (Or, more accurately, 70-cent chunks, after Apple’s cut.)

But if you’re a business that already exists, with its own native pre-iOS economic basis, you’re laden with a bunch of preset economic variables. If you’re a newspaper, you’ve already got a newsroom with X number of reporters and Y number of photographers and Z number of editors. (Which were probably around 2X, 2Y, and 2Z ten years ago.) You’re coming to a new platform, but it’s not an entirely new product you’re creating — you were already paying those reporters. And when you’re calculating something like pricing, you’re doing that with an understanding that you’re also navigating the economic space between what you’re already charging for your website (likely $0 now, although you’re planning on changing that later this year) and what you’re already charging for a print subscription (whether that’s $12, $20, or $30 a month). You’re already scared to death about trying to convince people they should pay for your website — and then all of a sudden, the monthly number you’d been planning to charge for your iPhone app needs to go up 30 percent to make the math work.

Now, that’s not Apple’s problem. Gruber’s right: Apple doesn’t give a damn about newspapers. The financial difficulties of American newspapers are not Apple’s fault and they’re not Apple’s to solve. And unlike Google — which has put a lot of energy into making newspaper-friendly noises to try to repair a relationship that bottomed out a couple of years ago — Apple doesn’t throw the industry any bone bigger than showing off nytimes.com in product demos.

But regardless of whether you think newspapers deserve any sympathy for their plight (good arguments on both sides!), it’s not just middlemen who are disadvantaged by Apple’s large take.

Kindle, and e-book platforms in general, are a different case. For one thing, Kindle doesn’t use subscriptions. Kindle offers purchases.

The Kindle does actually offer subscriptions, both to newspapers and blogs, like Daring Fireball itself. (Given where DF ranks in the Kindle Store, he probably has about 5-8 people paying $1.99 a month to read the site on their Kindles. We have 16! That’s likely to be the only traffic-related number where we edge Gruber.)

I don’t think any publisher would consider Amazon’s Kindle subscription model an improvement over Apple’s, though, for a host of reasons — not least that it’s Amazon who controls pricing, not the publisher, not to mention Amazon takes an even steeper cut than Apple does.

Second, the problem facing traditional publishers today is that circulation is falling. Newsstand sales and subscriptions are falling, under pressure from free-of-charge websites and other forms of digital content. The idea with Apple’s 70-30 revenue split is that developers and publishers can make it up in volume — that people aren’t just somewhat more willing to pay for content through iTunes than other online content stores, they are far more willing. The idea is that that Apple has cracked a nut no one else has — they’ve created an ecosystem where hundreds of millions of people are willing to pay for digital content. Thus, potentially, publishers won’t just make more money keeping only 70 percent of subscription fees generated through iOS apps than they are now with 96 percent (or whatever they’re left with after payment processing fees) of subscription fees they’re selling on their own — they stand to make a lot more money.

There’s no doubt that Apple’s built a great payment system. Although I’d also point out that it benefits from the natural market segmentation that comes whenever you sell expensive devices. Does the iPad make people more likely to buy digital goods? Or does the fact that someone has paid $499 or $829 for an iPad serve as a pretty good marker that they’re already the kind of person more likely to pay for digital goods? I think there’s truth in both.

To look at it from another angle, any developer will tell you that there are many more Mac users who buy shareware apps than Windows users. (I’m speaking in terms of percentage; obviously there are many more Windows users than Mac users. But a larger percentage of Mac users will download and pay for a $15 app than will Windows users.) Now, pre-Mac App Store, Apple didn’t make paying for software any easier than Microsoft did. But Mac users are, by their self-selected nature, people who were willing to spend a little more to get a better computing experience — in other words, people who are predisposed toward paying.

The other factor here is the idea of who “deserves” credit for bringing a customer to a purchase. As Apple said in its announcement, “when Apple brings a new subscriber to the app, Apple earns a 30 percent share.” And if someone discovers Tiny Wings (great game!) in the App Store rankings and downloads it, I think Apple’s certainly earned its 30 percent.

But if someone searches for and downloads The New York Times app — after the Times has spent more than a century building up its brand, as the cost of billions of dollars — can it really be said that Apple has “brought” that subscriber to the app, and that they deserve 30 percent of the revenue the app generates, forever? (Gruber doesn’t address the eternal nature of Apple’s cut; it’s like paying a New York apartment broker his finder’s fee, every year for the rest of your Manhattan-dwelling life.) It certainly seems like a transaction different in kind from, say, a game that exists only on (and only because) the iPhone platform.

Again, it’s a case of being disadvantaged if you’re bringing over an economic model from outside the platform. There’s a reason Rupert Murdoch said he was fine giving Apple 30 percent of the revenues from The Daily — but why he’s no doubt less thrilled about having to give over 30 percent of the revenue generated by The Wall Street Journal’s app. The Daily’s economics are built around getting 70 cents a subscriber each week. The Wall Street Journal has a host of price points in other media it needs to fit an iPad price into. (Not to mention an annual cost 4x The Daily’s.)

Finally, also note that most App Store developers don’t have such a readily substitutable good available for free over in Safari, the web browser. If you don’t want to pay 99 cents for Angry Birds, you don’t have the option of going to Safari and playing it for free. Again, you can blame newspapers for that state of affairs, and you wouldn’t be wrong. But given the degree to which newspapers are having to balance free and paid in a variety of ways to make digital revenue work, it’s a tough moment to be pushed into a corner by Apple’s decision.

This is what galls some: Apple is doing this because they can, and no other company is in a position to do it. This is not a fear that in-app subscriptions will fail because Apple’s 30 percent slice is too high, but rather that in-app subscriptions will succeed despite Apple’s (in their minds) egregious profiteering. I.e. that charging what the market will bear is somehow unscrupulous. To the charge that Apple Inc. is a for-profit corporation run by staunch capitalists, I say, “Duh”.

Of course. Apple’s not a charity. It has no financial reason to help out any content industry. While those of us who wish the newspaper business well would love to see a different approach, in the end, it’s Apple’s choice and they can do what they please.

And iOS subscriptions won’t fail. I wager that most of the news publishers grumbling about the issue now will come around and give the cut to Apple. They might increase their investment in Android phone and tablet apps a little, but let’s be honest: Apple’s still the big dog here. (Android users have inherited Windows users’ disinterest in paying for software or digital content.)

It’s just galling that the incumbent players in the news business face so many economic disadvantages because of their background, and because of their investment in journalism, that it would have been nice for this to be different.

Yes, the financially sound thing for them to do would be to abandon the old cost structure and instead build a digital-native company that could happily turn over 30 percent of revenues to Apple and reap all the benefits (distribution, scale, payment platform) that Apple provides.

The only problem with that, with that model, you end up, well, with something like The Daily — something light and tabloidy, something in nugget form, something that looks for the oldest dog in America. (Actually, I suspect you end up with less than that, because I’m not optimistic that Murdoch will get the subscriber numbers he needs to be profitable. And I say that despite being a great admirer of many of the people working there.)

With all the great innovation that’s gone on in the news space, there are still no for-profit newsrooms with the scale and heft and journalistic weaponry of the nation’s biggest newspapers. They’re still important, and they’ve been looking to the app economy as a big part of their efforts to figure out a place in the digital economy. It would have been nice if Apple might have cut them some slack. Yeah, that’s not Steve Jobs’ problem — I get that. Apple’s earned their pricing power by being innovative and smart. But it still would have been nice.

March 01 2011

19:30

A hive of long-form journalists: Gerry Marzorati and Mark Danner on a new model for long form

Yesterday at the Berkeley School of Journalism, former NYT Magazine editor Gerald Marzorati and author and former New Yorker writer Mark Danner sat down to talk about the “the fate of long-form journalism in a new media age.”

Their conversation came on the heels of Virginia Heffernan’s paen to long-form journalism and the possibilities of the new Kindle Singles platform, designed for “Compelling Ideas Expressed at Their Natural Length.”

Marzorati argued that the Internet has not shortened readers’ attention spans, and that the audience for long-form journalism is large, enthusiastic, and happy to read long pieces that are actually long. (He noted that, during his tenure, cover stories at the Times Magazine didn’t shrink, but actually grew from an average of 4,000 to 5,000 words to at least 8,000 words.) For him, the crisis of the form isn’t the audience, but the expense: Who is going to pay for  the necessary months of reporting, fact-checking, and editing — not to mention the legal protection that intensive pieces often require? (Marzorati has said previously that NYT Times cover stories regularly cost upwards of $40,000.)

Marzorati’s comments reinforce a trend Megan highlighted this January: In a world where magazine editors are increasingly unwilling to invest in a big, intriguing story before it’s finished, long-form journalists are often turning to nonprofits to finance their reporting. Nonprofits are the “lifeboats,” as Megan put it. They keep important stories afloat until they’re close enough to publication that editors will take them on.

But the most intriguing part of yesterday’s conversation came when Danner asked Marzorati to imagine how he would build a long form-focused organization from scratch, if he had $10 or $12 million to do it.

The first step, Marzorati replied, would be to attract a lot of big-name writers who already have their own audiences. Then, he said, he would “surround, immerse each of these writers in a lot of the tools — social media tools. The writers would sort of be the hive, and the experience people would be coming for would be not only to read and encounter the writers, but also the community that this writer had created.

Danner, liking this idea, said it might appeal to the writers by providing “one-stop shopping” for editing, publishing, literary representation, and more, so that writers could spend less time managing their professional lives, and more time writing.

An edited partial transcript of the pair’s conversation is below.

Mark Danner: Are we right in worrying about the survival of long-form journalism? Is it really threatened?

Gerry Marzorati: I do think it is threatened. I don’t think it’s a technological problem, I don’t think it’s an audience problem. I think the conventional wisdom about long-form journalism — that people’s attention spans have lessened to such a degree that they no longer have the time, or they’re too distracted to read long form, or the medium itself is non-conducive to that sort of longer read (the 45-minute, hour-long read) — I think all of those things are not true.

We have metrics at The New York Times that show that people absolutely click the 23 clicks through to the end of the story. When I was at the magazine, the longest pieces in the magazine were the best-read, the most-read, the most-emailed. The pieces also tended to be, at the end of the year, the pieces that got the most pageviews of anything the Times ran…. People figured out their own sorts of behavior. They printed out the story — on the subway, you would see a printed-out version. Or Instapaper. People are reading these things, and they still become conversation pieces. I don’t know how many of you read Larry Wright’s [New Yorker] piece on Scientology, but a lot of people have read that piece…. [That] you can comment on them, you can blog about them, actually brings more readers to these long-form pieces.

The problem is who’s going to pay to have these pieces reported. That’s the problem. That’s really the crisis. You have  fewer and fewer news outlets, you have fewer and fewer magazines, willing to have a journalist report for five or six or eight months, or send them to the edge of the world — and then have the edifice in place to edit and fact-check these pieces. There is a feeling among these magazines that they don’t have to fund these pieces to create readership. It’s a really, really big problem.

At The New York Times Magazine, the number of magazines that were competing with us was just a handful, and none of these magazines makes money. If you go back to the heyday of long-form journalism in the ’60s and ’70s, the publications were also making money —

MD: You’re talking about Esquire, Harper’s —

GM: There were city magazines, The Atlantic, Harper’s, the New Yorker. There were a lot of places that were making money publishing long-form journalism.

MD:  For many magazines, whose identities have been formed with the reputation of funding this kind of work, do they have an alternative? Are they having the possibility that “we can’t do this stuff anymore, we can just stop doing long form, period”?

GM: I think that’s what’s happened. I cannot believe that Rolling Stone’s newsstand sales, or what have you, that that’s being driven by whether they have long-form journalism or not. It’s a crisis of the expense of reporting.

MD: What does long form bring to a publication? [With Rolling Stone], the McChrystal piece, which earned them a great deal not only of attention but news chops…is this Tina Brown’s notion of  “the mix”? Take a glossy magazine, give it credibility by inserting long-form journalism? What do you have left if you pull this stuff away? [Do they think], “I’m going to cut this stuff, but we’ll be fine without it”?

GM: …Or we’ll take book excerpts rather than funding the original reporting ourselves.

In part, you’re seeing things like ProPublica rise up. When I was at the magazine, we won a Pulitzer Prize partnering with them on a long reported piece…and here’s  interesting story. [The author, Sheri Fink] had come to magazine with this pitch years before. She had really no experience as a magazine writer, but it was a really interesting idea. We just weren’t in a position to fund what we knew was going to take a year or two of reporting — and we especially weren’t in a position to make the case to make the money available to someone who didn’t have that experience. I think she started with a grant from Knight, and eventually ProPublica funded her reporting, and we got involved about a year before the piece was published, and began shaping the story, and getting our legal team involved, and that sort of thing.

MD: What was the economic model? Most of her travel and reporting was funded off-site?

GM: ProPublica funded most of her reporting, and did a lot of the initial editing and that sort of directional editing. Steve Engelberg, who had been the Times’ investigative editor in the 1990s, is the managing editor at ProPublica. We knew each other and had a good working relationship. It wasn’t without a fair amount of back-ing and forth-ing. It’s very unusual to be involved in a project like that, where you have so many editors. It turned out to be a great experience in the end.

I suspect you’re going to see more of these kinds of organizations springing up, which is not without its own problems. ProPublica has its own best practices. I imagine there will be organizations in the future who have a specific message they want to get out, or a specific line of inquiry to pursue, and what’s the Times’ relationship with them going to be? You need to know the agenda of everyone before you leap into bed with these things.

MD: From the point of view of a young writer who is looking at long form and trying to make a life of it…is the landscape from that point of view worse? Are their fewer outlets at the end of the day? Fewer chances to make a living?

GM: I d0n’t think we know yet. We’re at a very early moment in web journalism. It changes year to year just so rapidly. Obviously the tablet is going to have a bigger impact than we can even imagine. I think there is something about reading on the tablet that is just more conducive. I also think Steve Jobs has figured out a way, brilliantly, to get people to pay through the iTunes store. People will pay for things…. Could you imagine paying 99 cents for a piece of journalism that you really want to read? Probably, yes. If you now have these sorts of models in place, through some startup money and foundation money, someone coming along and creating these kinds of pieces…yeah, I think it could happen, there’s a good chance it will happen. I don’t think we’ll know what it’s going to be until we have the first Harold Ross of Web 2.0.

MD:  Maybe Kindle Singles are an early sign. But there’s  nothing in here about the editing method, nothing in here about if you have an idea for a story, how you end up published. It simply seems to be a place where writers of some reputation already can publish.

GM: Whether the metaphor is a magazine or a clearinghouse of some kind, there’s a few projects, Longreads, Longform.org — but I don’t know if they pay. A lot of them are just collecting pieces from various publications. The problem is discovery — search.

One of the things that’s really taken off in the last 10-15 years: The public has a hunger to actually encounter the writers who are writing these pieces. One of the ways nonfiction writers are able to make money — not all nonfiction writers, but a fair number of them — is on the lecture tour. A kind of 19th century idea, the book as a loss leader for actually going out and encountering people.

[On the web] there are costs that you do eliminate, physical paper costs, which are considerable. You could imagine that someone could pull together a cadre of writers, fund them through foundation money, raise some kind of venture capital money, have some combination of lecturing and writing. If I were in that position, one of the things I would be very interested in experimenting with is: Is there a way to make more transparent the work-in-progress, which you have the possibility of doing online? We’re experimenting somewhat with this in the Times. If you have Nick Kristof in the main square in Cairo and he’s tweeting, can you get people interested in the story through that, and the story comes later? And part of what he’s doing through tweeting is explaining how he’s gathering the story. You’ve got some added value, which you don’t have in print.

Maybe that’s one of the things that will make this work. You subscribe to this place, and you know you’re going to get a story in six months, from some war correspondent, that’s really going to be a big narrative — but along the way, that reporter is tweeting and posting about what he or she is doing.

MD: It’s really an amazing “back to the future” thing. Tolstoy did War and Peace by subscription, and finally, with publication in full, the earlier volumes were substantially changed. You signed up for the beginning and you basically did see it in progress.

If you were going to set something like this up — you had a few million dollars in venture capital — given the obstacles now and the advantages, how would you go about doing it? If I handed you $10 million, $12 million.

GM: You’d have to start by attracting some big-name authors. One of the things the Internet has reinforced is the individual brand of a writer, and it’s to those writers that people go. I was having this discussion with Michael Lewis. He publishes his pieces in Vanity Fair, but most of his readers don’t read Vanity Fair — they just read it because he’s attached the link to a tweet and sent it out.

MD: Most of his readers are not paying readers —

GM: Those writers in some ways have transcended the publication. I think it’s going to be harder online to set up this kind of “publication”” feel, this kind of magazine, front of the book/back of the book/feature well, that was there to serve advertisers — to some extent, anyway. That sort of thing will disappear.

You will have to at least start by building the brand around a handful of these writers, and then, how I would go about it, would be just: Surround, immerse each of these writers in a lot of the tools, social media tools. The writers would sort of be the hive, and the experience people would be coming for would be not only to read and encounter the writer, but also the community that this writer had created.

MD: So are we talking to them, paying to get onto the community, or paying for a Kindle —

GM: You’d probably give them different options. You could subscribe to all the people, you could subscribe to one writers. I’d probably use social gaming mechanics to actually get people returning to the particular place, by which I mean: You become the most important commenter on Mark Danner, you are recognized, because your comments are the most read of all the comments. We badge you. We give you the title and you are now badged.

This has an enormous effect on keeping people coming back. It’s the same thing as in those shoot-em-up Mafia Wars: You work your way up, you kill more and more mobsters. You keep coming back. You have a place in the game. You become a super commenter, your comments are flagged in some way. Maybe you do it in color shades. The blue overlaid comment is the one that’s teh most read. Your comment on Michael Lewis’ recent piece is the most important. Or you get badged by bringing other commenters to the site, bringing 20 of your Facebook fans to the site. [Marzorati is the Times' Assistant Managing Editor for New Products and Strategies, but when I asked him about that strategy after the talk, he said the Times is not planning to implement a badge system any time soon — it's just something he finds interesting.]

GM: How would you attract writers? Editors attract writers by some combination of paying them the going rate or force of personality.

MD:  What are you offering them as a lure?

GM: The promise of getting them more readers than they would otherwise have. You could work out deals with print magazines that you also reverse publish into, form partnerships with Amazon and other distributors…. Ultimately, what these writers want is the best readership they can have, and if you figure out a way to pull that off, the promise of the Internet is gigantic. The reach — The New York Times, on any given weekday, sells 800,000 copies, and you know, we have more than 60 million unique visitors a month. It’s gigantic. It’s international.

MD: There’s also an irony here. The Internet has made long form writers entrepreneurs. You have a website, you have speaking tours, you have a publisher and a literary agent…. It’s more time-consuming for the author. Maybe what you’re offering is one-stop shopping: We are your publisher, we are your editor, we are your literary agent.

During the Q&A session, Michael Pollan, who is also a professor at the journalism school, asked Marzorati:  “What should we teach these kids, especially as long form writers?

GM: I position myself on the more conservative side. I don’t think journalism school is a place to  learn how to write computer code. I think a lot of the tool kit you’ll need, you’ll get on the job. I think our job, if you want to be a long form journalist, is to read a lot of really great long-form journalism and learn how to write it…. Reading is my own particular hobby horse. I think in a lot of programs there isn’t a lot of time built in just to read, to read the people who did it really well.

17:30

February 22 2011

19:00

Jeff Israely: Building a news org in order to support good journalists

Editor’s Note: Jeff Israely, a Time magazine foreign correspondent in Europe, is in the early stages of a news startup called Worldcrunch. He occasionally describes and comments on his startup process here at the Lab. Read his past installments here.

Via bank wires and PayPal emails, sent to accounts in Philadelphia, New York, the U.K., Spain, Germany, Italy, Brazil, and here in France, Worldcrunch is sending out its first payments to the men and women (mostly women so far) who select, translate, and shape the stories we are producing for our site and the sites of our partners.

It is a significant occasion for any startup when it begins to make its wares with the sweat and smarts of real people, beyond its founders and first investors. I would add that it is even more significant — in 2011 — if those people are professional journalists, getting paid for their work.

But this post is not about self-congratulation, or even necessarily optimism for the news business or the profession of journalism as a whole. One of the rationales for our decision in December to go live with our online work-in-progress/pre-beta “garage” was to be able to take the first step in seeing how we might build a team of journalists — with a range of experience, backgrounds and foreign-language skills — to make our daily (top-quality!) supply of global donuts.

In financial terms, the good news for our project is bad news for the only line of work I’ve known for the past 18 years: smart, qualified, multilingual professionals are ready to work at a rate that is indeed lower than the very modest money I was making when I began 18 years ago.

In the short/medium term, this works in our favor, allowing Worldcrunch to showcase our stuff without burning through the first bit of seed investment we have raised. Whether it is good news in the longer term is a much more complicated question that touches on what we might call the labor economics of the transformation of the news business.

I am not an economist, and have exactly 14 months of business experience…so the best point of entry I can offer is the economics of my own transformation in the news business.

Time, where I’d been a correspondent since 2001, has progressively been moving to a freelance-stringer model, and has cut staff positions every year since 2005. My turn came in May 2009. I had the possibility to continue contributing with a solid pay rate, which — if I supplemented with another string or two — could allow me to earn a living and keep calling myself a Time correspondent. And indeed, that is what I did for a while.

But all along, this project was staring down at me from the shelf, saying “now or never.” And so, on the side, I got the ball rolling on what would become Worldcrunch.

But my story is the exception that proves the rule. For starters, I have a wife with a good job (that’s grist alone for a whole other post!), and a net of security from the French social system (ditto!) that colleagues in the U.S. and elsewhere don’t necessarily enjoy. But more to the point, I had Worldcrunch, a bona fide business concept, a would-be company to build, that went beyond the sum total of the journalism I could produce with my own two feet and 10 fingers.

And so, this post contains a conspicuously paradoxical polemic: an entrepreneurial journalist taking issue with all the huffing and puffing about the “rise of the entrepreneurial journalist.”

First, though, to try to limit the amount of hyperventilating on Twitter, let it be clear that the concept that Jarvis and others champion largely reflects what is in fact a new reality for both individual journalists and the news business as a whole: We all must market our work better, we must look for creative ways to generate revenue (for ourselves, and others), we must innovate, adapt, evolve, and take the occasional calculated professional risk that all successful people do to strike forth into new territory.

My gripe is that this misses a basic reality that most journalists face, that they know right well what territory they want to conquer: It’s called journalism, y’know, like doing stories, shooting videos, covering beats. Notwithstanding the power of Twitter/Facebook/liveblogging/extreme aggregation or any combination thereof, the self-contained “piece” of journalism remains the form the vast majority of people still rely on to get informed, educated, entertained. And by far, the most likely way to get paid for your journalistic work continues to be selling the sweat of your labors to a media outlet, either by the piece or by way of a salaried position. (For the record, having a fixed job doesn’t in itself make you fat or lazy or unethical. Indeed, it remains the most efficient path to the kind of honest/investigative/experimental work we used to call enterprise journalism, a term that both pre-dates and, a priori, produces more civic value than entrepreneurial journalism.)

Some like to celebrate the cases of those who have used the tools of new technology to carve out their own space and make major career leaps, unhindered by the conventions of traditional news business economics. But these exceptions continue to prove the rule: The vast majority of wannabe, would-be, once-were full-time journos — who work hard, have ideas and talent, and are willing to adapt to new platforms and technologies — are simply sliding down into that ever widening pool of underpaid piece workers, hired-gun press releasers, content-farm sharecroppers.

What may look like the golden new age of entrepreneurial journalism for the lucky few cannot hide the dark realities of bad-old freelancing for a growing proportion of those actually delivering the goods.

The cause, we all know well: The Internet-era business model for the industry just ain’t there yet, and probably won’t be for a good while. The risk, of course, is that the new landscape being tilled with the received wisdom that “anyone can do journalism” will wind up barren of anyone who can pay the bills doing journalism, the kind where news is gathered and sense is made of events in the places where they happen. We are in serious self-fulfilling prophecy territory.

Still, I would be a fool, on a number of levels, if I spent my energy trying to preserve or bring back the old labor model. But being flat in the middle of a do-or-die startup, I also have no choice but to think clearly about the way things are, rather than some idealized/demonized ideological view of where the industry is coming from, or going.

And that brings me back to those ever modest initial Worldcrunch payments. Yes, we have big plans to capture the proverbial “energy of the crowd.” But this particular project will not work without the steady/reliable/available labor of professionals. And so we must hope there is a model by which the talented and hungry (not starving!) will be able to stay in this line of work. Naturally, it will be different from the old labor model dominated by large staffs of fixed professionals. But it also cannot have “free” (or dirt cheap) as its baseline. This tweet was how it crystalized in my head just a week or two after we began paying journos: “Building a News company means having a vision for how journalists will earn a fair wage working for you.”

In just these first two months, when the early reality can’t match that “vision,” I am seeing how the journalists react (each, slightly differently!) to the work and the pay and the betting on our project’s future success. In the back-and-forth, we are coming up with new ideas about what and how stuff gets produced — and I see how it relates to renumeration. The shifting labor economics, indeed, will actually be part of how we shape both the business model and even the substance of the journalism we are producing. We must balance the need to bring great people into the fold with our own bootstrapped finances and future cost/revenue projections. We must be viable, in other words, or we will be providing no work for anyone.

It is clear that news and journalism are a different beast than just generic “content.” As a global news source, we have launched in this trial-by-fire moment of the rolling revolutions in the Arab world. We aren’t yet working directly with Arabic publications, but have gotten some great on-the ground stories and analysis translated from of our top European launch partners. We were also lucky enough to hook up with Kristen Gillespie, an Arabic (and French!) speaker, with 10 years of on-the-ground experience in the Middle East for the likes of CBS Radio, NPR and The Nation. With events unfolding fast, and the region’s media/information transforming before us, Kristen and I came up with this regular feature, Arabica, to give our readers a quick daily tour of what is being said/shared in Arabic. These items, like the pieces we are selecting/translating from the mainstream foreign-language media, must be accurate, reliable, accessible, interesting. They must also be timely. It is work for professionals. (The rubrique is also the kind of germ of an idea that comes in working/brainstorming in a team, rather than in isolation.)

I don’t know yet how we’re going to keep Kristen — or whether Kristen herself will even be able to continue to make a living in the news business. Don’t let the (temporary) influx into Cairo fool you: Kristen’s gigs from her base in Amman were gradually reduced and eliminated over the past few years, with one editor telling her “don’t call us unless Americans are killed.” In her desire to continue in this line of work, I am starting to get an idea how I might gauge my own entrepreneurial foray into the journalism business: We can consider Worldcrunch a success if we can build something that allows others to spend more and more of their time and energy focused on the business of producing the journalism itself.

14:00

Help Spot.Us Find a Path to Financial Sustainability

Spot.Us recently launched a new design, so this is an opportune time to write a "State of the Spot" post -- something we haven't done since the website was six months old. I hope to lay out how far we've come and what's on our plate and make a call to arms to the Spot.Us community and anyone else interested in the future of journalism.

In the two years since our site has launched, we've funded over 160 projects with the help of 5,000 contributors, a fifth of whom contributed more than once. We've done this in collaboration with 95 organizations, and our reporting projects have won eight journalism awards.

In short, we're making a difference. Whether it's funding FOIA requests, exposing the lies of a sheriff, or providing a deeper understanding of those less fortunate in our society, the stories we fund make a difference.

I earnestly believe in the power of an informed democracy. The guiding principle at Spot.Us is to make the process of journalism more transparent and participatory -- not merely to inform but to engage. Our site is a testament to the notion that people can take ownership over their information needs if there is a platform to support it.

Partnerships make our impact bigger. Take Oakland Local, for example, which has invested $700 into Spot.Us pitches and received $7,000 worth of reporting in return. Whether it's Mother Jones, The UpTake, WitnessLA or the myriad news organizations (many of them non-profit or community-based) we've collaborated with, our collective efforts allow stories to gain a wider audience, and we empower partnering organizations to do the fearless reporting that our communities need.

Room for Improvement

With all that said, I'm not satisfied. As Clay Shirky noted, our communities can become rife with "casual endemic corruption" if we don't figure out how to keep the public informed and engaged. The Spot.Us platform can and will improve to continue this fight.

Our redesign is an example of forward momentum, and now it's time to tackle the next hurdle: How can Spot.Us become a fully sustainable organization and increase the number of stories we support? Although 2011 looks to be promising, I'm already taking time to look to 2012 and beyond.

Running a startup organization means making choices. This is my attempt to explain to the Spot.Us community, journalists, and others who follow us what choices I'm debating, what obstacles we're facing, and to ask for your advice.

One of the biggest Spot.Us. opportunities is its unique sponsorship model. I've written about this at length before -- from announcing the idea to launching it to seeing early success. As far as I know, we are the only media organization experimenting with the idea of letting the public manage our advertising budget. It's our budget, but your decision. In many ways, this idea is as revolutionary as Spot.Us itself. Community members can fund a story without spending any of their own funds. Meanwhile, sponsors get meaningful engagement from community members, which can turn into tangible return on investment. Our advertising is transparent, participatory and therefore jibes with the mission of Spot.Us to get the public involved in the process of journalism. We are just acknowledging that advertising is part of that process.

Our sponsorship feature has created an important revenue stream for Spot.Us. At the moment, however, it doesn't offset our burn rate. The challenge is getting enough sponsors when we have no sales team (my spare time doesn't really count). We also need to find the right sponsorships which will engage community members so they continue to come back. This is compounded because our model is unique. I haven't found a media planning and buying agency to take it on, even though I'm offering a higher-than-normal commission.

How You Can Help

Tackling this challenge is one of the things I'm working on during a good chunk of my remaining time at the Reynolds Journalism Institute. Any help from a community member on the below action items would be greatly appreciated:

  1. Join Spot.Us and try our latest sponsored survey (free credits) and give me feedback on the experience. Take the challenge of doing the next three sponsorships we have planned (the next one will be sponsored by us to get feedback on how to better sell these).
  2. Help create the sales material for our sponsorship model -- maybe even find an individual or agency to take on the process of selling for a commission.

  3. Draft a long-term business plan with a road map for how Spot.Us would have to scale to become sustainable.
  4. Write a handbook for community-funded reporting, which would be a gift to the larger journalism community.
  5. And finally -- an A.P.I. with PRX, ASAP.

The Nitty Gritty

Allow me to elaborate. First, in regards to the material to sell sponsorships, our current sponsorship page doesn't do the concept justice. I can talk almost anyone's ear off about this model. We have some data about our users, but it hasn't been presented in any kind of media kit. Hopefully, a media planning/buying agency or an independent ad-sales person could use this material. I'm comfortable sharing a healthy commission, but we should provide them with the best sales material possible.

If you are an ad salesperson interested in working on an innovative project, let me know. If you want to contribute some pro-bono time to help us create the material, your karma will increase 13.6 points!

Up next is a business plan that shows a path to sustainability. I've played with some numbers and believe it's wholly possible if Spot.Us can grow its sponsorship model. It's a bit of a supply-demand issue. If we get more sponsorships (supply), I believe we can support more pitches and increase the number of surveys taken (demand). If either side falls short, we fail. At the moment, our demand is much higher than the supply. If somehow tomorrow we got our ideal number of sponsorships, I am not sure if we could hit the demand numbers, but I do believe these numbers are possible by 2012 with the right messaging and if the sponsorships are coming in regularly. The supply-demand conundrum is a bit of a chicken-and-egg scenario. If one side doesn't come through, the circle of life won't continue, and Spot.Us lets one side down.

The business plan I intend to lay out will show what numbers we'd need to hit on both sides to reach a sustainable equilibrium, one that funds stories, provides sponsors with an appropriate amount of engagement and leaves Spot.Us as a strong forward-leaning non-profit.

The community-funded reporting handbook is being led by Jonathan Peters, under my supervision. The handbook will be informed by Spot.Us experiences, but my hope is that it becomes a resource for anyone, regardless of a relationship to Spot.Us.

In regards to the application programing interface, it's important to remember that Spot.Us is not a news site but a news platform. In that same vein, we don't have to be a destination site. If partnering sites can use our back-end to fundraise for projects on their sites, then more power to them. But first we have a few technical hurdles to overcome.

Luckily, PRX is a willing guinea pig I mean, partner. ;) If we are able to create a seamless A.P.I. that integrates into a site, we can scale up the number of pitches (demand) Spot.Us has in its stables whenever we get a new sponsor. In some respects, this turns Spot.Us into a 21st-century advertising network in addition to inviting the public to support journalism.

So what now?

Obviously, we don't have a shortage of things to do. I remain encouraged both by the journalism community that supports our work and the public at large that has shown it supports quality reporting -- stories that need to be told, stories that can make a difference in the lives of individuals and the communities we live in.

Although that is exciting, I remain humbled and don't want to lose sight of what is at risk.

In the 1985 film "Brewster's Millions," Richard Pryor's character spends millions of dollars designing a room he could "die in." The designer goes through various iterations, each time getting closer and closer to the goal but never hitting the nail on the head. Eventually, the designer gets it right. This happens just as we find out the main character is broke, and an army of movers come to collect all the furnishings.

Aside from being one of my favorite comedians, Pryor, with the tip of his hat, touches on one of my biggest fears with Spot.Us. This new redesign leaves the site looking awesome. All the pieces are on the table, and the puzzle is coming together and beginning to show a beautiful image of a community-powered site. If Spot.Us isn't able to reach this dream, it would pain my heart, but I feel I could tip my hat in just the same way. Still, I feel we have a dragon by the tail and the tools in hand to bring it down.

Why I'm Sharing This

  1. Spot.Us as an experiment has always been about openness. As the journalism industry rants and raves about experimentation, I still don't see it happening, at least not at the level I think is possible. The more I can show what I'm doing -- the success, challenges, failures, and fears -- the more I hope others will follow, even if it's not "the industry" but rather lone and brave individuals. The water is fine, and I truly believe it is what we need.

  2. Somewhat selfishly, I think there are ways the Spot.Us community can help push us forward, especially with finding sponsors. Our current sales material is all here (it'll get better, promise), and we do offer a commission to anyone who lands a sponsor. I'm happy to give anyone the talking points.

  3. A similar plea is for any folks who want to dive into the numbers with me and come up with a long-term business plan and a proposal for funding. How I feel about the foundation world is a post in itself. Suffice it to say, it takes money to make money, and any funding we seek would have to abide by the old proverb of teaching people how to fish rather than giving them free meals. Again, we have a tangible revenue stream, but we need to shore up. As a non-profit, we can't get VC funding -- unless it's the kind the Texas Tribune gets), so we'd have to look to philanthropists.

I certainly can't predict what will happen. I never could. But that's what makes this an exciting ride and what I believe empowers the Spot.Us community. We've come this far only because you see value in our efforts. Together, we've funded meaningful stories in partnership with nearly 100 publications. I'm happy to say that I've seen many of them make a real impact in how our communities function.

I'm excited to tackle the future. I hope you'll be there with me


February 16 2011

18:36

How the Kindle Made Single-Story Sales a Reality for Magazines

I've never seen a "Not for Individual Sale" label on a magazine story. So why can't I buy most individual magazine articles in digital form just yet?

Selling stand-alone stories has seemed like a potential business model for magazines and other journalism organizations since the rise of iTunes. Observers hyped an incipient micropayment business model for journalism. But few companies have tried this model, instead offering complete digital editions and, whenever possible, digital subscriptions. The advantages of that approach are clear: packaging more into the product justifies a higher price, and loyal subscribers attract advertisers. Yet with the growth of e-reading on tablets and mobile devices, as well as new options for processing small payments for content (e.g., PayPal, Facebook, Apple's App Store), marketing individual stories may soon gain fresh appeal.

Magazines exploring this option would have to maintain their brand reputation and their editorial voice by carefully selecting stories to sell and ensuring that they respect their relationship with existing readers. Recent experiments with selling individual stories show, however, that it can be done successfully. The only cloud on the horizon could be Apple's new subscription service for iOS, which demands that the company gets 30% of all subscription sales.

Relying on Brand Strength

Well-known magazine The Atlantic ended its monthly publishing of short fiction in 2005, and now offers a single fiction issue yearly. However, the magazine, founded in 1857, wanted to explore other ways to continue its legacy of publishing fiction, and so recently finished a year-long experiment that made two short stories per month available exclusively on the Kindle. These were labeled on Amazon as Atlantic Fiction for Kindle.

atlantic_kindle final.jpg

"We wanted to recommit last year to being a purveyor of great fiction," said Scott Havens, Atlantic Media's vice president for digital strategy and operations. "It was an opportunistic play to further our entrance in the fiction market and to test out a new platform."

The Atlantic's access to established writers, such as Joyce Carol Oates and Paul Theroux, was a significant part of its success. Havens said the popularity of each individual story correlated to the prior popularity and "salability" of their writers. When Amazon customers searched for those authors' work, The Atlantic stories also came up in the results.

Overall, Havens said, Atlantic Kindle for Fiction "was a worthwhile effort, and it was a successful financial venture for us." The Atlantic is now working on new ventures for other digital platforms, and the complete magazine remains a top seller on the Kindle.

Success of 'One Story'

Clearly, The Atlantic's pre-existing brand strength and its ability to involve recognized authors factored into its achievement. However, smaller ventures can also establish a reputation for quality. One Story is a non-profit that publishes one story every three weeks in print format, and also publishes them on the Kindle, where One Story is ranked 19th among bestselling magazines.

one_story final.jpg

Maribeth Batcha, publisher and co-founder of One Story, said that after just a year of availability, readership on the Kindle was as high as the print edition's readership after four years of publication. Kindle and print readers receive a new story every three weeks, representing varied styles and genres.

"There is not a 'type' of story we publish," said Batcha. "We'll really publish anything, but it has to feel pretty meaty and hold its own. It needs to feel like you've gotten a whole artistic experience."

The magazine will only publish an author once, and yet it still has a recognizable character as a publication.

"Over time, people develop a relationship with a magazine....It's not between the reader and the individual story," Batcha said. "There has to be some way you define your curatorial voice. People want choice, but not too much choice."

For mainstream, established magazines, this may be a major challenge in attempting single-story sales. Can a lone story express enough of an editorial identity to appeal to readers on its own? Editors must select stories strong enough to stand alone not only for their quality and timelessness, but also for their ability to effectively communicate to readers the magazine's distinctive larger brand and "curatorial" identity.

Building a Passionate Audience

One Story also counts on the audience's passion for writing itself. The magazine's readers, Batcha said, are "serious." The non-profit magazine seeks donations and is partly grant-funded. It has also organized writing workshops and encourages educational uses of the magazine to promote the short story to young audiences.

A new project that sells individual stories is also hoping that readers' support for substantial, long-form writing and its writers will lead to success. The Atavist, which launched January 26, publishes stand-alone, in-depth non-fiction articles that are longer than most magazine pieces, especially given today's ever-shorter features. The articles, priced at $2.99, are available through the publication's iPad/iPhone apps, as well as on the Kindle and Nook e-readers. Income from the stories is shared between The Atavist and the authors.

atavist.PNG

"People don't think readers want [long stories]...but we thought there was an opportunity on the [smart]phone to give people this kind of story that they couldn't get anywhere else," said Evan Ratliff, editor of The Atavist and an award-winning magazine writer. "I do think there's a group of readers who'd like to support writers and creative people in general. If you say a lot of this money is going to the writers, [readers] know who made it and know where the money is going."

Ratliff describes The Atavist's approach as a "hybrid" between magazines and books. "We take some elements from one model and some from others. We're taking our editorial approach from magazines. We have fact-checkers just like at a major weekly or monthly magazine," he said. "We're taking a book approach in the way the story is told. It can have a nice arc to it, and it can have chapters more substantial than magazine sections."

The Atavist is not affiliated with a print magazine, though its founders are interested in partnering with both established and startup book and magazine publishers. There may also be advertising possibilities, though their style may depend on readers' preferences.

"Magazine readers are really amenable to advertising, but book readers are not. It's acceptable in one place, but not in the other," Ratliff said.

The Atavist is also part of a new Amazon venture called Kindle Singles, which Amazon says "allow a single killer idea -- well researched, well argued and well illustrated -- to be expressed at its natural length," generally from 5,000 to 30,000 words. In addition to the two non-fiction stories published as Singles by The Atavist, Amazon also has published short story collections and novellas as Singles, as well as non-fiction pieces based on TED talks. Amazon is taking submissions for Singles not just from the public, but also from publishers, making it possible that magazines and other established publications could sell individual long-form stories as Singles.

Choosing and Packaging Stories to Sell

One reason most journalism organizations haven't attempted a pay-per-story model, even in the form of micropayments, is that breaking news is available in so many places for free. However, these experiments show that readers may be willing to pay for timeless content that offers an immersive experience, as do long-form non-fiction storytelling and short fiction.

"You can't just take a type of article or a piece of work that is very similar to other things you can find for free on the web and ask people to pay for it," said Ratliff. "That's when people get mad. 'Why are you charging me $1.99 for this news?' We're offering a different proposition that offers something unique, that reads to you almost like fiction, except it's true."

The Atavist includes substantial multimedia in its stories -- such as photos, videos, maps, timelines, audio, and slideshows -- which smoothly integrate with the articles' text. One Story is also considering developing short videos -- such as author interviews -- to accompany its fiction. Right now, established print magazines have little incentive to create multimedia to supplement their stories, since most print readers won't go online to check out associated multimedia after they finish reading. However, adding multimedia enhancements for particular stories could make selling them singly more intriguing to readers and more profitable.

If magazine publishers can identify stories that provide rich, deep reading experiences, and then add engaging multimedia to develop that experience even further, they may be able to leverage their brands and editorial authority to market individual stories successfully. Other possibilities might include packaging stories on one topic together in one download, or combining stories from different magazines in a collaborative product. Individual stories or packages of stories can be sold through apps, websites, and vendors like Amazon or Barnes & Noble.

However, the iPad and iPhone might become more difficult platforms for single-serve content if Apple keeps a large percentage of the subscription price. It announced a 30% cut for all subscriptions sold in-app, which has brought an avalanche of bad press for Apple. We'll see if that deal holds, or whether competing subscription services, such as Google One Pass pressure Apple to loosen restrictions.

Given the relative ease of repurposing digital content and the limitless possibilities offered by multimedia, magazine publishers may have an opportunity to reach a bigger audience on multiple platforms. If these ventures flourish, it will be simply because readers love to lose themselves in a good story.

Susan Currie Sivek, Ph.D., is an assistant professor in the Mass Communication and Journalism Department at California State University, Fresno. Her research focuses on magazines and media communities. She also blogs at sivekmedia.com, and is the magazine correspondent for MediaShift.

This is a summary. Visit our site for the full post ».

February 15 2011

16:00

What Apple’s new subscription policy means for news: new rules, new incentives, new complaints

Apple has announced its long-awaited subscription policy for newspapers, magazines, and other outlets who want to sell content for the iPhone, iPad, and iPod touch. The high points:

— Publishers who sell subscriptions to content on Apple devices must make that subscription available for purchase within their apps — a path that promises easy, one-click purchases for users but that also gives Apple a 30 percent cut of the payment.

— Publishers can still sell access to subscriptions outside the app — say, by taking a credit-card payment on their website. But the cost can be no lower than the price offered inside the app, and publishers are responsible for setting up their own authentication system for those subscribers.

— Customer data for in-app subscribers will remain with Apple, generally speaking, but customers will have the option to send their name, email address, and zip code to publishers. (Opt-in, not opt-out.) If handed over, that data will be governed by the publisher’s privacy policy, not Apple’s.

At first glance, this is exactly what a lot of publishers were fearing: Apple setting itself up as a toll-taker on news orgs’ road to a new business model. (Excuse the metaphor.) For publishers who had been counting on a new rush of tablet revenue to support a lagging print model, it’s disappointing to learn that, in exchange for the convenience of a “Buy” button in their iPad app, they’ll have to give up 30 percent of the revenue it generates. We’ll have to see how it plays out in the coming months, but first, here are four quick reactions to what the latest word from Cupertino means for news outlets.

Converting print-to-tablet rather than tablet-native

As Steve Jobs says in the press release: “Our philosophy is simple — when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.” (We could debate what “brings” means all day.)

That means news organizations will be incentivized to convert customers they already have relationships with — a.k.a. print subscribers — into tablet-only or tablet-also readers. If you’re a newspaper and you can convince your 20-year subscriber to pay a little extra for a tablet subscription, you get to keep that marginal revenue because you “brought” that subscriber to the app and processed her billing outside Apple’s systems.

In the long run, though, such a strategy could hurt newspapers who already have disproportionately older audiences. Converting 20-year subscribers to a new platform isn’t as valuable as converting non-readers into tablet readers. Part of the appeal of tablets and smartphones is that they promise to put newspapers in front of a younger audience that, frankly, hasn’t picked up a print paper in years, or ever. For those people — people who download an app, like what they see, and decide to subscribe — Apple will take its cut. It’s a perverse incentive for publishers.

The big question here is what this policy will mean for bundling. Lots of publishers are selling bundled packages — pay one price and get print, web, iPhone, iPad, and whatever-else access. Apple’s press release is unclear on how those would be handled. Lots of publishers get away with “charging” an extra penny for access to an e-edition no one uses. Will they be able to get away with bundling tablet access with print outside an app? Or will they have to funnel their print revenues through Apple too if they want to sell as a package? Giving up 30 percent of tablet revenue is one thing; giving up 30 percent of print subscription revenue is suicide.

A missed opportunity to create a new pricing tier

It’s been rumored that the next iPhone, due this summer, would include near field communications, or NFC, capability. That’s similar to the technology that lets you tap your credit card instead of swiping it at some stores, and it could, in effect, turn your Apple device into something like a credit/debit card that lets you pay for physical items in physical locations, not just a Mighty Eagle in Angry Birds.

If that’s in the iPhone’s future, it’s clear Apple would need to create a different pricing tier for buying via NFC. Taking a 30 percent cut isn’t tenable if you’re buying a laptop or a week’s worth of groceries. Store owners will need to be convinced to embrace NFC payments, and they’ll only do so if they can do so at a cost that’s competitive (for them) with credit and debit cards. So the assumption’s been that Apple would, in a few months, debut a separate tier of pricing for Apple’s share of those purchases.

And it makes sense that, as Apple’s universe grows, a one-size-fits-all pricing model isn’t going to work. What made (grudging) sense to iPhone developers three years ago isn’t going to make sense in every other market. Selling subscriptions to content — content generally produced at substantial cost in a non-digital context, in the case of most newspapers and magazines — would seem to be a logical place to offer a smaller cut in an attempt get as many news orgs headed to iPads as possible. But that’s not what Apple’s chosen.

An opening for competitors?

The iPad dominates the tablet market, and most of the new competitors announced in the past few months appear to be overpriced to compete with the first iPad, let alone the second one expected in a few weeks. (Not to mention that most of them haven’t even shipped yet.)

But the vast majority of the world still lacks a tablet, of course, and there’s still a lot of selling to be done. It will be interesting to see whether Apple’s competitors will see an opportunity to get news outlets — which still have major marketing power — to shift their favor in some other tablet’s direction. RIM and HP both have proprietary operating systems on their tablets that could offer better deals in stores; the Android world remains something of a free-for-all, with rival stores for apps and what seems to be a real difficulty getting anyone to pay for anything. But if a rival OS could pitch a great deal to news orgs, the field is still fresh enough that some of them might be willing to promote the hell out of it as their preferred tablet choice. For a market where Apple takes up a lot of the oxygen, that promise of a promotion platform could be appealing.

No mention of restrictions on browser access

One thing absent from today’s announcement: any requirement that a news org selling subscriptions to an iPad app disable or charge for access to its website on iPads. Our own Ken Doctor predicted that would be part of the new Apple model, intending to funnel all tablet users through the app rather than relying on a still-free alternative a few taps away in Safari.

I think not going there is smart — too many news organizations are still betting on a mixture of free and paid for their digital strategy to tie web and app access together so closely. If we lived in a world where everyone was committed to Times (UK)-style paywalls, it might make sense. But there’s still a lot of nuance to be figured out on where to charge and where to give away, and any rule from Apple governing such a big part of the mobile web would stifle the experimentation I hope we’re finally going to see in 2011.

Finally, that’s one other question left unanswered by Apple’s release: How much leeway will publishers have to balance free and paid within an app. Outside the news world, app developers have complained that Apple doesn’t allow free trials for apps — you can’t download an app, try it out for seven days, then decide whether or not to pay. Developers complain that makes it harder to sell expensive apps, which people will rightfully want to try out before spending $50.

How will that idea carry over to publishers? Will someone be able to download an app and get the first three issues of a magazine free before getting pitched on a subscription? Will someone trying a metered model, like The New York Times, be able to let someone read 10 articles a month before hitting the paywall? The in-app purchasing model Apple’s using for subscription would seem to allow some leeway, but we’ll have to see how it works in the real world.

February 10 2011

15:00

The Newsonomics of overnight customers

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

It’s a new epidemic of digital-pricing strategery, to borrow a fading term, now breaking out within the newspaper executive suites of the western world. Rupert will soon be charging 99 cents a week for The Daily, and dozens of dailies are laying out digital payment plans to be put into effect this year. Some are hiring top-drawer consultants to parse the many possibilities and run the odds of success before they throw the dice.

The questions are many. Do I charge print subscribers anything extra for digital delivery? If so, how much? If I add a fee for print subscribers, is it opt-out or opt-in? Do I offer a day pass or week pass, or just stick with monthly and annual subscriptions? If I put up a wall, where do I place it? Do I restrict content access by type — allowing free access to classifieds, commerce, and commoditized national and global news, but keep the somewhat proprietary local stuff locked up? Do I let readers read some — maybe 10 or 20 pages a month — of their choosing before making them pay to go further? How many bundles should I offer, and what’s in them?

We’re in uncharted territory. We know very little about consumer behavior when it comes to paying for journalism because the old, steady, entrenched models worked so well for so long that they barely changed over decades. Then the Internet came along and publishers felt compelled to give away their work for free — a subject to be featured in many psychology dissertations to come — as they abandoned, for a 15-year period it appears, a two-legged (advertising + circulation) business model.

A year from now we’ll have lots of data, parsed by all of us every which way from London to New York to Memphis and Augusta to Dallas to San Jose and Modesto, and then we’ll see what works, what doesn’t, and indeed, what “works” means in dollars (and pounds) and cents.

For now, though, the paid plans consist of commonsense, conjecture, conventional wisdom, consultant graphs, and, I believe, some fascinating assumptions about human psychology. On the eve of the launches of more paid offers, let’s examine four of those assumptions underlying this new era.

Let’s call it the newsonomics of overnight customers, which is our first psychological model, and one that I think may turn out to be the most promising.

Our four psychologies:

The psychology of the overnight customer

In north Texas, if you’re a Dallas Morning News subscriber, you’ll wake up sometime after March 1 (the loose date for the debut of the company’s digital paywall), and find that you no longer have a split identity. Though for 15 years you’ve been a “subscriber” for print and a “user” for online, you’re now just a customer. You pay your $30 or $33.95 (the new price as of Jan. 1) a month, and you get seven days of the Morning News and access to the Morning News’ new digital bundle, consisting of desktop/laptop, smartphone, and tablet availability.

That’s right. You’re no longer a “user”, a hateful term if ever one were invented, or a “visitor,” or a brother from another digital planet. Overnight, you’re a customer again.

In this psychology, a news company has put a value on what it produces. You, the customer, now are being shown that value. Maybe a year, or two, or three, from now, you perceive that value — forgetting all about those days of “free” — and value your relationship to the Morning News’ news, whether you access it by paper, phone, tablet, or TV screen.

The big hope: When you are ready to forsake pulp itself, you’re accustomed to paying for digital — you’re a customer of all, clearly — and do so without thinking twice. (And if the Morning News can save big bucks on not having to print and deliver a paper to you, and tens of thousands of your neighbors, it can significantly cut costs, increase profits, and maybe grow its news-gathering capability.)

We expect that after The New York Times’ finishes its own (higher-priced) pricing strategy, it, too, will offer print subscribers digital access as part of the coming “All-Access” bundles. Journalism Online says that about half of its newspaper clients will offer print subscribers no-extra-charge access to digital, while the rest will tack a small upcharge onto print bills.

This psychology, I believe, offers elements of a winning one. Why? It begins to change the artificial split between print and digital consumption. Most likely, it slows down — only temporarily, but every year makes a huge financial difference to news companies — print loss. Bundle it all together — print + digital — and there’s less incentive to drop print, even your use is declining. Less loss in the short-term helps retain print ad revenue, which is still 80 percent or more of all newspaper company ad revenue.

Secondly, it sets up publishers for the hastening print-to-tablet transition. If the kind-of-print-like tablet convinces readers to move away from print more quickly, the more they’ve been accustomed to paying for tablet digital, the less likely they are to balk at paying just for tablet digital.

Journalism Online cofounder Steve Brill will tell you that the company still urges publishers to charge something extra for digital access, even a $1.95 or $3.95 a month, often a 60 percent or more discount compared to what digital-only bundle buyers will pay. Whether you ask print subscribers to pay a small amount for digital access or give them access “free” as part of their print subscription (they still have to register for the restricted access even if no new payment is involved), they’re as likely to sign up for digital access, he says. If that holds, a small, incremental price itself may not be that much of an issue with print subscribers. Those that want it are as likely to pay for it as take it for “free,” as a new digital customer. It’s a way too early to know if that will be the case, but it’s one metric that should be at the top of publishers’ watch lists.

One way or the other, though, print customers are becoming digital customers, quickly. One key lesson here: It is newspapers’ print subscribers and regular readers who should be the likeliest to maintain their loyalty (and show the most willingness to pay of all potential audiences). In a sense, this is a back-to-the-future scenario, redrawing that big “circulation” circle as it was, but now including digital access.

The Forrest Gump psychology

Is a news site just a bunch of chocolates? If so, how important is it to allow would-be news customers to sample the wares before making them open their wallets? If you let them sample, can they sample all the treats, or just half the box — and which half?

Morris Communications’ Augusta Chronicle, partnered with Journalism Online’s Press+, now gives readers 25 pageviews a month before the paywall comes down, giving them access to the whole site. Dallas Morning News digital readers will find that most local stories — other than widely covered local news — have a small “D” symbol, indicating restricted access content that only print or digital subscribers can get access to. In Memphis, the current plan of Scripps’ Commercial Appeal is to start charging in the second quarter, but only for mobile access, while the website itself remains free.

Sampling is a big question. Print subscribers, who tend to be older, know what they are getting, while less habituated readers, who tend to be younger, may need to develop a habit. If sampling of the key, unique, proprietary stuff is made difficult, then how likely are news sites’ to develop a next generation of paying readers?

The psychology of the maze

So what happens when digital visitors bump into paywalls? Remember TimesSelect, and how disorienting that seemed to be to many. It makes people anxious to bump into a wall. Publishers hope that those who bump into walls (after 10-20 pageviews a month), and don’t pay, will come back the next month, and be more likely to pay then. Michael Romaner, head of Morris Digital, which has rolled out an Augusta-like model in Lubbock and plans six more similar rollouts by July 1 (and the rest of the company’s titles by the end of the year), says early data shows that 25 percent of those who ran into the wall paid up. Again, that’s very early data. Let’s see if that 25 percent number holds in Augusta and elsewhere, and what the tracking of the 75 percent — how many go away and never come back? — shows. How many just keep sampling, and are ad-monetized, but never fork over circulation dollars?

The psychology of the psych-out

Maybe news companies are overthinking all of this. Maybe they’ve psyched themselves into believing the world of free news content has really and profoundly changed — with little supporting evidence, other than a number of one-time news apps sales. It’s true that the metered systems, pioneered by the Financial Times and at the core of The New York Times’ and Journalism Online’s models, aren’t bet-the-company strategies. They are designed to keep the engine of growing digital ad revenue humming, allowing 80 percent or more of digital customers go on their merry non-paid ways, while turning those heavier digital readers into digital customers. If they succeed, they’ve picked up a new digital revenue stream, maybe laid down the first pavement to tablet utopia, and maintained a commitment to a digital ad future. All that combined may be just a middling success in revenue, though, as print (see both recent McClatchy and Gannett reports) ad revenues remain stubbornly negative.

If they fail — and that means losing more traffic due to paywalls than they anticipate — then news publishers have once again too strongly believed their own conventional wisdom and will pay the additional consequences.

January 20 2011

18:30

The Newsonomics of Mr. Murdoch’s Daily

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

Let’s pause for a moment and reflect.

It’s a daily newspaper being taken to the web. And: It’s the sensation of the moment. After 15 years of decrying the re-purposing of print newspapers for “online,” we’re making quite a fuss about a product — Rupert Murdoch’s digital outlet, The Daily — that is proudly leveraging the newspaper metaphor, creating a mostly (we think) daily edition, with some updating.

At first blush, it seems like a 2001 idea, dressed in new 2011 clothes. But maybe it’s the clothes that make all the difference, and that make Mr. Murdoch The Man. The new outfit, after all, is the iPad, the hot device of our time — the one that seems to be playing havoc with what we thought we knew about digital news reading (“The Newsonomics of tablets replacing newspapers“).

It is impossible, of course, to make much sense of The Daily until we can actually read it. With iPad products, we’re often into that crazy first blush associated with any new digital device, confusing the device itself with the product.

We think The Daily will now launch in the next couple of weeks, as Apple finalizes its work around subscription offerings. Maybe Rupert won’t get his two-shot with Steve Jobs, given Jobs’ new leave of absence, but we know The Daily will greatly benefit from the great shelf placement Apple is bound to give it as it opens its subscription store. (And News Corp., of course, has plenty of its own owned properties to help in marketing, as well.)

So what might The Daily be?

It could be the USA Today of 2011, 30 years after that newspaper started its own category of national papers identified by nuggetized journalism and color-coded, easy-to-grasp presentation. As the first digital news native in the tablet space, The Daily certainly offers that possibility. Or it could be just New York Times lite, with its timing, by coincidence or purpose, blunting the Times’ own efforts to charge for digital content more generally and for the iPad specifically. Or it could be a next generation of “The National,” a white-hot star of a national sports daily, crammed with talent, that burned out within a year and a half in 1991. And it could read like either a newspaper or a magapaper, given its hiring of some magazine hands.

If you are the Huffington Post or the Daily Beast or Slate, you’ve got to be asking the question of why The Daily could charge and why it couldn’t. Is the value in its web (desktop/laptop access) lineage — or is portability just how we, readers and publishers, think about information now? As seems increasingly true, the tablet in general is upending lots of ways we think about digital news.

So let’s take a quick look at the Newsonomics of The Daily, tempered by our partial knowledge of it.

Budget

We’ve heard the $30 million number, which covers two-plus years of operation. (That’s close to the $31.5 million that Murdoch sunk into Alesia, as Jeff Bercovici has noted.)

The $30 million would be a big investment for many newspaper companies these days, but not for News Corp. Consider, just as an example, the $33 billion (in revenues) the company takes in through its 20th Century Fox division. Marmaduke, “a dog of a movie,” came in fourteenth on the company’s 2010 grossing list, at $33 million, behind Unstoppable, Knight and Day, and Vampires Suck. And Avatar (“The Avatar Advantage: Big and Bigger Media“), the top grosser, took in $408 million.

So the $30 million for The Daily is pocket change, at worst another big R&D project.

Costs

We’re hearing that about 150 staffers are assigned to the project, about 100 — or two-thirds of them — journalists. Let’s take $90,000 as an average FTE cost, a valid estimate given the New York (with L.A. as a bureau) siting of the product. That’s $13.5 million in annual staff costs. We don’t yet know how much News Corp. is leveraging its well-developed and ample advertising sales staff, its technologists, or its marketing people — or how the costs of “borrowed” News Corp. or Dow Jones resources are being allocated internally (echoes once again of USA Today). News Corp. could be devoting significant marketing dollars here, as well, to better leverage its Apple relationship and its first-in-format launch.

Figure a first-year run rate between $15 and $20 million, and maybe a tad less for a second year, and you’ve got $30 million.

Subscription revenue

On revenues, as well, the hypotheticals are intriguing. The Daily is a U.S.-centered, iPad-based product; its only web presence will be promotional. We think that Apple sold over 10 million iPads last year, mostly in the U.S., and — though numbers vary widely — forecasters estimate another 50 million in iPad sales between 2011 and 2012, and 70 million tablets overall (again in the U.S.). So let’s say, roundly, that by the end of 2012, there are around 80 million tablets extant in the U.S. Getting just 1 percent of their users to subscribe to The Daily (and, yes, some households will have multiple tablets, but let’s let that go for the moment) would mean 800,000 subscribers. And a quarter of those would be 200,000 subscribers.

Let’s say The Daily could get to 200,000 at $52 a year. (It’s priced at 99 cents a week, out of the chute.) That’s $10.4 million in subscription revenue. Apple, which presumably will be doing all the e-commerce for this tablet-only product, would take 30 percent of that, leaving $7 million in net annual returns.

There are a couple of early caveats here. First, The Daily, an old-fashioned news idea, will likely have to use old-fashioned selling approaches: lots of free sampling and discounts. (That’s one of the many issues Apple must work out as it decides what it means to be a subscription-offering company.) So the 200,000-multiplied-by-$52 math won’t be a straight line. (And, of course, if it’s successful, News Corp. can raise rates.)

Second, let’s fast-forward six months from The Daily’s launch. It is now challenged by a number of paid digital news products: those of the Times, the Journal, magazines, and regional newspapers. Those products, all with non-tablet roots, have lots of ways to promote both themselves and their digital/iPad subscriptions. The Daily, with no web presence — and so, presumably, little search engine optimization — may be at a significant disadvantage from that perspective. On the other hand, it can use News Corp. promotional assets (but those do have real costs) or continue to invest in marketing to keep awareness high. Of course, if The Daily is a great product and its social axis (Facebook, Twitter, Linked In) works, social search could offer a great deal of help there and cheaply.

Ad revenue

Early tablet revenue was off the charts, an effective cost-per-thousand rate of 10X website sales. Much of that early shine is wearing off, say some tablet news publishers, with some placements tossed into a print/online bundle in 2011. Does that mean that tablet rates will swoon to low website ones? Not necessarily, but we don’t yet have enough data to know. Sponsorship (given high brand value and lower traffic) will inevitably be joined by a full array of video pre- and mid-rolls, behavioral targeting and re-targeting, and still-ascendant pay-for-performance — all the modern tricks of the trade.

So if the cost run-rate is about $15 to $18 million a year, and subscription revenues net at $7 million, News Corp. would need $8 to $11 million a year in ad revenues to break even. Certainly possible, if that 200,000 number is hit and sustained, but that could be a tough proposition as tablet newbies sample widely and are confronted by a world of paid choices.

Bottom line: Yes, The Daily can work. But for Murdoch, whose moxie even the biggest detractor from Fox News can admire, The Daily represents another test, another foray. His success has been mixed. Alesia, his news portal, didn’t work, so he abandoned it. MySpace is being sold off, at a low point in its trajectory, while the Dow Jones/Wall Street Journal buy may indeed find significant new business success in the tablet age. And now there’s The Daily. It’s a grand lab for Murdoch. And the rest of us.

January 13 2011

15:30

The Newsonomics of 2011 news metrics to watch

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

January 06 2011

19:00

Dallas Morning News publisher on paywall plans: “This is a big risk”

In talking about the Dallas Morning News’ plans to begin charging for digital content next month, Jim Moroney is surprisingly candid about the decision and the economics of the industry. When the publisher of the News told his staff about the decision, he said they must be prepared to be ridiculed and vilified for putting their content behind a paywall.

“This is a big risk — I’m not confident we’re going to succeed,” Moroney told me. “But we’ve got to try something. We’ve got to try different things.”

Beginning February 15, the News will beginning charging for a majority of its content across its soon-to-be-redesigned website, its iPhone app, and a forthcoming iPad app. Print subscribers will get full access to everything for $33.95 a month, while those who eschew the paper can buy a subscription to the website and apps for $16.95. What’s unclear at the moment is how exactly the digital subscription will work given that Apple’s app store doesn’t allow for subscriptions (at least not yet, but that could be changing soon).

The move is not entirely a surprise given that other large metro papers, The New York Times and the Boston Globe, are developing paywalls. It’s also less of a surprise since A.H. Belo, parent company of the News, said in 2009 that it was considering switching some of its papers to paid sites. (A plan for the Providence Journal to go all-pay appears to have been changed or pushed back.)

What will readers have to pay for? Dallasnews.com exclusive reporting, for one thing, including its scoops on the biggest show around, Dallas Cowboys football. Free stuff will include breaking news, wire stories, obits, and blogs (which, curiously, could include sports coverage of the Cowboys).

Moroney is pragmatic about the paper going to a paid model. “It’s not an over-the-cliff strategy,” he said. “If this works, great, it’ll be fantastic. If it doesn’t, we can go back to providing access at a lower price or free.”

It’s an experimental approach that marks a shifted attitude toward paid content. In 2009, Moroney was one of several newspaper executives to testify at a Senate hearing on the future of newspapers. As he put it at the time, “If The Dallas Morning News today put up a paywall over its content, people would go to The Fort Worth Star-Telegram.”

Now, though, as he sees it, the News and other papers have no choice but to change. “I don’t see impression-based advertising, the thing that paid bills for newspapers for so long, as supportable in the long run for a newspaper,” he said in our phone conversation. Moroney said he expects that pageviews will drop by half once the paywall is up, which is no small consideration given that the News has roughly 40 million pageviews a month. But even with growing pageviews and modest gains in online ad revenue in the industry, CPM prices are still low and ad inventory is up, Moroney said. And as he told Ken Doctor in a Newsonomics post last August, the days of newspapers living off the old “80/20″ rule are long gone.

Over the last few years, the News has reined in its circulation from far-flung areas (sorry, readers in Arkansas and Oklahoma), cut back third party copy sales, and increased its home delivery price, all with the idea of turning the Dallas Morning News (in all of its forms) into a product that makes money off specific, targeted audiences — rather than one that makes money on volume, Moroney said.

What the paper hopes will make the difference is a tiered system of access, from individual apps to the digital-only bundle and the full-blown subscription. In debuting an iPad app, it made sense to make all the paper’s digital offerings paid, Moroney said — otherwise, why would someone pay for an app when they can access DallasNews.com on a smartphone or tablet’s web browser? That becomes especially true as more publishers build HTML5 sites that can offer an engaging app-esque experience. “You have a website you can access with a browser that has the same look and feel of an app. How can you expect people to pay for one,” he noted, and not the other?

In its research to prepare for the site, the News found that there was willingness to pay for access to the site or various apps. While, because of the relative newness of the iPad, Moroney said he takes the data with a grain of salt, it was still positive enough to encourage the paper to create a paid strategy for its digital products.

“I don’t think we can wait,” Moroney said. “The business has enough uncertainty around it.”

December 21 2010

16:00

Tablet-only, mobile-first: News orgs native to new platforms coming soon

Editor’s Note: We’re wrapping up 2010 by asking some of the smartest people in journalism what the new year will bring.

Here are 10 predictions from Vadim Lavrusik, community manager and social strategist at Mashable. Mashable, where these predictions first appeared, covers the heck out of the world of social media and have an honored place in our iPhone app.

In many ways, 2010 was finally the year of mobile for news media, and especially so if you consider the iPad a mobile device. Many news organizations like The Washington Post and CNN included heavy social media integrations into their apps, opening the devices beyond news consumption.

In 2011, the focus on mobile will continue to grow with the launch of mobile- and iPad-only news products, but the greater focus for news media in 2011 will be on re-imagining its approach to the open social web. The focus will shift from searchable news to social and share-able news, as social media referrals close the gap on search traffic for more news organizations. In the coming year, news media’s focus will be affected by the personalization of news consumption and social media’s influence on journalism.

Leaks and journalism: a new kind of media entity

In 2010, we saw the rise of WikiLeaks through its many controversial leaks. With each leak, the organization learned and evolved its process in distributing sensitive classified information. In 2011, we’ll see several governments prosecute WikiLeaks founder Julian Assange for his role in disseminating classified documents and some charges will have varying successes. But even if WikiLeaks itself gets shut down, we’re going to see the rise of “leakification” in journalism, and more importantly we’ll see a number of new media entities, not just mirror sites, that will model themselves to serve whistle blowers — WikiLeaks copycats of sorts. Toward the end of this year, we already saw Openleaks, Brusselsleaks, and Tradeleaks. There will be many more, some of which will be focused on niche topics.

Just like with other media entities, there will be a new competitive market and some will distinguish themselves and rise above the rest. So how will success be measured? The scale of the leak, the organization’s ability to distribute it and its ability or inability to partner with media organizations. Perhaps some will distinguish themselves by creating better distribution platforms through their own sites by focusing on the technology and, of course, the analysis of the leaks. The entities will still rely on partnerships with established media to distribute and analyze the information, but it may very well change the relationship whistleblowers have had with media organizations until now.

More media mergers and acquisitions

At the tail end of 2010, we saw the acquisition of TechCrunch by AOL and the Newsweek merger with The Daily Beast. In some ways, these moves have been a validation in the value of new media companies and blogs that have built an audience and a business.

But as some established news companies’ traditional sources of revenue continue to decline, while new media companies grow, 2011 may bring more media mergers and acquisitions. The question isn’t if, but who? I think that just like this year, most will be surprises.

Tablet-only and mobile-first news companies

In 2010, as news consumption began to shift to mobile devices, we saw news organizations take mobile seriously. Aside from launching mobile apps across various mobile platforms, perhaps the most notable example is News Corp’s plan to launch The Daily, an iPad-only news organization that is set to launch early 2011. Each new edition will cost $0.99 to download, though Apple will take 30%. But that’s not the only hurdle, as the publication relies on an iPad-owning audience. There will have been 15.7 million tablets sold worldwide in 2010, and the iPad represents roughly 85% of that. However, that number is expected to more than double in 2011. Despite a business gamble, this positions news organizations like The Daily for growth, and with little competition, besides news organizations that repurpose their web content. We’ve also seen the launch of an iPad-only magazine with Virgin’s Project and of course the soon-to-launch News.me social news iPad application from Betaworks.

But it’s not just an iPad-only approach, and some would argue that the iPad isn’t actually mobile; it’s leisurely (yes, Mark Zuckerberg). In 2011, we’ll see more news media startups take a mobile-first approach to launching their companies. This sets them up to be competitive by distributing on a completely new platform, where users are more comfortable with making purchases. We’re going to see more news companies that reverse the typical model of website first and mobile second.

Location-based news consumption

In 2010, we saw the growth of location-based services like Foursquare, Gowalla and SCVNGR. Even Facebook entered the location game by launching its Places product, and Google introduced HotPot, a recommendation engine for places and began testing it in Portland. The reality is that only 4% of online adults use such services on the go. My guess is that as the information users get on-the-go info from such services, they’ll becomes more valuable and these location-based platforms will attract more users.

Part of the missing piece is being able to easily get geo-tagged news content and information based on your GPS location. In 2011, with a continued shift toward mobile news consumption, we’re going to see news organizations implement location-based news features into their mobile apps. And of course if they do not, a startup will enter the market to create a solution to this problem or the likes of Foursquare or another company will begin to pull in geo-tagged content associated with locations as users check in.

Social vs. search

In 2010, we saw social media usage continue to surge globally. Facebook alone gets 25% of all U.S. pageviews and roughly 10% of Internet visits. Instead of focusing on search engine optimization (SEO), in 2011 we’ll see social media optimization become a priority at many news organizations, as they continue to see social close the gap on referrals to their sites.

Ken Doctor, author of Newsonomics and news industry analyst at Outsell, recently pointed out that social networks have become the fastest growing source of traffic referrals for many news sites. For many, social sites like Facebook and Twitter only account for 10% to 15% of their overall referrals, but are number one in growth. For news startups, the results are even more heavy on social. And of course, the quality of these referrals is often better than readers who come from search. They generally yield more pageviews and represent a more loyal reader than the one-off visitors who stumble across the site from Google.

The death of the “foreign correspondent”

What we’ve known as the role of the foreign correspondent will largely cease to exist in 2011. As a result of business pressures and the roles the citizenry now play in using digital technology to share and distribute news abroad, the role of a foreign correspondent reporting from an overseas bureau “may no longer be central to how we learn about the world,” according to a recent study by the Reuters Institute for the Study of of Journalism. The light in the gloomy assessment is that there is opportunity in other parts of the world, such as Asia and Africa, where media is expanding as a result of “economic and policy stability,” according to the report. In 2011, we’ll see more news organizations relying heavily on stringers and, in many cases, social content uploaded by the citizenry.

The syndication standard and the ultimate curators

Syndication models will be disrupted in 2011. As Clay Shirky recently predicted, more news outlets will get out of the business of re-running the same story on their site that appeared elsewhere. Though this is generally true, the approach to syndication will vary based on the outlet. The reality is that the content market has become highly fragmented, and if content is king, then niche is certainly queen. Niche outlets, which were once curators of original content produced by established organizations, will focus more on producing original content. While established news brands, still under pressure to produce a massive amount of content despite reduced staff numbers, will become the ultimate curators. This means they will feature just as much content, but instead through syndication partners.

You already see this taking place on sites like CNN.com or NYTimes.com, both of whose technology sections feature headlines and syndicated content from niche technology publications. In this case, it won’t only be the reader demand for original content that drives niche publications to produce more original content, but also its relationship with established organizations that strive to uphold the quality of their content and the credibility of their brand. Though original content will be rewarded, specialized, niche publications could benefit the most from the disruption.

Social storytelling becomes reality

In 2010, we saw social content get weaved into storytelling, in some cases to tell the whole story and in other cases to contextualize news events with curation tools such as Storify. We also saw the rise of social news readers, such as Flipboard and Pulse mobile apps and others.

In 2011, we’ll not only see social curation as part of storytelling, but we’ll see social and technology companies getting involved in the content creation and curation business, helping to find the signal in the noise of information.

We’ve already heard that YouTube is in talks to buy a video production company, but it wouldn’t be a surprise for the likes of Twitter or Facebook to play a more pivotal role in harnessing its data to present relevant news and content to its users. What if Facebook had a news landing page of the trending news content that users are discussing? Or if Twitter filtered its content to bring you the most relevant and curated tweets around news events?

News organizations get smarter with social media

In 2010, news organizations began to take social media more seriously and we saw many news organizations hire editors to oversee social media. USA Today recently appointed a social media editor, while The New York Times dropped the title, and handed off the ropes to Aron Pilhofer’s interactive news team.

The Times’ move to restructure its social media strategy, by going from a centralized model to a decentralized one owned by multiple editors and content producers in the newsroom, shows us that news organizations are becoming more sophisticated and strategic with their approach to integrating social into the journalism process. In 2011, we’re going to see more news organizations decentralize their social media strategy from one person to multiple editors and journalists, which will create an integrated and more streamlined approach. It won’t just be one editor updating or managing a news organization’s process, but instead news organizations will work toward a model in which each journalist serves as his or her own community manager.

The rise of interactive TV

In 2010, many people were introduced to Internet TV for the first time, as buzz about the likes of Google TV, iTV, Boxee Box and others proliferated headlines across the web. In 2011, the accessibility to Internet TV will transform television as we know it in not only the way content is presented, but it will also disrupt the dominance traditional TV has had for years in capturing ad dollars.

Americans now spend as much time using the Internet as they do watching television, and the reality is that half are doing both at the same time. The problem of being able to have a conversation with others about a show you’re watching has existed for some time, and users have mostly reacted to the problem by hosting informal conversations via Facebook threads and Twitter hashtags. Companies like Twitter are recognizing the problem and finding ways to make the television experience interactive.

It’s not only the interaction, but the way we consume content. Internet TV will also create a transition for those used to consuming video content through TVs and bring them to the web. That doesn’t mean that flat screens are going away; instead, they will only become interconnected to the web and its many content offerings.

Older posts are this way If this message doesn't go away, click anywhere on the page to continue loading posts.
Could not load more posts
Maybe Soup is currently being updated? I'll try again automatically in a few seconds...
Just a second, loading more posts...
You've reached the end.

Don't be the product, buy the product!

Schweinderl