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December 08 2011

15:20

Why Our Startup Decided Not To Target the Newspaper Industry

Are there opportunities for technology startups which target the media business?

Fred Wilson -- a venture capitalist who has made investments in Twitter, Zynga, Tumblr, Etsy, and FourSquare, among others -- apparently thinks not. As reported on MediaShift on November 15, Wilson told an audience of CUNY students with interests in business and journalism that better opportunities could be found in industries that aren't as "picked over" and have problems that aren't being solved.

As the co-founder of a technology startup that once considered the news industry as a source of partnerships and revenue, I agree with Wilson that startups should look elsewhere.

However, the reason they should do so is not because the media industry lacks problems that need to be solved. If anything, the media industry has problems that span every sector of the industry and every segment of the value chain. Rather, the reason why startups should look for other opportunities is many industry problems are so intractable, and the chance for making a successful business is so slim, that it simply doesn't make sense to target it.

The case of Invantory

Right now, we're developing Invantory, a mobile software platform that targets the local classifieds marketplace that is currently dominated by Craigslist. We're going to make the Invantory experience one that is defined by an easy-to-use interface and great-looking photographs that are now possible with most smartphones. Further, we're attacking a problem that has vexed users of Craigslist and newspaper classifieds for years -- the lack of a system to vet who you're dealing with. Our reputation system, which is built on proprietary algorithms and other safeguards, will help users better evaluate the other parties before they make contact.

My partner, Sam Chow, is a former Microsoft engineer and an experienced programmer for Apple's iOS platform. My own background is online news, content and communities. In the 2000s, I was a technology journalist and online editor, and in the 1990s, I worked at a daily newspaper and on a daily television newscast.

My news roots run deep, and I thought there might be some alignment between our platform and the needs of local news publishers, which have seen their own classifieds revenue fall sharply in the last five years. In 2006, classified revenue in four categories (cars, jobs, real estate and "other") totaled $17 billion, according to the Newspaper Association of America. Last year, it totaled just $5.6 billion. Wouldn't it be great if our platform could somehow help the media industry, while building Invantory's user base?

craigslist_350x225.png

I began seeking out publishers, online news professionals and other experts to better understand the market and the possibilities for our platform to serve online news operations through white-label apps or other solutions. Very quickly I realized there would be a problem selling to publishers. Most people I talked with had reservations about dealing with software vendors, ranging from a reluctance to share revenue to outright mistrust.

"I've dealt with enough vendors to become very cynical," a publisher of a small newspaper told me. "Whether they extrapolate revenue based on bigger markets or outright lie, we have become very suspicious."

This sentiment, which was echoed by others I spoke with, made me realize that the sales cycles would be punishing. For many customers, it would be hard to get our foot in the door, let alone successfully close a deal.

Yet the same publisher was interested in a technology that could help once again make classifieds a draw -- as well as bring in revenue or improve efficiencies. He readily admitted that his own technology was complicated for users. "On Craigslist, it's easy to create an ad, upload a photo, and publish," he said. "We should be able to do that."

The barriers

I spent time studying how classified systems worked at various publishers. I found it very interesting that many smaller publishers still had a classifieds desk that took ads over the phone, often augmented by email with customers. Some larger publishers had online classifieds tools, but they were clunky. Part of the problem related to the fact that most attempted to serve both the print and online classifieds, and did neither job well. Others were poorly configured. The system used by my hometown newspaper didn't even let me post classifieds locally -- but did make it possible to create listings in markets more than 20 miles away. The system also tried to charge expensive rates for relatively small ads -- $15 to $20 was a typical base rate for a small text ad in print. (A simple online classified ad was included for free.) No wonder people were abandoning newspaper classifieds for Craigslist.

Beyond the clunky ad creation systems, one of the biggest technology problems I observed was the nonstandard online publishing platforms used across the industry. This is actually a huge, underappreciated issue for all news publishers, including broadcasters, news agencies, blog-based news and opinion sites. It leads to additional costs, complexities, and talent shortages that companies based on older media platforms -- including print, television and radio -- did not have to deal with.

Among newspaper websites, it's not hard to find home-grown hacks or heavily customized content management systems. Even at publishers which use the same CMS across their properties, variations are common -- a typical example might involve different versions of Drupal and Drupal modules, owing to staggered technology upgrades, different needs for various brands, and complications involving legacy applications and data. Throw different registration and online payment systems into the mix, and you can start to understand the problem new software platforms targeting this industry are faced with.

Related to the CMS mess was a lack of developers and other technical staff at media organizations. This is a problem that afflicts many industries, not just the news business. But it exacerbated the problem with nonstandard publishing systems. Not only would heavy programming work be required to get Invantory to work with a new customer's site, but integration would largely fall back on us. Systems integration is technology consulting that requires lots of time and specialized development staff. It was not a business that we wanted to get into.

The Final Nails in the Coffin

The final nails in the coffin came at the New England Newspaper & Press Association's fall conference in October. There, I heard more details about the pain being experienced by publishers, and received advice that helped us make our decision to abandon our original plan to target the media industry.

One of the speakers, Amy Mitchell of the Pew Project for Excellence in Journalism, laid out the grim financial outlook. She stated that while most newspapers are still managing a profit, they're surviving by managing costs. Mitchell was unable to identify any solution to the revenue crisis. "We are not recommending anything other than experimentation," she told the audience, adding that this was going to be tough at many publications whose corporate cultures are resistant to change and innovation. This signaled that publishers were not only less likely to invest in innovative technologies, they were also unable to afford more expensive third-party software.

News industry analyst, author and blogger Ken Doctor was even more skeptical of a turnaround. "It is impossible for anyone to keep up with the disruption," he stated. Doctor went on to predict that broadcasters would soon begin to feel the same pain as newspapers and magazines, as business models based on traditional advertising eroded further.

However, Doctor also saw opportunity in tablet platforms. "If you read, you're going to have a tablet," he said, adding that the price of Kindles and other devices will soon drop to $50. "Why wouldn't you buy one?" he asked the audience.

The final presentation of the afternoon was from Alan Mutter, a former newspaper editor turned Silicon Valley CEO. As a consultant, speaker and author of the Reflections of a Newsosaur blog, he has become a well-known pundit on the travails of the news industry. During his NENPA talk, he predicted more top-line pain for publishers, owing to a number of trends:

  • "The audience trend is you don't have audiences under the age of 40."
  • "The most important thing happening is brands are going directly to consumers."
  • "High-priced reach advertising is not defensible."
  • "Coca-Cola has 34 million friends on Facebook ... This is the future for marketing and advertising."

Later in the day, I spoke with Mutter, and described our vision for Invantory as a mobile classifieds platform that could potentially sell white-labelled apps and platform technology to the news industry. He was pessimistic, not only because of the problems I cited earlier, but also because of the climate for raising capital in this space. "VCs with any experience won't invest in you," he warned.

Nevertheless, Mutter seemed hopeful about the idea of doing something different with classifieds. "Think about a real way to reinvent the classifieds market," Mutter told me. "Because there isn't one now."

Moving on

That evening, I met my partner and told him that the idea of selling to the news industry wouldn't work. Doing so would require huge investments of time and staff expertise, for skeptical customers who generally couldn't afford expensive technology systems. Raising capital would be more difficult when investors heard who we were targeting. We are still going ahead with our plan to create a mobile classifieds platform, but will instead go direct to consumer based on a freemium business model.

We've already built out the cloud infrastructure and now have a demo application. Work has already started on our intellectual property -- the proprietary technologies that will drive our reputation system. Soon we will begin user testing. (If you're interested in signing up for product updates, or seeing an alternative to Craigslist in your town or city, please use the sign-up form on the front page of the Invantory website.)

We understand that we'll face a new set of challenges, especially in terms of developing a solid go-to-market strategy and revenue plan. But we believe the time is ripe for innovation in this space.

Ian Lamont is the former managing editor of The Industry Standard and a web media veteran with years of experience developing online news, community and content. He eventually left the news media to return to grad school, earning an MBA as an MIT Sloan Fellow. His startup, Invantory, is a mobile software platform for local classifieds. Follow him on Twitter at @invantory or @ilamont or email him at ian.lamont@invantory.com.

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November 27 2011

19:09

As pressure builds on media, sports shine on (if you own the sports rights)

Reuters :: Amid a global economic environment plagued by debt, joblessness and recession fears, an unlikely haven has emerged for investors in the form of media companies that own sports rights.

Continue to read Georgina Prodhan | Paul Thomasch, www.reuters.com

March 08 2011

20:44

Why Are Hispanics Missing in Leadership at Media Companies?

AUlogo.jpg

Business content on MediaShift is sponsored by the weekend MA in Public Communication at American University. Designed for working professionals, the program is suited to career changers and public relations or social marketing professionals seeking career advancement. Learn more here.

Fifty million people. One trillion dollars in buying power. Ad spending up 164% since 2001 to $3.88 billion. Hundreds of Spanish-language TV stations across the U.S.

Those eye-catching numbers represent the immense, and largely untapped, scale and wealth of the Hispanic-American media market. Put into greater perspective, if Hispanic-Americans comprised their own country, it would be the fifth-largest, by population, in the European Union. And this demographic is growing -- rapidly.

Despite these figures, one component is still missing in the media industry's quest for greater diversity: Hispanic leadership in the executive suite at media companies.

As a Hispanic-American executive, who also happens to be female, I have seen first-hand the immense growth and impact diversity is having on the American economy and culture. Media executives, marketers, communicators, lawmakers and all of America are hurtling into an era where the business and marketing of diversity -- particularly the Hispanic-American market -- will be at the forefront of the American conscience.

Where Are The Hispanic Execs?

And yet a wide divide still exists between this reality and the promise for greater diversity in the ranks of media, PR, and ad agencies' senior management.

"The future of our nation depends on what happens in [the Hispanic-American] population, a segment of Americans that have not always gotten the opportunities," they deserve, said Manny Ruiz, founder of Hispanic PR Wire and Hispanicize.com, in a recent PRNewser interview.

This lack of opportunity has led to Hispanic-Americans being underrepresented in corporate boardrooms. According to the 2009 Hispanic Association for Corporate Responsibility Corporate Inclusion Index survey, only 4.8 percent of all Fortune 100 executive- and director-level positions are held by Hispanics. Similarly, Hispanics account for only 6 percent of representatives on Fortune 100 boards.

luis morales.jpg

It took my own professional organization, the Public Relations Society of America, 48 years before Luis Morales became its first Hispanic president in 1996. Fifteen years later, I'm the first Latina to serve as chair and CEO.

My question is: Why was there a gap in years for the PRSA to select another Hispanic leader? I also wonder, why aren't there more Hispanic-Americans, whom I know are succeeding in the business world, stepping forward to executive and board positions across the media and PR industries?

More Questions Than Answers

Is it an issue of being the "token"? Nearly 20 years ago, I remember looking around the boardroom and finding that, not only was I the only woman in the room, I also looked different from everyone else. Feeling like "the only one" didn't stop me from finding common ground with my colleagues, and it shouldn't be an impediment for greater diversity within media's C-suite.

Is it an issue of language? Many times, people assume that all Hispanic-Americans speak Spanish and prefer Spanish. That is as much a myth as is Spanish fluency for those who do speak Spanish. There are Hispanics, like me, who are just as comfortable communicating in Spanish or English because of our bi-lingual fluency. But, there are just as many who are only truly comfortable in one language -- English.

Is it cultural? Business development and growth is part of the Hispanic-American spirit. Our culture thrives on entrepreneurship. Hispanics aren't fond of sticking to the "way things have always been." We're living proof that change is the only constant; thus we prefer acculturation instead of assimilation.

Slow Progress

I'll admit, the level of diversity within public relations has progressed significantly in recent years. For example, 14 percent of PRSA members are self-described "diverse;" that's an increase from 7 percent in 2005.

But we still have quite a ways to go in order to meet the global business community's diverse communications and marketing challenges.

Playing a leading role in conversation development across societal, economic and ethnic variances has always been one of PR's strongest areas of focus. A key factor in continuing a surge in value will be the industry's ability to generate two-way, conversation-themed strategies. And this can only come from the inclusion of non-traditional hires, such as bloggers, social-media influencers and analysts that come from a variety of ethnic and racial backgrounds.

Diversity is Worth Trillions

It's quite simple, really: Diversity within PR will be crucial to agencies' success in years to come, as businesses continue seeking a more global perspective to their communications.

That means it is the responsibility of the PR industry -- along with the media companies that use our services -- to place an immediate focus on the business value of diversity and a diverse boardroom. Businesses must be prepared to tap into burgeoning and increasingly diverse markets for new revenue and growth. And having a more diverse executive suite, which reflects the modern ethnic makeup of the U.S., will better prepare the media industry to reap the immense financial rewards of a modern and very diverse America.

In today's stagnant economy, can any media company -- and the PR and marketing firms working within that sector -- afford to go without the diverse leadership that could help it tap into a $1 trillion market? Not likely.

(A tip of the hat to Julian McBride, whose excellent MediaShift post on fixing the tech PR industry's diversity issues inspired this post.)

Rosanna M. Fiske, APR, is chair and chief executive officer of the PRSA. She is also director of the Global Strategic Communications master's program in the School of Journalism and Mass Communication at Florida International University in Miami. With more than 20 years of experience, Fiske began her career as a journalist, and then moved to marketing and corporate communications. She has held senior communications counsel, marketing and management positions in agency and corporate settings.

AUlogo.jpg

Business content on MediaShift is sponsored by the weekend MA in Public Communication at American University. Designed for working professionals, the program is suited to career changers and public relations or social marketing professionals seeking career advancement. Learn more here.

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

October 22 2010

18:13

WHAT MEDIA COMPANIES COULD LEARN FROM IBM

Simon Valdman writes:

“The challenge isn’t just to do something smart and new on the edge of a traditional business – but to transform the business as a whole, and to position it for sustainable, profitable growth in the future.”

What a lesson for the print versus online talibans!

And said by the former director of digital strategy of the Guardian Group.

(Thanks to Guillermo Nagore in NY)

January 07 2010

15:53

GOOD NEWS FOR MEDIA COMPANIES: THE APPLE TABLET NEEDS CONTENT, CONTENT, CONTENT

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Do you remember the story of JVC’s VHS versus Sony’s BETAMAX?

Yes, Sony’s format was better with more reproduction quality, but…

JVC’s  had more movies available and at the end of the day, content prevailed over technology.

Well, now you can understand why Brian Marshall says that “for Apple, content is the focus of the tablet.”

Look at the Google Phone, the Super Phone, the “iPhone Killer”…

The Nexus One could be better as a product (it’s not) but the iPhone has these 100.000 applications, so the game is over.

The same is going to happen with the new upcoming tablets.

The key for the success of the Apple one  will be not the hardware but the software.

And just channeling these 100.000 applications to the new tablet will be enough to win the war.

The Apple tablet will have, I am sure, brilliant hardware.

Superb design.

Great usability.

Magnificent navigation tools…

But, again, it’s the software, stupid!

It’s the wine, not the bottle.

Or as the British used to say when the first computers were presented as “the” solution to have better education in the scholols:

“Garbage IN, Garbage Out”

So, good news for media companies and other content-driven providers.

The Apple tablet loves your content.

Apple wants your content.

Apple needs your content.

Music content made the difference for the iTunes and iPod.

So Multimedia content will make the difference for the Apple iTablet.

Are you ready?

Well, if your newspaper still dosen’t have an iPhone application, I don’t believe you.

You are NOT ready.

And shame to you and to your IT people!

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