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July 07 2011

15:00

The newsonomics of the Swift Street Courtyard

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.

You want local? The Swift Street Courtyard is local.

Amid all the many abstractions about local and hyperlocal, Patch and reader/ad match, print migration and monetization, the institution of the Swift Street Courtyard whispered something to me about “local” last week.

The Swift Street Courtyard is a small, commercial development on the west side of Santa Cruz, my new hometown. It’s the brainchild of bakers Kelly and Mark Sanchez, who developed and own the two-acre complex overall and run Kelly’s French Bakery, the courtyard’s hub. It sprung out of a fallen-down light industrial area (packing Brussels sprouts in the old days), opening in 2003. Now it’s a cool destination, a tiny slice of post-industrial paradise, housewares and lighting stores, salons and yoga studios, gift, silk, and knitting shops and a just-opened, direct-from-the-ranch butcher. People regularly use the courtyard, a “playpen” as Kelly Sanchez calls it, as a meeting and chatting spot. It’s on the mental map of Santa Cruzans, drawing 20,000 people or so a month. Across an alley, another developer has matched the Courtyard style, building a burgeoning center of wine tasting, so now the more than half dozen Santa Cruz Mountains wineries, an organic brewpub, and the four-star Cellar Door restaurant attract still more visitors. (There’s even a gin joint, literally a new boutique gin maker, a block or two down.)

Yet, if you look up Swift Street Courtyard on Google, you find little helpful. Of course, there are lots of links: 2.4 million without quotes around the name, a mere 436,000 if you add “Santa Cruz.” We find little helpful, useful — or indicative of why this local institution is an institution. While we get links to sites that mention the place, we don’t get a sense of the place, a feel of the place — or, really, much useful information. What we get — and my sense is this is increasingly true of online-delivered search results — is a kind of Yellow Pages 2.0. It’s not as simple as the old YP: In its mass, and clutter, there is far more information than the old YP, yet there’s little depth or breadth. I don’t need 74 sites offering me the same phone number, address, or “Map It” functions.

In the Swift Street Courtyard example, I think we see both a big, current problem of local and a huge opportunity, for readers, publishers, and marketers. If Gordon Borrell’s merry research band is close to right, there’s a cornucopia of local digital advertising spend developing: $13.5 billion in 2011, rising to $25 billion, when it could be 25 percent of the local ad spend. So let’s look at the newsonomics of the Swift Street Courtyard to see what we can learn and how the next generation of digital media can earn some of those dollars.

Let’s start with what we now find, via Google, in order, because that tells us how far local has to go:

  • Wine Country Getaways gives us a bare-bones paragraph, plus a brief mention of some lunch options. It’s one of those sites with a smattering of directory content for northern California wineries, offering lots of links to marketing partners and, apparently, great search engine optimization. It holds the top two search rankings.
  • Yelp, with a page, listing five of the Courtyard’s businesses.
  • An events page from the local daily, the Santa Cruz Sentinel. Here’s what it looks like:

Rather minimal.

Then, there are real estate sites, foodie sites and local wiki sites, each featuring a paragraph or two of directory-like info. Zvents follows with a map and nothing more. SFGate (the Chronicle’s website) offers the exact same non-information as the Sentinel (didn’t the Justice Department say that the Hearst-owned Chronicle and the MediaNews-owned were supposed to remain competitive?). Google Places pops up, you guessed it, more directory info.

Then, into the second page, we find some individual websites for the courtyard’s shops.

Local media? Good Times, an above-average alt weekly in print, only gives us some detail from its calendar. Its paler competitor, Santa Cruz Weekly, offers no search online, no Swift info. The same is the case for Santa Cruz’s small public radio station site, KUSP.org, and the larger KAZU.org, Central Coast public radio.

Patch shows up nowhere in the top three pages, though its page would rank as second-best to Yelp’s, with five listings of individual stores, and a ton of photos, most of them mediocre and unhelpful. (From how many angles can you shoot asphalt? Does anyone edit Patch photos?) Examiner.com puts Swift Street Courtyard on its Oakland (some 70 miles north) site.

Interestingly, the only video of the place, a self-conscious bit of a visit, can be found on TurnHere (“Short Films, Cool Places”), though I only found it because Mark Sanchez told me about it; it doesn’t turn up easily on Google.

So: Is it any surprise when we hear “local doesn’t work”? As consumers, as readers, what we get for local, largely, is what’s been repurposed from print. Local words, in text. But words and nothing more don’t fit us in 2011. Seeing is believing.

When we say local, we mean our whole local experience. Certainly, the news from City Hall and the schools and the cops report, prep sports, and the like. Community life, though, is far larger.

So, let’s return to Swift Street Courtyard. Imagine a world in which consumers can move their finger around a magic tablet surface, watching, listening, reading reviews and more? That world is here, but consumers and readers are way ahead of media. For local media, or others, the question is who, and first, will take advantage of the tablet/smartphone/visual era? Digital tools — those available cheaply today to anyone — will enable somebody to:

  • Bring video to the Courtyard party. The scene is about people, shopkeepers, shoppers, sippers, yoga enthusiasts, and conversationalists. The best way to describe the place is with video. Create video that tells the story of the place, update it from time to time, as part of a wider Santa Cruz video guide. I’m sure the Sentinel and the weeklies have done some good features about the Courtyard, its shopkeepers, and its openings. Good luck even finding them on their sites. Text features do have their place and their value, but are especially valuable in context, in organization, and fronted by video.
  • Bring tours, mapping and a bit of gaming to the Courtyard party. Pull in a little of the fluidity of Trulia’s mapping and searching, a little of the cinéma réalité of Grand Theft Auto, a little of the 360 views of real estate tours.
  • Bring events to the Courtyard party. Yes, if you meander through online listings of the daily, the weeklies, and Patch, you can find stuff happening there. Why not put it in single place? Events aren’t just unusual events. What kind of soup does Kelly’s French Bakery have today? What is Sones Winery tasting today? What’s new and fresh at the brand-new El Salsichero handcrafted charcuterie (I told you this was Santa Cruz)? That’s news, events — and shopping.
  • Yes, bring shopping to the Courtyard party. I recall Village Soup‘s Richard Anderson telling me a few years ago about his innovation: letting lunch places tell would-be patrons about the daily hot plate special. Visit Village Soup, and you see BizOffers and OrgOffers giving you very specific offers about what’s on tap, today, now. It’s a step beyond Groupon. Shopping here, commerce here, has lots of potential edges. A local medium could put up the whole Courtyard online, charging for its service. (That’s hardly a new idea. I remember Philly.com, under Chris Mills, offering sophisticated commercial video in the late ’90s; great idea, just too early.) In fact, the digital courtyard idea offers lots of selling and buying opportunities around search engine optimization and marketing, sponsorship, customer-list-building, deals of the day, location-aware deals of-the-moment, and lots more.

Sure, I may sign up for GotDailyDeals.com from the Santa Cruz Sentinel, but how cool would it be, if I could specifically select Courtyard deals and avoid offers from oil-change shops I’m not interested in? And how valuable would such segmenting be to merchants?

Take all of what local media are trying to sell and apply it to this micro-community, the Swift Street Courtyard. (Yes, you can also apply it to schools, and parks, and downtowns — some with more direct commercial opportunity than others.) The Courtyard is only a small piece of Santa Cruz, and Santa Cruz is only a tiny corner of the terrestrial and digital worlds. Yet it gives us a sense of how local could work, work differently and work profitably for merchants and for consumers. Start small, make it work and expand from there. Suddenly, local commerce — and understanding that $13.5 billion number — can look different.

What’s your Swift Street Courtyard?

So who will step up? Dailies and weeklies have such a tough time escaping their legacy of text, and seeing the world differently, though I do see some rumblings I’ll write about soon. Public radio stations understand audio, but the small ones have few staff. Patch has the benefit of several feet on the street, but they seem to be running as fast as they can. City guide sites have always stopped short, delivering templated information that now feels so ’90s. Maybe the merchants themselves, aided by smart marketers who can use today’s tools, will do it themselves, bypassing media “help”; our handcrafted charcuterie already has one impressive little site (sans video) for an a butcher shop. Maybe it’s nonprofits; the city of Santa Cruz has already engaged a WayFinding group to “to evaluate and improve upon the experience of navigating around Santa Cruz,” as a half dozen other cities are also doing.

It’s an opening, and a huge one. We may see some media grab on to the possibility, testing and developing models, which could spread through chains or franchises or simply best practice. Or we may see media further decrying the difficulty of defining and selling “local,” upping their sales attempts as their products continue to disappoint and fail to engage readers.

I’d like to believe in the former, but history has so far proven out the latter. Maybe 2012, with 50 million iPads in the U.S. — by my estimate, that means as many as 40,000 residents of Santa Cruz Country — will prove differently.

February 24 2011

15:30

The Newsonomics of the digital mercado

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 as old as organized humanity itself: the mercado, the bazaar, the marketplace. We love to visit Old World marketplaces as we travel abroad. At home, our own shopping is now a mish-mash of malls, big box stores, neighborhood shops, and online commerce. Amazon, itself, is now a $34 billion business, and its Prime delivery program can deliver just about anything (my favorite buy: an electric mower) right to your door, seeming so local.

We can research almost any purchase. We can compare prices. We can get advice and reviews from hordes we’ll never meet.

Yet it’s far from nirvana. Navigating the byways of web commerce, other than great walled gardens like Amazon, can be frustrating. Numerous culs-de-sac interrupt us. Price-comparison sites like Price Grabber, Google Product Search, Shopzilla, and UK’s Kelkoo only seem to give us a partial view of what’s available. It’s tough to know when reviews may be gamed. Sites like preprint-digitizer Shop Local (“Your Local Weekly Ads, All in One Place”), owned by Gannett, seems curiously backwards, like replica E-Edition newspaper products for reading. Trying to compare model numbers, on sites like CNET or Best Buy, can give us digital nervous breakdowns.

Within the infinity of shopping choice, a lot of us would like some order.

That’s what the new Find n Save product aims to provide, and for the benefit of newspaper companies. Find n Save is the latest effort from newspaper companies to reclaim what they consider to be their birthright, maybe a third generation of such marketplaces following the ShopLocals and the earlier Storerunners.

Find ‘n Save focuses us on a decade-old-plus newspaper company problem.

While the daily newspaper — with its display and classified ads, its Sunday circulars, and its Wednesday food coupon – used to be the leading local marketplace, it now is just part of the pack. One number — print ad revenue halved in 10 years to $24.8 billion in 2009 (no final tally is yet in for 2010, which was still lower in single-digit decline) in the U.S. — gives real meaning to this splintering of commerce.

Digital media, with its search-led research/price comparison abilities and, now, with the new couponing craze, has wrought havoc with the newspaper business model.  All of that digital commerce has been disruptive and disintermediating. Yet there’s been more disintermediation (of traditional publisher/merchant relationships) than remediation.

We turn to lots of digital media to research and shop, but we have few go-to places of habit, again with Amazon making the greatest inroads into our shopping lives so far.

From a customer-centric perspective, it’s never been more confusing to find good deals. Yes, they seem to come from every quarter — print circulars, the web overall, direct mail, eBay alerts, Amazon “notifications” — but they’re disordered.

A recent study by the BIA/Kelsey group puts a number on the proliferation of marketplace choice. The annual study points to consumers using an average of 7.9 different media to make buying decisions in 2010, compared to only 5.6 in 2007. Buying’s gotten more complex.

The flipside, of course, is that merchants’ own choices about how to market have gotten more complex (“The Newsonomics of  Eight Per Cent Reach“), with small- and medium-sized businesses using 4.6 media to reach customers in 2010, as compared to 3 in 2007.

So taking a look at Find n Save, let’s look at the Newsonomics of the would-be new mercado, and what it will take to make these new marketplaces bigger business for local media.

McClatchy’s newspapers are the first big clients for Find n Save, a product of Travidia, a long-time player in the print-to-digital ad conversion business. Find n Save replaces Marketplace 360, the company’s former regional marketplace product.

Two big McClatchy papers — its hometown Sacramento Bee and the Kansas City Star — launched Find n Save in November. The company’s other big sites, from the Miami Herald to its North Carolina properties (Charlotte and Raleigh) and the Fort Worth Star Telegram, should feature it by July 1, with the rest of the company’s 30 markets putting Find n Save in place by year’s end. MediaNews’ flagship Denver Post will also launch it soon.

It’s not the only new effort at a regional marketplace.

Find n Save will soon by joined by another regional commerce portal. FYI Philly will launch this spring, in the greater Philadelphia region, two of its principals tell me. It’s conceived as a commerce portal, details to come. Significantly, it’s the result of unprecedented cooperation among four newspaper competitors in that region: Philadelphia Media Network (the new parent of the Inquirer and Daily News), the Journal Register company, Gannett, and Calkins Newspapers.

For Chris Hendricks, McClatchy’s VP/interactive, the Find n Save push is about a grand goal: reclaiming retail advertising. While the destruction of print classifieds has been well chronicled, the steady decline of local retail has been less so. You can figure that retail advertising has declined about $7 billion annually since its 2001 height. Yes, online display advertising has yielded some retail revenue, but doesn’t come close to recreating the lost revenue — or the lost sense of marketplace. 

So Hendricks talks about “blowing up retail” — and reordering it with Find n Save. “People are searching more and more for local services and products,” he says. “And they’re getting more and more confused.”

Find n Save aims to bring some simplicity to that confusion. Take a look at it, and you can see it’s a work in progress. What we notice about it — very prominently — is the deal of the day. Yes, Find n Save aims to take advantage of the Groupon revolution. Some Find n Save sites are partnered with Groupon, while others offer their own deals of the day. The idea is that the deal of the day isn’t just a new ad play, a new revenue source, for news sites; it’s also a new gateway to local commerce. The rest of Find n Save shows its ambitions:

  • It gives prominence to other local couponing, deals without the social must-buy incentives of the daily deal. Subway sandwiches, vacuum cleaners, lots of restaurants, and car care — but all in one place.
  • It incorporates product search, as have previous versions of the product. Consumers can search by product, brand, and store, among other attributes, narrowing or expanding search as they wish, and see where that product is available locally. The big allure, here, is the ability to check whether a product is in stock, at multiple, close-by locations. Search for lamps or shoes or spas, and you’ll find a motley assortment of offers.

So far, the November-launched sites have seen their marketplace traffic “quintuple,” says James Green, chief marketing officer of Travidia and an alum of Raleigh’s pioneering Nando Media. He says that’s due mainly due to “product-centric search engine optimization,” providing a new level of prominence in Google search results. If that base can keep growing, Chris Hendricks sees the sites becoming commercial magnets. Possible new, related streams can include display ads, offering prominence and placement, charging local retailers for ingestion of their inventories and conversion of their print material generally and topical directories, he says.

“Deals are the content,” says Hendricks. He notes, for instance, that news sites’ attempts to connect up editorial content with restaurant directories — using newspapers’ unique and core strengths — hasn’t produced the dividends many of us thought they would. Forget the packaging of feature content with ads; just focus on the ads.

So what can we make of this step forward?

Well, it’s a step, but probably many more are needed. Fronting a site with coupons makes some sense, and will pull in additional audience. Yet the overall research and shopping experience will have to be fuller if these are to become go-to sites with masses of local buyers.

It’s hard to know how many years we are away from the perfection of commerce — you know, getting each of us the kinds of timely and meaningful shopping offers that bring order out of the digital shopping chaos. Certainly, though, here is some of what will be needed:

  • Broader, deeper databases of products: That’s simple to say, and hard to achieve. I asked James Green whether Find n Save is a breakthrough product. Not yet, he said, saying that there’s not yet “enough conversion.” That translates as product search being too spotty; provision of retailers’ real-time inventories is still a work-in-progress. If we as consumers run into more dead-ends than usable deals, we’ll stop coming back.
  • Reviews and recommendations: Find n Save contains none. In a world of imperfect knowledge, we love seeing what dozens of others think of products and services, just like in the early mercados. What’s new, good, and fresh? Throw out the reviews that are outliers, and we’ve got a better-than-even shot of making a better buying decision. Sites without them lack the critical component found in sites from Amazon to Best Buy to Yelp.
  • Preferences and customer knowledge: While some of us are highly concerned about privacy, many others say, ‘Just use your tracking to give me what I want — including deals — and stop spamming me with useless ads.’ So the ability to state preferences and to have my digital behavior intelligently watched — for my benefit — will be a big differentiator.
  • A great tablet product. James Green says Find n Save’s mobile app will be ready soon. Apps are, of course, becoming a price of admission for mobile customers. More importantly, the winning local marketplace will figure out how to combine deep, broad shopping info, social reviews, deals — and to fully embrace the interactive and visual capabilities of the tablet. Just as the iPad — and its newer cousins — are the big do-over opportunity for news companies’ reader business models, they’re also literally a blank slate for the new mercado.

Who will build it? It could be a Travidia, or an Amazon or a Google or a Facebook or a Flipboard-for-commerce so far unborn. There are billions of dollars baiting the hook.

November 29 2010

15:00

The Newsonomics of eight-percent reach

[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.]

We’ll all familiar with the chaos of the moment. Publishers and broadcasters, readers and viewers, search giants and software midgets — they all see that we’re on the verge of the next news and information revolution, as the built-out Internet really begins to power human access to content on an array of digital devices, anytime, anywhere. But it’s not just the media dealing with that revolution. The same chaos of choice that alternatively delights and befuddles envelops businesses as well.

For old-fashioned sellers of newspaper space and broadcast time, it’s been a fitful education, and a reminder that merchants don’t want to buy advertising — they want to find customers, as cheaply and efficiently as possible. The First Amendment didn’t tie merchants to media in a constitutional permanence; it just seemed that way.

Marketing spend — email marketing, social media commerce, search engine marketing and optimization, building and operation of brands’ own websites, events and conferences, among others — is increasing worldwide, while “advertising” stagnates, and that’s due mainly to the increase in digital, increasingly measurable, marketing alternatives for businesses of all kind.

Yet, it’s also clear that we’re at the beginning of this digital marketing revolution, with two numbers convincing me we’re maybe not even a tenth of the way there. I’ll call that the Newsonomics of eight-percent reach, and explain those eight percent in a moment.

Consider first the big picture of marketing spend. Chuck Richard, a fellow information industry analyst at Outsell, has done work showing that marketing ad spend in the U.S. now totals $368 billion, of which 32.5 percent is going to digital and 30.3 percent to print.

It decreased at the rate of only 4.5 percent in the recession-wracked 2009, and should rise about 4.2 percent this year. Spending on advertising alone was down 8.5 percent in 2009 and is forecast to be down 0.8 percent in 2010.

So against those numbers, let’s look at a couple of numbers.

Google reaches about eight percent of the small businesses in the country, estimates Click Z’s Gregg Stewart. That’s 1.5-2 million businesses who use Google’s ad services, contributing to its $27 billion annual revenue run rate. As Stewart points out, Google advertising is a convenience for many harried smaller merchants:

Local businesses face a multitude of challenges daily; servicing customers, generating sales, meeting payroll, and in effect doing what they “do” for a living. Basically, they’ve got their hand in everything and this rarely allows for deep specialization in any one specific facet of their business. Local businesses do not have the time required to research keywords, monitor results, and modify bids and ad creative along with all the additional complexity that is associated with SEM.

Look at that eight percent another way, of course, and we see 92 percent upside, a big opportunity to help merchants make sense of the chaos. Google — along with Yahoo, Yelp, Yellow Pages companies, AOL, and Microsoft — have been plumbing this territory, and so have newspaper companies and a trio of hungry online marketing services companies.

Now Google is making a couple of aggressive moves. It has announced Boost. It’s a product that is built on top of its local listings and Google Maps. Boost — there’s an ironic ambiguity to the name, in that it is intended to boost Google’s revenue and boost some money out of the pockets of local media — adds the ability to put ratings and reviews in place-based ads, and they are sold on a pay-for-performance basis, unlike an earlier similar offering. The Boost test is going forward in more than a dozen cities.

Secondly, Marissa Mayer, Google’s long-time maestro of the search business, is now in charge of the local business. That’s another signal of what an opportunity Google sees in local business, online and on mobile.

How much of the local business market do you think metro newspapers reach? Eight percent, estimates Mike Sacks, VP for operations at Tribune. That’s a number, give or take a couple of points, I’ve heard from other publishers as well. While that total is likely higher for smaller-circulation dailies, its small size is a reflection of the old way of selling, pre-chaos.

Newspapers worked the biggest local merchants for big contracts, concentrating on getting a relatively small number of checks from a small number of deep-pockets advertisers. Now, those advertisers — the likes of Best Buy, Target, and Macy’s — are increasingly going direct to their customers and using all manner of social and engagement media to find and upsell customers (“The Newsonomics of online marketing“).

So, newspaper companies, including Gannett, Hearst, and Tribune, most prominently, are re-strategizing. If the dollars from that eight percent are only half what they were 10 years ago, then we’d better get some revenue from the other 92 percent, they’re saying. They’re doing that three main ways:

  • Retraining salesforces, and hiring more commissioned salespeople, to work the territories, selling not only space in their own papers and sites, but Yahoo inventory, Facebook placements, mobile messaging and more.
  • Telesales: Think “boiler room” lite; more salespeople calling more prospects.
  • Self-service: Sack’s Tribune is one of the companies using the Mediaspectrum platform to enable local merchants to place their own online or print ads. This Orlando Sentinel “Place an Ad” page shows what merchants can choose from. At the sister Sun-Sentinel, in Fort Lauderdale, Sacks says that more than a hundred new advertisers have been added in the year the service has been in place. “Every single cent is a new one…I’d like to see it grow ten-fold,” he says of the prospects of turning an experiment into a line of significant revenue. Sacks says average sized deals come in at about $1,000/$2,000 and also provide lead generation for upselling. Overall, Mediaspectrum’s self-service ad product is in place at almost 100 newspaper titles, including all of the Tribune’s papers (but not broadcast properties), UK’s Trinity Mirror chain, Morris Publications, the Columbus Dispatch, and the Washington Post. Most offer both online and print placements.

As we enter 2011, this new battle for local ad dollars is growing in strength, as merchants aim to make sense of the chaos of marketing choice. This exercise in chaos — and how sellers of marketing services do or don’t take advantage of it — affects more than just newspapers, of course. Locally, commercial broadcasters and Yellow Pages companies — the two other local media with substantial feet-on-the-street sales forces — are sensing the same opportunity to get to smaller businesses, as they, too, lose some of the bigger-business advertising they’ve long held.

Advertising agencies are in the midst of their own identity crises, as their value proposition to businesses is thrown into question, with the advances of pay-for-performance advertising and self-service overall.

The online-only players aren’t just the search giants. ReachLocal, Orange Soda, and Yodle are the companies you hear a lot about when you talk to local site general managers. They are all working the same turf, with ferocity. A recent visitor to the Yodle “sales pit” came away with the impression of “how well trained these guys are” and how their state-of-the-art customer relations management system qualified prospects well.

That 92-percent “open” market — maybe 23 million businesses — tells us how early we are in this digital marketing movement. Commerce change is one thing. For those who care about the news, the big thing to watch is whether those dollars, as they move digitally, move to companies that produce news, distribute news — or have nothing to do with news.

Photo by Leo Reynolds used under a Creative Commons license.

June 03 2010

15:00

The Newsonomics of commercial crowdsourcing

[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.]

There are no new ideas in the digital business, just ones recycled from earlier dreams — ones that vaporware couldn’t make work, but newer technologies can.

Take business directories, for instance. The idea built huge Yellow Pages businesses, businesses now mature and, well, yellowing. You know you need a service — fix a broken water heater, a sore tooth, a cranky marriage — and you knew where to turn; let your analog fingers do the page-turning. Classic, order-taking annuity business. The web comes along and the Big Yellows, SuperPages and dozens of others — huge and small — take the print Yellow Pages business online. Of course, they struggle with the new medium, adding not much value, and usage is low; business growth is challenged. Angie’s List, Yelp and OpenTable come along, eating away the edges.

Now we’re seeing a next generation, best symbolized by PaperG’s new PlaceLocal product. In a nutshell, PlaceLocal creates instant ads for a business, drawn from the best of the available information out there on the web — photos, user reviews, basic address, phone, hours, menus.

It gives publishers — TimeOut, Hearst TV, and McClatchy are three of the first companies testing it — the ability to create ads on the fly, spec ’em out and use their sales staffs to do the selling. Victor Wong, one of the young geniuses behind the PaperG’s innovation — its first product, FlyerBoard, simply updated for the digital age the old notion of the ubiquitous kiosk flyers found around college campuses — tells me he thinks PlaceLocal will be a bigger product. It should sell for a higher rate, and that’s what his publisher customers are hoping. Initial rates — we’re talking about smaller businesses which aren’t frequent advertisers — run in the hundreds up to a thousand dollars monthly. That $1,000 target would more than double the pricing of the FlyerBoard product, a key in PaperG’s growth plan as the company of a dozen plus leaves the friendly confines of New Haven for Silicon Valley North, San Francisco.

Why a higher rate? Well, it’s potentially a highly actionable piece of commerce. As the commercial world moves increasingly beyond online display ads (a fairly static category of spending), beyond paid search (where almost half of today’s digital ad dollars are spent), to cost per call and various flavors of cost per acquisition, a PlaceLocal-kind of product — expect many knockoffs — is well-positioned.

One big lesson here for everyone to get their heads around. This is commercial crowdsourcing. Why outsource the collection, organization and checking of “directory data,” as numerous Yellow Pages companies have done over time, when you can have the crowd do it — for free. It’s using the web, as a whole, to find, value, and associate commercial content. We can see roots of Google PageRank, Demand Media content organization and Yelp user reviews in the thinking behind the product.

Newspaper companies have cut the cost of their ad production markedly over the last several years, as they’ve outsourced to companies like 2adpro, Affinity Express and Express KCS, with much of the work done in India. Those companies have made it possible for newspaper companies to cut their print (and increasingly online) ad production — often at union wage — costs by 40 percent or more. Now, a PaperG comes along, with a new kind of disintermediation notion, replacing that outsourcing with websourcing. Of course, we don’t yet have an apples-to-apples comparison of the advertising done the traditional way — asking a business what they want to sell and creating the ad from there — vs. the web-scraping PlaceLocal will test out. PaperG takes a revenue-share percentage of the ad sold, so publishers will have lots of comparisons to make on ad quality, ad effectiveness, net profit, and the ability to sell new customers.

My Newsonomics Law 9 — “Apply the 10-percent rule; the heavy lifting of journalism can be aided and abetted by smart use of technology” — comes into play here. Sometimes it takes 10 percent of the effort it used to to create news products — through smart aggregation, for instance. In this commercial case, we’re seeing a different twist on the 10-percent rule, and one that bears watching as city-based news and entertainment operations look for new revenue streams as the older ones morph rapidly.

March 11 2010

17:00

The Newsonomics of new news syndication

[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.]

It’s tough to get the printer’s ink out of news people’s veins. For many, journalism = printing, and in printing, each copy costs extra. It’s an analog, manufacturing mindset, and one to finally bid goodbye.

Of course, we all know how freely we can fling stories about on the web, but second copy value — and cost — has an evolving business model implication, as the news industry looks for new pillars of support. That business model implication is syndication. Syndication in the old world meant the syndicates — among them, King Features, Universal Press Syndicate and now-put-up-for-sale United Media —and it meant wires, like AP, Reuters, and AFP, all of whom built big businesses on the increasing margin in the second, third and fourth copies of editorial content created and redistributed. Other syndicators (think Lexis-Nexis and Factiva) have built big businesses, selling multiple copies of stories to corporations and governments for their workforces and to schools of every level and size.

Now, we’re beginning to see next-generation syndication embraced by digital news startups, and that’s good news, a good supplement to advertising and sponsorship revenues, to membership charges and conferences.

Take GlobalPost for example. GlobalPost CEO Phil Balboni embraced syndication as a revenue source from the site’s early planning and rollout. “I knew I needed multiple revenue streams to support our business, and syndication of our original content — in a world of rapidly diminishing international reporting — seemed like a no-brainer to me especially given our pricing flexibility.”

GlobalPost now gets about 12 percent of its overall revenue from syndication. It shares its correspondents’ posts with about 30 newspaper, broadcast and other news sites in the U.S. and worldwide. It counts among its clients CBS News, New York Daily News, the Times of India, Australian Associated Press, Pittsburgh Post Gazette and the Newark Star Ledger. Sites pay a monthly flat rate and can use their fill of GlobalPost stories. In addition to web use, print publications can and do use them in print as well.

GlobalPost isn’t alone. Politico added a syndication network, the Politico Media Network, to its bag of tricks early on. For Politico, it’s a multi-pocket pool play, leveraging a related advertising network around the syndication and its own partnership with Reuters.

California Watch, the new initiative of the Center for Investigative Reporting, is figuring out the contours of its syndication business. Early in its life, it has found daily newspapers, broadcasters, start-ups and the ethnic press to be eager customers of its work, with some big stories reaching audiences of two million or more. Early on, CIR has priced its work fairly inexpensively, in the low hundreds of dollars. As it is getting traction, it is thinking of syndication as a key business model and will test pricing models over the next year

The Chicago News Cooperative, the supplier of local news coverage for the Chicago edition of The New York Times, operates on a similar principle, able to sell stories to multiple customers.

The principle here is devilishly simple — but has not been well enough applied. It’s been described from the inception of the Internet: the second copy is free (or really close to free). It’s also part of a basic Newsonomics law, Law #9: Apply the 10% Rule. Let technology do the value multiplication, not expensive-to-hire-and-feed humans.

Every syndication dollar earned is another dollar that doesn’t have to be wrung out of highly competitive advertising markets. Importantly, the syndication dollars derive from what journalism organizations do best: create high-quality content. The big notion: create better-than-good-enough content, the kind of stuff that is beginning to flood the web. It’s another way to affirm worth: the more companies that want to use your content, the clearer the value proposition in the digital world.

So what’s old is new again. In addition, syndication offers the potential of selling beyond traditional media that may offer significant new revenues. For local news companies, established for more than a hundred years or a few months, it’s a destination-plus model. It’s not about readers coming to your site; it’s about getting people to read your content —and get paid for it. It’s also — witness the Politico model — a way to enable an ad network, related to syndicated content. In fact, I can envision a range of locally oriented sites — from the Yelps, Open Tables and Zillows to government sites to niche mom’s and family sites and beyond — that may find use for various kinds of content. The first step for would-be syndicators: inventory and categorize what you have, and talk to would-be customers about what they might want to use.

Some have said that in the digital world, news companies need to think of themselves both as creators and aggregators, doing what they do best and linking to the rest. Let’s amend that: creators, aggregators, and syndicators, doing what they do best, licensing with zest and linking to the rest.

January 30 2010

12:54

January 29 2010

23:50

4 Minute Roundup: iPad Mania; Yelp Scores $100 Million

This episode of 4MR is brought to you by GoDaddy, helping you set up your own website in a snap with domain name registration, web hosting and 24/7 support. Visit GoDaddy to learn more.

Here's the latest 4MR audio report from MediaShift. In this week's edition, I look at the hype and reality around the latest device from Apple, the iPad. While some have slammed it for what it's missing, it's too early to tell how media companies might use it to sell their content. Plus, Yelp gets up to $100 million from Elevation Partners, helping some employees cash out without an IPO. And I ask Just One Question to Google News' Josh Cohen about whether Google should have started working with publishers sooner.

Check it out:

4mrbareaudio12910.mp3

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Background music is "What the World Needs" by the The Ukelele Hipster Kings via PodSafe Music Network.

Here are some links to related sites and stories mentioned in the podcast:

8 Things That Suck About the iPad at Gizmodo

The Anti-Hype - Why Apple's iPad Disappoints at Mashable

The Apple iPad - First Impressions at NY Times

Can iPad save media? Skeptics weigh in at Reflections of a Newsosaur

Debating the merits of Apple's iPad at News.com

Can Apple's iPad Save the Media After All? at Wired Epicenter

Taking A Deeper Look At Media's Appetite For The iPad at PaidContent

Does Apple's IPad Take a Bite Out of Web Advertising? at AdAge

The iPad Is a Multimedia Device. So Where Are the Media? Be Patient. at MediaMemo

Will the iPad Help Media? Possibly. Save Media? No. at GigaOm

Elevation Partners giving Yelp a boost at SF Chronicle

Yelp Taking Big Investment From Elevation Partners at TechCrunch

Yelp Gets Up to $100 Million From Elevation Partners at BusinessWeek

Three's A Trend - First Facebook, Then Zynga, Now Yelp at WSJ

Google Now Collecting Local Reviews From Non-Traditional Sources at Search Engine Land

Google Maps Now Adding Reviews from News Sites, Hyperlocal Blogs and Other Non Traditional Review Sources at Understanding Google Maps

Here's a graphical view of the most recent MediaShift survey results. The question was: "What do you think about Google's intent to run an uncensored site in China?"

survey grab china.jpg

Also, be sure to vote in our poll about the iPad:


What do you think about the Apple iPad?(poll)

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.

This episode of 4MR is brought to you by GoDaddy, helping you set up your own website in a snap with domain name registration, web hosting and 24/7 support. Visit GoDaddy to learn more.

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

January 28 2010

23:00

Links on Twitter: Bloomberg may launch $100 million site, Google exec says NYT paywall won’t work, Yelp may get $100 million from Bono

Web marketer says Facebook is hitting “tech lock in,” better known as “worldwide domination” http://j.mp/cbgsMM »

Google exec says NYT paywall won’t make money: “It’s too easy to bypass” http://j.mp/aJVB55 »

Bloomberg may launch a $100 million site on the intersection of biz and politics, employing 40-50 http://j.mp/cPVVZS »

Bono’s private equity firm will invest up to $100 million in Yelp, home to 9 million user-generated reviews http://j.mp/dwF399 »

Publisher XXL aims to cash in on rising ad revenue in women’s magazines http://j.mp/994ta2 »

Hunting for new revenue stream, WSJ to launch travel service http://j.mp/7KaGox »

December 18 2009

08:38

December 15 2009

11:12

Journalism 2.0: ‘Patience is a virtue when building a local audience’

Mark Briggs shares his jottings from last week’s Interactive Local Media conference in Los Angeles, with some noteworthy nuggets from those behind successful and emerging news models. For example, advice from local community news/review site Yelp (also growing in the UK):

Patience is a virtue when building a local audience. Yelp COO Geoff Donaker said it takes 18-36 months for a new Yelp site to reach critical mass with reviews, even with staff ‘on the street’ in every Yelp market. Yelp has nearly doubled its audience in the past year to about 11 million uniques per month.

Full post at this link…

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