Category Archives: Business Models

Nokia’s Life Tools and 175+ Countries

Last month elsewhere, I wrote about the importance of providing services to mobile phones as the basis for any newspaper’s future services. I’m involved in a project in a small South Africa city in which mobile will be the key (the story at that hyperlink describes it).

I’d written, rather bluntly, that I don’t particularly care what online business model saves The New York Times or The Daily Telegraph or National Post or Le Monde. Those national publications’ journalism certainly is worth saving, but national publications are atypical. What’s really needed is a business model that can save much smaller daily newspapers, those with less than 100,000 circulation. Those comprise more than 95 percent of the world’s newspapers.

I today spent quite a bit of the day examining Nokia’s Life Tools project. On Sunday, CIO magazine published a brief article outlining the project. It notes:

Life Tools includes a range of services aimed at rural mobile users in emerging markets, where agriculture remains a mainstay of local economies.

Agriculture-related offerings on Life Tools include local weather forecasts, information on crop prices at local markets, advice on growing crops, as well as pricing information for pesticides, seeds and fertilizer. Educational services include English lessons and advice on taking exams, while sports scores and music are available for entertainment.

While agriculture-related services might not be attractive to small newspapers in post-industrial countries, such services are very important in more than 170 other countries worldwide, countries where most of the world’s population lives.

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Moreover, what I’ve been discovering over the past several years is that newspapers need to develop their mobile phone services the opposite way that newspapers developed services in their printed editions.

Newspapers have been printed for more than 400 years. The original newspapers printed only news (hence the name newspapers), but over the centuries other information was added: advertising, scores calendars of events, cartoons, stock prices, dining & entertainment listings, horoscopes, etc.

Today, however, newspapers that use mobile phones only to offer news won’t gain very many mobile users. But if they instead offer mobile services providing dining & entertainment listings, horoscopes, calendars of events, services that match consumers and local merchants, etc., those newspapers’ mobile services will then have enough usage to be profitably able to provide news.

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EPublishing Innovations Forum 2008

My opening keynote speech at the 2008 EPublishing Innovations Forum, London, May 7th

Thanks, David! Two linguistic notes before I begin.

First, please forgive my Yank accent. My great-grandfather Crosbie, who was born in London, would wince at it.

Second, doe anyone here speak Chinese? I ask because, after people who read English, the second largest linguistic group online today is people who read Chinese. To make sure they benefit from my speech, I took the title that the conference organizers suggested – Thriving in the digital age: threats and opportunities for digital publishers – and put that into Google’s English-to-Chinese translation engine. Then, just to make sure that I got the Chinese version right, I took that result and put it into Yahoo’s Chinese-to-English translation engine. The resulting title is Watts that you say? Screw Gutenberg, the Change Underway is Even Larger. So that’s what I’m going to talk about.

Gutenberg. The Screw. Watt. And why the changes today underway are even larger than during Gutenberg. (Don’t worry, I’ll explain the screw.)

Here is a slide of Gutenberg in Strasbourg. His statue in bronze and a target today for pigeons. He’s also a target for quotes about the Internet. My guess is that you’ve all heard most the quotes before:

‘The Internet is the biggest things since Gutenberg.’
‘The change underway will be the biggest since Gutenberg.’
‘The Internet will change things as much as Gutenberg did.’

Well, don’t get me wrong: Gutenberg’s invention of the printing press probably sparked the Renaissance. Yet it’s time we understand something: The change today underway is even larger!

The change now underway is bigger than mass production was for the medieval calligraphers and scribes who Gutenberg’s invention put out of work. Moreover, it’s not just a change from production of single calligraphic editions to mass production of millions of books. What is underway is an intellectual jump. It’s a quantum jump in how information is distributed to people and how they find information.

I’ve lately become an academic, and in academia we have a technical term for the magnitude of the change today underway. It is an academic term that combines Norman French and Anglo-Saxon. We call it a Mindf*ck.

It’s like a jump from two to three dimensions. And from this new dimension arises phenomenal new opportunities for publishers. Opportunities we’ll talk about.

Unfortunately, most publishers today still think only in the old two dimensions – and therein lay the only threat to their livelihoods. Their failure to understand the new dimension underway in publishing is the threat. Understand me: The only threat is not to understand the change underway.

Let’s go back in time for a moment. The U.K. Statistics Office says there are more than 10,000 Britons who are more than 100 years old. In 1908, the streets outside this hotel, and all the streets of London, were full of horse carriages and horse carts. Though the 20th Century was new then, people nevertheless knew that the 21st Century would be a mechanized age despite the abundance of horses.

The early automobiles showed promise. Telephones were beginning to become common in offices and homes. Tesla and Marconi were each experimenting with something that would eventually be called radio. Yet nobody knew how quickly all those things would affect London’s seven million people, one million horses, 25 daily newspapers. Also, more esoteric and far-reaching things were also being developed in 1908. Things like quantum mechanics, which would later give us devices such as television, the transistor, the computer, the laser, and the CD, DVD, etc.

Today in 2008, people still get information distributed on paper pulp or from analog broadcast transmitters that fundamentally have changed little since Marconi’s time. Nevertheless, we know that our new century will be an all- digital age. An age of pervasive information. If the personal computer and mobile phone were our equivalents of the newfangled telephones and automobiles for people 100 years ago, so too can we now foresee things that are only recently being and invented, things we’re starting to have a clue that will shape the 21st century.

The one million horses were gone from London’s streets by 1920, only a dozen years’ after 1908. Likewise, the changes between now and 2020 will be phenomenal. If you think that you’ve seen change during the past dozen years, you ain’t seen nothing yet!

I’ve a bold agenda this morning. My job is to tell you how much things will change and explain the general themes and opportunities in those changes for publishers in the 21st century.

  • I will explain why 1.3 billion people have gravitate online despite their already having access to mass media in much more convenient formats than online.
  • I will explain why the fragmentation of audiences is an illusion.
  • I will explain why traditional newspapers’ and news magazines’ circulations, and news broadcasts’ viewerships, must ineluctably evaporate. And the reason is not because people don’t want news.
  • I will explain why most newspapers’ and news magazines’ and news broadcasters’ Web sites won’t save their companies. (In other words, why what you here in British publishing circles are calling the Rusbridger Cross won’t occur.)
  • And I’ll explain why people will be even better served by New Media than by Mass Media. In other words, why the change today is even greater than that during Gutenberg’s era.

That’s an ambitious agenda, so let’s begin.

Continue reading EPublishing Innovations Forum 2008

Payment for Online Content is Far From Dead, Despite TimesSelect's Demise

Many commentators are hailing the demise of The New York Times‘ TimesSelect service as the demise of paid content online. I hate to rain on their parade, but paid content isn’t dead. Consumer Reports, Zagat, Playboy and other premier brands prove everyday that paying for the premier content in a topical category is very much alive.

So why did the premier brand of The New York Times fail at paid content with Times Select? Because The New York Times and other traditional newspapers don’t provide premier content in a topical category. Traditional newspapers provide a package of news that attempts to satisfy everyone’s interests in all categories— an endeavor that is doomed to fail online and that is increasingly failing in print, too.

The demise of TimesSelect is notable only because it’s the last major gasp of newspaper publishers’ attempts to charge for providing everybody online with the exactly the same package of content. Not only won’t online consumers pay to receive exactly the same package as everyone else gets from a newspaper brand, but they won’t pay for even the best slice of that package.

That doesn’t mean that online consumers aren’t willing to pay; they just aren’t willing to pay to receive exactly the same package as everyone else gets. Unfortunately, most media executives don’t seem capable of conceiving that their companies can produce anything else at once but the same package of content for every consumers. Those executives are stuck thinking in what academics call ‘one-to-many’ or mass media terms.

People would be willing to pay a subscription fee for a service that delivers news to them online; but not for a service that doesn’t exactly meet their needs and interests, that sends exactly the same package of news to everyone. Paid content isn’t dead; just payment for the traditional ‘one-to-many’ package of content is.

There is a three-step process towards understanding why TimesSelect and other similar newspaper projects are doomed from the start. The steps are to understand why more than one billion people worldwide have gravitated onto the Internet; why traditional newspapers fail to match the reason why those people gravitated there; and why the traditional packaging of newspapers needs to radically change if that industry is to survive.

The fact is that, while everyone shares a few common interests (the weather, for example) and some people share some common interests (such as fans of the Red Sox), each person has many specific interests (a fan of Patrick McGoohan, knitting, Malaysian cuisine, etc.) and each individual is a quite unique mix of those common and specific interests.

To satisfy her mix of interests, an individual will use whatever media is available to her. Thirty years ago, her only choices in media were the three or four general-interest TV networks (ABC, CBS, NBC, and maybe PBS) she could receive via antenna, one or two dozen magazines (mostly general interests ones such as Time, Newsweek, USN&WR, Life, Look, etc.) available on her local newsstands, and one or perhaps two (unless she lived in a metropolis) daily newspapers that were delivered in her town. While those would likely certainly her common interests each day, she’d have to glean them for the very occasional that might satisfy her mix of specific interests.

Then came cable (and later satellite) TV, which gave her dozens of specifically topical channels 24/7/365. Then came developments in offset lithography that made publication and distribution of topical (‘niche’) magazines economical, and hundreds appeared on newsstands. And then she got access to the Internet, which gave her access to millions of topical webpages. Usage of all of these satisfies her – and a billion other people’s — unique mix of commons and individual interests better than any general-interest newspaper or news program can. People’s use of the Internet to satisfy their individual mixes of interests caused the growth of the search engines. They didn’t gravitate to online to read general-interest newspapers and news magazines (things that later followed them online).

Because people now have better means of satisfying their unique mixes of common and individual interests, general-interest newspapers’ circulation and readership are declining, as are general-interest news program’s listenership and viewership. For the past 30 years, you can track those declines to match the rise of CATV, ‘niche’ magazines, and Internet access (the recent plummet in newspaper circulation began almost exactly when the majority of Americans got broadband access, ‘always-on’ access to this better way satisfying their individual mixes of interests).

Traditional newspapers are obsolete. The reason why the traditional newspaper deliver exactly the same package of stories to all readers isn’t because all readers want exactly the same package. It’s due to a limitation of the Industrial Era technologies still used to produce those newspapers: an analog press (like an analog broadcast transmitter) can only produce the same edition at one time. That’s the latent reason why a newspaper editor picks for publication mainly the stories that are of most common interest. For example, I’m a New York Times subscriber who’s a soccer and Formula One racing fan but I rarely see stories about those sports in that newspaper. Yet I know NYT receives entire wires devoted to daily events those sports (even the Swiss Intercantonal league, Turkish Third Div., etc.) because I was the Reuters executive in charge of delivering those to the Times. The NYT newsroom has the soccer stories I want, but doesn’t print them and instead prints baseball and American football stories, because its analog presses simply can’t produce editions that match each individual subscriber’s interests.

Though that limitation of analog presses doesn’t exist online, almost every newspaper is inadvertently transplanting it there. For most of the past ten years, I couldn’t get those soccer stories from NYTimes.com either, because it would publish online only the stories that appeared in print. (For the past four years I’ve been able to find the soccer wire on NYTimes.com but had to click half a dozen levels down into the site to find them.) Shoveling into online the same package of content for everyone doesn’t add value in a medium that people are using to satisfy their individual interests and needs.

Moreover, people ‘unpackage’ the traditional newspaper’s package of content online. A person who might have read the printed Willimantic Chronicle for national news because it’s the only printed daily available in Willimantic aren’t likely to read that paper’s website for national news, because they’ve got now access to NYTimes.com, CNN.com, etc. Ditto with national sports, business, international news, etc. They’ll use a newspaper’s website only for whatever that newspaper can uniquely do (which is local news in the most cases). This means that only a fraction of the traditional newspaper’s package of content has value online. That means people might be willing to pay, at most, only a fraction of the traditional price for it online (which fits within surveys that indicate people are willing to pay online for newspaper content, but no more than about $1 per mo.)

So if providing the same package of content for everyone doesn’t add value in a medium that people are using to satisfy their individual mixes of interests and that package is worth only a fraction online of what (fewer and fewer) people are willing pay for it in print, why do so many newspaper publishers still hope people will pay the same for it online as in print? Or pay something for just a slice of that traditional package?

The NYT at least realized that its columnists were a unique part of its traditional package, but wildly miscalculated the people would pay $50 per year for that. Some 227,000 people did, producing $10 milion per year in revenue for NYT, but they were only 1.6% of NYTimes.com’s 13M registered users and that revenue wasn’t much compared to its $300M in revenues. Pluse, lack of access meanwhile displeased the other 12.7M registered users.

The reason I mentioned soccer is that the stories exist that can satisfy each person’s unique mix of common and specific, but traditionally produced newspapers — in print and online — don’t deliver the right match to each person’s mix. It’s a distribution problem: the stories exist but aren’t getting to the right people. So, people are using new media to hunt for the mix that satisfies them, visiting many sites and using many different mechanisms. Eliminating their need to hunt is the business opportunity here for media companies. Google and Yahoo! know that, which is why they’re beginning to offer customizable services that can deliver from all sources stories that can match each user’s unique mix of common and specific interests.

Although services like that can be subsidized entirely by advertising, if people are willing to pay for anything online, it’s likely that they’d be willing to pay for a daily news service that uniquely matches each of their mix of common and specific interest. Would you be willing to pay $5 to $3 per month for a service that each day delivers exactly what you want from all news sources, trade journals, blogs, etc.? The technologies (structured data, etc.) to do this online already exist, but the problem is the news industry’s infrastructure is still based on the Industrial Era practices of producing the same thing for every users and producing it from only one brand.

Therein also lies the problem with most micropayment systems. You’d need a universal one to satisfy most people’s needs and interests. People aren’t going to use a different one for each site (even if it might serve a number sites). It’ll need to either be build into the infrastructure, not layered atop the status quo, or exist upstream of the consumer and built into whatever service ultimately delivers the customized service to her. In other words, the aggregation of micropayments would be done wholesale by whatever service charges the consumer the monthly macro-price.

A paid service for custom content would likely also feature advertising, except it would be advertising to match the person’s unique mix of interests. Such a service would be more valuable to both consumer and advertiser. [How to remedy the way that online marketers have blown consumers’ trust during the past 15 years is another matter.]

A unique printed edition for each user can also now be produced. Agfa and Oce are now manufacturing digital presses (i.e., giant inkjet printers) for newspapers that, when coupled to a database and templates, can produce an edition uniquely customized for each subscriber. (For example, the Agfa Dotrix press costs a fraction what an analog press does, requires only one operator, and can produce 20,000 newspaper copies per hour. That speed is fine for about 1,000 of the nation’s 1,450 dailies; larger ones need only buy multiple digital presses.) I know that MAN Roland and other manufacturers of traditional presses are likewise developing digital presses that would service larger newspapers. [Whether printed editions will soon be supplanted by e-paper is another matter.]

So, the era of one-to-many, of each person getting the same thing daily, is over. People aren’t going to pay for that online. Fewer and fewer people are continuing to pay for it in print. And if soon nobody’s going to pay for that package, then nobody’s going to pay much or anything for just a portion of that package.

Paid content isn’t dead; just payment for one-to-many content is. The problem is most people in the industry still think in only one-to-many terms, including those pundits who are hailing TimesSelect’s demise as the demise of paid content online.

TimesSelect No Longer $elective

Since we launched TimesSelect in 2005, the online landscape has altered significantly. Readers increasingly find news through search, as well as through social networks, blogs and other online sources. In light of this shift, we believe offering unfettered access to New York Times reporting and analysis best serves the interest of our readers, our brand and the long-term vitality of our journalism.

You don’t need an online geologist to see that the online landscape hasn’t altered significantly since 2005. The quotation above, from an announcement in today’s NYTimes.com Senior Vice President & General Manager Vivian Schiller, is simply her company’s attempt to make people think that charging for online access to some of its website was a good idea two years ago.

Charging for online access to the Opinion section and archives of The New York Times never made sense. The newspaper would have earned greater revenues through advertising if it had kept access to those sections free and it wouldn’t have aggravated a significant number of its online readers.

Instead, TimesSelect was an ego exercise forced on NYTimes.com by several senior executives of The New York Times Company. They never really understood the economics of new-media and insisted that the circulation revenue business model of printed edition publishing should work if shoveled online.

The exercise yielded some $10 million from 227,000 paying customers. That’s less than 2 percent of the site’s more than 13 million registered users. Its revenues are less than 5 percent of the site’s revenues from advertising on freely accessible webpages. Another half a million users were given free access to TimesSelect because they were either paying subscribers of the printed edition or students or academics. However, the exercise effectively prevented the more than 12 million registered users of the site from accessing the Opinions section or archives sections for two years. I call thatt a failure and hope those corporate executives have learned something from it.

Supply & Demand and 'Unpackaging' on Newspaper Content Online

Yesterday on the Online News Association‘s discussion list, the editor of a 37,000-circulation daily newspaper asked to hear:

“…from folks who have tried something in between free and paid regarding your online content, such as holding back some print content from online; charging for ‘premium’ online content; giving access to some online content only to print subscribers. If you’ve done anything like this has it produced revenue or slowed print circulation erosion?”

Though I’ve not run a newspaper website in more than a decade, I today replied because I’ve spent more than a dozen years studying online paid content strategy and cases and had for several years been a columnists about the subject.

Here’s the information I provided:

Continue reading Supply & Demand and 'Unpackaging' on Newspaper Content Online

The Roles of Newsstands, Archives, and Virtual Newsrooms

On this day when eMarketer estimates that Google is well on the way to capturing 25 percent of all U.S. online advertisement spending and almost twice the amount of Yahoo!’s revenues, with which Google’s revenues only 18 months ago were on par, here are some other issues that my business partner and I are examining:

° What will be the future role of news agents and newsstands? Although they don’t play a sizeable role in distribution of American, Canadian, German, and Japanese newspaper (only about seven percent of circulation in those countries), local newsstands and news agent play a most significant role in most other major countries’ newspaper ecology. Plus they play significant roles in magazine distribution in every country.

In most of the world’s countries, newspapers and their hired wholesalers distributed daily copies to the news agents and newsstands, who then distribute them to you. when you subscribe to home delivery of a daily newspaper, you make your subscription with your neighborhood newsstand or news agent (not directly with the newspaper as is the situation here in the U.S.) The news agents or newsstand has the relationships with the subscribers; the newspapers themselves don’t know who subscribes, just that the wholesalers reports how many copies were sold to the retail newsstand and news agents.

Some digerati simply expect newsstands and news agents to go out of business if newspapers and magazines someday switch entirely to online publication. But that would create a major disruption in countries such as the United Kingdom, where 47 percent of the daily newspapers’ gross revenues came from newsstands and news agents. Must the newspapers forge direct subscription relationships with consumers? Will physical newsstands and kiosks cease to exist? (Do remember that browsing a physical newsstands if much easily than one online.) Or will they be replaced by physical versions of some sort of electronic kiosk?

° More immediately on that topic, we’ve today been helping a U.S. investment client ascertain what the U.K. Office of Fair Trade’s provisional decision-making about news agent competition means for major newspaper and magazine distribution wholesalers such as W.H.Smith, Menzies, or Dawson News.

In the U.K. wholesalers grant news agents and newsstands exclusive rights to distribute certain titles in specific geographical areas (a rural town, a one block radius in London, etc.). Since 2004, the OFT has been investigating whether such exclusivity is anti-competitive and disserves consumers. It last year issued a provisional finding that these exclusivities weren’t anti-competitive with newspapers but were with magazines. Several months ago, it however changed its findings to say the exclusivities are anti-competitive for newspapers, too. It’s still investigating, and will issue new findings in the spring.

° Would the regional press be better served using virtual newsrooms? We know several reporters at various regional newspapers who’ve gotten into trouble by not being at their newsroom desks five days and 40-hours per week. They’ve defended themselves by pointing out that news doesn’t occur in newsrooms. That’s all too true. The successful newsroom was an empty one 25 years ago because all its reporters who expending shoe leather, but too many corporations now consider an emply desk or cubicle in a newsroom to mean that the reporter isn’t doing her job.

Today’s technologies allow reporters to work from anywhere. So, why should they be physically anchored to their newsroom for most of the work day? Newsrooms are a great place for reporters and editors to have story conferences, but with instant messaging, SMS, person-to-person webcasting and voicecasting, mobile devices, etc., the reporter should be able to work from his car, home, local coffee shop, or the news scene. Why chain them to an Atex or SII mainframe six or eight hours each day?

Many journalism schools teach how to report using multimedia and new technologies, but none teach editors how to use those technologies to replace the newsroom itself. It’s time that was done.

° Open archives. How much are newspapers really making by charging for online access to stories that might be more than a week old? Do they earn more that way than the online advertising revenues from opening up their entire archives to consumers and search engines? Are publishers being foolishly doctrinaire by charging for archives?

° Regarding paid online content, Netimperative has a B2B case study about how Macmillian’s onestopenglih.com, a site for English-language teachers, successfully converted from free to paid access.

° American business publications in print took a revenue bath last month. The Society of American Business Editors and Writers’ Talking Biz News reports Magazine Publishers Association data showing large drops in advertising pages and revenues.

Though Barron’s, The Economist and Inc magazines showed increases in ad revenue,
Forbes 4.2 percent, Smart Money 5.4 percent, Money 6.6 percent, em>Business 2.0 fell 7.4, BusinessWeek 8.9 percent, Kiplinger 19 percent, and Fortune 28.1 percent (after that magazine had already declined 12 percent in August). It’s odd that business magazines would have less advertising once the summer vacation season ended.

° The Financial Times and the weekly New York Sun published ‘think’ articles about the future of the American newspaper industry, and both make the same point about profit margin versus product development.

The FT story contrasts the Los Angeles Times and the St. Petersburg Times. The former is owned by the publicly-traded Tribune Company and the latter owned by a not-for-profit trust. The FT‘s reporter suggests that Wall Street demanding too much profit (“trying to push profit margins beyond 20 per cent”) comes at the expense of keeping newspapers viable.

The Sun‘s story looks at The Los Angeles Times and the now defunct Knight Ridder Inc., and is a bit more blunt:

It seems its [Knight Ridder] 32 daily newspapers had been able to record “only” a 20% return on investment in recent years.

Cut back on the quality of a newspaper in order to show an impressive short-term return for the market’s sake, and the slide toward disaster has begun. Readers will notice and begin drifting away, and advertisers will soon follow. It won’t be long before the vultures are circling.

° Last but not least, the online news pioneer Milverton Wallace, who’d organized the European NetMedia conference during the new-media industry’s first decade, looks at the long-term changes underway, in an essay he’s written for the Club of Amsterdam.



newhouse3.jpg.jpeg


I’ve quite literally been watching construction of two new facilities in the U.S. that might become important for new-media journalism. The first is Newhouse III (above), construction of which is well underway at Syracuse University’s Newhouse School of Communication. The other facility is the Donald W. Reynolds Journalism Institute at the University of Missouri. There are steerable webcams overlooking the construction of Syracuse’s Newhouse III and Missouri’s Reynolds Institute.

Free versus Fee: The Print Battle in Baltimore

Printed newspapers have been pricing themselves out of the consumer market for a long time. Newspaper publishers have slowly increased their subscription prices while the value that consumers place on the information in newspapers has declined.

Publishers think that a newspaper today is a bargain at 50¢ or even $1,00 and they don’t realize that its relative worth has instead fallen to a fraction of that. They see ony their own printed product in their market, where most have a monopoly. They think their newspaper is the daily text news product available in their market — a true statement if you consider only print — and they know that their production costs are rising, so they raise their printed newspapers’ price.

What they forget is that consumers in those markets have gotten get more and more access to other daily sources of news in text — notably the ability to access every other newspaper in the world online. The effect of consumers’ newfound cornucopia is that the economic principle of Supply & Demand has lowered the relative value of the printed newspaper for those consumers. (I’ve previously written about the online version of this change).

This effect is a major reason why newspaper circulation has declined in the U.S.: Consumers see the newspaper’s value as worth just a fraction of what publishers are charging for it. The consumers moreover know that the publisher’s demand for 50¢ to $1.00 per day adds up. Just ask anyone who’s paying $621.40 annually for home delivery of The New York Times‘s daily printed edition.

I mention all this because the Baltimore market today began what amounts to a test of this thesis. A free newspaper, the Baltimore Examiner, distributing copies daily onto 260,000 upscale consumers’ doorsteps, launching into competition against the Baltimore Sun, which charges $2.50 per week for each of the 247,193 copies that it delivers to homes daily. Until today, the 169-year old Sun had a monopoly on its market, but nonetheless lost 20,000 readers, or nearly 8% of its circulation, last year. What will happen now that it has a free competitor?

Though those newspapers’ distribution numbers are almost equal, the rest of the competition might not be, reports today’s Wall Street Journal (paid content). Over its history, the Sun has won 15 Pulitzer Prizes for journalism and has a newsroom staff of 340. The Examiner apparently has a newsroom staff of only 20. The Examiner‘s stories will short— 300 words or so — and the paper is designed to be read in under 20 minutes. The Sun‘s 247,193 copies are distributed throughout Baltimore, but the Examiner‘s 260,000 will distributed only in neighborhoods where the median household income is at least $73,000, far above the $50,000 medium household income in Baltimore County overall. And the Examiner‘s ads rates are relatively cheap, about $2,900 for a full page, versus perhaps $17,000 for the Sun.

Whichever newspaper wins the battle — and victory will be apparent by the relative direction that the newspapers’ circulation move during the next two or three years— it will be an object lesson about paid content and the relative value of newspaper news in the U.S..

Benchmarking Online Newspaper Revenues

I’m in Paris where later this week I’ll be representing my friend Gordon Borrell‘s firm at the World Association of Newspapers’ Advertising Conference and be one of the conference’s speakers about online revenues.

That’s one reason why I’ll be missing the Newspaper Association of America’s Connections conference about online newspapers, which is underway in Orlando (where a section of of a theme park resembles a dwarf Paris but the food isn’t anywhere as good). I haven’t heard any news arise from the Connections conference — except that the NAA itself has launched a $50 million advertising campaign to “‘surprise advertisers with the truth’ about how engaged consumers are with newspaper advertising and to remind them of the reach of newspaper media in all its forms – print, online, niche publications, wireless, kiosks and even podcasts.” I bet that really will surprise advertisers who are armed with tons of research showing that consumer actually are becoming less and less engaged with newspapers in print and only modestly more so online.

Meanwhile, 5,000 kilometers northeast of Orlando, the departing editor in chief of The Economist weekly news magazine in London, which has doubled its circulation worldwide, said that newspapers had played their part in his magazine’s success by preferring ‘entertainment’ journalism to serious analysis. “I think we have been left a bit of space,” Bill Emmott told the Guardian. “They [newspapers] have had a hard task of how to deal with and preserve a mass market in an age when their market has been eroded by television on the one hand and the internet on the other…. But I think they have left us some space by continuing to play in the mass, almost entertainment market. Very few have come in our direction of analysis. There’s a choice – more entertainment or more information, and the numbers that have taken the more information route are very few.”

Perhaps unrelated to that dichotomy, Associates New Media, the digital publishers of the Daily Mail‘s website, is launching an ad-funded video news service online. Every London weekday lunchtime, ANM will broadcast celebrity, music and film-related news clips online. ANM COO Mark Milner told Netimperative that “Integrating advertising with our video broadcast provides an excellent opportunity to reach and communicate with the Mail’s unique audience in a content rich environment whilst ensuring stand-out.”

A thousand kilometers south of ANM, the chief creative officer of British TV show (Big Brother) producer Endemol told the 3GSM conference in Barcelona that the mobile network operators have failed to discover a ‘killer application’ for mobile phone (presumably besides voice calls and SMS?). Peter Bazalgette said a ‘killer app’ for mobile content would need to harness viceo, consumer participation, and the mentality of the ‘user generation,’ the Guardian reported.

Speaking of the 3GSM conference and the Guardian, that newspaper let Magic Lantern Production’s Anthony Lilley boldface all the buzzwords he heard there, although you’ve probably heard most before.

I’m pleased to read that Times Newspapers of London has hired former FT.com COO Zack Leonard as its new digital media publisher. Savvy move. Leonard, like former Wall Street Journal Online Edition publisher Neil Budde, who’s now general manager of Yahoo’s news operations, is a pioneer in online publishing.

Editorials as Paid Content? Expert Witness about Newspaper Vending Boxes?

My company’s business is the busiest it’s been since the height of the dot.com boom in 1999, which is another way to say that we’re swamped.

Or maybe swamped isn’t an apt verb because there’s no muck involved.

The work onsite for my major client is growing by leaps and bounds. The online video news and video search sector of Internet media is blossoming the way that text search did ten years ago. And I’ve received a flurry of speaking engagements in various places (Los Angeles; Birmingham, England; Albany, New York; Las Vegas) during the next four weeks on various topics (future media in universities, SMS and weblogging for newspapers; what newspapers must do to survive; and future innovative strategies for local television stations, respectively) that will each require preparation of different presentations. Eighty-hour weeks have been the norm this year.

The downside is that I owe to a magazine editor a long-overdue article that I hope will be almost as notable (or infamous) as one I submitted to that magazine a year ago this month. Also, I owe two non-clients some pro bono that help I’d agree to provide, which is point of this posting.

I need help finding the following:

    1. A case study about newspaper websites that charge for access to their Editorial & Opinions pages.

    A newspaper’s website staff has desperately asked me for some data to refute their newspaper publisher’s wishes to start charging for access to that portion of their site. The publisher’s belief is that his newspaper’s editorials and news opinion columns are too valuable ‘to be given away for free’ on the Internet.

    His new-media staff has asked me for case studies, data, or examples to reinforce their contrary belief that refute that charging for access to those pages will hurt their site’s traffic and overall revenues.

    I’d routinely do such work, but this newspaper isn’t a client and the research work involved would require a committment of time that I cannot now afford to give away for free. But the website staff’s cause is good. They and I hate how some publishers make impulsive, destructive decisions that are based soley upon flimsy anecdotes and not upon facts and data. So, I’m trying to do what I can for the website staff within the tiny free time that I have available. I’m thus sending up a flare: Does anyone know of cases where a news website charged for access to Editorial & Opinions? What were those sites’ results?

    I know about newspapers websites that charge for access to the answers to crossword puzzles or for e-mailed routine delivery of specific columns, but none that charge for access to their editorials.

    As a consultant, the question I’d ask is: Will charging for access to these webpages generate revenues that will overcome whatever overall website advertising revenues are lost from walling off those pages from free access? I think it won’t, but don’t yet have any data.

    2. The owners of a shopping mall here in America have asked if I know of any newspaper print circulation executives, current or retired, who might be willing to testify in a court case that pits a municipality against several major newspapers. The trick here is the testimony would be against the newspapers.

    The municipality leases a newsstand within one of its buildings. Several newspaper companies have places coin-operated newspaper vending machines within that building without the permission of the municipality or its building manager. When the lessee of the newsstand complained to the manager that the machines were cutting into his business selling those same newspapers to building visitors, the managers ejected the machines. However, the newspaper companies have sued the municipality, claiming a First Amendment right to place those vending machines within the municipal building.

    I’m a former reporter, editor, and publisher who defends legitimate claims of the that Amendment rights. But this is a case of business people misusing the First Amendment.

    The municipality isn’t forbidding the distribution of those newspapers (or opinion or free speech) within that building. In fact, the municipality has leased space to one of those newspapers’ own retailers who is trying to sell those newspapers within the building. But the newspapers’ publishers want to have even more distribution points within that building, without themselves leasing space for that purpose and regardless of the municipality’s right to control commercial usages of the building’s space (including vending machine space).

    The publishers also have an additional profit motive for positioning newspaper vending machines near a newspaper retailer– the publisher takes 100 percent of the sales price from newspapers sold from the vending machine rather than 50 percent from the sales prices from those sold by the retailer.

    So, I don’t think this isn’t a First Amendment issue. It’s a case of businesses (the newspaper companies) cloaking themselves in the First Amendment while trying to increase their product sales and margins, regardless of the property rights of the municipality that is already permitting distribution of those newspapers on that property. Cases like this distract, muddy, and confuse legitimate First Amendment issues.

    Unfortunately, few people, particularly newspaper circulation executives, are willing to provide expert testimony that this is not clearly considered a First Amendment case within the newspaper industry. Most circulation executives worry too much about their salaries or pensions. Many newspaper industry executives are reluctant to testify in any way against the interests of the industry.

    That’s too bad. When the newspaper industry starts cloaking its purely commercial interests under Constitutional guise, the industry is no better than other industry that newspaper editorials criticize for those purposes.

Why I’m at Critical Mention

Every few years in new media, I find a consulting client whose business plan, product or service, and managers are refreshingly sharp, competent, and unusually opportune. In those rare cases, and particularly if it’s a startup venture, I’ll trade some of Digital Deliverance’s consulting fees for deferred compensation or future equity in the venture because I’m confident of its potential. And if I like the venture even more after working with it for awhile, I’ll even taken a very active stake in it by joining the venture as an officer.

That’s been the case with Critical Mention.

Its founder & CEO Sean Morgan approached me last November, via an intermediary in London, about consulting to his company. Now, after three months of consulting to Critical Mention, I’ve joined the New York City-based company as its vice president of broadcast relations to implement the solution.

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What is Critical Mention? It’s a Twenty First century update of the old analog concept of a broadcast news monitoring company. Corporations hire it to monitor television news and talk shows for any mention of their corporations, products, products, and interests. It monitors all U.S. national network channels plus the local news broadcasts in the top markets.

Yet, rather than use its employees to monitor and videotape broadcast the way that traditional companies in broadcast monitoring do, Critical Mention instantly digitizes all the broadcasts. Because by law all U.S. broadcasts must all send closed captioning text streams with their videos, Critical Mention converts that stream into keyworded metadata associated with each minute of a broadcast. The result is a video news database that is searchable and can alert the moment a news or talk program mentions a corporation’s interest. Clients can then view these digitized, keyword-searchable broadcast via a secure, non-downloadable feed from Critical Mention.

Since Morgan started Critical Mention, more than 100 of the Fortune 500 companies (including 20 of the Fortune 100) have hired it to research and monitor their interests. Other clients include most major public relations firms, the offices of many U.S. senators, congressional representatives, a former president of the United States, and the federal departments of Defense, Homeland Security, and Transportation. Not bad for a two year-old company.

Continue reading Why I’m at Critical Mention

Talbott Leaves Editorship of Now Profitable Salon

Congratulations to David Talbott, who weathered the storm of the dot.com bust and guided his baby Salon.com to profitability. The New York Times today reports (registration site) that he’s now stepping down as its editor-in-chief but retaining the title of chairman. He’ll be replaced as editor by Joan Walsh, his longtime deputy.

Salon will also announce its first profitable quarter, a profit of $400,000 on revenues of $2.2 million. The online magazine now has 88,000 subscribers paying an average of $7.50 a quarter, plus had $2.2 million in advertising revenues last quarter. Salon lost $1.2 million last year, but is on the road to reversing that. The company’s stock went public in June 1999 soared to $15.13 a month later, but was trading for less than a quarter dollar for the past year.

The Times article points out that opinion magazines, whether in print or online, as generally losing propositions for investors. Salon was very close to going out of business during the past two years, but was thrown a life saver by rich individuals who gave the company total of $50 million. At its current rate of quarterly profitability, Salon will be able to repay those investors by 2035, nonetheless the public investors in its stock. Salon’s market capitalization today is $3.28 million, which is highly depressed compared to its $1.6 million annualized quarterly profit. That depressed price is the market’s way of saying Salon’s business model is still precarious.

Senior Vice President of Business Operations Patrick Hurley is the other person who deserves congratulation for keeping Salon alive and now profitable. He has done a remarkable job turning Salon’s finances around. A few years ago, I didn’t think a paid subscription model would work as well as it has for Salon. I thought that the site’s subscribership would quickly peak once its avid fans immediately signed up. However, 16,000 of 88,000 net subscribers are new this past year.

Nonetheless, as the Times story quotes Talbot’s replacement as editor:

    “I think that when we went to a subscription model, we lost a lot of casual readers,” Ms. Walsh said. “My job is to get people’s awareness up and let them know that you can read Salon for free.”

    Salon claims to have 3.4 million readers who visit the site every month, but it is not the buzz bomb of journalism it was when it was free. Slate, which was sold last year to the Washington Post Company, gave the subscription model a go a few years ago and threw up its hands. Now that advertising dollars are rushing toward the Web, it will be interesting to see whether Salon continues to charge at the door or will fling open the gates in pursuit of big audience numbers to sell to advertisers.”

Salon has a long way to go, but has soldiered on remarkably well.

Online Video Increased 80%, radio 76%, in 2004

AccuStream iMedia Research reports that the number of video streams online increased by more than 80 percent last year, for a total of 14.2 billion streams. Almost 80 percent of those streams were broadband (defined as 100 Kbps or higher).

One of the four factors cited for the growing number of video streams is that the number of broadband homes in the U.S. increased by 36 percent last year — broadband is now the predominant method of home access, accounting for 55 percent of all at-home users, according to Nielsen//NetRatings, which predicts that, if the broadband home rate continues, almost 70 percent of all U.S. home users will have broadband connections by the end of this year.

AccuStream says that music videos accounted for the greatest number of video streams (34 percent of the total), with news and information second (20 percent), and sports third (15 percent.

The report also found increased online radio usage. The average online ‘aggregate tuning hours per month’ in 2004 was 178.9 million, up 76 percent over 2003. AccuStream predicts growth in online radio use will trend ahead of video in 2005, growing 60 percent year over year.

What these increases may mean for online broadcasters should be astonishing.

OK, So What Will Be A Good Use of RSS for News Publishers?

[UPDATE: Some blogs which have linked to this item call it my vision of the newspaper of 2010. Calling it that is inaccurate. I believe that e-paper devices will be in common use by 2010 and that consumers will use these device for reading books, magazines, business reports, grocery lists, homework, etc. But whether or not the newspapers industry will take advantage of this by 2010 and make newspapers available on these devices is very much an intangible. Perhaps a few individual newspapers will, but I now don’t see much concerted work by the majority of the newspaper industry or its industry groups to prepare for these technologies.]

I believe that by the end of this decade we’ll begin to see portable, flexible (capable of being rolled up and put into a pocket or purse when not in use), handheld, color electronic display for sale to consumers.

If that sounds far-fetched, please understand that the first generation of electronic paper displays from Philips can display B&W text or flickering video and can be rolled into a cylinder less than one inch (2.54 cm) in diameter, and that Philips will start pilot plant production of one million such displays next year. Technical improvements on these display have been swift, so I believe that further improvements will lead to color, high resolution versions during the remaining half of the decade. Nonetheless, Philips (plus Sony and other manufacturers) are already planning sales of those versions in an even shorter time.

These electronic paper displays will have a CPU and a battery (note that today’s e-paper consumes a fraction of the electricity of contemporary LCD screens, allowing 3 to 21 hours on a charge, according to a report in Nature). The CPU and battery will probably take the form of a narrow cylinder bound along longest perimeter of the display, around which you can roll-up the display when not in use.

If these devices will contain a CPU and battery, why not also a wireless chip? The display will need outside connectivity and wireless is a better means for that than docking stations or plugs. GSM/GPRS wireless telephony chips have already become so inexpensive that disposable cell phones are on sale in Europe. Later this decade, broadband wireless (3G/UMTS) will be in use (it’s already being implemented in Hong Kong, Korea, and many European companies). Why not a chip that combines 3G/UMTS, Wi-Fi (whatever 801.11 alphabet exists then), and BlueTooth. Moore’s Law should reduce the cost of such of wireless chip to a reasonable level this decade.

And if this e-paper device then has wireless connectivity, how can news publishers or news broadcasters utilize that to automatically and routinely deliver their content into these devices to people who subscribe to those news organizations’ content, without those people having to remember to download the content each day?

Until six months ago, I thought the only likely answer to that question would be by publishers sending their content into these devices via the wireless telephony subcarrier frequencies that now provide SMS and MMS. That solution is still viable. However, RSS feeds delivered via wireless broadband GPRS/UTMS, Wi-Fi, or even BlueTooth might be a viable alternative.

These wouldn’t be today’s plain-text, graphically empty RSS feeds. Instead, this future form of RSS would encapsulate publisher’s or broadcaster’s entire daily report in full graphical, interactive layout. This would include all hyperlinks to video or other multimedia. Imagine a hybrid of digital edition and website; all the graphical capabilities and layouts of the former, plus the interactivity and multimedia of the latter. Click the photo, see the video, etc. Click the links embedded in texts and related stories appear, etc.

If RSS can be adapted to encapsulate radio or video programming into Apple iPods (as is now beginning to be done), then future versions of it should be capable of encapsulating entire, hybrid ‘converged’ editions.

Automatic and routine daily delivery would eliminate one of the fundamental flaws about publishing news via the Web: A web site doesn’t actually delivery anything; its contents instead away retrieval, which consumers have proven to do infrequently (the average online consumers retrieves it only 2 to 5 times per month, according to Nielsen//Netratings or ComScore Media Metrix). Like the automatic and routine daily delivery of a printed newspaper onto your doorstep or into your office, the newspaper (or broadcast) that you request would be automatically and routinely delivered daily into your e-paper device.

By automatically and routinely receiving an entire edition that is a hybrid of digital edition and website, rather than simply a website home page, the subscriber wouldn’t need to deal two with another flaws of the Web: (1) having to download Web pages one at a time and (2) the HTML’s graphical layout inferiority when compared to printed editions. By hybrid of digital edition and website, I don’t mean a 2MB to 20MB PDF file embedded with hyperlinks, but a file format that is thinner than that.

[Update: tthe presentation of these editions’ content — in other words, whether or not full graphics are visible — will be controllable by the consumer, not solely by the publisher as with today’s printed publications. These editions also would utilize tagged files formats that flow to fit device screensiz, rather than be fixed size like today’s digital editions or print editions. And the content in these editions will also be individualizable. I indeed don’t see any reason why an ‘edition’ must necessarily be from a single publisher.]

This hybrid of digital edition and website wouldn’t utilize Web banner ads. The major economic problem banner ads is that as an Web edition’s popularity grows, so does that website’s inventory of ad space that must be sold. For example, if the 60-page daily The New York Times somehow doubles its print circulation, the newspaper probably wouldn’t begin printing an 120-page edition. It instead would probably continue to print its 60-age edition but begin charging twice as much money for an advertising page in it. However, if NYTimes.com someone doubles it site traffic, the website now has twice as many advertising spots to sell. It can’t simply double its rate per spot, as it could with print. The economics of print ad rates operate according to the principle of scarce space, but the economics of banner ads operate according to the principle of surplus space. (This is the reason why NYTimes.com’s ad revenues haven’t increased 250X during the years that its site traffic increased that much.) The economics of electronic publication advertising need to brought back to the principles of scarcity.

This hybrid of digital edition would delivery interactive print ads. Neither the advertisers nor the publisher would need staffs to create or sell separate banner and print ads.

Electronically publishing an edition with a fixed number of pages (such as in a digital edition), ostensibly does that. Electronically delivering an entire edition intact also creates a package that websites don’t offer, a service that will more likely motivate subscribers to pay something for a subscription.

These are only some of the ideas involved.

Digital Newspaper Strategies at the Financial Times

A month ago, I’d mentioned Nigel Pocklington‘s appointment to the newly created role of director of online publishing for the Financial Times. From London, Kieren McCarthy points me to an article he wrote today in The Independent about Pocklington’s role at FT.com and thoughts about paid content and also publishing to handheld mobile devices. This good article also quotes the thoughts of Simon Waldman of The Guardian and Annelies van den Belt of the Times, and Alex White of the UK Association of Online Publishers about some of those same subjects.

Publishing to handheld devices is already beginning to transform the news business in South Korea and Japan. I believe that the first English-speaking market that it will transform is the United Kingdom, due to already widespread consumer adoption of fairly advanced mobile phone handsets and texting, fierce competition among the national dailies, and the follout of 3G (UMTS) services.

U.S. Newspaper Web Sites That Charge for Access

During my absence last month, a professor of journalism e-mailed me to review and correct his list of U.S. newspaper websites that charge for access. I do have a master list of daily newspapers throughout the world that charge for access, but I provide that information only to my consulting clients.

Nevertheless, here is a quick list of the U.S. daily newspaper sites. They fall into three categories:

U.S. Newspaper Websites That Charge All Their Users for Access

  • The Wall Street Journal, New York, New York, 2,106,774 weekday circulation.
  • Post-Register, Idaho Falls, Idaho, 23,829 wkday circ.
  • The Messenger, Madisonville, Kentucky, 8,864 wkday circ.
  • The Chanute Tribune, Canute, Kansas, 4,431 wkday circ.

    Those newspapers’ websites charge both their print subscribers and print non-subscribers for access. The median rates charged non-subscribers are US$6.00 per month, $18.00 per quarter, $36.00 semi-annually, and $72 per year. The median rates charged print subscribers are $9.98 per month, $13.50 per quarter, $27 seminannually, and $54 per year.

    I gives medians rather than averages for these three newspapers because of the huge relative size of the WSJ. For example, the average weekday circulation of these newspapers is 535,975 but the median circulation is only 8,864.

    The reason why the median rate charged print subscribers each month is more than that charged non-subscribers is simply a mathematical artifact arising from the Post-Register not offering a monthly rate to its print subscribers, who must instead pay quarterly.

    U.S. Newspaper Websites That Charge Only Non-Print Subscribers for Access

  • Daily Dispatch, Columbus, Ohio, 251,045, wkday circ.
  • Tulsa World, Tulsa, Oklahoma, 143,852 wkday circ.
  • Alburquerque Journal, Alburquerque, New Mexico, 110,531 wkday circ.
  • The Spokesman-Review, Spokane, Washington, 108,000 wkday circ.
  • Telegram & Gazette, Worcester, Massachusetts, 100,000 wkday circ.
  • The Gazette, Schenectady, New York, 49,890 wkday circ.
  • Santa Barbara News-Press, Santa Barbara, California, 42,406 wkday circ.
  • The Standard-Times, New Bedford, Massachusetts, 36,663 wkday circ.
  • Daily Hampshire Gazette, Northampton, Massachusetts, 18,000 wkday circ.
  • Aiken Standard, Aiken, South Carolina, 15,051 wkday circ.
  • Daily Messenger, Canandaigua, New York, 12,134 wkday circ.
  • The Newton Daily News, Newton, Iowa, 7,092 wkday circ.
  • Creston News-Advertisers, Creston, Iowa, 5,648 wkday circ.

    The average weekday circulation of those 13 newspapers is 69,234, the median is 42,406. The average rates charged for site access were $6.43 per week, $6.94 per month, $23.95 per quarter, $63.35 semi-annually, and $83.91 per year.

    The medians were $4.50 per week. $6.75 per month, $18 per quarter, $63.35 semi-annually, and $64.50 per year. Two newspaper also charge daily rates of $0.60 and $2.95 respectively.

    Those 13 newspapers require that non-subscribers pay to read any local stories. However, two other newspapers offer some of their local stories each day for free but charge non-print subscribers to read any other local stories:

    U.S. Newspaper Websites That Charge Non-Print Subscribers for Complete Access

  • Moline Dispatch, Moline, Illinois, 36,163 wkday circ.
  • Lewiston Morning Tribune, Lewiston, Idaho, 22,301 weekday circ.

    The average circulation of these two newspapers is 29,232. Both offer rates of $30 semi-annually and $50 annually. Lewiston also offers a $7 monthly rate.

    Overall, the average weekday circulation among these 19 newspapers is 163,284 but mainly due to inclusion of the WSJ. The median circulation is only 36,163. The average rates the 19 charge non-print subscribers are $1.78 per day, $643 per week, $7.60 per month, $21.57 per quarter, $45.74 semi-annually, and $75.36 per year. The median rates were $1.78 per day, $4.50 per week, $6.75 per month, $18 per quarter, $36 semi-annually, and $64.50 per year.

    How successful have these daily newspapers been at charging for content? I haven’t examined the finances of each one. However, Borrell Associates examined 15 of the 19 during 2001 and found that none had been able to generate paying online subscribers equal to more than 2.5 percent of their print circulation numbers.

    The other 1,437 daily newspapers in the U.S. continue to offer their content for free. I think they have good reasons.