Category Archives: Paying for Online Content

Pressing ‘Reset’

In 1993, after two decades working for newspapers’ print editions and for two of the world’s major international news services, I switched the focus of my career to working full-time on journalism’s transition from print and terrestrial or cable and satellite broadcasting to online. As would be for anybody working in a relatively new field, my portfolio was relatively wide, ranging from how online changes the consumption and hence business models of the news media and changes the nature and contents of journalism itself. I became a frequent contributor to the news media’s internal discussion lists and discussion forums about these changes; a frequent speaker at media industry conferences, and became a consultant helping news industry companies begin making those changes.

By 1998, however, I had become vocally dissident compared to most of the people working in that growing field. I realized — and had the data showing — that online distribution wasn’t going to be a lucrative venue for traditional publishers or broadcasters. By traditional, I mean companies that produce packages of Mass Media contents. Online couldn’t lucratively be used as merely an electronic’ or ‘paperless’ means of distributing such Industrial Era products. Online was different and much more than that. These predictions, which with every subsequent year have become more obviously valid, didn’t endear me to most people working in those traditional news companies. ‘I apologize, but I can’t have you speak at this year’s conference because what you said there last year depresses everyone,’ one conference organizer told me. Most people in the industry not only thought I was wrong but pointed to the record profits that Mass Media companies were making during the first few years of this century as evidence that I must be wrong.

If record profits were a true indicator of a company’s or industry’s future viability, then horse livery stables, the Penn Central Railroad, Enron, and Blockbuster Video, to name just a few industries or companies that went bankrupt only a few years after earning record profits, would be doing business today. Not only during 1998 to 2006, when Mass Media companies were posting record profits, but ever since the mid 1980’s, Mass Media’s audiences (as measured by readership or listenership or viewership if respectively print, radio, or television or cinema, and as measured daily if a daily publication or broadcast, measured weekly if a weekly publications or broadcast, etc.) have been declining per capita in the United States and other developed countries. Those declines started years before the Internet was opened to the public in 1992 via the first commercial Internet Service Provider to consumers. And Internet access to consumer exacerbated those declines in the U.S., particularly after 2004 when approximately half of consumers obtained ‘always-on’ broadband access to it, access which changed how they consume news, entertainment, and other information. The change in how they consume is the key.

Since the late-1990s, when companies such as Nielsen (formerly AC Nielsen) and ComScore began recording how and how often consumers online consume news, entertainment, and other information, it’s been obvious that consumers do so in far different ways than they had (or still do) consumer printed publications and over-the-air, cable, or satellite broadcasts. Although consumers spend increasingly more time online each month, they notably consume the websites of publishers of printed periodicals and those of traditional broadcasters far less frequently and far less deeply than they had used those same publishers’ printed editions or same broadcasters’ traditionally broadcast programming. Indeed, it’s become obvious that consumers use all Mass Media companies’ contents far less frequently and far less deeply that way.

The radically different ways in which consumers online consume news, entertainment, and other information, than they did those same contents in print editions or traditional broadcasts has had devastating effects on the industries and companies of Mass Media. The more of their consumers who switch from consuming printed editions or traditional broadcasts and instead consume online, the worse the situation of those industries and companies get. Although Mass Media companies expected their online consumers to pay either the same (or even a significant fraction of the) subscription or newsstand rates that those same consumers had paid before going online, most of those consumers did not and have not. Moreover, Mass Media companies have not generated sufficient revenues from online advertising to compensate those revenues lost from subscriptions or newsstand sales as their consumers went online. Nearly all Mass Media companies earn far less revenue from online than those companies had from printed editions or traditional broadcast. For example, although U.S. newspapers’ annual revenues from online grew from $900 million in 2004 to $3 billion in 2016, those newspapers’ revenues from print edition shrank from $42 billion to $19 billion, a net annual loss of nearly $21 billion or almost 50 percent.

My family in 1877 began publishing a daily newspaper in Connecticut. By 2004, I had convinced most of my family members who managed that newspaper to sell the company. However, one family member disagreed (we ultimately sold it last year for markedly less than it was worth in 2004). By 2006, I’d grown tired of consulting to an industry that I’d literally been raised in but that had become suicidally adverse to change, and the following year I joined both the faculty and the staff of Syracuse University’s S. I. Newhouse School of Public Communications. There I formulated and for the past ten years have been teaching a postgraduate course entitled “New Media Business’, a required course for New Media Management master’s degree students. It focuses on how the Individuated Media, products of the dawning Informational Era, have already begun replacing the Mass Media, products of the waning Industrial Era, as the predominant ways in which most consumers in developed countries now obtain news, entertainment, and other information.

It goes back to my 1998 paper (updated in 2006) entitled What is ‘New Media’? That paper stated that the ‘New Media’ isn’t simply any new device through which information can be conveyed. Nor is the ‘New Media’ printed or broadcast information placed (‘shoveled’) online. Instead, the ‘New Media’ is a more profound, potent, and pregnant concept than the Mass Media, which it already is superseding.

Mass production was an innovation of the Industrial Era: the mass production of books and later newspapers and magazines, and then over-the-air broadcasts of sound and video. The analog printing press (c. 1440) and the analog broadcast transmitter (c. 1896) respectively permitted the mass consumption in homes of printed information and the mass consumption of audio and later video. However, Industrial Era mass production technologies have a hallmark flaw: each produces at once one product for all its consumers.

For example, a daily newspaper produces the same daily edition for its readers on that day. (At a very large-circulation newspaper there might be some minor variations among that day’s editions, such as the New England edition of The New York Times including a different selection of stories than that day’s West Coast edition. However, most of the stories selected for inclusion in any of those editions will be in each that day.) Similarly, all viewers of a TV channel simultaneously see the same program at a given time. Mass production increases the reach (i.e., number of recipients) of a media product, but all recipients receive virtually that same product at that given time. Yet there is no way in which Industrial Era technologies can create a unique edition (or mix of broadcast programs in a schedule) for each recipient, a unique product containing a mix of stories or programs matching that individual’s unique mix of needs, interests, and tastes. However, the Informational Era’s computer technologies can create a unique mix of stories or programs that match an individual’s unique mix of needs, interests, and tastes, simultaneously for mass numbers of consumers.

Consider the Industrial Era media product known as a newspaper. A daily newspaper’s newsroom receives hundreds, if not thousands, of stories each day from its reporters, news wire services, and news syndicates. However, the Industrial Era production technologies used to print a newspaper, namely an analog press, which presses paper onto inked type, cannot from among those hundreds or thousands of stories produce a unique edition for each individual reader’s own unique mix of needs, interests, and tastes, the mix that makes that individual reader individual. It’s a technological limitation. Instead, those Industrial Era production technologies forces that newspaper’s editors to choose a limited number of stories which they think might best satisfy the greatest aggregate number of readers. That same selection of stories, which might range between 20 and 100 depending upon the circulation of that newspaper, goes to all readers. However, online technologies have no such technological limitation. Programmed with appropriate algorithms, a website can be made to identify each individual reader and match its mix of contents to match that individual consumer’s expressed needs, interests, and tastes. The ‘New Media’ are media products that, as with Mass Media, have mass distribution but, unlike Mass Media, customize the content each recipient sees for that recipient.

[I’m a stickler for accurate terminology because marketers often conflate or blur the real meanings of too many words and phrases. For instance, enter the work turbo in Amazon.com’s search box and among the results will be Turbotax, Turbo Tide laundry detergent, Gillette Mach 3 Turbo razors, etc., none of which actually have anything to do with turbines or turbochargers. Marketers misuse the real meaning of turbo. Likewise, too many misuse words and phrases such as digital, interactive, personalization, and New Media. For example, an unsolicited, commercial marketing postal letter mass mailed to tens thousands of individuals including me might begin with ‘Dear Vin’ but that personalized greeting doesn’t mean the letter is customized in any way to me and my needs, interests, or tastes. No more than a personalized golf ball on which my name appears is fundamentally any different than any other golf ball. Personalization isn’t customization. Customization of content is customization. And complete or perfect customization is call individualization, the latter word based upon the psychological term for that which makes a person a unique from others.]

Facebook, Spotify, Twitter, Pandora, Tencent QQ Flipboard, Vkontake, etc., are all examples of New Media companies. Their contents are individually customized for each one of their many users. Is Facebook a Mass Media company? No. Although Facebook reaches more than 2 billion consumers, the greatest mass reaches of any media company in history, each of those consumers simultaneously sees different contents than any other consumer. The mix each sees is customized to that consumer’s explicit ‘Like’s of contents and mix of friends on Facebook. Mass reach with true customization (beyond personalization although perhaps not yet individualization) are the hallmark of true New Media and of truly New Media companies.

If you were given the choice of either consuming a mix of contents based not upon your unique mix of needs, interests, and tastes, but upon the aggregate demographics people who live near you, which of those mixes would you prefer to consume? Most consumers will gravitate towards a mix that matches their own individual mix of needs, interests, and tastes. This is natural. That is why hundreds of millions of consumers, indeed billions of consumers, have been gravitating to customized media services such as those produced by Facebook, Spotify, Twitter, Pandora, Tencent, Flipboard, Vkontake, etc. Within just a little more than a dozen years, those companies’ Individuated Media products have superseded traditional Mass Media companies’ products as the predominant ways in which most people in developed countries obtain news, entertainment, and other information.

All media industries and all media companies need to understand and adapt to this epochal change in the media environment: the era of Mass Media is waning and the era of Individuated Media is dawning. If traditional media companies and traditional media industries are to survive, they must adapt their products, their production and distribution practices, and their business models, to fit this new era. What has made Facebook, Spotify, Twitter, Pandora, Tencent QQ Flipboard, Vkontake, etc., successful isn’t necessarily their managers or investors but that those companies, born of the Informational Era, happened to design their products and service toward individuation. Indeed, search engines such as Google, Baidu, and Bing, likewise are Individuated Media because each of their users uses them to find contents that match their individual needs, interests, and tastes, rather than those users simply relying on the generic or demographically aggregate mixes of contents that comes in the printed periodicals or broadcasts that they already receive. Individuated Media superseding Mass Media.

Today, I reset my career and hang my new sign as one of the world’s leading consultants about Individuated Media.  Although I continue to teach my postgraduate course at Syracuse University’s Newhouse School of Public Communications, it’s time for me to consult about what is blossoming rather than what is shrinking or withering. Embrace and develop the future rather than manage the fading past. Want to know about the true epochal change underway in the media environment? Then give me a phone call or email.

Chisholm States Why Charging For Newspaper Websites Is Self-Destructive

Nobody in the world knows more about newspaper operations than Jim Chisholm. That is a declarative sentence.

The former senior strategy advisor to the World Association of Newspapers (WAN) and former director of its Shaping the Future of the Newspaper project, as well as the former managing director of daily newspaper, Chisholm nowadays is a principal of iMedia, WAN-Ifra’s joint venture advisory service.

I declare his expertise and mention his credentials because no less than he has now declared daily newspapers’ attempts to begin for access to their websites. For example, The Times of London now charges online for access. Chisholm says that doing this simply “can’t work because the amount of money they will lose through lost advertising is far greater than the amount made up for with their paywall…If the Times are going to charge and the Guardian and Telegraph aren’t, readers are just going to move somewhere else because they [UK online consumers] are reading on average four newspapers a day online.”

So don’t take it from me, a graduate school professor of news industry New Media and newspaper consultant, that newspapers’ charging for online access is self-destructive. Accept the words of  Chisholm.

Advocates of newspapers charging for online access, people such as Rupert and James Murdoch, Steven Brill and L. Gordon Crovitz, or Walter Hussman, use superficial or specious logic to back their aim.

For instance, they say that because newspaper content is expensive to produce it shouldn’t be given away for free. Or that people have paid for that content in print, so that they should be willing to pay for it online. Or that people who’ve grown used to free access to newspaper websites simply must be ‘educated’ to pay. Or that the why fewer and fewer people are paying for printed newspaper is because those people can instead  get access to those newspapers’ content for free.

That’s unfortunate for them because Chisholm (and I also), people who say it won’t work, base our knowledge on not upon specious or superficial logic or wishes, but upon the newspaper industry’s own data and case studies from newspaper’s attempts to charge for online access during the past 19 years since the Internet opened to public use.

For example, download and look at the data in Chisholm’s PowerPoint slides from his speech Monday at the UK Society of Editors Conference. His slides prove why newspapers that charge for online access to their websites’ are shooting themselves in their guts.  Read Chisholm’s 12 slides (two of which are simply title slides). The folly of charging isn’t hard to understand.

Moreover, Chisholm addresses the real problem which newspaper people who advocate charging intentionally ignore:

“There’s no statistical evidence that the internet has damaged circulation any more than a whole range of other factors. I’ve not been able to find any evidence of this anywhere, and I’ve studied this in a dozen different [international] markets.”

Publishing a newspaper’s content online for free isn’t really why newspaper printed circulation is declining. Likewise, publishing a newspaper’s content online — whether for free access or paid access — won’t stop those declines.