Posts Tagged ‘newspapers’

Digital disruption in action

October 19, 2011

This cute video making the rounds on the Internet that I’ve posted below is a perfect illustration of disruption in action.  Not only must print industries like newspapers and magazines grapple with digital disruption of their business models that has eroded competitive advantages in creation and distribution of news and information and advertising, but  they must also take into consideration the new customer segments digital technology has created.

As this video shows, digital natives are born with a “digital first” mindset.  They simply do not have the same affinity for print that previous generations may have had.  One of the early mistakes newspaper executives made with the Internet was to try to recreate the print product online, failing to ignore and capitalize on the advantages afforded by an interactive medium.  Almost a decade ago, when he was a Harvard Business professor, Clark Gilbert (he now runs Deseret Media), conducted a multi-case study of 8 different newspapers.  The vast majority of the newspaper’s online content (75-95%) was a recreation of the print product at all but one of the newspapers.

Newspapers have certainly come a long way since Gilbert’s 2002 study.  Now, wireless mobile distribution affords newspapers another opportunity to tackle digital disruption head on. Tablet devices like the iPad and smartphones like the iPhone and Droid devices afford newspapers the opportunity to create new digital products for digital consumers like this baby below.

Wireless devices disrupt newspapers

October 4, 2011

“The faster the disruption of print by tablet happens, the faster newspaper owners can jettison print expenses and get closer to sustainable (but not yet proven) mainly-digital business models.”

-Ken Doctor, newsonomics blog post

Newspaper executives and industry observers are starting to pay attention to two significant developments that are altering their business: disruption and the continued emergence of wireless mobile devices (specifically smartphones and tablet devices).

In a blog post on “the newsonomics of disruption,”  digital news analyst Ken Doctor writes about tablet disruption of tablet, tablet disruption of laptops, tablet disruption of smartphones and most importantly, local news disruption and tablet news disruption.

“Digital disruption is now increasing,” according to Doctor. “Audiences are even more up for grabs than they were a couple of years ago. Advertising and sponsorship dollars, pounds and euros, are also being more greatly swayed by these disruptive winds than they were in 2009.”

In an article first published in Editor & Publisher and republished on his Reflections of a Newsosaur blog, Alan Mutter writes that “publishers have not failed to embrace disruptive experimentation because they are not smart enough to do so. The video embedded below (note: also embedded on this blog) is proof that the folks at Knight Ridder in 1994 had a pretty good idea of what the future might hold. But the newspaper business historically was so successful that publishers didn’t need, or want, to change much about it. Consequently, risk-taking and experimentation took a back seat to business as usual. ”

“With print circulation and advertising revenues falling to ever-lower lows for each of the last five years, newspapers now must find new ways to cost-effectively create content; build new web, mobile and social audiences, and monetize their traffic as profitably as Facebook and Google do,” Mutter continues. “To do that, they will have to bring the creative chaos of Silicon Valley into every corner of their businesses. This means launching multiple, carefully planned initiatives across the full array of print and digital media.”

These newspaper disruptions brought on by wireless mobile devices is precisely what I’m looking at for my dissertation.  I’m interested not only in the disruption to newspaper business models, but what publishers are doing about it.  A good headline for an article about my work would be “Wireless devices disrupt newspaper business models, publishers respond.”

Here’s a brief summary of my ongoing dissertation research:

Firms are now operating in hypercompetitive, emergent, dynamic, unstable, highly volatile environments in which a sustained competitive advantage may no longer be possible.  Disruptive innovation (disruption) may alter not only business models, but the strategic processes used to address the disruption.

Disruptive innovation can either disrupt or sustain a firm or industry either through business model innovations or radical product innovations.  There is not one clear definition for business models, but revenue streams and consumer values are vital to most business-model concepts.  Circulation revenue and advertising in print have long made up the traditional newspaper business model now being disrupted by the Internet and mobile devices. Whereas the Internet served as the first wave of disruption to newspaper business models, wireless mobile devices represent a second wave of disruption.

Newspapers are now experimenting with emerging models for online and mobile content, but have a history of failing to act on risk-taking experimentation that brings about change even though companies like Knight Ridder designed a futuristic tablet nearly two decades ago that closely resembles today’s iPad, and other newspaper companies commissioned a group to address disruption.  Wireless mobile devices have emerged as a critical news delivery platform and offer potential to newspapers at the same time as they continue to disrupt existing newspaper business models.

The highly uncertain “emergent” disrupted environment, characterized by evolving business models, unclear industry boundaries, new competitors and consumer preferences that are not well known, can have a dramatic impact on the managerial process of newspaper managers.  Newspaper managers’ decision speed, participation, comprehensiveness, and perceptions of the environment can affect the business model implemented to address business model innovation in order to gain a competitive advantage.  My dissertation explores these internal strategy processes newspaper executives are using to develop strategies and tactics to address mobile disruption.

 

The value of newspapers lost on the public

September 30, 2011

While the latest study by the Pew centers and Knight Foundation provides a comprehensive look at “how people learn about their local community” , one of the most troubling findings is how little people value a primary provider of that information.

More than two-thirds of surveyed respondents told pollsters that if their hometown newspaper disappeared, it would not seriously hurt their ability to keep up with the news.  This finding is telling because it demonstrates that first and foremost newspapers have done a poor job of  illustrating the value of their reporting.  As a paid content advocate, I would argue that a decade+ of giving content away for free online has brought newspapers to this point.  To say that putting news content online for free has tremendously devalued that content would be an understatement.  Readers have been conditioned to believe that newspapers’ best content is not worth paying for.   Is worth nothing. Nada. Zip. Zlich. Zero.

“The assumption seems to be that this information is a commodity, that it’s free and it’s omnipresent,” Tom Rosenstiel, principal author of the Project for Excellence in Journalism report told The Los Angeles Times. “That may not be true, particularly with this civic information that newspapers are primary in producing. It’s quite possible, if the newspaper disappeared, that the information would disappear along with it.”

Rosenstiel links what should be contradictory concepts in one sentence.  Even in the most simplest of terms, a commodity is a thing of value.  In economic terms, consumers pay a price for what they value.  A free commodity is an oxymoron.  And yet by failing to charge for online content, newspapers have been peddling a free commodity for years.

The Pew study should serve as the latest warning siren to beleaguered newspaper executives.  As the Los Angeles Times’ James Rainey writes “newspapers could do a lot more to tell their unique stories to the public.”  True.  But they also need to send a message that their content is highly valuable.  That it truly is a commodity.  That the content is worth paying for.  Charging for online content restores the value proposition that has been obliterated by FREE content.

Watch the last 30 seconds of this humorous but biting commentary on student journalists today (you can start around the 2:35 mark).  The fact is that not even journalism students are instinctively willing to pay for news content because of the free online alternatives.

 

 

If newspapers value their content so little that they don’t even ask the reader to pay for it, that they aren’t even willing to put any price tag on the toils of their labor, why should we expect the audience to find value in that work?  Thus, newspapers are faced with an audience who cares so little for their product that they feel they would not be phased without them. Newspapers need to show the public otherwise.  But first newspapers need to value their own product before they expect others to do the same.

Social media in journalism

September 22, 2011

Here’s the slides from my presentation on social media in journalism that I delivered this afternoon at the Georgia Scholastic Press Association annual conference. Enjoy!

Stories From and For “Followers” and “Friends”

Mixed models: How micropayment can work with freemium

April 1, 2011

Note: The International Symposium on Online Journalism (ISOJ) is taking place right now in Austin, Texas.   Last year we unveiled our “Modified News Micropayment Model” at that very conference.  Panelists discussing paywalls today stressed the need for multiple business models.  I couldn’t agree more.  Now seemed like an appropriate time to write this post that I’ve been wanting to do for quite some time. Here goes.

When my colleague and I developed our “Modified News Micropayment Model” (now in press, International Journal on Media Management) we wrote that it was but one new business model for online news.  Our micropayment model not only could be, but should be, used in tandem with other digital business models.  With the launch of the New York Times’ “paywall,” the news industry’s focus has been on its tiered, metered approach.  Other smaller news organizations, such as Morris Communications’ Augusta Chronicle are following suit with similar metered approaches.

Such a freemium model, while promising, leaves out a valuable audience segment and is not without  flaws.  A micropayment system can address the flaws and fill in the gaps created by a freemium metered approach.  The good news is that micropayment can work with freemium.  Let me tell you how.

What metered approach is not

The metered approach is predicated on the old notion that news consumers will seek out the news they want to consume.  It relies on the newspaper website as a destination. The reader can have 20 free views when they come to the site. Of course, in today’s news ecosystem news often finds the reader rather than the reader finding the news.  Metered fails to capitalize on, use and harness the power of referral and sharing that takes place on the Social Web.

The existing metered approaches are also designed to get new digital subscribers.  With online content, there are a number of users who come to the site who are not in your market, who only want to read a few articles from your site (since it found them and they are not seeking out your site, brand or content) and who will never become a subscriber to your publication.  Micropayments allow for news organizations to capture some revenue from “one off” users.

Another downside to the prevailing freemium model is that it does not place a premium on valued content.

Freemium + Micropayment = Success?

Micropayment can be implemented to serve a variety of needs and in a variety of ways in tandem with freemium metered approaches:

1)Metered micropayment:  You can set benchmarks that would activate a switch toward micropayment per article.  For example, once an article that is free on your website reaches X number of pageviews, you can start to charge for that piece of content.  If a story happens to go viral, you can (literally) capitalize on the buzz and additional traffic.  John Paton, CEO of the Journal Register Co. has talked about the importance of news organizations stacking “digital dimes” and such a “metered micropayment” approach allows news organizations to monetize their most popular stories.

2)Exclusive, premium content:  You can be selective with the types of content you offer for free and the types of content users must (micro) pay for.  If your news organization offers exclusive, high quality premium (presumably hyperlocal) content that readers cannot get anywhere else, why not charge for it?  Implement a micropayment component for your most prized content.  The Augusta Chronicle offers a perfect example.  In just a few short days, The Masters golf tournament will roll into town.  The Chronicle owns that story because it is in their backyard.  Golf lovers who do not live in Augusta but want to read stories they can’t get elsewhere will likely (micro) pay for individual stories.

3)Social readers: Micropayments can serve a unique audience– users who do not want to subscribe to your newspaper.  This may be because they live out of the market.  This may be because they want to read a specific piece of content that found them (perhaps by the recommendation of a friend), not that they actively sought.  Micropayments work better as a monetization strategy for active Social readers, rather than destination-seeking Web viewers.

4)The one-off news event.  This is not an everyday event, but from time to time a breaking news story happens in your community that may attract regional, national or even international attention.  You may suddenly find foreign readers clamoring for your coverage.  Why not have a mechanism in place to make money off the increased traffic and attention your paper will receive if and when these “one-off” events find their way to your town?  Micropayment serves that need.

These are just a few examples.

The bottom line is that micropayments can work and work well with other approaches.  Thoughts?

 

 

The birth, death and resurrection of micropayments

March 7, 2011

Are micropayments dead? They were never born.- Jeff Jarvis, blogger and CUNY J-school prof

My favorite panel at the paidContent 2011 conference was “Paying it Forward: Paywalls, Meters & Subscriptions,” which consisted of an all-star panel including Journalism Online Co-Founder (and former Wall Street Journal publisher Gordon Crovitz), Financial Times.com Managing Director Rob Grimshaw, Atlantic President Justin Smith and Google’s Director of Strategic Partnerships Jim Gerber.

Toward the end of the 50-minute talk, moderator Robert Andrews, UK editor for paidContent, asked a question about micropayments. Surprisingly, most of the panelists were dismissive of micropayments. Gerber, who has helped lead Google’s OnePass initiative, said they had not heard much interest in micropayments from the public because of the friction involved in transactions.

Despite early press materials indicating the inclusion of micropayments in its PressPlus platform, Journalism Online continues to primarily advocate for a metered freemium model.

“Down with paywall, up with freemium,” was Gordon Crovitz’ final salvo during the session.

Grimshaw told me after the conference that the Financial Times’ experiments with micropayments were unsuccesful, but I suspect that has more to do with the nature of its business content (in other words, people are still likely to seek out business news, rather than have it find them as is the case with other types of news in the social web environment).

If the expert panel is any indication, then mainstream newspapers appear to have given up any hope in trying out micropayments just two years after headlines proclaimed them as the way to “save newspapers.”

This, in my humble opinion, would be a huge mistake.  Just a year ago, my colleague Jameson Hayes and I outlined how micropayments could work for newspapers (opens PDF document) at the International Symposium on Online Journalism (a more advanced and refined version of that paper is in press in the International Journal on Media Management).

The bottom line is that the only way to tell whether micropayments will succeed as a viable model for online (and mobile and tablet) news is to try them.  As CUNY professor Jeff Jarvis tweeted during the conference, “are micropayments dead? They were never born.”

This isn’t entirely true.  As we point out in our paper, micropayments were tried in the late 90s and early 2000s to no avail. A 2000 Boston Globe article, for example, shouted “MICROPAYMENTS COULD BE THE WEB’S NEXT BEST HOPE.”  Flooz, Beenz, CyberCash, Bitpass, Peppercoin and DigiCash are a few examples of failed micropayment companies from what can be considered the Micropayment 1.0 era.

The difference between Micropayment 1.0 and Micropayment 2.0 is the emergence of the Social Web.  Newspapers may be  (wrongly) hesistant to adopt micropayments, but that does not mean they are not alive and well.

Micropayments have thrived for song and video downloads on iTunes, and micropayments are poised to become even more prevalent for digital goods, gaming and virtual currencies with big time players like Facebook (Buy with Friends)and PayPal (Digital Goods) enabling them.

Not all newspapers have given up on micropayments, either.  At 99 cents for a week’s worth of issues, The Daily is basically a subscription micropayment option.  Hong Kong-based CarrotPay also offers microsyndication technology for newspaper companies to enable seamless micropayments.

Mainstream American newspaper companies may be reticent to try micropayments as a new digital pricing strategy, but there are at least two other huge underserved markets that could experiment with the new business model. Non-American media markets are ripe for micropayments (Google’s OnePass is already in play in many European countries), as are community daily newspapers (under 50,000 circulation) and non-dailies.

Don’t write off micropayments for newspapers just yet.  Newspapers are perfectly poised to contribute in a big time way to the resurrection and rebirth of micropayments on the Social Web.  The models and technology are both in place.  All that is missing are willing newspaper partners.

Now is the time for newspapers to act.

Of Elephants and Field Mice: The Battle over Paid Digital Content Distribution

March 6, 2011

What happens when you get a former newspaper publisher leading the charge to enable newspapers’ paid digital content efforts in the same room as a top executive of a technology company doing the same thing?

In a classic battle between Old Media and New Media sensibilities, this situation unfolded last week at the paidContent conference held at the New York Times’ EducationCenter.

The result? Some great analogies, a frank, direct offensive by the newspaper guy and a polite, politically correct defensive response from the tech guy.

Gordon Crovitz, former publisher of the Wall Street Journal and co-founder of Journalism Online and its PressPlus system didn’t hold back his criticism of the pricing structures established by Apple and Google.  Of course, PressPlus is a direct competitor of the two giant technology companies.  For an excellent primer of what’s at stake, read Newsonomics Ken Doctor’s recap on the Nieman Journalism site.

Crovitz called Apple (with its 30 percent cut) and Google (with its 10 percent cut) “giant elephants” who are dueling it out and controlling data with their rules and regulations to distribute content on their platforms and through their distribution systems.  Contrasting his company’s product with theirs, Crovitz said that the PressPlus approach allows publishers to own the data and provide consumers access to their brands across all digital channels. The market will naturally move in that direction “if the elephants in the room don’t squash publishers,” Crovitz said.

Jim Gerber, the director of strategic partnerships for Google, took offense at the characterization of being a giant elephant.

“We’re not an elephant,” he said. “We’re not trying to crunch field mice.”

Gerber, who has played a lead role in developing Google’s OnePass (formerly called NewsPass), said that “no one has cracked the code yet” and that there are lots of ways people adopt a product.  OnePass aims to allow access across platforms, Gerber said.  Gerber said that the competition is in its early stages but he classified it as being healthy.  Multiple markets and approaches will help the market evolve so that consumers can buy the products they want and need, Gerber said.

Crovitz belives the key question is whether “the elephants” will permit easy consumer relationships.  Crovitz said that if he watches an HBO show on a Sony television, Sony does not expect HBO to pay them for having the content displayed on their televisions.

Crovitz said the industry is facing an unsure moment but that customers are clamoring for all-access digital models.  The reasons that consumers subscribe to news is not device-specific, Crovitz said, adding that intermediaries should get out of the way and let publishers set their own digital pricing structures.

The economics of The Daily: 1, 1 million, 1 billion

March 4, 2011

The Daily, the Rupert Murdoch-funded first ipad-only newspaper/newsmagazine is doing well, according to publisher Greg Clayman.

Clayman spoke at the annual PaidContent conference at the New York Times yesterday.  This AFP article provides an excellent recap of Clayman’s talk.  Clayman said that “hundreds of thousands” of people have downloaded The Daily app since the publication launched a month ago. He wouldn’t disclose how many people have paid for the app (the free trial period for The Daily has been extended for a few more weeks), but joked that it’s “more than 1 and less than a billion.”

Earlier in the conference, Forrester analyst Sarah Epps said that The Daily would need close to 1 million subscribers to recoup the investment.

I had the opportunity to chat with Clayman briefly when he arrived at the event. We talked about some of the technical glitches that have occured (they’ve released three versions to correct early technical issues).  As I’ve blogged about before, the design and hands-on aspects of The Daily are impressive.  I also commend The Daily for creating a hybrid micropayment subscription model.

I enjoyed the opportunity to meet the man leading this new digital publishing effort.

 

The Daily dose of hands-on news

February 4, 2011

Now that The Daily, the first iPad-only newspaper, has arrived I wanted to provide a quick analysis based on my first impressions.  For starters, the iPad is clearly a game-changer for news designers.  The content is designed specifically for the iPad and the interactivity is impressive.  The Daily  is visually appealing with fun hands-on elements and in-app video streaming.  The Daily gets high marks for its interactivity, design and ease of use.

No offense to those involved in the publication, but the journalistic quality of the content is average at best.  Of course, you get what you pay for.  At 14 cents per issue, I don’t expect the type of quality, explanatory, long-form interpretative journalism that I could find in, say, The Wall Street Journal or The New York Times.  In pricing The Daily so cheap and devaluing the content it offers, Murdoch may actually be improving the value of his other newspapers.  I’m certainly willing to pay a premium price for content from The Journal.  The Daily dishes up journalism-lite.  But the lack of breadth and depth make for a quick daily read.

In pricing The Daily at 99 cents per week, Rupert Murdoch has effectively invented a new digital business model.  In essence, Murdoch has created a subscription micropayment.  For news content, micropayments are the idea of consumers paying pennies or less per article.  For non-news content, micropayments are usually priced from about $1 to $5.  The iTunes model of charging $1.29 per song download or the mobile modile of selling ringtones for a few bucks are examples of successful media micropayment models.  The Daily, however, offers 100 iPad pages of content per day in a weekly subscription rate of 99 cents.  Subscription strategy meets micropayment price.

The pricing point and iPad-only distribution strategy could very well work. The Daily could prove to be immensely popular and ultimately a success. But what works for one of the world’s biggest media barons does not a successful business model make for the rest of the industry.  While there’s a lot to like about The Daily, the product still remains a destination-seeking site.  You must find the news by downloading the app, pay the subscription and log on and in, rather than news stories finding you through social networks.

I have serious doubts that this app-fueled micropayment-subscription hybrid iPad-exclusive content model could ever work for the majority of the newspaper industry.  Certainly, most of the local daily newspapers with circulations less than 50,000 would lack the resources and capital to create and staff such a publication.  Few, if any, would be able to draw enough readers to justify the ridiculously low pricing point.  This does not even factor in all the non-daily community newspapers with strong print products.

The purpose of offering digital content and digital pricing structures is to obtain new paying customers.  For Murdoch, The Daily will almost certainly achieve that aim.  Other newspapers, with strong print subscribers but few paying online customers, need a platform that will allow them to earn revenue off new readers whose stories find them through the Social Web.  Micropayments are needed.

Imagine this scenario: You are the owner of a community newspaper.  An odd tragedy strikes your town that captures national attention. The national media converge on your town to cover the story, but no media outlet can provide the same level of coverage as you.  Your reporters write compelling, original pieces that no other media outlet carries but the public is clamoring to read.  In essence, your paper has a viral news story.  With a micropayment platform, you could charge a small amount per article.  Suddenly, you have a new revenue stream from thousands of new readers. Granted this is a one-off source and you wouldn’t want to bank on a once-in-a-lifetime occurrence to add money to your coffers, but the principle ideas behind this scenario remain relevant.

The bottom line about The Daily is it is right for Murdoch, (mostly) good for journalism, but the wrong approach for the newspaper industry.

Nevertheless, I look forward to seeing what The Daily continues to offer. I will gladly plunk down 99 cents each week to read it.  No, scratch that.  I will gladly pay the weekly price to experience The Daily.

Wilkinson at ISOJ: Newspapers must adapt in “age of micro media”

April 23, 2010

AUSTIN, TEXAS_ Newspapers have to adapt to the “age of micro media” in which every unit of content must have value, INMA chief Earl Wilkinson told attendees Friday morning at the International Symposium on Online Journalism.

Determining their content’s value should be a top priority for newspapers, because content value can serve as a proxy for engagement in the Digital Age, Wilkinson said during a fiery, impassioned presentation.

Even if  newspapers never charge for content, segmenting “content platform,  audiences” forces a market approach to growth and places them in the context of today’s “abundance of information,” Wilkinson said.

The traditional business model will not survive,  Wilkinson said.

“We clearly have reached a point where we need alternative funding sources,” he said.

Advertising will account for a smaller portion of a newspapers’ revenue, but won’t disappear entirely, Wilkinson said.  The pure value of content, however, keeps changing.  Newspapers must find ways to monetize content, which will require significant leadership and industry collaboration, Wilkinson said.

The global recession accelerated changes to the news industry.

“It’s transformed our business models and we’re never going to go back,” Wilkinson said.

Newspapers are going through transformation and evolution, but they’re not going to die, Wilkinson said.

The future media landscape will consist of less advertising and smaller companies, Wilkinson said. There will be less journalists, but more editors as print complexity is replaced by a digital one.  According to Wilkinson, newspapers should invest more in sales, marketing and research, while focusing on product development and speedy delivering of news enhanced through social media.

Wilkinson says that  “Value= Audience + content + platform”

I found myself often nodding in agreement during Wilkinson’s presentation because, in my humble opinion, he “gets it.”  His presentation, more than any other, has me fired up to present my paper proposing a new business model tomorrow.