Tag Archive for 'future of media'

The change brought by the Internet is a correction

I was sitting at a restaurant with Mick Liubinskas of Pollenizer the other week, who I regard as one of the best minds in the Australian tech scene. Mick in a previous life used to run marketing at Kazaa, which was the music-industry’s anti-Christ during the early 2000s. Kazaa was one of the higher profile peer-to-peer technologies that made the distribution of music so widespread on the Internet.

I said to Mick how one of the things that plagues my thinking is trying to work out the future business models for content. Naturally, we ended up talking about the music industry and he explained to me the concept of Soft DRM which he thought was one avenue for the future but which the record labels rejected at the time.

DRM

DRM or Digital Rights Management is the attempt by companies to control the distribution of digital content. Hard DRM places control over access, copying and distribution Рwhile soft DRM does not prohibit unauthorised actions but merely monitors a user’s interaction with the content.

The basic difference, is that Hard DRM protects copyrights by preventing unauthorised actions before the fact, while Soft DRM protects copyrights by giving copyright owners information about infringing uses after the fact.

As I questioned Mick on this, he compared it to us sitting in that restaurant. What’s stopping either of us from getting up and not paying the bill? The restaurant let’s us sit, serves us food – and only at the end do we pay for the service.

Hard DRM is not congruent with our society
Part of the music industry’s problem is that they’ve focused too much on Hard DRM. And that’s wrong. They could get away with it in the past because that’s how the world worked with controlled distribution lines, but now that world no longer exists with the uncontrollable Internet.

In a restaurant, like any other service industry, the risk that you don’t get paid is real but not big enough to prevent it from operating. Our social conventions are what make us pay that bill, even though we have the ability to avoid it.

To insist on the Hard DRM approach, is going against how the rest of the western world works. Our society is philosophically based on the principle of innocent until proven guilty. Likewise, you pay after a service has been rendered – and you pay for something that has unique value (only scarcity is rewarded). What existed with the media world was unique over any other industry, but unique purely due to technological limitations, not because it was genuinely better.

The record companies (not the artists) are hurting
Artists practically sell their soul to get a record deal, and make little money from the actual albums themselves. This change for music is really a threat to the century-old record company model, of which the Internet has broken their distribution power and their marketing ability is now dwarfed by the potential of social media.

Instead of reinventing themselves, they wasted time by persisting with an old model that worked in the industrial age. They should have been reflecting on what value people will pay for, and working out the things that are better than free. Unfortunately, the entire content business – movies, television, radio, magazines, newspapers, books and the rest – have made similar mistakes.

The Internet is transforming our world and every object in our lives one day will be connected. In some ways, the great change brought about by the Internet is actually a step back to how things used to be (like it is for music where the record model was an anomaly in our history). Even the concept of a “nation state” is a 20th century experiment pushed after the first world war, where for our entire history prior to that, our world was governed by independent cities or empires that governed multiple ethnic nations – the Internet is breaking down the nation-state concept and good riddance because its complicated our lives.

Future

We need to clear the white board and start fresh. The Internet is only going to get more entrenched in our world, so we must re-engineer our views of the world to embrace it. With content, distribution was one of the biggest barriers to those industries to get into, and now it has been obliterated. Business models can no longer rely on that.

We should not let the old world drive our strategies for business because the dynamics have changed completely. If you are looking to defend yourself against an oncoming army – stop polishing the sword and start looking for the bullets to put in the machine gun.

The evolution of news and the bootstrapping of the Semantic Web

The other month (as in, the ones where I am working 16 hour days and don’t have time to blog), I read in amazement a stunning move made by the New York Times. It was the announcement of its first API, where you could query campaign finance data. It turns out this wasn’t an isolated incident, as evidenced by yet another API release, this time for movies, with plenty more to come.

Fake New York Times newspaper That is massive! Basically, using the same data people will be able to create completely different information products.

I doubt the journalists toiling away at the Times have any idea what this will do to their antiquated craft (validating that to get the future of media you need to track technology). As the switched on Marshall Kirkpatrick said in the above linked article for Read Write Web "We believe that steps like this are going to prove key if big media is to thrive in the future."

Hell yeah. The web has now evolved beyond ‘destination’ sites as a business model. News organisations need to harness the two emerging business models – platforms and networks. Whilst we’ve seen lots of people trying the platform model (as aggregators – after all, that is what a traditional newspaper has been in society), this is the first real example I have seen of the heritage media doing the network model. The network model means your business thrives by people using *other* peoples’ sites and services. It sounds counter intuitive but it’s the evolution of the information value chain.

This will certainly make Sir Tim Berners-Lee happy. The Semantic Web is a vision that information on the web is machine readable so that computers can truly unleash their power. However this vision is gaining traction very slowly. We will get there, but I am wondering whether the way we get there is not how we expect.

The New Improve Semantic Web: now with added meaning!

These API’s that allow web services to reuse their data in a structured way may just be what the Semantic Web needs to bootstrap it. There’s an assumption with the vision, which is that for it to work, all data needs to be open and publicly accessible. The economics are just not there yet for companies to unlock their data and my work this year with the DataPortability Project has made me realise to get value out of your data you simply need access to it (which doesn’t necessarily mean public data).

Either way, for me this was one of the biggest news events of the year, and one that very quietly has moved on. This will certainly be something worth tracking in 2009 as we see the evolution of not just the Semantic Web, but also Social Media.

The future of journalism and media

Last week, Deep Throat died. No, not the porn actress but the guy who was effectively in operational control of the FBI during the Nixon years. Mark Felt was a guy who was in line to run the FBI from his number three position, but was passed up by Nixon who brought in an outsider. Whilst people often remark that the Russian government is controlled by the intelligence services, it’s worth reflecting that the poster-child of the free world has its own domestic intelligence services yielding too much power over the presidents. Nixon broke tradition for the first time in 48 years, doing something other presidents couldn’t do: it was appointing an outsider to run the agency. And so lays the roots to his downfall, in one of the most dramatic episodes in the mass media’s history – a newspaper brought the downfall of one of the the most powerful men in the world.

Felt’s identity has been protected for decades, and was only made public three years ago, arguably because someone else was going to expose him and he beat them too it. In an interesting article by George Friedman at Stratfor:

Journalists have celebrated the Post’s role in bringing down the president for a generation. Even after the revelation of Deep Throat’s identity in 2005, there was no serious soul-searching on the omission from the historical record. Without understanding the role played by Felt and the FBI in bringing Nixon down, Watergate cannot be understood completely. Woodward, Bernstein and Bradlee were willingly used by Felt to destroy Nixon. The three acknowledged a secret source, but they did not reveal that the secret source was in operational control of the FBI. They did not reveal that the FBI was passing on the fruits of surveillance of the White House. They did not reveal the genesis of the fall of Nixon. They accepted the accolades while withholding an extraordinarily important fact, elevating their own role in the episode while distorting the actual dynamic of Nixon’s fall.

Absent any widespread reconsideration of the Post’s actions during Watergate in the three years since Felt’s identity became known, the press in Washington continues to serve as a conduit for leaks of secret information. They publish this information while protecting the leakers, and therefore the leakers’ motives. Rather than being a venue for the neutral reporting of events, journalism thus becomes the arena in which political power plays are executed. What appears to be enterprising journalism is in fact a symbiotic relationship between journalists and government factions. It may be the best path journalists have for acquiring secrets, but it creates a very partial record of events — especially since the origin of a leak frequently is much more important to the public than the leak itself.

Now consider my own experiences as an amateur journalist.

After several years of failed media experiments, my university enterprise (I did it as a society, not as a company, because I want to treat this as my "throw-away" startup to learn but not be tied down when I left) at changing student media suddenly hit the gold mine: we created an online weekly "news digest" that literally became the talk of the campus for those in the university administration and the people surrounding it. An elite audience (not the 40,000 University of Sydney crowd), but the several hundreds of people that theoretically represented the campus and ran the multi-million dollar student infrastructure. Of the 23 editions we created that year, we literally had people hanging off their seats for the next edition: trying to predict the new URL, and e-mails with quotes of it sent out within hours of publishing.

The News Digest, October 29th 2004.

It was interesting because of how the product evolved during its first year. I started it thinking it would be a cool thing to have a summary of the news, once a week, in a "digest" format. The news was split arbitrarily as student, Australian and international. However within a few editions, the student news segment was no longer just about the latest party but about confidential information and the core reason why people read it. In the second edition I wrote:

USYD UNION : Chris Farral has been hired as the Union 's new General Manager. Farral has a highly reputable background in the ABC and various community-based groups. It has been a decade since the Union 's last General Manager was appointed, and as such we hope Farral will bring a new flair and vitality to the position. Chris also happens to be the father of Honi Soit editor Sophie. Does this mean an end to critical analysis in Honi's reporting of the traditionally stale and bitter Union ? No. That would require there to have been critical analysis in the first place. (EB)

Cheekily written but an innocent attempt to report news. Someone saw that, realised we had an audience, and in edition three we revealed:

SYDNEY UNIVERSITY UNION: Last week we reported that Chris Farrell was appointed the new General Manager of Sydney University’s student union. This week we can reveal that close to $50,000 was spent on external recruitment agencies to find Mr Farrell. Where was he hiding? The selection panel was evenly split for two candidates: Paul McJamett, the current Facilities Manager and previously expected next-in-line for the job, was supported by Vice-President Penny Crossley, Ex-President Ani Satchithanada, and Human Resources Manager Sandra Hardie. Meanwhile Farrell was supported by current President Toby Brennan, and the two senate reps (one of whom is new this year to the Board). Crossley is rumoured to have crossed the floor, and made the casting vote for Farrell. (Elias Bizannes)

And then we go threatened with a law suit (the first of many in my life, it would turn out) because we exposed some dirty secrets of a very politicised group of people. The reason I wanted to share that story, was to have you see how we evolved from a “summary of the news” to a “tool for the politicians”. The rest of that year, I had people in all the different factions developing relationships with me and breaking news. Yes, I knew I was being played for their own reasons. However it was a two way using: I was getting access to confidential information from the insiders. Our little creation turned into a battleground for the local politicians – and so long as I could manage the players equally, I won just as much as they did, if not more.

Up until now, I never realised (or really thought) that my experience in student journalism was actually how the big players of the world operate. Forget the crap about what journalism is: at its core, it’s about creating relationships with insiders and being part of a game in politics, that as a by-product (not a function) also creates accountability and order in society.

On the future of journalism
For as long as we have politics, we will have “journalists”. In the tech industry for example, the major blogs have become a tool for companies. I recently saw an example where I e-mailed a CEO of a prominent startup about an issue, and within days, two major blogs posted some old news to get exposure to fixing the issue. This CEO used his media credits with the publishers of these blogs, to help him with the issue. It’s the same dynamic described above: people who create news and people with the audience. Heck – we have an entire industry created to manage those two groups: the Public Relations industry.

So the question about the future of journalism, needs a re-look. It’s a career path being disrupted by the Internet and breaking traditional business models, with the new innovations going to have their bubble burst one day. Where we will find answers to the future, is where we can see in play the dynamics of news creators and news distributors, as that is where journalism will evolve.

Personally, I’m still trying to work out if the captive audience has now left the building. But my 2004 experiment in student media – targeting the same Gen Y’s that don’t read newspapers – is recent enough experience to prove the Internet hasn’t broken this relationship yet. If you are looking to see what the future of journalism and especially the media is – you need to follow where the audience is. But a word of caution: don’t measure the audience by its size, but by its type. One million people may read the blog TechCrunch, but it’s the same one-million early adopters around the world that are asked by their Luddite families to fix the video recording machine. There is an indirect reader of a publication, but they are just as much influenced and can be reached out to, if determined by the direct reader. Even though Michael Arrington who started TechCrunch was a corporate lawyer, his successful blog has now done what the mass media used to do. That’s something worth recognising as the core to his success, I think. Certainly, it validates that the future is just like the past – just slightly tweaked in its delivery.

The broken business model of newspapers

About six weeks ago I took a week off work to catch up on life and do some research and testing of market opportunities. I had several hypotheses I wanted to test and sent content to a closed group of friends and colleagues. My goal was to watch how they reacted to it, to understand how time-poor people consume information…and it was an absolutely fascinating experience.

As part of this excercise, I took the task of reading all the major newspapers every day. It has literally been years since I’ve given that much attention to them – I used to read them daily, but my Gen-Y ways got the better of me, and I moved online. Unfortunately, I still can’t seem to manage my online rituals to efficiently consume information (hence the research I did – turns out other people are struggling as well). Something I realised in the course of my research, is that whilst newspapers are losing circulation due to the Internet – there is a lot they could do to really improve their competitiveness.

Too much detail
I tried reading the main newspapers word for word, and it took me hours. I don’t care how much people whine that they love the newspaper experience – the reality is, the people who read the news also work full-time. They barely have time to take out five minutes in their day; the reason people don’t read newspapers is because of the complexity of life. Personally I work through lunch; and if I don’t work, I am trying to do things in my life so as to make more time for myself after work. The weekend is literally the only time I have a chance to take a time out to read the newspaper – but given I neglect people in my personal life during the week and the myriad of other things I am involved in outside of work, means I don’t even get that chance. I rarely sit down – that’s why I read the news on my phone on the train.

Newspapers contain quality content, there is no doubt about that. However, if you are going to compete in the news business, you need to understand your audience: that’s all they want. If you read any news item in a newspaper, it will be flowered with extra facts, background information, and endless perspectives to colour the central issue. For example, an article about the Central Bank in Australia dropping its cash rate by 1% had several paragraphs talking about the exchange rate. Yes, it’s valid to talk about it – but there were another half dozen articles that did the same thing in the related coverage, and quite frankly, it’s a separate issue. Another article about the impact of the rate change on local business, makes mention that 50 million pizzas get sold through Dominoes Australia. Interesting stuff – but is it relevant to the news?

A newspaper should have a headline, and literally report just on that news. I’m not saying they shouldn’t report on the extra stuff – quite the contrary I love the extra stuff – but they fail to recognise that the problem with reading a newspaper is that it takes so long, and so people can only skim it. Report just the news, and let consumers follow up on the website with extra detail through special links provided.

Newspapers can’t compete in news any more
I was able to get copies of the major newspapers between 11pm and 12.40am – as in, the night before people usually buy it. Those newspapers had been delivered by a truck, after being printed in a factory far away, with thousands of copies being loaded and distributed earlier that evening. Of course, there is a staggered distribution with some newsagents getting them through the night and early morning (about 5am), but it’s still the same newspaper delivered at 12am as at the high profile newsagents.

The timeline for reporting news is a joke. The only hope a newspaper has in reporting news uniquely, is if it breaks it. By breaking news, it has a chance to take its time and frame the flow of information. But is this that common? Most newspapers use shared agencies to pool their resources with stories, like international news. Newspapers are being ignored by consumers, because they get news quicker on the Internet. Why must these media executives continue to ignore the reality that an online news organistaion is much more efficient in distributing breaking news. That’s why newspapers existed in the past, but they no longer fill that role in society – newspapers need to get out of that role (or become “news brand”, but no longer treating print as the prime distribution for that news).

The incentives and structures can’t compete with this new world
Journalists, especially freelancers, get paid by word count.
Readers, especially time poor ones, skim through the newspaper.

See a problem there? It’s called friction. In case you are a mass media executive, let me build on it for you: the economics of information have now changed. When your industry was created several hundred years ago, information was scarce and people had plenty of time. Today, it is people’s time (or “attention”) that is scarce, whereas information is abundant. Tradition through the “art” and skill of journalism seems to drive the industry more than its fundamental economic shifts. As I remarked at the Future of Media Summit several months back after hearing a mass media journalist rant on justifying her existence: “The skill of journalism? It’s just as relevant as the skill of sword makers. It’s nice, but I prefer a gun.”

A business that does not respond to its market, will die one day. The cost structures of the newspaper (and magazine industries) are sustaining a structure that no longer suits the market for which it supposedly caters for. Instead, it relies purely on generational factors of a Luddite population to sustain its circulation, trying to make money on a model that has now been broken.

What’s so exciting about this? The traditional media don’t get it, in the same way a bible-basher won’t accept there is no God despite presenting logic suggesting otherwise. I’ve heard this from friends in the industry, from people I’ve met at conferences, and from observing my own clients who are part of a broader media group.

Denial by a legacy industry can be a beautiful thing for an entrepreneur.