Tag Archive for 'newspaper industry'

A solution for the newspaper industry

Newspaper executives around the world are scrambling at a solution to the new marketplace. NewsCorp’s CEO in Australia remarked a few months ago that they only make 1/10th of the revenue on websites as they do through print – but with declining print circulation due to the popularity of online news – this is really affecting the bottom line of the industry. Unfortunately, they’ve been attacking news aggregators despite the fact that that’s the solution to their problems – it’s now a changed marketplace that they need to embrace.

The market dynamics are different now
Newspapers existed at a time when information was scarce. They performed the role of aggregating news (as well as creating it), and distributing it to the public through expensive channels which could not be easily recreated.

In today’s age, information is in abundance and is drowning out consumers – with a distribution environment that is now cheap. Further, the role of news aggregation can be done more efficiently through online tools. However this has caused a problem – because in the value chain of online news, the aggregators are the ones that are able to monetise the content. Because people don’t have time to read all the news now, they rely on aggregators that pull content from a variety of sources – and then only click on stories that capture their attention. These aggregators can place sponsored posts or advertisements alongside other articles, and so have found a new way to monetise content in the ‘click economy’.

However from the content providers point of view, they’ve invested time and money in creating unique content, only for it to be ignored by consumers because they no longer have a captive audience – and for aggregators who do, to be monetising content they didn’t pay for.

Google News - aggregator

Newspapers need to drop advertising and think about the entire value chain
Content can no longer rely on advertising as a revenue model – as I’ve argued before, it’s a broken bubble economy. But premium content can exist as a paid subscriber service. This seems to be the direction newspapers are heading. But I think it’s a mistake to enact paid subscriptions on all newspaper websites – it will kill demand and will not scale across the entire industry, other than for the few globally recognised newspapers and strong national brands where their location gives them a comparative advantage (ie, LA times for entertainment; Washington Post for US politics; Wall Street Journal for the capital markets).

Rather than charge consumers to subscribe to a newspaper, what the newspaper companies should be doing is creating a new type of organisation that can pool their resources. They should do this in the same way they did with the associated presses around the world several decades ago, where they can source expensive overseas content in a cooperative, which can then be distributed by newspapers in their niche markets.

Newspapers should create niche aggregators modeled in the same way Google News, Techmeme and its political cousin memeorandum (shown below) have done. Consumers will pay a subscription fee to these aggregators to get access to certain sources of information. And newspapers will get proportionally remunerated through the co-operatative making money on the aggregators service, but also control the distribution of their premium content which can be monetised further down the value chain (ie, once a consumer visits their website).

memeorandum

The model scales because a consumer has only one organisation to deal with, and can control their content consumption and payments. The aggregators also allow the consumer to define what sources of information they value. Better still, this controlled environment of information distribution puts more onus on the content creators to generate quality product. If people include them in their aggregator subscription but never click on that particular organisations content, no one can be faulted but the content creator themselves for not creating compelling content.

Better still, market dynamics can come into play. Part of the function of an aggregator is to cluster stories. This allows for a fair way of distributing the content – the news source that pays a premium can get a higher weighting in this clustering. So an aggregator may have 50 sources that all get clustered as one headline; based on a sources ability to pay per headline, will determine how much the dominate in weighting. This then puts the onus on the newspaper to create a better sales force that can monetise content later down the value chain, which can subsidise this discovery phase of the value chain.

Is this the answer?
Who really knows but its a step in the right direction. With consumers paying to subscribe to an aggregator, they’re getting better value through diversity of inputs – and newspaper companies will get remunerated on how much content they provided as a proportion of the total attention by a consumer on the aggregator. The future of content will be driven by the subscription model, and this is a way that achieves that with the best value for a consumer.

Newspapers are reliant on the aggregators as a source of traffic and discovery. Rather than trying to kill them – they should copy them, license the technology and control the discovery phase of news consumption now crucial for today’s information-overloaded consumer.

What’s holding back newspapers from going down this path? They are too used to being the aggregators themselves. Instead, they need to realise that they must specialise now. They should focus on creating great content (a discussion in itself), and let technologists drive the discovery phase.

Can the newspaper industry please stop their damn whining

Google is not a blood sucking vampire. In fact, the newspaper industry is a spoilt little brat.

Search engines such as Google and aggregators (like the constantly criticised techmeme) provide a huge amount of economic value for the newspaper industry. They enable discovery by people that are not regular subscribers to their content. They provide traffic, which drive up the page views, that enable them to sell inflated prices for perceived access to an audience.

Newspapers put their content on the web for free by their own choice. They have plenty of ways of excluding their content from being freely accessible, either through a paid wall or technology conventions like the robots.txt…But they don’t want to completely do that, because they lose the traffic.

Subscription models will be the future revenue model for content. One where people will pay for constant access to a particular information provider (as fresh access – not static objects – is where the real value comes from in information and especially in news). Of course, this means people with established brands can only do this as people will not pay unless they know what to expect. However despite their current lead in this game due to their century-old mastheads, the newspaper industry is refusing to solely go down this route. And the reason for this, is because they still rely on advertising for the majority of their revenue mix – and advertising is driven by traffic.

Newspaper executives want the economic value provided by search engines and aggregators in discovery and traffic – but they whine consistently because these innovative new businesses in the information age have found a way to monetise this function in the value chain.

The solution is simple: cut public access, and put all content behind a paid wall. And only participate in exclusive aggregators. The search engines and free aggregators no longer have your content to add to their mix – and yes, you Mr newspaper executive no longer get as much traffic. But that’s what you get for being a whining little kid.

I am sick and tired of hearing industrial age executives refuse to compromise with information age business models.

The WSJ nails it with their iPhone app

For years, people who have bothered to think, have known the newspaper industry was going on a downward spiral. But now that everyone is fretting that this industry is collapsing due to sudden events, it’s time people joined the thinkers about the future of the newspaper industry because there is hope. Having spent a few days with the Wall Street Journals iPhone app, I think I see a light in the tunnel for them.

I don’t read newspapers for a simple reason: I don’t have the time to. During the day, I’m out at client sites under the pump that I barely even read the online news. After hours, I am either out or working on one of the many projects I am involved in. I might be only in my twenties and still early in my career, but my workaholism has made me busier than you think. Did you hear that newspaper exec who’s spent a decade worrying how you’d catch my generation?

WSJ iPhone app - main screen

Which is why the iPhone is a God-send for me. My attention is limited, and information creators need to work on my schedule if they expect me to consume – hence why the WSJ app that was released a few days ago, hits the spot for me. I am able to read the news and my emails on the go, whenever I have down time (like catching a train to work).

Just look at the screen shots. You’ll notice it’s easy for me to scan the news -like a newspaper. It allows me to mark and share the news, which is a feature that draws me to using it. In fact, it’s just plain enjoyable reading the news – the same sense of enjoyment you get from putting your feet up and reading the weekend broadsheet. Newspapers are an experience, and this application is the first time I’ve felt a digital newspaper experience reawaken that feeling.

WSJ iPhone app - article screen

But forget about me for a bit, because that’s not why the application has nailed it. Have another look at the screenshots, and tell me who is the #1 business software company?

As you may have heard me before, I believe advertising is a bubble economy. It’s going down, down, down – and that is the real problem with the newspaper industry, which has relied on it as it’s revenue model. However, just because I think it’s a bubble, doesn’t mean I think all advertising is dead – just some types.

The reason why advertising is not really working on the Internet, is because the traditional media relied on the assumption their audience was captured (on the Internet, they’re not). When an ad plays on the TV or the radio, there is little you can do but put up with it. Most people change the channel, but no one could prove that. Unlike the Internet, where people genuinely can ignore ads (either through banner blindness or block-out technologies)…and which can be proven because online advertising is more measureable.

The thing about mobile and why it’s so promising, is because the audience is once again captured. Because the screen real estate is so precious, any advertising that gets shown, is genuinely noticed by the consumer. The phone user has less control on manipulating their viewing experience, which they do on a desktop computer.

I actually clicked on that Oracle ad three times, which is amazing considering I rarely click on ads. The first time was because I genuinely was interested to see what was behind the link. But the other two times were because my tapping on the screen to read an article was mistaken thanks to my fat fingers. It might have been accidental, but as far as Oracle and the WSJ is concerned – I’ve just shown them engagement. And even if I don’t want to follow through on the ad, I sure as hell noticed it.