A New Media Model Emerges

English: A photo of author and political comme...
Andrew Sullivan (Wikipedia)

A new business model is emerging for media companies, consisting of a traditional core combined with a confederation of sites. Nate Silver‘s relationship with the New York Times and now with ESPN, and <re/code>‘s relationship with NBC and in it’s previous incarnation as AllThingsD with the Wall Street Journal, are examples. As more journalists decide to venture out on their own (Ezra Klein, Jessica Lessin, Andrew Sullivan), the model becomes more viable.

The confederation piece of this model is a group of autonomous websites partially owned by the larger media company, which also provides operational support. This works for the media company because it gets to participate in any potential upside, while continuing to generate revenue from the separated website, and works for the newly independent journalist because he or she gets capital and operational support while still running the show.

English: Steve Jobs and Walt Mossberg at the A...
Walt Mossberg (Wikipedia)

At the moment, however, the biggest obstacle to this structure is hubris. The media company believes that the journalist won’t be able to survive on his own, while the journalist believes the mother ship is dragging him down. Somewhere in the middle lies the truth. Some of these journalists will become success stories such as Walt Mossberg and Kara Swisher at <re/code> and Sharon Waxman at my own company, TheWrap. But it’s hard to build a digital media company and many more won’t make it, while others will find that they can live on their new business, but nothing more. And that’s the beauty of the confederation – the media company rides along with the stars, while those who are less successful will be happy they offset some of their risk.

Journalists: Brands Not Commodities

Reading about Glam Media’s “Facebook in a box for content creators” reminded me of Gene Weingarten’s article in the Washington Post a few weeks ago lamenting the deleterious effect of branding on journalism. The Glam tools, of course, exist to help its writers develop and build their own brands. What’s more, Glam believes that authors will have to “create social networks around themselves” to be successful, a notion that would no doubt be anathema to Weingarten.

While confusing pandering for readers with a writer creating a brand, Weingarten suggests that the craft of journalism is being redefined “so it is no longer a calling but a commodity.” A suggestion that implies that somehow news organizations brought this fate on themselves by no longer giving readers “what we thought they needed. Now, in desperation, we give readers what we think they want.” Within the craft of journalism, apparently, there is no greater sin than meeting market demand. What Weingarten seems not to understand is that even in the good old days of newspaper prominence, readers never ate their vegetables if they didn’t like them, they simply turned to the sports page, or the comics. The newspaper, as a package, exists because it has to give readers a lot of what “we think they want” to subsidize what “we think they need.”

Out of all this, Weingarten comes to blame the commoditization of journalism on branding when, in fact, branding is the solution. When faced with commodity prices for its microprocessors, Intel branded them with its Intel Inside campaign. Think of Florida Orange Juice and Chiquita Bananas – successful branding campaigns that rescued products from commoditization. As a collection of blogs and micro-sites, Glam may have a more immediate reason to create writer brands, but it’s a model that can be followed by news organizations. And, except for the fact that in the past only a select few of its writers became brands, it’s a model that is familiar to them. Columnists have always been brands, but brands created by their employer. Today those brands, the newspapers, are declining, and becoming simply a collection of writers. And a collection of unbranded writers is just a heap of “content.”

News Comes “Full Circle”

The industry is being reshaped by technology—but by undermining the mass media’s business models, that technology is in many ways returning the industry to the more vibrant, freewheeling and discursive ways of the pre-industrial era.

From The Economist

Tim Wu – Dangerous If Serious

(Tim Wu, www.timwu.org) This photo has been pl...

Tim Wu, the Columbia Law School prof who coined the term “net neutrality” and current senior adviser at the FTC, was profiled in a recent article in The Chronicle of Higher Education. He quickly comes off just a bit too cute for his own good, ticking off every box on the hipster checklist – tattoos, vintage Hondas, Burning Man, honeymoon in Antarctica. All this and a Harvard law degree. Clearly this is a guy who thinks big thoughts. Well, yes, and it’s those thoughts that seem so dangerous.

The article tells us that in his book The Master Switch, “Wu warns that ‘an unprecedented potential is building for centralized control over what Americans see and hear.'” Wu then goes on to make a case for that potential to be realized in the federal government. He says “his goal in joining [the FTC] was to help ‘reinvigorate the role of a public counterforce to private power.'” Later, as the article describes a class Wu is teaching at MIT, it says he suggests that “in theory, the government could say, ‘Well, this company has clearly shown it’s corrupt. … So let’s just nationalize their source code.'”

When it comes to advocacy of government power, statements like these speak for themselves. They should also give supporters of net neutrality pause when the concept’s father is seen to be arguing less for an open Internet, and more over just who should control it.

Do Journalists Really Beg for the Rope to Hang Themselves?

Discussing the Huffington Post in his February 13th Monday Note, Frédéric Filloux states that “original publishers are giving the ‘aggrelooter’ the rope it will use to hang them.” He was prompted to make this statement by a post on HuffPo by a staffer amusingly named Jason Linkins. In his post last week Linkins says:

All day long, [the front page editors] receive emails from reporters, editors, publishers, publicists and flacks from organizations that include but are not limited to, the following: The New York Times, The Washington Post, The Wall Street Journal, The Chicago Tribune, McClatchy Newspapers, the London Guardian, USA Today, CNN, MSNBC, ABC News, CBS News, C-SPAN, Time, Newsweek, Rolling Stone, The Atlantic, etc. Those emails all ask the same thing: Would you consider placing this content on The Huffington Post?

Is this the rope that will be used to hang original sources of news? Or are these editors and publishers using HuffPo for free distribution – distribution that in

other industries would normally cost money? Can these people really be acting so aggressively against their own interests, or are they rational actors in a new content ecosystem? Surely it’s the latter. While news executives argue about “aggrelooters,” those charged with driving traffic and ad inventory understand that the aggrelooters are really free distributors.

Print Magazines Still Alive

The press release for Deloitte’s “State of the Media Democracy” survey contains three pretty amazing paragraphs about the state of print magazines. First this:

According to the survey, since 2007 a consistent 70 percent of Americans state that they enjoy reading printed magazines even though they know that they could find most of the same information online, and 55 percent have continued to subscribe to printed magazines.

Seems pretty simple – formats matter. It’s lazy thinking to believe that simply because the same information may be available in a new format, the old format is dead. Nor is there reason to believe that a print publication’s web site must be a direct replacement. There is no law of physics that requires all content in a print product to be available in it’s digital version. They’re two different products and meet different needs for their audiences.

Another interesting result:

Additionally, a majority of U.S. respondents state that an important feature of printed magazines is the advertising that helps them learn about new things for themselves and their family.

For all the promise of targeted advertising in digital formats, it seems that print ads do a pretty good job of reaching their target audience. I wonder if a majority of people would say the same about online ads. Seems unlikely, doesn’t it? There are no “network” ads running in the pages of a print magazine hawking solutions to belly fat, only ads that are intended for that publication. And they’re not all measured as direct response ads no matter the creative. In fact, tablet advertising seems to have so much potential precisely because tablets are a platform that allows ads to build off of and extend what’s right with magazine ads.

And finally:

“Enthusiasm for printed magazines is consistent across all age groups, a unique result in consumer attitudes across all the media categories, we surveyed,” said James McDonnell, principal, Deloitte Consulting LLP.

Enthusiasm for a legacy product is a good thing, even as you plot it’s destruction.

New Formats, New Methods, Better Brands

While there’s no denying the fact that online content producers must develop revenue legs other than advertising, there’s also no denying that advertising is not holding up it’s end of the bargain. The reasons are myriad from advertisers who measure branding advertising with direct response metrics to publishers who consign ads to web page “ad ghettos,” but while publishers continue to inflate the potential of digital subscriptions, it’s really advertising that must be fixed.

iPad con dock y teclado inalámbrico
Image via Wikipedia

Despite the ascendance of search advertising and click-throughs, brand advertising is not going away, and publishers and brands must work together to create and deliver new ad formats and methods to rejuvenate it. Thankfully we see signs of this happening from iPad iAds to AOL’s Project Devil. Yet whenever a publisher comes out with a new ad unit that they sell for a premium, marketers want to determine its worth using the same old measures – mainly click-throughs – that have been so unsuccessful in the past at measuring branding value. It’s short-sighted because, if there’s one thing we can all agree on, it’s that current ad formats are awful and people who click on them are usually poor targets. New effectiveness metrics then, although much more difficult than new ad formats, are also vital.

While not a new ad format, social media advertising (and I don’t just mean simply advertising on social media sites) is now leading the way in brand advertising. Social media gives marketers the ability for their brands to display more personality, better target, and more fully engage resulting in a more robust experience for consumers, and content producers need to learn how to play in that arena. There may be no better evidence of this than the current willingness to use social media marketing despite many companies’ inability to measure its effectiveness. Instead of pretending they know which 0.1% of their advertising works, marketers are back to wondering which 50% works. And that, sad to say, is progress.

Tablets: New Ad Formats Are Critical

Word came a few days ago that Crispin Porter + Bogusky is partnering with Bonnier for new tablet ad formats. I can’t imagine why it’s taken this long to focus on new ad formats, but surely it has to do with the content industry’s focus on subscription revenue. Tablet subscriptions have long been mistakenly seen as the Holy Grail of the magazine industry, and the quest for those revenues have subsumed all other initiatives. While subscription revenues shouldn’t be overlooked, the real promise of the tablet format is advertising. Advertising that truly engages consumers, that builds brands, that isn’t measured using direct response metrics. Advertising isn’t dead, it’s just stale, and now Bonnier just may lead the industry into its next evolution.

Update: Some evidence from eMarketer that tablet ads really do offer a better consumer experience.

Pay Walls Aren’t A Silver Bullet

All the talk about newspapers and other publishers charging for digital content is growing ever more tiresome. We’re left breathlessly waiting for the implementation of pay walls, as if their success means salvation for the content industry. Only it doesn’t. If these publications can retain a substantial portion of their audience (a big if), it may mean some incremental revenue, but anyone who has ever modeled a subscription scenario knows that’s the best to hope for. Survival will depend on what it always has – connecting businesses with consumers. Whether transactional or branding, we call it advertising. The paywall discussion is one we need to have, but how to make advertising pay is the key question for online content.

Apple Knows, People Want to be Led

In a recent New York Times article on Apple’s new iAds mobile advertising system, Steve Jobs delivered an interesting quote:

‘Search is not where it’s at’ on phones, he said. ‘People are not searching on a mobile device like they are on the desktop.’

A Google spokesman responded with some stats about the growth of mobile search, none of which really addressed the point. Intuitively Jobs seems to be correct so, if he is, what are the implications?

In the last website redesign I did, we were keenly aware that Google had become the web’s homepage and that users dipped into the interior of our site for a story and then backed out to a search results page. This means that we could no longer count on our audience entering the site from our homepage and had to try to keep search engine visitors by some means found on interior pages. Search engines are now homepages and site homepages are becoming increasingly marginalized.

Now look at mobile. People don’t use search engines the same way. On a smart phone they go to an app that will solve their current problem. Many of these apps, of course, are search based, but that search is typically controlled within the app. Some examples are Yelp, Siri, Fandango, and Shazam – very useful search based apps, but controlled. On mobile devices, and now the iPad, product and brand are regaining the value they once had, but which was stripped away by search engines. For many pundits, this is cause for great consternation, but they forget one important thing – people want to be led.

People want to be led for a variety of reasons – lack of expertise, time prioritization, timidity, ignorance  – but we all sooner or later reach the point where we think, “Good heavens, just get me to the good stuff!” We’ve been through the phase where to avoid being told, “You just don’t get it,” everyone had to praise the chaos of crowd sourced news, RSS readers, and open source everything. In each of these cases, and many others, companies emerged to make sense of the chaos and bring people products and information they didn’t have to create or curate themselves. To lead users to the good stuff. Crowd sourced information and design, user generated content, and open source software will continue to be critically important components of our world, but there is also room for products that do more of the work for us. For any given product or service, most users don’t have the desire or skills to be creators, leaving the largest market open to those brands who are able to lead people to the good stuff. People who want this leadership aren’t losers who “don’t get it,” they simply have different priorities. Maybe the guy who works all day on open source code just can’t be bothered to cull the web for his favorite RSS feeds so he just goes to NYT.com for his news.

So back to mobile. Apple understands that people want to be led. Their closed systems bother me, but I still buy their products, and so do a lot of people so it’s awfully hard to criticize their strategy. For the rest of us, this is an opportunity to create and leverage brands in the digital world. With that comes the necessity of building a great product, but the potential is there. To be sure, this isn’t a reversion to some glorious time in the past, it’s simply another evolution of our world. We don’t know exactly how it will play out, and we know it will continue to evolve, but right now, there is an opportunity to be seized.