| “Are Operations Like Flipboard Scams Against Publishers?” Posted: 10 Oct 2013 11:21 AM PDT That’s the shall-we-say provocative title of Josh Marshall’s post over at Talking Points Memo, the liberal politics website he founded and has led to quite a bit of growth over the past decade or so. Marshall announced a couple of days ago that he’d killed off TPM’s full-text RSS feeds for general users and removed the site from Flipboard, Google Currents, and similar aggregator apps, calling them “basically scams against the publishers.” What’s his reasoning? First, there’s no single digital news publishing model. And I’m not trying to speak for everyone. Different sites have different editorial and business strategies. Also, ‘scam’ may have been a bit too harsh; no one forces a TPM or other sites to work with these services and there not really explicit lying… That said, I do think these services, as they currently exist are bad for publishers. We give them the entirety of our product — news stories, updates, posts, what-have-you — in exchange for a notional thing called exposure, brand awareness, blah blah blah and in theory or at some point in the future a cut of the ad revenues these services bring in for selling ads on their platforms. The problem is there are no ad revenues that go to the publishers. Where they exist they are literally trivial. The real payoff is supposed to be reach, letting new potential readers know we’re out there… What I hear from some is, “Well, I just read Flipboard and I don’t have the time to visit a bunch of different sites. So you’re cutting off your nose to spite your face because you’re going to lose out on the audience I represent.” Well, that’s the key. That audience has nothing to do with us as a healthy news operation. We have no relationship with you. We don’t know about you in terms of how often you visit. When we tell advertisers how many people read our stuff we can’t include you in the number because we don’t know about you and really why would they care since ads we run don’t appear there. Most of all there’s no revenue stream tied to your readership.
Marshall comes around to defending his scams comment: “From where we sit, in their current incarnations, these services are basically scams. I think their success is largely a matter of publishers being snowed by the mass transformations in publishing and particularly digital publishing and not being able to keep their heads about them.”  |
| Have we hit peak advertising? Posted: 10 Oct 2013 09:08 AM PDT You may be familiar with the concept of peak oil, but Tim Hwang and Adi Kamdar (both former affiliates of the Berkman Center here at Harvard) are pushing the idea of peak advertising. (Tim is best known for cofounding ROFLcon; Adi is now an activist at the Electronic Frontier Foundation.) The highlights of their working paper: Key indicators for online advertising effectiveness have declined since the launch of the first banner advertisement in 1994. These declines are increasingly placing pressure on even the most established businesses in the space. These developments suggest important (and potentially painful) implications for market structure, privacy, and authenticity online. Existing alternatives appear at present to be insufficient to replace lost revenue from near-future declines in the value of display, search, and mobile advertising. Ultimately, the economics of the web will necessitate pivotal decisions about the financial underpinnings of the Internet in the decades to come.
Here’s the full PDF. Tim and Adi have made up some fanciful titles for themselves — they’re at the “Advertising Subduction Observatory” and “Cyber Tectonics Research Initiative” of the “Nesson Center for Internet Geophysics,” respectively — but the facts they’re writing up are very real. So are some of the implications: To that end, Peak Advertising will drive the formation of highly monopolistic or oligopolistic market structures for advertising, since only the largest companies will have the scale of advertising inventory necessary to remain profitable. Smaller companies that are especially reliant on advertising will have difficulty remaining profitable and will face incentives to sell to companies with larger aggregate volume to sell… We may very well reach and pass the point of Peak Advertising without any significant innovation emerging to maintain and grow the flow of revenue supporting the Internet. What will be left with is a stagnant and ever eroding flow of revenue from the primary sources of advertising, and the inadequate substitution of new forms of advertising in its place. Of the few players that remain, they will produce a web experience that engineers the erosion of user privacy and the blurring of the line between real content and advertising. The future we end up with is partially a matter of technological innovation, but also a matter of human choice. To those designing platforms and using those platforms, the issue is: what kind of Internet do we want to have?
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| The newsonomics of 10 ways we’ll judge 2014 Posted: 10 Oct 2013 07:40 AM PDT At the World Publishing Expo held in Berlin this week, two CEOs of major international news companies — Andrew Miller of The Guardian and Mathias Döpfner of Axel Springer — were asked a question: On a scale of one to 10, how far along were there companies in their digital transition? How far have they traveled on the road to where they need to be? Miller: 3. Döpfner: 4. At the conference, held by WAN-IFRA, Döpfner summed up the chances of all this activity producing a happy result in a single word: “Perhaps.” As the news industry approaches 2014 — wary and uneasy, its annual budgeting exercises by now a familiar form of torture — that “perhaps” sums up so much. Over the past three years, new hopes and strategies have been fueled by the new knowledge that readers will indeed pay — and sometimes a lot — for digitally delivered content. But the deepening print ad downturn has allowed no one to enjoy that lesson. You can sum up 2013 in news publishing in a single word: sobering. So as that budgeting starts to take out more staff and change the nature of how news companies are run, let’s take a look at the 2014 soon to come. Let’s look at the 10 of the most impactful facts that look ready to shape the year ahead: - The print ad decline continues unabated. As recently as this year, news publishers expected the drop in print advertising to flatten out. Marketers’ rush to shift print dollars and euros to digital would slow a bit as advertisers found some balance in their spending. A recovering economy would help lift their print boats a bit.
It hasn’t happened. Quite the opposite. If anything, we’ve seen an acceleration of the transition; European publishers are telling me of double-digit print declines, while U.S. ones are struggling to keep their losses in the high single-digit range. Most importantly, they now believe next year will just offer more of the same. Negative print revenue is a foregone conclusion in 2014 budgeting; the only question is how much. The big question: If it took almost a decade for news publishers to lose half of their print ad revenue, might it take just half a decade to lose another half? The astounding toll so far: The global newspaper industry is down $51 billion a year in total revenues from 2006, having lost 39 percent of its take. - Consolidation and layoffs are the order of the day. We’ve seen more than a half decade of serious cost cutting. Only more cost cutting will preserve the relatively meager 5 to 10 percent profit margin many publishers now crank out, down by two-thirds or more from good old days. So in anticipation of continuing print ad losses, we’re seeing new rounds of layoffs. From Gannett to Reuters to Sao Paulo, announced and mostly unannounced, newsroom staff reductions continue.
We’re also seeing lots of new consolidation, from Digital First’s Thunderdome and Gannett in the U.S. to Local World in the U.K. and Funke Media and Madsack in Germany. Work-saving consolidation — putting together a common set of nation/world pages, for instance, and sharing it across groups — can make great sense, but it’s all in how well it is done. 2014 will show us that on several continents. The dean of the old clusterers, MediaNews builder Dean Singleton, must be amazed at the clustering chops of this new generation of consolidators. - Long-term private investors enter the U.S. newspaper market. It’s a parade from public to private. From Tampa to Orange Country and San Diego, and now Boston to D.C. — and with Tribune newspapers still hanging in limbo — we see longer-term focused private investors taking over. (Just this morning, Aaron Kushner’s Orange County operation announced it was buying the Riverside Press-Enterprise from A.H. Belo, shifting it from public to private ownership.)
What’s crystal clear is that trying to meet Wall Street’s demands for quarterly numbers over the next three years will require gymnastic skill, given all the transitions and needed investments still unmade. The big question for 2014: Will we see these new private owners pump breath into their companies, taking a longer-term view, and laying down a multi-year path to revival? Will they, as 2013′s most famous new newspaper owner has promised, provide runway? - Jeff Bezos Amazonizes The Washington Post. Will he or won’t he? Will Bezos send occasional emails and text messages to the Post leadership, or will his Bezos Expeditions venture troops — who have already visited the Post and started poking around — exert real influence? The mind reels at all the Amazon-like potential of modernizing a strong news brand like the Post’s with state-of-art analytics, product development, and customer relationship management. 2014 will be disappointing if the Post doesn’t start to move profoundly to produce new models for itself — and the industry worldwide.
- Paywalls 2.0 debut. Yes, I know that a lot of 1.0 paywalls are still rolling out. About two-thirds of U.S. dailies haven’t yet taken the plunge. While northern Europe has made a number of preparatory moves in 2013, 2014 will be the year paywalls kick in there, and start to populate southern Europe.
But the next generation of paywalls will, as New York Times Co. CEO Mark Thompson puts it, “work the engagement curve.” The Times will debut several niche paid digital products six months from now, and we’ll see many more efforts to find new ways to extract money from digital news content. We’re finally moving beyond sales of omnibus subscriptions only — take ‘em or leave ‘em — to a world of delivering the best, timely content to the right reader at the right time and being paid for it. 2014 will offer a beginning. - We’re on the brink of mobile-mainly. News companies worldwide report around a third of their traffic is coming from smartphones and tablets. Within a couple of years, that traffic will amount to more than 50 percent of all news traffic, as it already does at certain moments of the news cycle. (The BBC recently recorded its first mobile-mainly weekend.) How prepared are news publishers to take advantage of this big shift? In product development, the national/global players have a lengthening lead on most local publishers.
The big dilemma, as 2014 move closer to 40 percent mobile audience: mobile advertising. Guess who already dominates there? Google, which pulls in 53 percent of mobile ad dollars in the U.S. The runner-up: Facebook. - New strategies will be tested. We’re bound to get some sense of how the major strategies put into local markets this year are working. Think Advance’s Slim-Fast three-day-a-week home delivery plan is a good or bad idea? Let’s see — or least divine, since Advance is privately held — the results. How about Aaron Kushner’s major reinvestment in southern California? What’s the payoff in circulation, reader revenue, and advertising? As DFM’s Thunderdome rolls out for a full year, will it be a hit or a miss?
- Selling more stuff adds up to more, or less. On the reader side, the revolution in reader psychology and payment has been fast and furious. On the ad side, publishers who used to sell advertising now sell so much more: digital services, events, sponsorships, content marketing, and education, to name the top of the list. Which of these will excel at replacing lost ad revenue and margin? 2014 will tell us a lot, as major companies test and benchmark against each other.
- Local commerce becomes a more nuanced battleground. We’ll see if Patch really regroups and reinvests in the halfway-there success that Tim Armstrong has described — or if it’s left gurgling, further stretched in resources and on its journey to the digital museum. While the moves into local digital services have gotten far less attention than Patch, that’s where the action is: thousands of sales people are selling marketing services to tens of thousands of small and medium businesses. Hearst, Gannett, Gatehouse, Digital First, and McClatchy are among those clawing for new business, to replace lost ad dollars. 2014 will be a pivotal year in toting up how real, and big, that business can be.
We’ll see the rollout of the son-of-the-Yahoo Newspaper Consortium. The Local Media Consortium has just announced itself, after a long formation. At announcement, though, no new partnership relationships were bannered, unusual in the announcement trade. We’ll see whether such a consortium, with its own changing cast of publisher members, is as relevant in 2014 as it was when The Newspaper Consortium inked its five-year-plus deal with Yahoo way back in 2006. A lot has changed in ownership and the marketplace. - The news crisis continues. It’s easy to become inured to journalism loss. It’s mounting every day across the world. While it can range from upsetting to life-changing to energizing (for the lucky) for those laid off or bought out — for readers, it’s mainly a tale of loss. They know less about more, at a time when democratic societies are struggling and often failing to deal with fundamental issues before them. As we reshape the business of news, we’ve got to ask better questions about how those reshapings affect what readers get — and what they don’t.
Photo by Artis Rams used under a Creative Commons license.  |