Media in the maelstrom (part 3)
20 January 2010
You can find part 1 here and part 2 here.
Playing the old Music
The debate is still raging on whether some of the major News Publishers are going to be able to charge readers for online content and therefore survive the current crisis and come out stronger.
Nobody probably knows how things are going to pan out in the end, but casting an eye to what recently happened to the music industry can provide some useful insight.
The music industry experienced a profound crisis in the last few years. While most of the traditional big labels were and still are struggling to understand what hit them and correct their course, new businesses and business models were born and started flourishing. What happened?
Music piracy, one of the symptoms of the Music industry desease, developed and spread like wild fire for two main reasons: A packaging/mispricing problem and a Distribution/usability problem.
Packaging/mispricing: until very recently, in the majority of cases, if I wanted to listen to a specific tune, I had to buy an entire CD with 9-15 (mostly crap) tracks or pay a disproportionate amount of money to buy just the single CD (when available);
Distribution/usability: music is something that people enjoy in the company of friends and that like to share.
I am of course over simplifying here, but it is safe to say that Apple, with iTunes, figured out that people didn’t want to steal music but that they were simply using technology at their disposal to ‘take’ and enjoy music the way they wanted, not the way the labels wanted. With iTunes, you can listen to samples of music and then buy single tracks at a reasonable price. They provided a good solution to the Packaging/mispricing problem and a partial solution (the portability part) to the Distribution/usability problem. They are now facing increasing pressure to let people share the music they have purchased with their friends and, soon, with other devices. This will solve the rest of the problem.
You can argue that News Publishing faces the same problems (with some important differences) of the Music industry.
The Packaging/mispricing model is represented well by the magazines which were, in fact, the first form of publishing to face intense pressure and collapse. Why would I spend 3-6 US Dollars to buy a magazine when there’s probably only 1-2 articles that are of interest to me in each issue? There’s also a Distribution problem; the problem here is less about consuming and sharing with one’s friends and more about getting the news fast, and making sure that I am not missing any important news I need to do my job. There is also a lot of ‘noise’ news that I don’t want to see. An important difference with the Music industry is that many people use news also or mainly for business and cannot afford to miss something important to them. Professional news consumers also tend to manipulate (that is copy, paste, edit, format, etc.) the news for presentations, research and other uses.
The first obvious deduction from this analogy is that people don’t need or want an online NY Times or WSJ or FT. They want a ‘tool’ (the equivalent of iTunes) where they can pick and chose news (content) relevant to them regardless of the original source as long as it’s reliable (we’ll discuss UGC in more detail in a later post). In Music, people are happy to pay 99 cents/pence to buy a single tune with iTunes or to pay a monthly subscription (for a ad free version) for services like Spotify, Pandora, LastFM, etc. These tools not only let people listen to specific tunes but also allow them personalization, discovery and interaction.
Similarly, I am certain that people would be happy to pay a fair subscription price for a system that gave them access to all relevant content with additional tools letting them personalize, share, manipulate, etc. valuable content.
Yes, it’s a big switch for the Publishers, who are also, for reasons that baffle me, still heavily reliant on advertising, but it is a necessary change that should have started years ago.
Of course there are many differences between Music and News Publishing. But, these similarities are obvious and cannot be ignored. We heard Murdoch treatening to pull out his properties from Google; Google is not sharing enough of the upside with the papers. Murdoch doesn’t want to take his content away from Google, he just wants Google (or someone else) pay for it, be it through a subscription model or supported by advertising.
Now, I am all for free content but someone has to pay for those (you can say rarer and rarer) serious journalists who provide real value.
So, quality journalism in my view will survive and grow stronger, but the Publishers will continue to suffer unless they embrace (or build their own) new business models.
People don’t care about the WSJ or NYTimes as they don’t care about EMI or Virgin: They care about the content (the news article or the tune) and the content makers (the journalist or the musician).
The above is a simplistic view of the issue facing the entire Media industry but one that I believe is at the very basis of the problem and cannot be ignored.
Some related info:
Study: Internet radio reaching 32 percent of households, e-readers are hot, newspapers are dead
Being born under this sign determines many talents, as well as other characteristics that may not be so commendable. Rats are very lively and need a lot of mental and physical stimulation. They can be calm and perceptive, but sometimes their brains can cause a mental restlessness, tempting them to take on too much, only to discover they are unable to meet their commitments. Rats are blessed with one of the best intellects going. Add to their intelligence a curiosity and a bright imagination, and they seem as sharp as a needle.
Detailed Description
of The Water Rat
20 January 2010 at 19:14
really interesting analysis. i’m wondering, based on all this, in your opinion, is there room for an entrepreneurial solution? can a small outfit build a “newsy iTunes”? or do you think this has to come from one of the big publishers with the relationships and power to get the deals done?
while in general i agree with everything you are saying, i would raise one issue with your analogy of the NYTimes to EMI. I do have a brand affinity to the NYTimes, say, over the Daily News (depending on what I want to read about, I guess). I believe the NYTimes influences the news it reports in a way that I trust or am interested in, where as I have no such illusion about EMI or Virgin. Though, I wonder if in the olden days, labels didn’t have a similar cache – for example the Verve jazz label?
one of the interesting implications of the analogy that you don’t mention, however, is that if content makers are to be successful in the new news business, they must become rock stars. they must create and maintain a public persona of sufficient weight as to influence reading choices. are there many journalists out there who embrace this thinking or who do much to create their own personal brand as being something apart from where they write? i’m not sure, or if there are, they haven’t yet reached superstar status.
20 January 2010 at 19:43
Yes and No is my answer. I believe that the outfit that will deliver the right solution is not going to be an existing publisher (because of the legacy culture and cost associated to it) but more likely a technology company like it happened for Apple in music. In my view a ‘big’ brand name would make things easier but instead of Apple/Google/Microsoft it could simply be a small start up that manages to get a relationship working with one well known publisher. I have been thinking a lot about this and I think I know what the right combination is. Happy to discuss further.
I agree that the brand value of NYTimes is more important than that of music labels, today, and I think that will survive. The tool I have in mind will be incredibly flexible so that you can pick and chose your feed as you prefer. An attempt of this, which perhaps I should have mentioned is what is happening with ebooks; I think the approach is wrong there, but you can subscribe to multiple sources of content via the Kindle and other devices.
As for the analogy, you’re right; it’s only fitting to a point. There are differences between journalists and musicians and I don’t think that, in general, journalists can reach the same status or influence as musicians. But, within the Publishing world other factors count as well. I’ll mention only 2: Advertising – this is the main business model right now for most publishers and is very different from the labels model; UGC – users can create music and publish it right now but it’s much easier and cheaper for citizen journalists to publish their content; this aspect will play a big role in the way the publishing industry will change.
21 January 2010 at 21:09
I have totally been thinking about this post… I wonder if the timing of it isn’t just amazing – the maelstrom of hype around the iSlate or whatever it will be has suggested that this will be Apple’s attempt to move again against the Kindle/Nook/etc – and there are some interesting similarities to when they are launching this compared to when they launched iTunes… a newsy iTunes on the horizon?!
Also, don’t know if you know about Dave Winer – Interesting guy that I have been reading and would probably spark some interesting ideas. Check out his most recent missive on solving the NYTimes’ problem – sounds like you would dig some of this stuff.
http://rebootnews.com/2010/01/20/a-breakthrough-for-the-times-possibly/
21 January 2010 at 22:29
I think timing is good and I am actually surprised this has not been done before, a combination of the world crisis and the stubborness of the establishment, perhaps.
My feeling is that Apple or someone else and the Publishers will try force on users a solution that is not exactly what readers want. A device that let’s you access papers and magazines is better than what we have now but not good enough for the reasons I mention in the post. I would not be completely surprised if Apple announced the inews alongside the iSlate in the same way they did for iTunes and iPod, but perhaps I am giving them too much credit.
Dave Winer’s idea sounds interesting at first but if you think about it he’s just proposing advertising all over again; i.e. someone paying to gain spotlight in a good spot. I think we are way past that.
21 January 2010 at 22:31
Don’t get me wrong. I think his idea is very valid, infact I remember discussing this with James 3 years ago, some sort of video advertorial alongside the main news article; but I am not sure this is enough for the user.
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