TheWaterRat

White Knight or Black Knight? Maybe Blue Knight

A couple of weeks ago, in part 3, I discussed in broad terms how I see the News Publishing industry evolving, and provided some comparison with the Music industry.

Among the other things, I said that I see a new player emerging in this space, not a traditional Publisher but rather a technology company that will provide a better delivery mechanism, a better channel for news, with tools allowing readers to consume and manipulate the content at will, based on their specific personal and professional needs.

Lately, many have written on how the ipad may affect this space. I am certain that the ipad will have some impact on the industry but I am not convinced it will be the main disruptive force reshaping its business models.  Whilst the two go hand in hand, a software solution (i.e. similar to the iTunes for music) will be far more important than a hardware solution (e.g. the iPad).

In my mind, the new player in the market has to have the following characteristics:

 1 – Not be a big Publisher - all incumbents have huge legacy costs due to the phisical assets they are tied to and even bigger cultural legacy which is even harder to overcome;

2 – Be technologically ahead – again, this would suggest not an existing Publisher;

3 – Have a big, loved and trusted brand name;

4 - Be able to scale up quickly;

Based on the current business and technology landscape I thought that a new start up would emerge and solve the sector’s problems, perhaps in partnership with one or more of  the main Publishers. But I had forgotten about a very important player that is already in the market and that fits all 4 requirements above.

There were a couple of articles recently, from GigaOm (article here) and VentureBeat (article here) analysing Facebook’s growing importance as a News channel. 

Both blogs seem to agree that while Facebook will certainly become a significant player in the sector it will not be the Papers’ ’saviour’ because it’s not as close as Google to the ‘intent of purchase’ point and other reasons you can read in the articles above.

My take is slightly different. I think that if Facebook decided to seriously enter the space (and I think they will), the entire Industry would be completely disrupted. I think it’s wrong to think about Facebook as just another channel for newspapers in the same way as Google may be. Facebook is not a news stand with a large audience. Content will flow through it and be consumed by its users in an entirely different way. And until traditional publishers undertsand this they will continue to fail.

An intermediary like Facebook would be able to build that elusive paywall on behalf of the papers without upsetting readership; it would be able to create mllions of niche news channels, more, multiple channels per reader, and a much more engaged reader. Advertising won’t be advertising anymore but will become engaged discovery (see where Bing is going). And paying a small but fair amount of money to access professional and highly targeted content and the tools  to manipulate that content will not be an issue, especially in the business and professional arena (of course, some people may chose to receive some advertising instead of paying).

But we won’t see or, in my opinion, we shouldn’t see the creation of news channels branded like the traditional newspapers or magazines (e.g. NYTimes, WSJ, etc.). We should see content coming from different sources: a mix of UGC, professionally produced (by the traditional publishers) and curated content aggregated into themed or personalised channels (e.g. pet lovers channel, my own channel, etc.).

These channels will be very specific and relevant to each individual reader, a very engaged audience in the case of Facebook. The monetization of these channels will then be spread according to the attention each article has drawn. Changes will need to be made to FB’s interface and new tools created. Perhaps even a separate way of accessing the content needs to be designed but this is going to be a big change.

A connected but still closed environment like Facebook, where users can control access and the level of noise (and advertising) they want to let in is a very good place to hang around as all FB stats seem to show. Brands can be built and destroyed very quickly on FB, elections can be won and lost at similar speed. If this is not the perfect news outlet, what is?

You can read part 1 here and part 2 here.

Some additional reading here

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

This post is the continuation of my previous post Media in the maelstrom (part 1). I realized that the structure presented in the first post wasn’t right and would not allow me to present my considerations in a coherent way going forward. I have therefore slightly modified part 1 and here is its follow up.

I Media, You Media.

In the last few years we have moved quickly and randomly into User Generated Media (UGM). People, everybody, have started producing their own content: blogs, videos, music, and spreading it fast and widely through the internet.

This phenomenon has caused many changes in the way media are generated, distributed and used:

- Technology has made it easier and cheaper to produce written content, music and videos so there is much more of it;

-  Because more people are making content, the average quality of content out there has decreased;  

-  Content is spreading faster and getting consumed faster;

-  Content is being copied, changed and re-generated more and more. Fast;

Contrary perhaps to superficial perception, I think these effects of the media revolution are potentially positive for traditional media companies as long as they understand them and embrace them instead of trying to stop them.

Traditional media cannot stop this shift. They can only control the people (to a certain degree) that are on their payroll; but cannot control millions of people that every day are making, hacking, sharing and spreading content across the globe

Check this for an incredible example of what UGM is doing: http://www.thru-you.com.

Yesterday, I was reading a very interesting post from John Borthwick (Distribution … now). Referring to the now web he says that we should think in terms of streams, and not anymore in terms of pages. He’s talking in general about content, with reference to Twitter, Facebook, Tumblr and the like: A stream. A real time, flowing, dynamic stream of  information — that we as users and participants can dip in and out of and whether we participate in them or simply observe we are a part of this flow.

Or, as Om Malik puts it: More and more people are publishing more and more “social objects” and sharing them online.

We are observing here that the real time web means real time media, it means that everybody is participating to the creation and distribution of content. It means that there is a stream of content (and we are part of it) that doesn’t belong to anyone anymore and that cannot be controlled.

So, if the production barriers have fallen and the distribution barriers have also been shattered, how do we as users take advantage of this situation? There’s a lot more content but there’s also a lot more noise. How do we pick all that is interesting for us? And only what is interesting for us? How do we make sure that professional content is fairly monetized so that it can continue to be produced? What do you do when the so called pirates are at the same time your best customers and your best sales people?

To be continued

Back in 2006, the company I was working for, The Mergermarket Group, was acquired by the Financial Times Group. At that time I discovered one thing that let me a little perplexed. The Financial Times (the paper) and the FT.com (the website) had separate editorial staff and were managed like two distinct entities within the group. I could not understand why. I soon found out that most newspapers had a similar structure.

This fact added stupor to something that for me was already strange and that had been bugging me for a while: why are newspapers giving for free all of their content online and then trying to charge readers for the print version of the same (or very similar) content?

These two facts: the separate editorial teams and the free vs paid content seemed given for granted in the publishing world. At the time I thought I must be missing something. I don’t understand how it works I told myself, they must know better…

Over the last 3 years I have followed much of what has been happening in the Media industry, partly because I continued working in the sector and partly because I am fascinated by the incredibly fast and devastating way in which technology is affecting all media.

Now we all know that the old business models couldn’t work in the ‘new world’ and it is already too late for many newspapers to survive the digital tsunami. It’s just of today the news that Business Week will be sold for chump change.

Still, I don’t see many major publishers moving quickly and steadily to address the problems they face. There’s a lot of talking about possibly charging users for online content or charging the new intermediaries (i.e. Google) but nothing is being done. What are the big publishers waiting for? Haven’t they learnt anything from the (still unfolding) disaster of the music labels? What is happening to media? What models are emerging and where are we now?

I am going to try and explain the way I see the industry today and the direction it is (or should be) taking. I’ll be looking at how production, distribution, consumption and business models are changing. My writing will probably be as unstructured as my thought process. I’ll be talking about all media as, soon, there won’t be any point in distinguishing between publishing, broadcasting, music, etc. All media are converging into one big, cahotic, exciting blend of content and delivery. You’re welcome to contribute to the debate.

Free for all … Ouch!

For a moment forget web 2.0, user generated content, new business models and the advertising slump of the last 18 months. Think just this: a few years back the possibility emerged for publishers to produce and deliver online better and fresher content than before, at a marginal additional cost and to a much broader audience. Publishers should have delivered that content at a small price to the user, not for free. That simple. Gradually, they should have replaced physical delivery with online delivery and put in place a plan to dismantle the old physical infrastructure and the related costs.

Things are now getting a little more complicated, with Google having stepped heavily into this space causing disruption and with the consolidating perception by the users that content should be free. But I think there is still a small window of opportunity for the major brands to deliver their content (and value) digitally and charge for it. Big publishers should just take the bull by the horns, offer news, proprietary content and added value features in exchange for a small fee.
Why though are they still debating this?

Media smoothie anyone?

Until now different types of ‘media’ (television, newspapers, radio, books, etc.) were defined by their delivery mechanism, the medium through which they were delivered. Now, the medium is the same, it’s the internet. The different delivery mechanisms are blending, the old silos are breaking down. Users are expecting these barriers to disappear. Younger users may not even be aware of such barriers, they certainly don’t understand them. Media companies need to re-think fundamentally how to produce and deliver content. They cannot in my view afford not to deliver all types of content in an integrated way, whether that is by producing it themselves or by partnering with other media companies.

Read more in the next post.

Useful Links
AP and News Corp want to charge Google for their news
David Gillespie Digital Strangelove or how-i-learned-to-stop-worrying-and-love-the-internet