This year's International Consumer Electronics Show was awash in more tablets than a local pharmacy, with both actual models being shown and overarching buzz from Apple's anticipated iSlate tablet offering expected later this year. While many of the new tablet models were largely warmed-over versions of netbooks or smartbooks, some were oriented towards executives and (presumably) wealthy students who would be willing to pay close to a thousand dollars for a tablet that "acted" like a paper document. Two key models making their debut at CES in this column were the Hearst-sponsored Skiff newspaper and magazine reader and the Que document and e-book reader from Plastic Logic.

Labels: 3-d, apple, avatar, cinerama, eBooks, ereader, facebook, hearst, islate, magazines, mobile, newspapers, pc, plastic logic, que, skiff, tablet, television, Twitter

I've had the privilege to have moderated many great SIIA panels over the years, but the 24 June Brown Bag Lunch mid-day event at the McGraw Hill building in New York City (online video available) certainly ranks among the most important topics that I've had the opportunity to moderate with some excellent panelists who will stimulate your thinking on how best to monetize content on today's hot distribution platforms. Please register soon, the last Brown Bag Lunch event was a sellout both in-person and online. If you have suggestions for questions that the panel should address, please add them as comments to this post. A panel summary and a list of our truly distinguished panelists follows. See you there!

Labels: Amazon Kindle, books, brown bag, busines models, crovitz, events, Google, iPhone, journalism online, magazines, Monetization, newspapers, Oxford, profits, Publishing, settlement, SIIA, thomson reuters

As you may recall David Carr triggered a firestorm of discussion in the media industry about micropayments with his 11 January column in The New York Times when he suggested that newspaper publishers should think about how Apple's iTunes platform does quite handily charging consumers for by-the-song access to music. I blogged on this and other aspects of the business model quandary a couple of days later and mentioned micropayments as one innovative avenue for publishers to explore. It would be hubris for me to say that I triggered the ensuing firestorm of discussion on micropayments, but certainly the "M word" has been buzzing around quite a bit these days.

The crescendo on micropayments was marked by former Slate online magazine editor Michael Kinsley's op/ed piece in The New York Times a few days ago in which he lambasted the idea of micropayments. Kinsley notes rightly as have others that the prime thing that keeps people from paying for content from traditional brand sources is the availability of free/ad-supported sources of content from new online sources that are oftentimes perfectly acceptable alternatives. There's no doubt that Kinsley's early abandoned experiment with online subscriptions was a bellweather for the content industry (my now-rusting Slate umbrella from my own subscription now shelters me on the way to the end of my driveway for newspapers and mail), so his negativity certainly speaks from experience. However, Kinsley's slap against micropayments seems to miss the mark. He notes:

Micropayment advocates imagine extracting as much as $2 a month from readers. The Times sells just over a million daily papers. If every one of those million buyers went online and paid $2 a month, that would be $24 million a year. Even with the economic crisis, paper and digital advertising in The Times brought in about $1 billion last year. Circulation brought in $668 million. Two bucks per reader per month is not going to save newspapers.

Well, yes, micropayments of that scale are certainly not going to preserve major media companies as they've existed for the past century or so. But Kinsley's math is based on newsprint daily circulation. Looking at the New York Times' online monthy unique visitors - estimated by Compete.com to be at about 16 million in January - the same math would come up with a rather tidy $384 million annual revenue for The New York Times from online micropayments. Given that such revenue would not have to support the lumbering NYTimes printing presses over in the borough of Queens, that would also be a pretty tidy profit, as well, probably close to the net income from newspaper circulation.

I don't think that micropayments are the only answer to online media's problems, nor is any one particular business model going to produce a "magic bullet" revenue stream in all likelihood. As Walter Isaacson noted in his recent Time magazine article on how to save newspapers:

Newspapers and magazines traditionally have had three revenue sources: newsstand sales, subscriptions and advertising. The new business model relies only on the last of these. That makes for a wobbly stool even when the one leg is strong. When it weakens — as countless publishers have seen happen as a result of the recession — the stool can't possibly stand.

Clearly most publishers have relied on multiple business models and revenue streams to build strong businesses, including Time magazine's own powerful direct marketing capabilities, as noted by Susan Mernit at The Huffington Post. There's no solid reason to think that micropayments couldn't develop into one important revenue stream that could benefit both traditional media organizations as well as the millions of independent publishers whose content has become popular online. Unfortunately micropayments remain a neglected alternative with a reputation that's been scarred by poorly planned early micropayment experiments in the early days of the Web. What's most discouraging is that there are plenty of successful models that are analagous to online micropayments that work very well for content and communications revenues. A few familiar analogies to micropayments:

• The phone bill model. You might say that telecommunications companies introduced the first micropayment model with their ability to charge by the minute for phone calls that were billed to clients on a monthly basis. It has worked for decades and has included both fixed payments for base-rate services and add-on payments for value-add services. Thinking of news as a communication rather than as a thing may help publishers to reconsider just what it is that they're trying to get people to support.
  
• The music royalty model. The music industry certainly has its challenges these days, but certain aspects of music monetization are still fairly intact and operable - including the royalty payment scheme that's used to disperse payments to music publishers and artists when songs are played on broadcast outlets. Monitoring the use of news content can provide similar mechanisms.
• The newsstand model. One of the most obvious payment models that's been around for years is the newsstand model. After years of plunking down quarters for newspapers on the way to catch a train to or from New York, it's hard for me to accept that some people cannot fathom the idea of small payments for news content when it's in the right place at the right time.
  
• The tips model. You see it all the time on streets and in public spaces: street musicians plunking, bowing or blowing away with a tray to collect tips from passers-by. Public broadcast outlets in the U.S. as well as many online news Web sites have been using the tips model to receive donations from people who appreciate their content creation efforts. Micropayments could be as simple as enabling a per-item tip jar infrastructure.
  

Any and all of these are possible approaches to micropayment-supported media that are both relatively simple to implement from a technology perspective and that offer possible paths to value-add revenues. A micropayment system may tick along in the background on some metered system at lower rates than newsstand fees without a per-use transaction, but an obvious advantage of such a system is that it could easily trigger a per-issue payment for someone who want to browse through more than one or two hit-and-run articles - which could also be billed in the background.

Why hasn't such a system been built to date? Certainly highly competitive rivals in the content industry have managed time and again to try to turn micropayment systems into a proprietary choke point that can give them an advantage in the marketplace; in the process of doing so they choke off the potential for the industry as a whole to grow through micropayment. Nobody down at Grand Central Terminal is trying to install cash registers at newsstands that can be used for only certain newspapers or magazines: why would it benefit the industry to do so for electronic content?

Similarly, for all of the praise that's been lavished on premium downloads on iPhones, the iPhone represents a relatively small sliver of the mobile markeplace where music could be sold. The model appeals to music publishers because it has that good old "choke point" feel to it, but the truth is that the iPhone's highly proprietary approach to content ecommerce only underscores how poorly music publishers fared in coming up with a technology-neutral micropayment solution.

I do believe that many new successful models for generating revenue for content suppliers are on the verge of being introduced. The bad news for many publishers is that probably established major media companies are not the ones that will create them or implement them first. It's far more likely that the chokehold-averse, technology-neutral community that generates social media and other new forms of publishing will recognize that there are benefits to be gained by collaborating on payment systems that can benefit their community as a whole - with our without established publishers benefiting from them. One can see this to some degree already in the book publishing industry, where innovative online outlets such as Lulu.com have been aggressive in pushing value-add print-on-demand sources of revenues while traditional book publishers continue to focus on mass production of print titles.

The sad truth about most media companies is that if their existing sales and marketing forces aren't going to benefit from a new revenue stream it's fairly difficult to get it accepted by their organizations. Thus the anxiety about exploring micropayments may have as much to do with an executive's career comfort level as it does with any strategic business factors. The flap about micropayments is really not about micropayments themselves as much as it is about a mindset in most media organizations that has yet to grasp how to do business the Web way. Search engine optimization is a small step forward in that understanding, but it's really only about optimizing one revenue model and not much at all about confronting the real nature of how to broaden the revenue base for content on the Web.

Micropayments are coming and they will provide billions more in content revenues online eventually, but by the time that traditional publishers get around to adapting them the millions of publishers using social media publishing tools to take advantage of them may leave them a fairly meager slice of the revenue pie to share. If media companies can stop trying to build artificial chokeholds and focus more on enabling content commerce the way that the Web really works, perhaps there will be hope yet for them to close the revenue gap between online operations and their traditional operations. In the meantime, brace yourself for micropayments - they're coming anyway.

Labels: busines models, michael kinsley, micropayment, newspapers, slate

I enjoyed this year's SIIA Information Industry Summit and Previews events very much; there were great presentations and great discussions throughout the two-plus days in New York. However, I was a bit disturbed by some of the gossip I heard percolating in the background about the successes of Congressional Quarterly that were highlighted by CQ's president and editor-in-chief Robert Merry in his panel presentation. Under Merry CQ went from being one of many challenged niche Washington print publications into a highly successful for-profit online subscription service with a healthy array of complementary of online and print publications. The undercurrent at the conference was along the lines of "Well, that's easy for him to say, he works for a non-profit." Sorry, folks, while the non-profit Poynter Institute owns CQ as well as The St. Petersburg Times via parent umbrella Times Publishing Co., Merry has had to work towards a profit component as much as any other publication.

Such critiques are especially ironic given the announcement that TPC is now looking to sell CQ in order to raise cash that will allow its beleaguered St. Pete Times to stay afloat. Politico has a particularly meaty take on the proposed sale, with lots of insider quotes. The bottom line of this deal is fairly simple: CQ is a valuable asset, will sell as soon as there's money available to buy it and is the baby being thrown out to rescue the soiled bathwater that is today's consumer newspapers. It is akin to The New York Times' recent decision to lease out real estate from its new building to raise operating cash for its newspaper, but unlike the NYT, TPC has decided that it's better to hang on to a dying publication and to let go a publication that's done its homework on how to survive in a very tough market niche.

At least TPC is making an honest attempt to try to figure out a working business model for newspapers in a post-print era. By contrast, The New York Times went to print with an op-ed piece by David Swensen and Michael Schmidt which claims that today's news organizations should be subsidized as non-profit organizations. The op-ed piece lays out the facts of the news industry's woes objectively enough, but then it adds this nugget:

By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America’s colleges and universities. Endowments would transform newspapers into unshakable fixtures of American life, with greater stability and enhanced independence that would allow them to serve the public good more effectively.

Perhaps with bailout fever in the air news organizations are feeling that they should join the Washington gravy train and try to get a permanent government subsidy. If so, this would be both extremely ironic and highly unlikely, given Washington's relentless cutbacks on public radio and television outlets, which have lost the lion's share of their government subsidization and which do not have the extensive international correspondent networks that Swensen and Schmidt claim are in need of subsidization. From crowing about "cash cow" profits to going hat in hand to governmental organizations seems to be an unlikely transition for most major media companies, especially given their recent tendency to play high stakes M&A games on highly leveraged dealmaking at the expense of staff and product development.

In one sense the concept of endowing consumer news journalism is a sound one; we should be making it easier for good news to be collected in a way that puts less profit pressure on news organizations. The truth of the matter, though, is that this is happening anyway. In addition to some news organizations teaching people in local markets how to help them in collecting news, the marketplace is encouaging startups that are filling the gaps left behind from the media industry's dilution of news coverage. Emma Heald notes at Editorsweblog.org the progress of VoiceofSanDiego.org, an investigative journalism startup funded by contributions from the greater San Diego, California community and from the Knight Foundation. VoSD.org has the flexibility to produce investigative journalism without the pressure of advertising, but that's not the only solution to filling in the revenue gap required to produce important news. More partisan outlets such as The Raw Story have periodic fund drives to help close the gap between modest online ad revenues and what it takes to field journalists who are willing to pursue commercially unpalatable news.

So although it is romantic to think that news organizations that have tried to be blue-chip stock plays can become well-disciplined investigative news organizations at the wave of an endowment wand, the reality is that there is a new generation of investigative news being produced both by professionals and citizen-journalists independent of those media companies. News will survive and thrive in the online world, to borrow from the title of Content Nation, but not necessarily in the hands of organizations that are the product of the era of mass production. Much of it will be produced for free or for the purposes of people who choose to support it either through endowments for through their good will in producing it. But news will continue to be produced for a profit - if its producers can understand that the content industry is entering the post-industrial era. Mass production still has value, but the most value in the publishing marketplace is in the mass-production of highly contextual information and experiences. The key to the survival of publishing is to focus on monetizing the contexts, not the "things."

In some ways the consumer news industry understands this in their improved focus on search engine optimization, contextual ads, better content engagement and better integration of content generated by its communities. But at the heart of the gap between yesterday's more robust revenues and today's more meager online revenues is a failure to monetize contexts efficiently. Some of that gap can be closed by a standardized approach to micropayments, but in large part the proliferation of news on many topics from online sources and independent aggregators of news links means that there will always be fewer contexts that traditional news organizations can monetize. So yes, get those endowments if you can find them, but don't expect that you'll support the same kind of news organization with them.

All of this brings us back to Bob Merry's great historical insights on the news industry. He noted at the SIIA Information Industry Summit that prior to the rise of today's "objective" news gathering organizations in the industrial 19th century there was a robust array of smaller and more partisan news organizations from which people could pick and choose insights on the topics of the day. In this fray, few news rooms would claim to have the "objective" view of the truth: people would have to assemble that on their own through studying the sources and discussing them with others. In Merry's view the industrialization of news to produce a standardized consumer commodity was a relatively brief phenomenon in its long-term history. In other words, perhaps what we are seeing in the news industry is not its undoing but rather its re-doing into its more native form.

CQ can expect to find an eager buyer soon enough, and the consumer news industry as a whole will turn into whatever free markets want it to be soon enough as well. I do believe that it would be a mistake to subsidize today's news organizations as they have existed in recent decades. This would be as large a mistake as countries that have subsidized other inefficient industries in the past. Instead, we need to continue to ask the question of major consumer news publishers, "Which part of the word 'change' is it that do you not understand?" Let's endow new business models for consumer news such as new approaches to micropayments and community-supported news generation methods that serve people as they want to be served. The rest will take care of itself soon enough. In the meantime, the successes of CQ underscores the point that a good publication in a good niche will always have a fighting chance. And in any business it really is all about the fight, after all - isn't it?

Labels: B2b media, congressional quarterly, Deals Partnerships and Sales, newspapers, Robert Merry, subscription, washington

For years major media companies have tried to finesse their transition into online markets. They've made investments in portals and ad-serving systems. They've built up online communities and search engine optimization schemes to maximize revenues from engaged audiences. In fact, publishers have done a lot of good things to make a stronger transition to online revenues. Yet in spite of these efforts, one thing that they haven't done is to prepare for the day when they'd have to rely on online media to carry their bottom lines.

It appears that this day has come. And most publishers aren't ready. By a long shot.

Where do we start? The highly leveraged newspaper deals of the past few years that were based on fantasy projections of "cash cow" revenues? As formerly solid mid-market papers such as the Seattle Post-Intelligencer are prepared for sale (and possibly going online only), as major papers such as the Chicago Tribune abandon broadsheet sales on newsstands in favor of a truncated tabloid edition, as television producers wrestle with online portals that threaten to take the steam out of broadcast and cable deals, as music companies stumble into another year of falling CD sales and wrestling matches with social media playlist aggregators, as...well, you get the picture, I assume. Nobody has a real clue as to how they are going to get robust revenues from online distribution and many old channels of distribution are drying up quickly in a slow economy. In trying to keep old cash cows alive, the potential growth markets for online content have been stunted from a lack of truly inventive approaches to revenue generation.

Online display ads? Spare inventory is running at half the rates of last year. Online subscription? It works for The Wall Street Journal and plenty of enterprise services, but few others have been willing to risk the lack of exposure to search engines and social media. In the meantime, media organizations eager to trim staffs after consolidation deals are left with less and less editorial staff to generate attention-getting content. The presumption that online revenues for traditional media properties would ramp up at a pace that would offset declines in revenues from traditional outlets is essentially false. Media companies have under-invested in online revenue generatiion and are now faced with the uncomfortable duty of trying to think their way out of both an ad recession and an idea recession.

This is not to say that there aren't bright exceptions to this rule - many great brands continue to thrive, albeit on a slimmer slice of revenues and market attention than before - but there is a fundamental revenue gap that is not going to close any time soon for many publishers. David Carr highlighted this in his recent New York Times article, mentioning with only part of his tongue in his cheek that publishers should take advantage of oversized iPods expected this fall to facilitate pay-as-you-go downloads of content. Carr is on to one essential point: ads on their own properties can't pull the full freight for most publishers in their traditional media, and neither should they pull the full freight in online media. The main problem, though, is that media producers seem to be searching continually for some magic-bullet device portal that will solve their problems and recreate, at one level or another, the "walled gardens" that they had relied upon for revenue generation in the past. These artificial scarcity plays, though, generally strike audiences as, well, artificial, and rarely float on their own without exceptional features and content from a broad spectrum of sources. Even then, the next great portal or platform comes along and the game is off.

Will the revenue gap ever close to the satisfaction of today's publishers and media producers? Probably not. Smart publishers know now much technology has passed their brands by and how much technology has enabled other brands to sweep into their audience's mindshare, but it's an uphill battle. They are up against billions of dollars invested in new publishing technologies that have not benefited their own products before benefiting the content produced by Content Nation and by any number of professionally-oriented startups that have their own take on content aggregation and production. Latest example: The Printed Blog, a startup that is launching a twice-daily free newspaper in Chicago based on content aggregated from popular local blogs. Even print itself is not a barrier for technology that can aggregate attractive content sourced from anywhere.

OK, enough of the doom and gloom, where's the good news? The good news is that there are business and payment model options for publishers to explore to make better use of their key publishing assets:

• Micropayments. Micropayments are not regarded highly in many circles, but they're a logical extension of existing business models such as newsstands (a quarter for the New York Post at the train station? Essentially a micropayment.) and can be implemented more effectively using technologies such as Attributor that track use but don't necessarily limit distribution. A widespread embeddable micropayment system would enable publishers to expose limited content through viral distribution and still enable direct revenues on a transparent "I'll try anything once" impulse buying system that monitors access passively. It may turn out to be only a few cents per view - something along the line of messaging units on mobile phones - but it could create a fundamental offset in revenues that could begin to build a bottom floor for revenues that keep the doors open.
• Agnostic aggregation. The most successful plays in online publishing are far more willing to treat anyone's content as potentially interesting content for their audiences. This may frustrate traditional journalists at times, but since there are fewer of them making a decent living these days to be aghast at the idea of their content being beside an independent blogger, perhaps it's not such an unthinkable thing in the long run (yes, there are probably guild/union issues, but realistically it will happen). Having spent years trying to define technology that would enable aggregation to be controlled along the lines of traditional media business development, perhaps media companies can invest a little more heavily in aggregation plays that do not require top-heavy approaches to aggregation.
• Focus on talent support. With all of the talented journalists and media producers out there, you would think that someone would decide to recognize that the trend is towards "the talent" powering publications as independents and focus more on getting their content in the best channels possible. If it's important for a journalist to be able to follow a particular story independent of daily publishing pressures, then why not make it easier for journalists to do so with high-visibility distribution on a wider variety of channels? Exclusive access to specific editorial teams no longer seems to pay the bills, anyway. I think that we're likely to see a content bidding system emerge not unlike that used for online ads which will allow independent journalists to sell off the rights to their work to key media outlets on an on-demand basis. If making money in publishing is about getting the right content in front of the audience at the right time, why not make it easier for both the content producers and the content distributors to optimize the content side as efficiently as they do the ad side?

Whatever way you look at it, today's publishing environment has put the spotlight on The New Aggregation that I presaged several years ago and has forced publishers to think about specific assets that they have and to use them more effectively as individual components that can serve markets in a variety of ways - not just through their traditional branded outlets in traditional ways. Be it news, databases, entertainment or any other form of media, the winners will be those that can meter out the value of their content production to facilitate on-demand aggregation far more efficiently than they have to date. The brand isn't the bundle - the brand is the ability to bundle what's most important today.

Labels: advertising, busines models, business media, economy, media, music, newspapers, subscription

Good news about the newspaper industry has been an oxymoron at best in a sinking global economy, and today is no exception. TheStreet.com confirms the buzz that The New York Times is taking out a USD 225 million loan against its new office building off of Times Square while the Wall Street Journal notes that Sam Zell's Tribune Co. is sniffing out options for a Chapter 11 bankruptcy restructuring. Quite a change of pace from last year's triumphal posturing of new media headquarters and highly unrealistic revenue goals for private acquisitions would eventually lead to new glories. 'T'ain't working, apparently, as print ad revenues continue to crater except for feature article sections that vie with magazines for more targeted interest groups. As was noted in a study from earlier this year 37 percent of Americans go online for their news, while only 27 percent were picking up a newspaper on any given day. Newspapers in the U.S. are now officially a legacy product, though they still represent the majority of ad revenues for most news organizations. The only large markets where newspapers are growing significantly are in nations such as India, where the penetration of the Web still lags behind the thirst for news.

While some well-diversified media companies are prepared for the long run of news' transition into a more electronic future, 2009 is shaping up to be the year in which the newspaper industry begins to face either massive restructuring or widespread collapse. Yet there is hope for traditional providers of news - if they can put their best efforts behind the most profitable opportunities. Here are a few thoughts as to where traditionally print-oriented news organizations must be headed in 2009 to build a more profitable future:

• Get better than bloggers and search engines at aggregating news. Mainstream journalists are still equipped oftentimes with the personal networks that enable them to deliver breaking news effectively, but nobody trusts any single news organization as their source for news. Instead, many online news users are turning to bloggers, search engines and messaging services such as Twitter to aggregate breaking news on the topics that matter most to them. In other words, while referral links are highly valuable for people who bother to engage full-length news stories, the sites that provide them are the "go-to" stops for a rapidly growing number of news hounds. Getting breaking news to appear more automatically in these other venues - and to have revenue-producing ads and partnership "hooks" in that remote content - is a key factor for making the most of these aggregators. However, it also points to the lingering question: why aren't more mainstream news organizations aggregating more links from other sources in their own core news coverage? I would agree that automated aggregation services like Sphere are of limited value in this regard, but the source-agnostic form of editorial content aggregation favored by bloggers and outlets such as the Huffington Post and Newser appear to be enabling far more engagement for online audiences than "not invented here" news organizations that still insist that their own teams must create most every drop of news that they monetize.
  
  
• Love print as a service, not as your brand. In the nineteenth century newspapers grew up in buildings that housed their editorial staffs, printing presses and loading docks - self-contained factories very much in the model of that era's mass manufacturing. In the twentieth century printing presses in many markets moved away to remote locations but most still produced newsprint products only for one source of editorial content and ads. In an era in which news can be aggregated effectively by anyone, that model is no longer a cost-effective approach to print production. Print will continue to thrive as a reading format for some time, but it's far less likely that printing presses are going to be running news and ads from only one source. It's far more likely that new types of newspapers are going to be with us very shortly, ones which license news from today's newspaper staffs and other news sources and share revenues and links to online materials via Data Matrix codes and other print-to-online linking technologies. Individual news organizations are not likely to invest enough in these new kinds of source-agnostic aggregation technologies fast enough to make a difference to their bottom lines, so suffering news organizations would be smart to band together to make such technologies happen sooner rather than later. Alternatively, the time for a "Google Newspapers" printing plant in major markets that aggregates content from many sources agnostically may have come at long last.
  
  
• Enable community-generated news more effectively. Small-market newspapers and television cable news outlets have become fairly aggressive in embracing their audiences as sources of news and entertainment. Yet major newspaper chains in many markets are still struggling to get their hands around what it means to empower everyday people as news producers. Social media provides some of the most engaging content online today, yet many publishers still shy away from empowering local news gatherers that do not conform to traditional models of journalism. But many sources of community-generated content - sports scores, traffic reports, eyewitness news - are highly engaging sources of content that can be monetized easily. In an era of real-time broadcast news alerts from anyone on services such as Twitter newspapers need to rethink what's the best way to engage a community that already knows how to publish to one another.

There's no doubt that many news organizations are hitting the right buttons in making decisions on the future of making money from news, but the pace at which those decisions are being made has left a gaping chasm between the cost of sustaining their greatest revenue-generator - print publishing - and the cost of investing more heavily in online publishing methods that will carry them forward to long-term profitability. As much as online is the answer, though, I think that it's time for publishers to take a far more radical approach to print as soon as possible. Print will survive and thrive - the only question is, in whose hands? The time to release the medium from the brand is at hand, and it can come none too soon for most news organizations' bottom lines.

Labels: newspapers, print, publishers, turnaround

AP notes along with others the announcement that Google plans to extend its print archives scanning program to include the print archives of any newspaper that would like to participate in their program. This new effort builds upon Google's existing scanning efforts to capture books and other materials in the archives of major libraries. Early participants in the newspaper scanning program include Montreal, Quebec's Chronicle-Telegraph, the Pittsburgh Post-Gazette and the St. Petersburg Times in Florida. Regional newspapers are struggling to find sources of revenue for their print assets what will offset plummeting print ad income, so the prospect of exposing their archives for revenues from Google's AdWords and to benefit from referral links to their subscription signup pages is found money for assets that are otherwise sound asleep in most library collections.

Unlike previous arrangements for newspaper archives, which were arranged based on access to subscription or pay-per-view databases or limited access to "snippets" of copyrighted content, the newspaper scanning program's direct parallels with the Google Books program means that people will be able to benefit both from the literal image of a newspaper as it existed at the time but also from text-based searching of those news sources. The differences in approaches are clear and somewhat startling when you compare the scan-based approach to other approaches. For example, a Google News search for "Man Walks on Moon" in the Google News 1969 archives, for example, yields dozens of pay-per-view articles on the topic, but eventually one can look at an ad-supported article from the Pittsburgh Post-Gazette that captures not only the words but also the flavor of graphics, editorial cartoons and other features that were of importance in the era of the early space program, with key search terms highlighted in the scanned text image.

For larger media organizations this approach may not be as appealing as waiting for the "big fish" of pay-per-view and subscription database revenues, but for regional and local newspapers this is likely a very attractive alternative to microfiche collections which are expensive to create and will have relatively low-volume, one-time sales, versus the evergreen potential for revenues from online scanned archives. This alternative to microfiche and subscription databases also puts pressure on suppliers such as ProQuest and Cengage to justify the breadth of their archives as a key selling point. AdWords revenues will not be the answer for every publisher's need to monetize archives but it appears that Google has found another way to add value to hard-to-find content sources that challenges publishers to think more creatively about how they intend to add value to the delivery of their archived content.

Labels: adwords, archives, FAST Search and Transfer, Google, Monetization, newspapers, pay-per-view, scanning, subscription

There's the usual spate of moans and groans about print profits coming out of the Argyle Executive Forum on Leadership in Media, according to Red Herring, which featured insights from many key figures in today's news media markets. This negative outlook is underscored by News Corp's withdrawal from bidding for New York area newspaper Newsday based on it being "uneconomical" and setting the stage for a potential takeover of the paper by Cablevision. While revenues continue to climb from online content at news outlets classified revenues are still highly vulnerable from online competitors, making it hard to translate growing online audiences into profiles that resemble print.

There's not much new in all of this, to be sure, but I was interested in the following comment from the Argyle conference:

Norman Pearlstine of the Carlyle Group told attendees that newspapers enjoyed a brief period of monopoly that attracted investors and convinced many families to take their businesses public. However, he said, for most of its history, the newspaper business did not enjoy the double-digit margins that characterized the 1980s and 1990s. “At the end of the 19th century there were 29 newspapers in Chicago,” he said.

In other words at the end of the day perhaps the consolidation in the print industry of the past fifty years or so, first in response to rising fixed labor costs and television competition and then from the Web, created an illusion that highly capitalized media operations would yield superior results in an industry that has historically favored diversity in lower-margin operations. By creating larger swaths of exclusivity for fewer brands in major markets, newspapers and other print outlets were able to attract advertisers for several decades and provide reach at the same level of television markets. But in doing so they never really addressed the lack of technologies that could deliver higher margins except through higher production volume. This created an artificial illusion of technology scarcity that helped to drive both margins and the expectations of people creating print content. As long as there was a steady stream of companies to acquire to build up the illusion of scarcity, this worked rather well. But we seem to have come to the end of the run of worthwhile mass market print acquisitions. Big will probably get bigger yet if government regulations allow it, but to far less avail.

By contrast, the Red Herring article highlights how Playboy Magazine was one of the very first to invest heavily in Web technologies and to learn how to make them both profitable and attractive to advertisers and audiences, including heavy investments in online video and multiplatform delivery. The result: a highly profitable and attractive operation that offers some unique appeal to online audiences based on both content and branding. Instead of focusing on acquisitions in a sea of abundant competitors to create more artificial scarcity, Playboy worked to create something more appealing what would create quality that would be hard to replace.

Another important contrast comes from a recent MediaPost article, in which Ken Doctor points out that local newspapers are still doing fairly well, in part because many local advertisers as well as audiences have yet to be able to leverage a confusing array of online options effectively. This creates a real scarcity of audiences focused on local online content that are easy for advertisers to attract with some scale. Online alternatives are catching up fairly quickly in terms of content quality, but until GPS-enabled advertising services grow more sophisticated local print will continue to offer a ray of hope for print.

The bottom line is that it's far from clear that major media outlets as we know them really need to exist as they have for the past fifty or so years much longer. If the historical state of content is a wide variety of focused outlets with relatively low revenues, low volumes and low margins, then maybe what online publishing is beginning to usher in is simply the return of publishing to its more normal state. The difference with current markets is that electronic content aggregation makes it relatively easy for a wide variety of publications to leverage common technology. For example, individual weblogs such as ours use a tiny fraction of the power found in Google's Blogger.com infrastructure. So by focusing their capital mostly on pure infrastructure, Google has created true scarcity of highly scalable publishing capabilities that can service both localized and broad audiences very effectively.

Notably even companies like Google go out and buy market share through acquisitions - online video outlet Blinkx is rumored to be on their short list of short-term possible acquistions -
but these tend to be acquisitions that bring in both unique technologies and unique audiences. Where major media companies look mostly at reducing costs through online and print publication consolidation, the Googles of the world stay focused on creating more unique product value through acquisitions. With such an insistence on sticking with old metrics for performance it's not clear that established media companies can commit their capital effectively to gain a market advantage as long as they continue to focus on creating more artificial scarcity for dated products and dated delivery technologies. In the meantime private equity abounds to fund technology platforms that will take away the best opportunities for a wide variety of producers content with higher margins on lower volume and advertisers pleased with more focused audiences.

In other words, it's very unclear where the news industry goes from this point if they don't want to invest far more heavily in new electronic product development for more focused audiences. With a sour economy making it all the more hard to raise more capital for investment, expect media titans to continue to wrestle with their place in a content market traditionally dominated by smaller, more agile and more innovative players.

Labels: media, Monetization, News, News Corp, newspapers, print