On-demand Media

links for 2008-09-29

• Government plans to tighten up online regulation, says culture secretary Andy Burnham | Media | guardian.co.uk
  "The internet as a whole is an excellent source of casual opinion," he said. "TV is where people often look for expert or authoritative opinion."

links for 2008-09-25

• Drudge-ology 101: McCain, Obama and Media Bias - The Fix
  A quick note to preempt the inevitable argument that Drudge's influence is overblown. Tomorrow morning, take a minute to look at the stories Drudge is highlighting. Then, later in the day, watch a few cable channels to see what stories they are talking about. It will open your eyes

links for 2008-09-24

• How Newspapers Abdicated the Front Page's Influence and How They Can ...
  Yes, any one piece of content can be very influential, but systemically, content is not the source of influence on the web.

Doing well without content

If you have been following my recent posts you should go and read a very similar discussion going on at Scott Karp's blog.

Scott zooms in on engagement (time spent) and loyalty (repeat visits by the same person) as performance metrics for news sites, and points out that the Drudge Report scores higher than CNN, Yahoo News, Gannett newspapers, the NY Times on both counts. The reason, Scott ventures, is that the Drudge is mainly an aggregation play, while the other sites are not and receive much of their traffic from other sites.

I agree. As I've argued many times in this blog, brand loyalty is built through aggregates and not through content (unless you accept my motto that 'aggregation is content'). But this doesn't mean that mainstream sites have fewer readers than the Drudge. It only means that loyal readers account for a smaller percentage of their audience – and they are able to monetise both. The important question is which of the two models is more profitable (in terms of rate-of-return) and scalable.

(Scott also ventures that mainstream sites' traffic comes largely from aggregation sites like the Drudge and search engines like Google. From my own experience in these matters I suspect the latter is significant while the former is less so. But this is not essential to his argument.)

While the Drudge's overall audience is far smaller than that of CNN et al, its average reader is presumably more profitable. And the same may be true of it as an operation in terms of rate-of-return ($54m pa with one member of staff, by Scott's reckoning). Further, Scott points out that the Drudge's audience is one of the largest among web-only news-only sites.

This supports the argument in my previous post. To recap, this was that web-only plays have the flexibility of restricting their content to only what they can't find elsewhere while linking to others for everything else. By contrast, outlets with a print (or broadcast) operation can't do this, because they need to produce (or buy) content for the old-media version. I concluded that "the game for incumbents is managing to produce enough content to publish a decent print paper even as the associated revenues decline, without being able to face the disruptors at their own game." Comparing newspapers' and the Drudge's rates of return underscores this point.

But then I think Scott makes a mistake. He recommends that mainstream sites "put a continuously updated news aggregation on the homepage," so that readers can monitor these pages and stay across "the best stories" from mainstream sites in addition to a site's own content. Left unspecified, this could mean just adding a machine that algorithmically trawls news sites and somehow selects "the best" is enough. Even if that were possible, you would be competing with Google News on the basis of technology – and there you have no chance. Further, as Tim Buden implies in a comment to Scott's post (in my reading of it), you would be diluting your brand. A newspaper is known for its editorial voice, not for giving you "the best".

What the Drudge offers is not "the best" links. It is a distinct editorial voice (idiosyncratic, tongue-in-cheek) aimed at a specific readership, just like any newspaper does, but by using only curation. From the reader's point of view this is not that different from a site that did this while relying only on its own content (although from the publisher the difference is enormous). And it is because of this that mainstream sites have chance at aggregation (as Scott implies), but only if they set their best editors to the task. I repeat: aggregation is content.

There are many more connections to be made between my previous posts and what Scott and his commentators say, but if this interests you I suggest you read both blogs and draw your own conclusions.

 

Update: Well I was wrong. In a later post, Scott Karp makes it clear that when he calls for newspapers to "put a continuously updated news aggregation on the homepage" he is not talking about algorithms. He notes: "Giving over the function of choosing links, of filtering the web, to an algorithm is an implicit devaluation of the quality of human judgment, of what makes an individual editor's perspective so interesting". I agree with that, but I don't share his concern (later in his post) that that human editors will find it difficult to compete with machines on exhaustiveness (which leads him to call for collaboration between journalists so that, between them, they can trawl the web). I don't think that is the point. What human link-editors offer is not a 'service' to monitor the web or the world, but a view, a that reflects a community's concerns, not the world. Millions of events happen every minute, more and more of them are getting reported somewhere on the web, and for different people different events are 'news' while others aren't. The view comes first, the events second. And the view has to do with being a certain kind of person, a member of a certain community, with certain shared concerns. Link journalism is not about offering endless choice, but about keeping your readers in the loop about a few key things that reflect (or set) a community's key concerns- and these are limited, because a community can't be talking about a million things. In my humble view, the notion that journalism is just about relying information is a myth, a myth that is necessary to the ethics of journalism (how could you talk about honesty otherwise?), but a myth nonetheless. "Focussed and honest storytelling" is closer to the mark.

Do you need your content?

I keep musing about the separation between content and aggregation, following on from my previous posts. This work-in-process, but then that's what blogging is about.

They key question, it seems to me, is whether there are any synergies between owning a content brand and owning an aggregation brand. And they key fact is that in the web you can have one without the other. Many people do both things well, but would they be better off if they did the two independently?

Put it this way:

• On one hand, you have the money that you earn by controlling both your content and the main route to it.
• On the other hand, you have the money you would earn if you could monetise all the viewing of your content, plus the money you would make by monetising your aggregation brand – e.g. the Times' front page – if it were ran independently, without being constrained to linking to your own content only.

Which of the two is more profitable? Note that this is not an either/or question. Perhaps you would maximize profits by aggregating a mixture of your own and other people's content. The extra profits from the second option would come from the extra traffic (or willingness to pay) to your front page, plus the savings on the content you don't need to create, minus any lost revenue from the viewing of the content you no longer make. There may not be a one-size-fits-all answer – it probably depends on your brand, who your readers are, etc.

But my guess is that few publishers have the guts to make this calculation with a cool head. In a case of what Theodore Levitt called 'marketing myopia', too many see their content as their core product when it may not be, and are too emotionally invested in it to contemplate the notion that something else – aggregation – may be what their brand is best at.

But even if you make the cold calculation, if you are also an old-media publisher then you can't act on it. If you have a print paper, you can't "do what you do best and link to the rest" (Jeff Jarvis' motto) because you have to "do" everything you put in your print edition. And if you are doing that, you might as well put it online. The same applies to broadcasting. Syndication and indies complicate the argument somewhat, but not fundamentally – just substitute content rights for production costs.

If all this is right, then the battleground between disruptors and incumbents is clear. On one side, disruptors have the flexibility of being able to produce only as much content as necessary (and in some cases this may be zero). On the other, incumbents have the advantage of 'free' content for their online operations (taken from the print paper / broadcast channel / etc). But the more audiences move online, the less it makes sense to think of incumbents' online operations in isolation. The game for incumbents is managing to produce enough content to publish a decent print paper even as the associated revenues decline, without being able to face the disruptors at their own game. This may be possible while print circulation remains high, but if this falls below a critical point (a big if) then it may be game over. Or at least a whole new game.

(With credits to Simon Waldman for much of this)

 

Your readers don’t want your content

I've been thinking about Rob Grimshaw's point (via PaidContent) that you can have subscribers to an online newspaper who will be happy to pay for the same content that they could get for free, and my observation that this is a case of segmentation and legitimate, non-abusive price discrimination.

Wikipedia's article on price discrimination notes that

In a theoretical market with perfect information, no transaction costs or prohibition on secondary exchange (or re-selling) to prevent arbitrage, price discrimination can be a feature only of monopoly markets.

Well, the web is as perfect a market as it gets. The transaction costs involved in Googling an FT.com article are near zero, and Google gives you pretty much perfect information (a direct link) about how to get what you want for free. FT.com can hardly be said to have a monopoly on financial news. And yet they manage to charge for subscriptions without having to fool anyone. How can this be?

You probably got to this post by following a link on another blog, or searching Google with some generic words like "free content". You were not looking for this article (because didn't know about it), and you didn't want to hear what I have to say (because you didn't know about me; of course you may be one of my loved loyal readers, but sadly you are in a minority). And if you are not looking for what I have to offer, I would find it hard to charge you for it.

But before you got here you did start with a specific want, but it was not for this piece of content or someone else's. You were looking for a person or brand that you know, and what you expected to get was not an article but an annotated list of content that may be worth reading, a list that you know where to find and expect to be up to date. A portal, a search engine or a blogger you trust (not a specific article by him/her). A brand. An aggregate.

Whoever you went to is in a much more privileged position than me. As Scottt Karp observed, "Influentials On The Web Are People With The Power To Link". And people with the power to link can also, sometimes, have the power to charge. What these people give you is something you are prepared to look for. And if you want it badly enough, and it is unique, they you may even be prepared to pay for it. In an earlier post, I suggested that some papers could try this out by charging for access to their front page (or frequent access to it) but not for the articles it links to.

There's a lot of theorizing that follows from this. Maybe another day.

Online newspapers: charging for free content

Via PaidContent I find this quote from FT.com managing director Rob Grimshaw:

There are some very narrow debates in the media industry. If you look at the airline business has done with the internet as a pricing vehicle, the idea that Ryanair can have two customers sitting next to each other, one has paid £100 and the other has paid £500 but they're both happy… I think that's fascinating and real innovation. I don't see that anyone in the media industry has got anywhere near that kind of pricing sophistication.

His point is that there is no tension in charging frequent readers of FT.com for a membership fee while giving everyone free access. Too right. Frequent and serendipitous readers are different segments with different needs and different willingness to pay (although of course you can try to persuade people to move from one to the other). This is price discrimination done in an extreme but transparent way.

In a recent post I suggested a variant of this: give everyone unrestricted free access to all your content (the articles), but restrict access to your aggregation – i.e. your front page or your subject-specific index pages. That's because your front page is catches your loyal readers (the ones that seek you as a brand), while your articles receive all the deep-link traffic from users who are not looking for you. Most readers in the second group won't pay you for a subscription, but you can still advertise to them.

As Grimshaw is also quoted as saying later in the PC piece, publishers need to find their own business models, and what works for one paper may not work for the next. This will be a fluid area in the next few years, and I wonder if any players will do what I suggest. My guess is that something like it will happen at least in the trade space.

There is a there there

The curious incident of the UK's Advertising Standards Agency slapping Apple over an ad got me thinking about net neutrality. In case you missed it, the ASA ruled that an ad's claim that the iPhone lets you access "all the parts of the internet" was "misleading."

Leave aside for a moment the fact that in the ASA's strict interpretation hangs on the fact that the iPhone does not support Flash or Java: on a less demanding definition the iPhone does let you access the entire web. Leave also aside for a moment the fact that the whole debate confuses the web with the internet (I'll pick this up below).

What is interesting is that there is a perceived consumer need for access to the web. Think about the key word there: "the". I've philosophised before about that this means: in a nutshell, it means that there is something that is more or less the same for everyone. The need is not just for the benefit that this or that website can deliver, or the need to be able to benefit from any site you may want tomorrow. Crucially, there is also a demand for that thing that you know and that you talk about with people. A thing that is such that a friend can tell you to go to such and such URL and you know that you will get exactly what she got. An object of common reference. A public place, in the sense that a city is: there are private properties within it, but they exist within a space that is accessible and known to everybody.

Now that such a place exists in our culture, no amount of exclusive services provided by your mobile operator can substitute for it. They can offer things on top of it, but the strongest demand is for access to the place. Another key word: "access" – operators' low-margin, undifferentiated nemesis.

In the short term, there are profits to be made by offering access to it via mobile phones, as a differentiator. But in short order this will be offered by all operators and a myriad of devices, and the profit opportunity will wither away.

Operators' hopes then must be pinned on the extras: things that you can't get from mere web access. Those things come in two flavours: (i) non-web internet things like Skype, peer-to-peer programs, etc; and (ii) things that are not possible or economical over the internet: this mainly means things that they use a lot of bandwidth, like high-definition live TV.

About (i), there certainly will be differentiation (and profit) opportunities for the medium term, via partnerships such as that between the UK operator '3' and Skype. But it is a matter of time until someone "does an iPhone" on this and repeats what Apple and AT&T did for the web, offering true internet access, allowing you to install any program and letting it send any packet to any application anywhere. There is also a 'there' here. Today people already speak of things like Skype, IM, etc as objects of common reference, and the demand for having access to this 'there' from mobile phones is latent. So in the medium term this profit opportunity will wither too.

Which leaves the latter – i.e. things that you can't do over the internet. The ability to offer this is at the core of telcos' IPTV plays the world over, and is also at the core of the net neutrality debate. Net neutrality proponents claim that because the internet gets faster and better every day, it is only a matter of time before there is no need to pay for better-than-internet services. And they fear that, because of this, telcos have an incentive to ensure that the internet never gets that good. And hence, they argue, regulators should step in.

But if my argument is right, then net neutrality will be a natural market development, at least in countries where consumers can choose between many ISPs. The key question is whether there will be a "there" there – an ecosystem of services that work over the internet, "access" to which consumers can demand. At first sight this is a chicken-and-egg problem: if connectivity is not good enough for that, the services (e.g. live high-definition TV) won't take-off; and if they don't take off, there won't be demand for 'access' to them. But I'm not sure this is so. The internet is a big, global place, and it would be difficult for operators to act in concert. There will always be some ISPs willing to offer unhindered, fast 'dumb pipes', and if enough people take this up the services will emerge. Then everybody will demand 'access' to them, and the iPhone/AT&T scenario will repeat itself all over again.

Lots of ifs, but plausible. If it happens, what is a telco to do? I don't know, but an approach like that being advocated by the Telco 2.0 people may offer some clues.

Link ethics and link economics

In my previous post I said I had many things to say about Scott Karp's dictum that 'links can be the reporting', and my follow-up that 'aggregation is content'. Then I went on two say one thing, or two: that it may be easier to get people to pay for lists of links than for the content those links lead to; and that if this is so then you may be keener to protect your links' copyright than that of the content they lead to – even if it is your own. Now I'll say another thing.

If you buy my story so far, then there may be troubling consequences for content owners. The value may be in aggregation, but aggregation is a business with very low barriers to entry. If my logic is right (is it?) this is just an opportunity waiting to be exploited. It doesn't take much capital to set up a small team of plugged-in, respected journalists to scour the web for articles in their area of expertise and offer a top-notch portal linking to hand-picked must-read content from across the web. Of course this is essentially what outfits like Paidcontent are doing in the trade space. But it puzzles me that so few people are doing it for general news. (I once put this question to a journalist colleague. His response was that, well, that may indeed be a business opportunity, but it wouldn't be a fulfilling job for a good journalist. Is that true? And does it matter, in these times?)

Jeff Jarvis makes the case for a 'link ethics' whereby news organisations would produce content on the subjects they do best, links to other sources on other subjects, and not object if people link to them. The logic if that if everyone does this everyone benefits: you get as much traffic as before, and lower your content production costs.

But this is business, and you can't expect people to be nice. What is to stop a thousand Huffington Posts deep-linking to mainstream sites, free-riding on their content? If this happens, and if it is true that the value is in aggregation, then some of the profits will drain from mainstream media towards alternative aggregators.

What can mainstream sites do? Very little, I think. To stop this, all publishers would have to act together "for the good of the industry", and try to stop people deep linking into their properties (they could try to rely on litigation, the government, pay-walls or clever technology – with uncertain success). But of course this isn't going to happen. And lacking coordination, every publisher will act selfishly; and the selfish, rational option is to let people deep-link. It is rational because, unless your content is very unique, people will look to other sources and you will miss out on the ad revenue. And even if your content is unique, if my previous post is right then you still stand to gain from letting people in.

So there you have it. Disruption. What should you do? I don't know, but Jeff's recipe may be a good starting point: do what you do best and link to the rest. That way at least you maximise the value of your aggregation, and you can monetise that. You can also monetise other people's deep-linking as much as you can, with ads. And protect your aggregation – don't let people lift it from your site.

But all of these are palliative tactics. One day there will be a thousand Huffington Posts linking to your content, with editors that claim to be better, or more tuned to their audience, than you. Monetise your aggregation as much as you can, while you can. And that means linking to other people.

Link ethics and aggregation as content

I've been following with interest a conversation between Jeff Jarvis, Scott Karp and others about what they call "link journalism" – the kind of service that people like the Huffington Post provide by offering links to content provided by other companies. Jeff provides a good summary in this Guardian piece.

This is the latest incarnation of an old debate about aggregation. What is new is the simple economic focus. As Jeff puts it, "content is becoming a cost burden, what you have to have to get the links, but in and of itself, content can't draw value without an audience, without links." He then issues a manifesto: "Do what you do best and link to the rest." And in a related post Scott says that "links aren't just a fundamental element of the reporting. Links can BE the reporting. [...] Links are influential. Links set the agenda. Links direct public attention. Links connect ideas and people." That is, linking to content on subjects that are not your forte is not just a cost-cutting strategy. Linking can be your forte.

I have lots of things to say about this. Here is one.

Following the idea that "links can be the reporting", you can more generally say that "aggregation can be the content" – a point I've made before. Links are content because they are expressive forms (you can say a lot through your choices of what to link to, how and when). They are also marketable "products" in that they are designed to address specific consumers' needs (e.g. the Huffington's readers' need for noteworthy articles in the wider web), can build loyalty and become brands. But to make that kind of product it's not enough to create a few good links: you need a place that your audience will want to come back to – a destination – with a certain voice and style. The links can be to your own content, to other people's content, or to both. In an old post I once called those places "aggregates". Aggregates are what lets content be "discovered" (an inaccurate word, but it's in vogue). Aggregates are the new distribution; in marketing lingo, they are the new marketing channels, but not the logistic channels (the logistics are provided by content owners, not the aggregators).

The key thing about the web is that controlling the logistics channel (i.e. hosting your own content) does not normally give you any monopoly over the marketing channels for your own content (the links to your content). Of course you can make an exception to this – namely by controlling the logistics channel (i.e. the hosting) and refusing to serve content to people who are not subscribers. In some cases this may make sense. But when you do this you miss out on much of what the web has to offer: e.g. Google Juice, being referenced by Wikipedia and letting your content become authoritative. More often than not, it makes sense to make your content "part of the web" (another fashionable phrase), and Jeff, Tom Loosemore and myself (and probably others) have at different times tried to spell out what this means. The principles include:

• Ensuring that everything you publish has a unique web address
• Keeping it there forever
• Ensuring that it is accessible globally, and not just from one country

But let's turn this around. Until now, this debate has been about the virtues of making sure that your content is discoverable. Fine. But it doesn't follow from this that your aggregates – your lists of links – should be.

To illustrate with an example, say you are the Wall Street Journal. Your product addresses two customer needs:

1. The need to stay up to date on key business news
2. The need to be able to read authoritative articles on various subjects

Until recently, the Journal took the wholly respectable view that it did not want to offer its product for free, and chose to charge for (2). You could visit the front page for free, but if you followed any link you were asked to pay. That is, they kept (1) free as a promotional tool for (2), which they saw as the real, core product – and wasn't free.

But perhaps they should have done the opposite. The two needs above are catered for via different products. The first is catered for by the Journal's front page and other subject-specific aggregates. The second is catered for by the articles.

Now, my guess is that the market segment that is willing to pay for (1) and (2) is not much bigger than the segment that would be willing to pay for (1) alone, even if (2) were free. That is, those people who are willing to pay for the privilege of being able to browse the day's news and follow the links may not care if the articles they read after following the links are available for free to people who got there by other means. Provided, of course, that the front page and subject indices – i.e. the browsing, the lists of links, the aggregates – are not available for free.

If this is true, it suggests a new business model. Make your front page and subject indices subscription-only (and ditto for RSS feeds), but let anyone with the right link access any of your articles for free. You still get the subscription revenue, but you get more ad revenue (thanks to all the non-subscribers who view your content), Google Juice and all the other good things that come from being part of the web. Plus, your content's quality will drive more people to subscribe to your front page, and you'll make even more subscription revenue.

There is one snag. What if someone manages to set up a machine that poses as a subscriber, monitors your front pages, and reproduces your links on a third-party site verbatim, keeping it updated 24 hours a day? This can happen but it should be easy to police: by the time the portal gets any noteworthy audience you will know about it and can send a cease-and-desist (or terminate the offending account) before much damage is done. Intranets are a more difficult case, but even then some clever technology using URL redirects might do the trick. Still, the model would rely on a new ethic, to be added to Jeff's code: treat lists of links as content, and respect its copyright. Aggregation is content.

Would this work? I'm not sure, but my guess is that it should – if not for big sites like the Journal then at least for niche publications. The members-only portal could even be a daily email. I've never seen it done, but perhaps someone has?

Update 02/09: Is this what the Britannica is trying to do?