Ad growth in the last 20 years?
Best performer Cable TV, worst, newspapers.
Hal Varian, Google’s chief economist had some interesting facts in his FTC presentation.
Total online revenue has grown to 25-33% of newspaper ad revenue, while newspaper online ad revenue is only 3-5% of the total newspaper ad revenue. Which agrees with the proportion of pages they visit, 3% online and 97% on print.
Approximately 50% of the total costs could be saved if newspapers dropped the paper from “news
Cable TV, billboards and… direct mail?? are the winners in ad growth. While we could almost draw a straight line for the downward slope for newspaper revenue shrinkage since 1990, and for circulation per household since 1950.
Interestingly, newspaper ad revenue predicts recessions. There’s a steep drop since the year 2000…
Local news has fared better than national, worse off: classifieds.
43% of online users get their news from their phones, mostly for the weather, and 46% jump to at least 6 different sites to get their news.
Are marginal costs for Internet content really free? If not, what’s wrong with Chris Anderson’s arguments?
In discussing Chris Anderson’s views of a new digital free market, it occurred to me that we have to look at marginal costs from a totally different perspective.
Briefly, we accept newspaper copies in our doorways, —nobody expects them in our bedrooms. By the same token, a delivery to the web is similar in nature, it is a place where the reader may pick up his news.
Then, who cares what goes on within the reader’s bedroom?
Though we do care about him paying for his copy, —like he used to, less distribution costs—, and to respect newspapers’ copyrights.
Now, in regards to marginal costs, they should be viewed as the cost of producing an additional “article”, —not of an additional “edition”—, which is a better reflection of the true nature of the online publishing business, raising and distancing the price from free.
But, with all the free media, readers are confused.
We must continue to educate them out of their confusion and into a better ethic’s ethos. Free content harms an author of a song, book, scientific research or the journalist behind a news article. If you don’t believe me, ask any songwriter.
Then we must take care of our content.
The enforcement of copyright protections and subscriptions is needed to counter the ease in which digital content can be acquired and reproduced. One “lonely” free publication is enough to allow the whole wide world to read it, and I need not mention how easy it is to copy digital content.
With these thoughts in mind, I feel we should set the subscription fence to separate trusted content from the rest. Some of the remarkable content should jump out of the fence to viralize itself, in order to grow site traffic.
Even with AP and the other news agencies continuing to publish their articles free to readers, all trusted and quality journalism has no alternative but to find home within the subscription fence.
Highly engaging blogs, as well as, breaking news, exclusives and all news with a high marketing value should be brought out into the open, or free, to viralize as many readers as possible.
What do you think?
After reading Malcolm Gladwell’s “Priced to Sell”, I felt compelled to combine some of the gems from his article with some other thoughts.
If we are to believe in what Dan Pink —so adamantly— presents as the latest findings of Social Science, then, we should be doing whatever we want at work as long as we deliver the goods…
And also, that managers are an invention that is obsolete—so we can do away with them too.
(So far, I like it.)
In essence, studies show that people perform worse with financial incentives, except on mechanical tasks. It seems that focus hinders the harvest of the more precious creativity crop, which requires an open “walking on the edge” frame of mind.
(Too bad, that hurts. Let’s keep this between you and me.)
We are motivated by autonomy, mastery and purpose. The urge to do things on our own, to feel that we are conquering our skills and that we are doing something for a higher purpose.
Now, this doesn’t mean that we should work for free. We should get a fair reward for our labor, but, from there on, it’s these other motivations that drive us to do our best —fascinating stuff!
Here’s where I see that trained journalists should act as community ring leaders, to harness blogger stories that evoke that sense of higher purpose in doing some good for their community.
(I’m sorry, I smell cheap, but gratifying work.)
Bloggers with a natural high interest in their communities who get published in their local newspaper, may be a great way to help the bottom line. Which would fit nicely within the hybrid “Microsoft – open source model” I’ve been promoting, where high quality journalism sits behind paid subscriptions and highly engaging community blogging is free.
Malcolm makes a great argument to debunk the “information wants to be free” statement, citing as an example the $500 million spent in research by a biotechnological company on one project.
He also points out that there are always two sides to this issue. One, like Amazon, that would love to get books for free, but a second, the authors and publishers, who need to charge a fair price to survive.
If content is free, ask yourselves, why are authors going to write music, books, report news, do scientific research..?
Are we all going to go out on concerts and sell T-shirts?
Finally, there is an underlying major ethic issue at stake.
If Google News or anyone else gets content for free, isn’t this piracy, isn’t this the equivalent of robbing someone’s labor..?
Are we all going to be treated like idiots in this new technological paradigm? Are these the moral standards that we will teach our children?
Could Google News be affecting the brand value of newspapers?
It’s outright impossible for a newspaper to compete with a news aggregator.
First, the content they get is free. Then, they publish a selection of the best articles published from any news source. If they’re missing a topic, they use AP paid articles to fill in the gap.
If one stops to think for a moment, AP’s policies make no sense. First, they publish themselves their own articles giving away their news online, then, they allow aggregators to use them too, and finally they syndicate their service to newspapers?
Doesn’t publishing an article online “once” make it available to all readers worldwide due to the Internet’s ubiquity? Or, doesn’t that first free AP publication make the value of their content laughable from there on?
Shouldn’t they limit their content usage to print publications only, to be in accordance with the geographical limitations of print publishing?
It’s not only a sure suicide for AP, but it’s also helping to kill newspapers. In the long run, the only AP clients standing are going to be Google News and maybe a few other aggregators, which is not enough for AP’s survival. Unless, of course, Google decides to buy AP and get into the news content provider business.
But, enough with AP. The intention of this post was to bring attention to another significant angle in which Google News is deteriorating newspapers.
As I’ve mentioned before, there’s only two kinds of online destinations, search and bookmark. The former is laser focused on a specific subject matter, but the latter, takes us to a trusted place to see what else the author has to offer.
If newspapers allow their bookmarks to fade away with Google News, so will their brand value and… their existence.
One more reason to take aggregators to court —their practices are damaging to the copyright holders of news content.
Free, why not?
Digital marginal costs are practically nil. Economy 101 tells us that a producer should sell down to a price close to his marginal costs to maximize his profits.
Chris Anderson explains Free in this wired video.
Let’s review this “free” issue with a loupe —it may be the undoing of the media and advertising industry.
Rephrasing, economic theory states that a producer should stop his production when the price of a good is equal to its marginal cost. It makes no sense to produce more when there is no profit.
We can derive some important consequences from this statement.
First, if the price of a digital good is not higher than the marginal cost of producing one more unit, production should stop —or, we should not sell any more units.
Second, marginal costs, although insignificant, never touch “0”, they’re always greater than “0”, with the implication that the price should never be free, because it should always be higher than the marginal cost.
So, why is the media giving away its content for free?
If the media is basing its strategy on Gillette’s model, they’re giving away the razor… with the blades.
It can’t be Microsoft’s “give piracy leeway, to get a future lock-in” strategy, because the media has a shallower and hence no hook to a news learning curve.
Could it be a “free for all” to the last man battle, in a twisted “transistor versus tube” strategy, where the media is anticipating their foes with these nil prices..?
Unfortunately, the answer is none of the above. I won’t go into further detail, it doesn’t help. Let’s just say that media erred in expecting advertising to cover those costs.
The first thing that comes to my mind, is that we need to be tech savvier, —it’s why its taken us so long to figure this out—, to gain control of the distribution of our online content.
We should also get our own advertising networks in place. If not, Google and others will continue to earn the lion’s share of the online market —with commonplace accepted 70-75% commissions. Having our own ad networks would allow us to turn the tables, to potentially increase revenue three times on (text and display) contextual ads.
I don’t like walls. They hinder creativity, and they don’t work most of the time, e.g. the Nigerian terrorist’s bomb plot aboard Flight 253. But, in order for journalism to survive, we need to apply a subscription model.
We sometimes miss that a “digital good” or content is the final product. It’s not what takes place at a hardware store site, where content is given for free, but the purpose of the site is to get the visitor to pay for the hammers and nails.
There’s also the issue of reporting, interviewing, taking pictures, recording, and on and on… which are not replaced by software, as in the case of a travel agent or stock broker. In the end, producing content is costly for the news source.
Unless, of course, you’re Google News (or any other news aggregator) and you feel that you have the right to piggyback on the best news sources for free to publish an edition with select content… Don’t we all wish we could do that?
Intent, and damage to the commercial value of the work are important considerations, in the copyright protection law. So, my next recommendation is to continue to escalate the enforcement of our copyright protections, which have been much neglected, but is a movement that is starting to gain momentum within the media.
Next, and although I hear this little voice in the back warning me that we must stop all leaks, to avoid the ship from sinking, I find that the Microsoft versus open software model fits nicely with our situation.
Microsoft charges a premium on its software, and users are willing to pay the premium, because of the risks they avoid by not using an unsupported free open version.
I still feel there is a case for branded journalism institutions capable of charging a premium for reader perceived quality journalism.
Branded news institutions have a place, readers not only need to find more about something they know little about, as with searches, but they also need to know what they know nothing about… They need to go to a place where they trust they will be informed of what is going on.
Getting back to the content metering issue, I’d like to bring you back to how magazine subscriptions worked a few years ago. Their promotions were endless and their enticing offers never ceased. In other words, I feel that a similar continued enticement, with free and discount offers should candy the reader’s path into his subscription —like it used to.
Finally, since the Internet is ubiquitous, either content is remarkable —a la purple cows— or it’s focused locally, in order to be able to get paid subscribers.
There’s much more, I’m sure —love to hear your thoughts.