Posts from July 2009

WWGD? brought to life

There’s little I love more these days than seeing people bring the precepts of What Would Google Do? into their realms. I just hope I’m right and don’t lead them astray.

Here‘s a post by Arild Nybø Førde, a Norwegian entrepreneur who wonders whether he’s better off being transparent about his business idea, weighing the input he’d get against the risk of someone taking is idea:

Why keep secrets?”, Jarvis asks, and he rephrases: “Why keep more secrets than you have to?” The most common answer is of course that we don’t want our potential competitors to steal the ideas. That would also be my answer.

But is the risk of being lifted for ideas greater than the risk of failing by not being transparent? If asked myself this question, and after some consideration my answer is “No”. . . .

OK, so having great ideas is not my biggest challenge right now. It’s the ability to evaluate them, and then realize them, which will be my greatest struggle in the months and years to come.

So, how can being transparent help the ability to realize the ideas? . . .

Right now I’m alone with my ideas. I don’t have any employees yet. . . .

Therefore, I guess, the best way to get my ideas analyzed and criticized, is to let them out in the open. And what is more open than the World Wide Web?

In addition to getting feedback to my ideas, through blogs and social media, laying them out publically will also kick my butt. As long as I write in my blog, or state in an interview, that I’m going to do this and that, I make a commitment to my readers. . . . And if I don’t fulfill my commitments, I can’t be trusted, and my business will fail.

That’s why I’ll risk it. From now on I’ll be transparent and reveal more and more of my strategy in this blog.

And then there’s this exec, writing under the name Oz, talking about how cable should be run today:

If I were running the cable company I would do pricing and product offering differently. Transparency and simplification will be a core objective. Reducing the barrier to taking on new clients/customer will be at the fore of every decision and Internet copy that is produced. Borrowing from Jeff Jarvis in What Would Google Do? Simplify or die. This should be a pillar of running any business in the age of the web. Firms should no longer seek to profit from cordoning off a section of the market hoping that the black box of disinformation which they have built will not be found out and exposed.

I am sure some analysts will be quick to suggest that this disinformation that I speak of is a cash cow. Meaning that this firms make money from their ability to coax new clients into paying more than they usually should. To me, this is an old world way of thinking, information wants to and will be free, any business model built on erecting barriers to information will eventually fail. This idea may have served the firms well in the past but with many more firms, channels and platforms competing for my attention, it is a strategy headed for disaster.
Competition will blindside these firms. Any firm with a good enough service that chooses to be transparent and simple will win. I would be the first to line up at their door.

PS: This applies to all firms in all industries.

Yesterday, I had lunch with a reporter-friend who can’t advise companies because he’s a reporter; he can only soak in, and not bounce back. But I said that I’ve learned so much talking with companies – in person or on this blog – to learn their problems and their opportunities as they try to reinvent themselves – as the good ones are – for our new reality. It gives me the chance to test my ideas and observations against their reality and there’s nothing more valuable than that. As Arild said above, transparency and interaction are what enable analysis, criticism, challenges, and improvements.

Supporting the new news ecosystem

Friend Mark Potts is announcing a new company today, called GrowthSpur, which will help support what I believe will be the future ecosystem of local news. You can read about it at Jon Fine’s column in BusinessWeek and on Mark’s blog. I’ve been helping since its early phases.

Mark, who also founded and learned a lot of hyperlocal lessons at Backfence.com, saw a need and an opportunity in providing news to metro areas as newspapers there fade. Like others, he and I – being editors – thought of organizing shock troops of journalists to go into such silent markets. But then we realized that there already is journalism happening there with bloggers and former journalists starting sites to serve local communities. So it seemed the real need and opportunity was to provide business support for them: helping them survive and succeed online.

And so that’s what GrowthSpur will do: optimize the business of local sites and blogs – hyperlocal blogs, local interest blogs, new news organizations. It will help them create and sell better advertising and services for local marketers. It will help create metro-wide and local networks. It will enable new revenue models (think: e-commerce). In short: Its aim is to improve the business of local news. Potts has assembled a team to do that.

At the New Business Models for News Project at CUNY, we’re seeing that hyperlocal blogs can already be good businesses and through the efforts of enterprises like GrowthSpur, we think they can be even better, which we believe will encourage more of them to start (more on that soon). At the Project, we’ve worked with Potts et al; they’ve helped us with thinking through models and we’ve helped them – and other enterprises – with research and analysis, all of which we’ll be sharing on the project’s site.

I’m excited to see entrepreneurship come to local news – not just mourning over the fate of legacy businesses and institutions but investment in the future of journalism. At the NewBizNews Project, we’ve surveyed scores of local bloggers and sites that are making new, sustainable businesses. We will be advising them on how to improve those businesses and we hope that might inspire more journalists and bloggers to join in. We’ve gotten advice from new companies like Merrill Brown’s Prism, which has a plan for metro news and will build it. We’re collecting new revenue models. We’ll soon share much more about our research and models. The bottom line: There is a bottom line for news.

: And here’s John Thornton, founder of the Texas Tribune, talking about his investment in local news from the not-for-profit perspective.

Pay = “mass delusion”: Schiller

I know I’m a day late, but I can’t resist quoting Vivianne Schiller, head of NPR and former head of NYTimes.com, in Newsweek on paid content. Mind you, she is one of the few executives in the industry with real experience on the subject.

Q: While employed by The New York Times, you helped the newspaper stop charging for online content. Now it’s reconsidering. Generally, why do you oppose paying for content?

A: I am a staunch believer that people will not in large numbers pay for news content online. It’s almost like there’s mass delusion going on in the industry—They’re saying we really really need it, that we didn’t put up a pay wall 15 years ago, so let’s do it now. In other words, they think that wanting it so badly will automatically actually change the behavior of the audience. The world doesn’t work that way. Frankly, if all the news organizations locked pinkies, and said we’re all going to put up a big fat pay wall, you know what, more traffic for us. News is a commodity; I’m sorry to say.

Q: But the Times did get people to pay, right?
A: We far exceeded our expectation—225,000 subscribers paid $50 a year, in addition to the home delivery subscribers, who got all of the Web for free. But guess what, that’s $10 million. Instead of 225,000 who pay the $50, let’s say it’s one million subscribers. OK. That’s $50 million a year. That’s not going to save any newspaper. It’s going to kill your advertising base. The numbers don’t work.

I also like her coinage that what we’re trying to protect is not much vaunted investigative journalism but instead “accountability journalism,” which includes beat reporters, watchdogs.

In the New Business Models for News Project, I hope to speculate on how NPR and its affiliates could play a key role enabling local networks of accountability journalism.

A next generation in Ann Arbor

(First, full disclosure: I consulted for Advance Publications on its project in Ann Arbor and worked for the company for a dozen years as president and creative director of its online arm, Advance.net.)

AnnArbor.com launched on Friday. I think it’s a bigger deal than it seems at first glance. Advance folded the Ann Arbor News the day before and closed that company. On the next day, it launched AnnArbor.com as a new service, based online and in the community, structured very differently from a newspaper: smaller and more collaborative. As folks have noticed on Twitter, the home page looks nothing like a newspaper site of yore. It’s a blog and it’s intensely local.

Note also that the advertising is different. Rather than banners and buttons, AnnArbor.com offers local deals that are interspersed in the content and also listed in a directory. It happens that these deals are published as blog posts and they read that way. We need to try new and more appropriate means of serving local marketers.

The new company will still print two days a week, and that’s probably why people don’t notice just how much of a change this represents. As I said below, there’s still money in distributing coupons and circulars and in some print advertising, so the company will continue to grab that, at least in the transition. But this company is focused online and in the community.

Ann Arbor is a unique place: highly interested in news, highly connected, with a great university, not to mention a Google office, in town. That’s why it was picked. From the moment this shift became public, the project’s editor, Tony Dearing, and business chief, Matt Kraner, were out in the community to build with the community. I said sometime ago that if this works, the community didn’t help them build AnnArbor.com; they helped the community build it (and their own sites in a new news ecosystem in town).

It’s just a beginning. I hope we’ll see the service become more collaborative, more of a network and less of a site. I know they will experiment with new advertising and sales models and methods. And I hope they will find the way to create a sustainable journalistic enterprise serving the town for many years to come. It’s a brave start and I think it’s worth watching, so that’s why I’m drawing it to your attention.

Another industry disintermediated

Here’s another industry opened up by the internet: mutual funds and financial advise.

Covestor – a company in which I have a small investment – just introduced its new multi-managed account service. What the hell is that? I had to have it explained to me, too. Think of it this way: It opens up the mutual fund with transparency to and control by the investor.

Here’s how it works: You can pick an investor whose strategy (and luck) you like and say, “Do whatever he says.” When he buys Apple, you buy Apple. When he sells, you sell. When you decide to stop following him, you get rid of all the positions he put you in. This investor doesn’t take control your money. Your funds sit in your own brokerage account. Covestor just created the means for you to follow his actions, to shadow him. For that, the investor and Covestor get a small cut. This also means that you can follow multiple investors at a time – just like the rich folks. And for all of them, you know just what they’re doing because Covestor has the means to track their decisions, successes, and failures.

Think of it as Twitter – the idea of following – combined with blogging – transparency – but about money, your money.

This thing is built for someone like me because I’m a lousy investor. I bought Google at $512. I still have a f****g Time Warner Stock. I bought Sirius. I held onto my Microsoft. Get the picture? I finally cried uncle – actually, our family friend the broker made me cry uncle – and put all my money in mutual funds. But that is almost entirely opaque. And I do miss out on the fun and control of trading myself. I plan to use Covestor’s CV.IM with a small start to see how it works for me.

Fuller disclosure: Covestor was founded by Rikki Tahta, who was a fellow board director of mine on Nick Denton’s last company, Moreover. He’s a tough and brilliant businessman, so I invested along with him – I followed him and now I can follow others.

/plug

Guardian column: Charity v. collaboration

My Guardian column this week expands on an idea I discussed here, about viewing charity to news organizations as collaboration in the news ecosystem. The kicker: “Charity is likely to be a contributor to the future of news. So will volunteer labour in the form of bloggers and crowdsourcing. But we still need a business model for news. News still needs to be profitable to survive. It’s not a church.”

The death of snail mail & Sunday papers

The Washington Post reports that “in the past year alone, the Postal Service has seen the single largest drop-off in mail volume in its 234-year history…. That downward trend is only accelerating. The Postal Service projects a decline of about 10 billion pieces of mail in each of the next two years, going from a high of 213 billion pieces of mail in 2006 to 170 billion projected for 2010.”

No, physical delivery won’t ever die. (Like a good newspaperman, I lie in headlines to get attention.) Indeed, we’ll get more ever deliveries of more stuff that used to be on store shelves but are now ordered online. That’s what UPS’ and FedEx’ businesses are built for. But, as the Post says, we’re sending fewer messages to each other; we have much better means to do that now. And companies are trying hard to reduce their cost of dealing with us – billing, bank statements – by taking that online.

There is still a business to be had in distributing coupons and circulars (aka junk mail); this is why newspapers are holding onto delivery a day or two a week. But that’s transitional; it won’t last forever.

As volume decreases, costs to users will increase as deliverers try to cover fixed costs that just can’t be cut anymore. Newspapers like to think they, too, have fixed costs and that’s why they keep whining that readers “should” pay their bills. But they don’t; for their core business – content and advertising – papers have new efficiencies online that the Postal Service doesn’t have. Except for those trucks and presses. They are fixed costs and that puts them in the same sinking ship as the mail.

At some point soon, the couponers will desert both the Postal Service and newspapers because they’ll be just too expensive. But consumers still want coupons; they have real value. (I often tell the story of coming back from a strike when I was Sunday editor of the New York Daily News. We didn’t have coupons because our new owner, Robert Maxwell, was feuding with Rupert Murdoch, who controls coupons – aka FSIs or free-standing inserts – in the U.S. When we got them back, circulation went up more than 100,000. Those readers weren’t buying news. They were buying ads.) Coupons are creeping online but it’s still a pain to deal with them digitally. Mobile devices may be the solution, but they’re not there yet.

So physical coupons and circulars are still great business – if you can get them into consumers’ hands. And it occurs to me that someone will craigslist – that is, undercut – both newspapers and the Postal Service in the delivery business. It’s in the interests of Murdoch’s coupon empire to do so and work with large retailers that produce circulars to come up with an alternative. Or an entrepreneur could establish a network to make it happen. I see the return of the paperboy (oops, the world has changed since then; pardon me: the paperyoungperson): networks of small agents who can deliver this material, which isn’t wildly timely (get it there this week) without the cost structure needed for individualized delivery – the Postal Service – or with a time wrapper of expensive content – the newspaper. Again, it’s transitional, but it’s a nice business for some years.

Here’s what happens then: The cost of mailing an old-fashioned letter will become prohibitive as the Postal Service covers its fixed costs for a system we won’t kill.

And the economic benefit of distributing a Sunday newspaper will all but disappear and news organizations – the ones still standing – will have no reason to hold onto the presses and trucks.

How (and why) to replace the AP

The Associated Press is becoming the enemy of the internet because it is fighting the link and the link is the basis of the internet. From Richard Perez-Pena’s New York Times story today:

Tom Curley, The A.P.’s president and chief executive, said the company’s position was that even minimal use of a news article online required a licensing agreement with the news organization that produced it. In an interview, he specifically cited references that include a headline and a link to an article, a standard practice of search engines like Google, Bing and Yahoo, news aggregators and blogs.

Them’s fightin’ words: quoting an article’s headline while linking to it would require licensing? This means we would have to get permission from and negotiate with sites before linking to them. That would kill the internet. It also would kill the Associated Press and the news organizations it cons into joining its dangerous crusade – make that its cartel – for no one will link to them and they will not be heard.

There has been much stupidity lately about how news should operate in the ecosystem in the internet – threats to try to extend copyright, the ominously named and ambiguously written Hamburg Declaration, the ACAP “standard” that would be a boon to spammers – but the AP’s shot across our bow is the most destructive and ignorant of them all. The AP doggedly refuses to understand the link economy of the digital age and its imperatives.

The AP would rather destroy the link economy. Oh, it probably won’t succeed, just because what it suggests is so impractical and illegal and ultimately undemocratic and unconstitutional. But like a bull in a knowledgeshop, it could do a lot of damage along the way, trying to rewrite the fair use that is the basis of the democratic conversation and rushing its members to even earlier graves by hiding their content from the readers it is meant to serve. Note well that most news organizations depend upon fair use every day when they quote somebody else’s story or comment on somebody else’s content. The AP is dangerous.

But that’s not the reason to replace it (it’s merely a bonus). No, the reason to replace the AP is because is that it is hopelessly, mortally outmoded for the digital age and its ownership structure – I blame its board of newspaper owners more than I blame its management – won’t let it be transformed for our new reality. We need a replacement that will better serve journalism and the public, not to mention the democracy.

The AP’s primary job is to distribute content. In a content economy, that worked well. In the link economy, what the AP does is a disservice to content because it cuts the links to the source by rewriting news. The AP also translates content from one medium to another, rewriting newspaper stories so they can be read on radio or TV; that, too, cuts the link to the source (and note that rip-and-read has been the worse enemy of original reporting since the invention of broadcast, long before the internet). And the AP adds some original reporting to the ecosystem but it can’t monetize that value in the link economy because to do so would compete with its owner/clients.

What we need is an infrastructure for a content marketplace online that rewards the creators of original reporting – not the copiers or the commodifiers (that is, the AP) – by exploiting the essential nature of how the internet operates, that is, the link.

I’ve called one fundamental example of this structure reverse syndication – and Politico has started implementing it. Look at it this way: In the old days – in the AP’s ways – Politico would have syndicated its story to other papers, which would have sold ads to earn the money to pay Politico. Now, of course, Politico’s story is just a link and a click away. So now another paper – say, the Chicago Tribune – can just link to Politico’s story. That rewards Politico for creating the story. But what about also rewarding the Tribune for adding value through the link, sending audience to Politico? It would be in Politico’s interest to pay the Tribune a share of its ad revenue for the article to encourage it to send more traffic and add more value. That is the missing piece.

Now imagine this Politico story sits out there on the internet with an ad on it and it is sharing that revenue with the Tribune proportional to the traffic the Tribune brings. Politico could sell that ad. But if the Tribune could get higher value, then it should sell the ad and share the revenue with Politico. Or a third party – oh, I dunno, Google – could sell the ad and share revenue with both. Whatever makes more money – that’s the question we should be asking; that’s what’s going to save the news business.

At the CUNY New Business Models for News Project, we are modeling the news ecosystem that we believe will emerge when a metro paper fades away. For our next project – when funded – I’d like to tackle this content marketplace infrastructure to look at what is needed: systems to track and pay and conventions to label content and draw audience to – and thus support – journalism at its source. With or without an AP, we need to improve the means by which original reporting is found and supported.

Another project I’d like to tackle is The New York Times’ favorite subject: how to support a Baghdad bureau in this new ecosystem. I don’t know that I have the answer or that there is one. Global Post is one try. There may be a need for support from charitable sources (the subject of my Monday Guardian column, which I’ll link to later). The AP and large, ambitious news organizations like The Times report from places where others can’t afford to go; we need to look at how to continue to do this.

That leaves the AP’s other role: translating content among media. Well, there’s an entrepreneurial opportunity. On Twitter, Reuters’ Chris Ahearn volunteered to step in. And online, there’s really no need to do that anymore; it takes all media.

Could the AP remake itself? Doubtful. Its owners won’t let it be run as a rational business – redefining rational for the link economy. It also isn’t structured to help its members remake themselves. I told the AP a decade ago, when I was still working for a client, that I wished it would start a national ad network for news sites, to help them succeed. But that’s just not the way they think.

I’ve also speculated with folks with money about buying the AP and remaking it for the digital age, without the handcuffs of its ownership structure. But every time, we come back to the gigantic wind-down costs that would entail, getting rid of parts of the operation that aren’t needed anymore. And that’s the problem: much of it isn’t needed anymore. Just ask the many newspapers that are canceling the service along with their $1-million-a-year bills. (See the Star-Ledger that was produced with a single AP pixel.)

So I think there are entrepreneurial opportunities to replace the AP and bring far greater benefit to content creators online – all content creators, not just the old news oligopoly. It’s time to break out the hammers.

(Disclosures: I am a partner at Daylife, a news aggregator. I was an advisor to Publish2, which also traffics in links. I was on the board of Moreover, which aggregates and creates feeds of headlines and links. I did all that because I see the potential of the link economy, by the way. I also wrote a book about Google – have I told you about that? – and have discussed many of these ideas with people there.)

: MORE: Note that the New York Times Company’s chief counsel does not think aggregation is a copyright issue.

: Note, too, that the “problem” of copyright violation is misdefined (a headline and a link is clearly not theft), and overstated (show me the millions of sites- other than spam blogs – that are copying whole articles), and wrongheaded in the idea that there’s a pot of gold here that will save the news business. It’s a big red herring. It’s a diversion from the real issue: the failure of the news industry to transform itself for the new economy. I guarantee you that if the AP goes ahead with this, it will pay lawyers more than it could ever earn. And it will hurt the industry and its brand in the process.

: Here’s a quick Marketplace story on the AP.

: TechDirt has some advice for Reuters: Go for it.