Posts about newbiznews

Who’s afraid of Arianna Huffington?

The New York Times has been gunning for The Huffington Post lately, which makes me wonder what exactly Arianna Huffington has done to scare or anger them so. Or perhaps that’s the wrong question. Given that our enemies are often those we don’t understand, I wonder what The Times fails to grasp about HuffPo. That then leads to the question of what The Times can learn from this Post.

Felix Salmon has done a skillful job covering this one-way war, this schoolyard taunting in two posts. Times Executive Editor Bill Keller wrote two columns and a blog post going after Huffington—once directly; once without (as Salmon puts it) the intellectual honesty to link to and allow his readers to judge those he criticizes; and once defensively, after Huffington called his bluff. Times staff loyally picked up Keller’s spitballs to lob their own. Media critic David Carr wrote and then killed a tweet sniping about Arianna that he later conceded was “tasteless.” Andrew Goldman didn’t so much interview Huffington for The Times Magazine as he acted like a parody of a TV prosecutor trying to bait a cagey witness—or perhaps it is better described as a comic homage to Joe McCarthy trying to elicit confessions of leftness. Then Salmon points out that The Times snagged a HuffPo scoop without credit. Just now Carr delivers a glancing blow to Aol/HuffPo, reading into a defection a defeat.

What is The Times’ problem? I think it’s that they do not understand what makes Huffington Post successful and they lash out at the unknown. Here, I suggest, is what The Times and Keller don’t understand about HuffPo. Here is what they think is wrong with it:

* Huffington Post is not content. Content is what content people make; if they don’t make it, it’s not content. That, I believe, is The Times’ cultural view of HuffPo: It cannot be content because the likes of The Times have not made it (no matter how many Timesman Huffington hires). That, I theorized, is why The Times and other media temples did not start their own HuffPo’s or buy the original: It’s not real. Even if The Times were to give it credit for the one-third of HuffPo that is content—by dozens of journalists—they’d still say it’s diluted by the other third that is aggregation and the last third that is comment. And that leads to…

* Conversation is not content. When I had Henry Blodget speak with my class on new business models and disruption, he praised HuffPo for its understanding of the value of conversation. In The Times’ view, conversation is what they enable—no, tolerate—when readers chatter under articles once they are finished. As I learn in every damned meeting with news folks I ever have, comments have cooties. All they can ever hear from the vox populi is the voices of the trolls. Blodget and Huffington have a broader sense of the conversation. That was Arianna’s essential insight when she gave celebrities a place to speak; that is conversation. That was Henry’s insight when he learned to listen to what people were talking about so he could join in and add to their conversation. Which leads to…

* Aggregation is cheating. The Times thinks aggregation is not content. Worse, they are coming around to Rupert Murdoch’s view that it is theft. As Jay Rosen tweeted, seen from the readers’ point of view, aggregation is helpful; it adds value to coverage. Indeed, that’s why The Times does aggregate and curate. But when looking for enemies, it’s best not to look in the mirror. I talk (a lot) about the link economy and how there are two distinct creations of value online: the creation of content and the creation of a public (née audience) for it. Aggregators, curators, and commentators bring audience—and value—to content. If the recipient of those links can’t build a relationship of value with the people who are clicking, that’s their problem. At CUNY, I will soon finally have the time to start a research project on the value of links and how to optimize it. I’d like to see this debate about aggregation between The Times and HuffPo occur on economic rather than emotional terms and hope to inform that discussion with facts.

* Free is offensive. Here’s another area in which The Times is coming to side with—gasp!—Murdoch. Now that it has a meter—and without a proven economic basis for it (not yet)—Times people must put the case again, in emotional terms of entitlement: Readers *want* to pay. Readers *should* pay. Times content *deserves* payment. People who question the strategy are demonized. (David Carr attacked me on NPR over just this … we’ve since hugged and made up; this is what I really have to say about the Times’ meter.) Huffington created value—we know the exact amount, to nine figures—out of getting people to write for free (because they wanted to and found value in). She’s cheapening the valuable work we journalists perform, isn’t she? No, like her free writers, she’s valuing something else. She’s valuing the relationships she has with the people formerly known as an audience.

* Left is not right. Goldman’s desperate effort to get Huffington to admit—CONFESS, I SAY AGAIN, CONFESS!—that she’s—gasp!—liberal, taken with Keller’s paeans to himself and his kind of journalism, were as revealing as they were disingenuous. I find Arianna, too, disingenuous in her efforts to sidestep the word the way Roger Ailes won’t own right. All of them want to dump us, the people, in these two buckets, left and right, but they are above classification. The Times’ real problem is not that Huffington a liberal but that she is an advocate of a point of view. So she tweaks The Times for WMDs and upholding antiquated definitions of objectivity and balance.

* Fun is not allowed. Journalism is serious business. It’s no place for kittens.

In my class, I’ve had my students pick a target to disrupt with a new business (after doing that, they’ll turn around and act as the disrupted company to craft a defense—it’s a lesson in finding opportunity in change). The class picked their target: Huffington Post (when I thought they would have picked The Times). Last week, they presented research and what struck me was the difference in engagement at both sites. HuffPo users generate 18 page views per month on average. The Times is defining only a small slice of its uniques—10%? 20%?—as that engaged, at 20 pageviews per month. I say The Times would have better used the $30-40 million reportedly spent on its meter finding ways to better engage its public—multiplying pageviews (fourfold or more?) and consequent ad revenue—while finding new ways to exploit these deeper relationships (data, commerce, events….). The Times knows it needs to increase engagement; that’s the industry’s favorite conference buzzword. The irony of The Times’ meter is that when it succeeds at engaging a once-casual reader, their reward is a wall. That is an economic and strategic question.

How could The Times increase engagement? By learning from Huffington Post rather than snarking at it. Aggregation has value for readers. Conversation is engaging. Fighting for the people—which is what newspapers did, in their good old days—is the most meaningful way to engage with a community. Fun is fine.

I am reminded of the schoolyard, when the boy nasty to a girl and some sage adult would see that he really just had a crush on her and didn’t know how to say it. OK, Bill and Arianna, kiss and make up.

: See also Jonathan Stray, who calls for a paid content API. I’d broaden that (as above) into a means to exchange value for both content and audience however that value is then exploited.

Daily economics

I have not seen News Corp’s Daily (I was invited to the preview last night but travel, exhaustion, health, weather, and thus prudence had me take the train home and I couldn’t get in today because of the ice). So I have nothing at all to say about the product. I am trying to get my head around the economics and I hope better mathematical and business minds than mine will analyze what it will take for the Daily to succeed.

Rupert Murdoch said the Daily went through $30 million in development costs that are already written off. He said operating costs will run $500,000 a week. So in the first year, the Daily will cost roughly $55 million. That’s a lot. For comparison, Portfolio went through somewhere between $40-100 million. I said we’d never see another publication launch of that scale. I was wrong. Also for comparison, News Corp’s abortive aggregator, Project Alesia, went through a reported $30 million.

Let’s say that circulation covers the costs of the Daily — since getting consumer revenue is the real point of the exercise — and that advertising is profit. Note well that I have *no* reason to believe that’s News Corp’s strategy. It simply makes it easier to illustrate the economics and the questions I hope other reporters tackle.

The Daily is selling for $1 a week or $40 a year.

So how many subs would they have to sell to break even on the $500k/week cost? (Note that’s break-even on an operating basis, not on the total investment.) It’s a bit more than 500k subs at $1 each for the reasons below.

Figure that Apple is taking something less than its normal 30% share for the privilege of having the Daily. Murdoch said that it will be ported to all major table platforms but then he said that last year, this year, and next year “belong to Apple.” (I have no idea whether he means that metaphorically or contractually.)

Figure also that there will be churn as there has been in iPad magazine sales. That means — as it always does with sub sales — that one must sell new subscriptions to replace cancellations to reach your magic number. Let’s say the Daily loses–and I’m pulling this number out of a hat– 10% a month, which it needs to replace. So if you’re selling 100k this month, you need to sell 110k next month to get to 200k and 120k the following month to get to 300 and so on.

I’m not qualified to run these numbers; I wish someone with circ experience would. But to pick another number out of the hat, let’s say that the Daily needs 750k net subs to hit cash-flow break-even because around 25% of circ revenue goes to Apple and half the subs are sold at the 20% discount. With churn, they’d need to sell a total of up to 1 million gross to reach that number while accounting for a subscriber acquisition (marketing) cost of, say, $10 (which is light but given Apple’s promotion, probably not unreasonable).

I picked 750k because it’s somewhere in the ballpark — Murdoch said he eventually plans to sell “millions” — and also because it leads to an easily rounded number for marketshare: The Daily would capture about 10% of the installed base of iPad owners today (though that’s a worldwide number, so the U.S. figure would be higher). That’s pretty high.

For comparison, Wired sells about 22k issues a month on the iPad, down from a debut of 31k, Glamour sold 2,775 in November, losing 20% a month from the prior two months (even as iPad sales soared)–note the higher churn number than I used above. So the Daily would need to sell roughly 34 times the sales of Wired. But it is daily and not monthly.

Now switch to advertising. The market will be small for sometime. I’m told these days that major brand advertisers won’t pay attention to a site until it gets 3 million audience. Then again, the value of tablet advertising is supposed to be high and advertisers like the experience. I also wonder whether the ads will also go through Apple and it will again take a share of a quarter to a third. There are so many variables in advertising–unique users per day; time spend and pages and ads views; avails per page; measurement of ROI (is there click-through?)–that it’s nigh until impossible for me to guess at the revenue. But I throw this out, again, in hopes that someone will tackle it.

Once more: I have NO figures other than the two Murdoch gave. I have ONLY questions. I hope the Daily is profitable; I hope any new news venture is profitable. I’d simply like to have a better idea of what it will take to get there. Anyone want to help? Please DO tell me where I and my assumptions are full of crap and please DO add experience and data. I just want to understand the dynamics of the business.

: Folks on Twitter are saying that I say the economics of the Daily don’t add up. I am not saying that. I simply want to see the addition.

The NJ News Co-op

Please take a look at — and rate and comment on! — a proposal I helped draft for the Knight News Challenge proposing a co-op to support the emerging local news ecosystem in otherwise-deprived New Jersey.

The idea is that the scattered, independent members of that ecosystem need help to (1) curate and share the best of what they do across all media and get them more attention; (2) organize them to create collaborative works of journalism; to train them in skills from journalism to new media to business; and (3) begin to fill in the blanks that the ecosystem and the market leave with beat reporting and investigations. It’s not meant to be a news organization so much as it helps organize and support other news organizations of all sizes, media, and models in the state. The goal is not to grow a large enterprise but to help grow a large ecosystem.

I believe we are seeing the new ecosystem emerge (see our business modeling at CUNY’s Tow-Knight Center for Entrepreneurial Journalism here) but I also believe it needs help and support to grow and inspire more journalists and community members to join in. Thus the co-op.

The notion of a co-op was inspired by Deb Gallant, New Jersey’s own Queen of Hyperlocal at a meeting organized by my friend and neighbor, Chris Daggett, whom you last saw here when he ran as an independent for governor of New Jersey; now he heads the Geraldine R. Dodge Foundation. Chris brought together other foundations plus journalists, public broadcasting folks, and state officials in an all-day meeting to look at what can be done to help New Jersey’s media future. There are other efforts coming out of these players; this is just one.

New Jersey’s media scene is a unique mess. It has never been served by the media outlets at either end of the state, in New York and Philadelphia. The daily newspapers are shrinking rapidly. The governor has been looking to sell the public broadcasting licenses here at NJN and, truth be told, they’ve never been robust.

But all that bad news is good news, for it means that New Jersey is a blank slate, a unique opportunity to build a new media sphere. We want to nurture that development. This endeavor is a not-for-profit cooperative. These enterprises also need commercial help with revenue (advertising and events); others are simultaneously working on that.

(Because entries lose paragraph-spacing, it’s a bit hard to read on the Knight site. So you can read it here but please, please do comment there. We’re eager for suggestions and questions and help in fleshing this out.)

Entrepreneurial Journalism curriculum at CUNY

Here are the courses that make up the new Entrepreneurial Journalism curriculum at CUNY. We plan to offer these courses this spring–to our own students and to midcareer journalists. Once approved by the state, we’ll award a certificate and then an MA in entrepreneurial journalism.

This Monday evening the 29th at 6p, we’ll hold an information session at the school–219 W. 40th St. in NY–and we’ll stream it for folks who can’t be there. Details here. We’re accepting applications now–admissions addresses here.

We’ll teach a course in business basics in the media context and a course in new business models for news–which is really, I’ve discovered, a course about disruption (whether you cause it or have to cope with it). Students will create their own business plans and incubate them in a third course. We’ll give students an immersion in relevant technologies to inform their plans. And students will work on an apprenticeship in a New York startup to be exposed to startup and engineering culture. I’m delighted to be teaching these courses with my colleague, Jeremy Caplan, and others we’re recruiting in various specialties.

Students may leave starting their own businesses and making their own jobs. They may work for startups. They may bring entrepreneurship into legacy companies. And legacy companies may send them to the program. In my Entrepreneurial Journalism class at CUNY — an inspiration for this program — we have a few midcareer professionals in the class this term and I’m finding the mix with students to be good. So we plan to continue that mix in the larger program.

This educational program is one of the three legs of the stool that makes up the new Tow-Knight Center for Entrepreneurial Journalism. We will also continue research on new business models for news. We are also starting in incubator and investment fund. The research will inform the students businesses and those in the incubator and identify new opportunities we can help start. The courses we create for this program will also bring in resources to help teach and support businesses in the incubator. And having more services in the incubator will help the students with their businesses. That’s the idea.

At the end of the day, we hope to bring more innovation and innovators to journalism. That’s the hope.

Here are the syllabi (don’t ya love that word?) for the courses. If you would prefer, you can see them on Google Docs here.

CUNY Entrepreneurial Journalism curriculum

Whither the Times magazine?

MediaWeek, under its new boss, Michael Wolff, asked a bunch of us what we’d advise the New York Times Magazines’ new boss to do. Here was my full answer:

Their Q: The New York Times Magazine has a new editor, Hugo Lindgren. If you could make one suggestion for how he could improve the Times Magazine what would it be?

My A: Ask me whether I care. I don’t pick up the magazine. I do read stories out of it when I see links and discussion. The magazine — like the newspaper — is unbundled. Or to pick another metaphor: its content is atomized, and then some of the free atoms find their way into new molecules not through editors’ packaging but through readers’ recommendations.

Other real (read: standalone) magazines at least have some worldview and community of shared interest gathered around them. The Times Magazine has a weaker identity and weaker ties; it’s not a magazine so much as a slick paper on which to print more Times stories.

So why have a magazine? Slick advertising. So I’d put the reporting where it belongs — in the paper — and let the fluffy speciality magazines with good endemic ad categories — fashion, travel, home — take over.

Or here’s another idea: Turn the magazine into a curation of great content of the week from the web. Become a molecule-maker.

New molecules

Guardian editor-in-chief Alan Rusbridger asked for help with his view of the fourth estate’s separation (outside the U.S.) into three sub-estates: legacy media, public media, our media (my wording). My response:

Pardon my metaphors:

I had a bunch of public broadcasters from Sweden at my school last week. They’re quite successful—audience is up; marketshare is up—and so it may be difficult for them to feel the urgency of the winds of change and move with them. I suggested that we are only beginning to feel the storm (/metaphor) and I argued that if we are coming out the other side of what some Danish researchers call (metaphor) the Gutenberg Parenthesis then our concepts of media and our consequent cognition of society will change profoundly over years yet to come.

In her amazing history of Gutenberg’s influence, Elizabeth Einstenstein argues that it took 50 years for books to come into their own and not merely copy the scribes and another 50 years or so for the impact of the press to become clear. The Gutenberg Parenthesis team argues that we are entering a period of confusion as great as the one Gutenberg caused. Granted, we are operating in internet years, not Gutenberg years. Still, we’ve only seen the beginning. And so I asked the Swedes to pull back and consider their role more broadly.

So I urged the Swedes to think of media as the essential tool of publicness and one that is no longer mediated. And so in their role of being publicly supported (but not — I’ll grant to them and to the BBC their fig leaves — tax-supported) then I suggested the best thing they could do is to enable and protect the voice of the public. They could curate, train, promote, and collaborate with new people using new tools in new ways, for example. They could establish platforms that make that possible and networks that help make it sustainable. They could see it as their role to support a lively, healthy ecosystem and all of its members, including not only the new kids but also the struggling legacy media (by that view, I’ve long argued that the BBC should make it its mission to use its powerful megaphone to promote and support the best of journalism and media in the UK, no matter who makes it; that is a public good).

All of which is to say that I think your trilogy-view of media today is correct but temporary. We are still in the phase when the printers are copying the scribes’ fonts and content. New wine, old skins. We are also still in a phase of separating the old-media folks from the new-media folks, the public from the private, and for that matter, the media (the journalists) from the public. I think those distinctions must melt away when we move past the stage of copying the copyists and invent entirely new forms.

We see content as that which we make. Google sees content everywhere. Twitter creates content even Twitter doesn’t understand yet (our useless chatter has real value as a predictor of movies’ success). Blippy creates a transparent marketplace for stuff. Google Goggles with Foursquare and Yelp and Facebook and Google Maps and the devices we carry that are always connected and location-aware and us-aware force us to rethink our definitions of both local and news. The Guardian turns data into news by collaborating with the people formerly known as its audience. We ain’t seen nothin’ yet.

So I don’t think we’re yet at a stage of stasis where we can find three estates out of the fourth estate and count on the tensions among them to support a new dynamic of media.

Overlaying this view, I think we are entering a phase in the economy in which industries — filled with closed, centralized corporations that own their means of production or distribution — are replaced by ecosystems — filled with entities that must collaborate and cooperate and complement each other to find efficiencies and through those efficiencies profitability and sustainability. So the idea that your three sub-estates will compete won’t be sustainable; they will have to specialize and then collaborate and as that occurs there may still be separations of roles — e.g., creator v. curator, platform v. network, local v. national — but they are new separations.

What you are identifying is the start of an atomization of media. But I see those atoms reforming into new molecules. (/metalphor)

Wrong battlefield

It’s kinda touching that Rupert Murdoch’s loyal lieutenants are trying to entertain the boss by starting an old-fashioned newspaper war (old-fashioned modifies newspaper). But it’s also ever-more revealing of their worldview.

And of course, the best way to declare a war is to declare it over and claim victory. “Nationally, there’s no contest now,” Robert Thomson, editor of the Wall Street Journal, said, according to the AP, “We’re more than twice as big as The New York Times. They’re not a serious competitor.” The AP goes on to tell us that the “Journal sold an average of about 2 million copies nationwide on weekends compared with the Times’ 900,000.”

OK, but that’s half the story. It’s more like 10 percent of the story. For now shift to the future, the web, and comScore tells us that in July, The Times reached 43.6 million people online vs. the Journal’s 16.1 million. By the time you add in pass-around readers for the paper and de-dupe the same readers for print and online, those numbers might change, but the moral to the story doesn’t.

The New York Times has roughly two and a half times more readers than the Journal. That translates to two and a half times more influence, two and a half times more relationships, a two-and-a-half-time bigger brand.

Murdoch has been willing to lose tens of millions of dollars on his New York Post for one reason: he wants a “bully pulpit” (his words.) He has certainly turned FoxNews into just that. So its kind of sad, if you’re feeling empathetic, that his Journal is losing so to The Times. That’s why Thomson doth protest too much.

That is the price of the pay wall. It may be a price worth paying. The New York Times is, of course, piling up bricks for its wall now. But off in the open field, no bricks in sight, stands Guardian editor Alan Rusbridger with 37 million readers online wondering whether he could soon run the largest newspaper site in the world.

Now I argue these days that brands are no longer magnets; they become labels when you find content through search, algorithms, and peers’ links. Murdoch cut off the algorithms when he pulled his Times of London out of Google News just as he put it behind the wall. That was not a business decision but an emotional but. But I’m even willing to stipulate that his pay wall could work — work in the sense that he gets satisfactory revenue (whatever the definition of that is) from readers rather than from advertisers.

But the real price is growth. It won’t grow. I see that not as victory in the war for the biggest bully pulpit — for the bragging rights to talking to more people. I see that as surrender.

Regulating sex and speech

Let me start with a disclosure: I hope to think that Craig Newmark is a friend. He can be as hard for me to read as James Joyce or C++. But I know him as a decent and genuine man who believes that he is bringing a service to millions of people, saving them billions of dollars that used to go to overpriced, monopolistic middlemen. He doesn’t do it to get rich (I’ve driven by his office and home and they ain’t palaces), which is precisely what bedevils those old middlemen; I’ve watched them try to break him and prove he’s greedy, too, and I’ve watched them fail. When I last had coffee with Craig in San Francisco (on the craigslist tab, I should disclose), he talked about the number of free ads craigslist has given people in terms of economic philanthropy, which is also what he said to my students at CUNY two years ago.

These days, Craig and the company he founded are being demonized in courts of political and media power as sex peddlers. The service — which Craig is quick to point out, he does not run; he means it when he says he is its customer-service representative — just took down its adult ads in the U.S., replacing the link with the word “censored.”

The argument has been that craigslist ads are used to serve human sex trafficking. Except craigslist has been openly and consistently helping police in their efforts to arrest traffickers. The adult ads were paid and more trackable than free personals on craigslist or ads in many other places online and in print. Now the trade, whatever its scale, is only more distributed. Gawker has a guide to post-craigslist paid sex and craigslist has pointed out that even eBay has sold party favors of another sort.

So why are government and media going after craigslist? The same reason, I think, that media and government in, for example, Germany are demonizing Google (even as the German people give Google its biggest market share anywhere in the world). They’re going after the disruptors, the biggest disruptors in sight.

Since craigslist and the internet have existed, newspaper classified revenue has fallen by $13 billion a year, leaving that money in the pockets of former advertiser-customers. Since Google and the internet have existed, many more billions have left traditional media as Google offered their former ad customers a better deal.

The New York Times today belittles craigslist’s censorship, calling it a “stunt” and “ploy” and labeling as “screeds” craisglist CEO Jim Buckmaster’s defenses of the service—and of free speech—against attorneys general and against ratings-starved CNN ambushing Craig. Nowhere does The Times disclose its own dead dog in this hunt, its loss of billions in classified revenue (in blogs, we’d be expected to, eh?). But the paper does acknowledge that the law is on craigslist’s side even if its enforcers are not and that this is a matter of free speech, which should put The Times and its journalists on craigslist’s side as well.

But they’re not. I’m not suggesting conspiracy; I rarely do. But I do see old power structures huddling together against the cold breath of technologists bringing change. At the Aspen Ideas Festival last summer, I asked Google’s Eric Schmidt whether we were going through a larger restructuring than a mere crisis. He replied that he wished we were but cautioned that, as I wrote then, too much of our resource, people, government help and attention go to the big, old legacy companies rather than supporting innovation (read: disruption). I would have translated that into the idea that instead of bailing out GM and subsidizing and artificially, temporarily propping up house and car prices, government should invest in bringing broadband to every door. I would have hoped that Schmidt might have agreed. Sadly, even he is now listing to the legacy. Google, the big boy, plays with other big boys.

But craigslist is still the weird kid. At the end of its story, The Times quotes someone saying that “Craigslist is not your typical company in the sense that it doesn’t seem to be exclusively motivated by profit.” What a strange, inscrutable child, it is. It’s easier to attack a company that doesn’t act like a company. And it’s easier to attack free speech and liberty when they — and dollars — are spent on nasty sex.

But this is a fight of old establishment power — business, media, and political — against new and disruptive technologists who are writing new rules. This is also a fight over freedom of speech. Last night, I woke up on the couch to see the end of The People vs. Larry Flynt. In this country, we protect bad speech to protect all speech.

Yes, prostitution is illegal. It long has been — the oldest laws cover the oldest profession — but the authorities have been blinking at ads for *cough* escort services in newspapers of many sorts for many years (here are the Village Voice’s adult ads). I’m headed to Berlin and Amsterdam in a few weeks, where prostitution is legal and regulated. Beyond exploitation of children — which every civilized person on earth abhors; as Mike Masnick says, the real enemy, not discussed in all this, is the trafficker — do we really want and need government regulating sex among free-willed adults? But that’s not the issue here. If it were, those attorneys general and CNN and The Times would be going after all those services Gawker lists and some newspapers, still.

No, the issue is disruption.