BuzzMachine

The media pundit's pundit. Written by NYC insider Jeff Jarvis, BuzzMachine covers news, media, journalism, and politics.

Tag: newbiznews

  • Daily economics

    32 comments on Daily economics
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    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

    7 comments on The NJ News Co-op
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    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

    12 comments on Entrepreneurial Journalism curriculum at CUNY
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    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?

    17 comments on Whither the Times magazine?
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    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

    2 comments on New molecules
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    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)