Posts about newbiznews

Inside an entrepreneur’s sausage factory

September 29, 2014 by Jeff Jarvis
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I will be assigning all my entrepreneurial journalism students to listen to every episode of Alex Blumberg’s podcast about starting a podcast company. It is an open, honest, true portrayal of the making of an entrepreneur.

Blumberg, you’ll recall, was a producer and voice on This American Life and one of the geniuses — along with NPR economic correspondent Adam Davidson — behind its Giant Pool of Money and then their podcast and blog Planet Money.

He decided to pick up and start a new company to produce quality, journalistic podcasts because he wisely saw the opportunity — we’ll all be streamin’ while we’re drivin’ — and because he saw their success in public radio.

Blumberg’s progress sounds so much like that of our entrepreneurial students. He starts with a passion to make what he does now pay. He faces and admits to many tough reality checks: How can he get the business to scale? Does he have the business and technical skills needed to make the enterprise sustainable? He faces fundamental choices: whether to become a content or a technology company. He learns that venture capitalists fund only technology companies; they fund scale. He learns the importance of the elevator pitch and clarity of vision. He learns the importance of learning from pitches.

Blumberg is a master storyteller and so this tale has plenty of suspense. I’ll be listening to every episode — and assigning every episode as well. Here are the first three:

Technoeuropanic

September 4, 2014 by Jeff Jarvis
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Europe is at it again. Or still. I’m told that a consortium of European publishers will run an ad in European papers this weekend attacking Google and the EU’s antitrust deal with the company. It’s the same old stuff: publishers whining and stomping their feet that it’s just not fair that Google is doing better than they are and government should step in to do something about this, this damned, uh … competitor.

Screenshot 2014-09-04 at 8.17.21 PMIn the ad, the publishers’ argument is that Google’s search is not “impartial.” First, who said it has to be? Second, Google does point to its competitors; see this search for “maps” to the left. Third, who requires the publishers to promote their competitors? Here, the so-called Open Internet Project — a front started by German publisher Axel Springer — demands “equal search” (what the hell would that be?) for, say, shoe listings, complaining that Google makes money pointing to its shoe advertisers. Hmmm. And here is Bild, Springer’s gigantic newspaper, selling shoes itself. I don’t see them linking to Google’s shoe ads. Shouldn’t a news publication be — what’s the word? — impartial?

But, of course, this isn’t the point. It’s a game. I’ve seen German publishers chuckling about it that way. They think they can use government and political pressure to cut some flesh out of Google. But they should beware the unintended consequences. They are helping Europe — and particularly Germany — get a reputation for being hostile or at least inhospitable to technology. Here is the Economist writing about “Germany’s Googlephobia.”

It so happens that I’m going to Berlin next week to speak at the IFA technology show about just this topic: Europe (specifically Germany) and technology specifically American technology companies). I worry about Europe.

Germany just banned Uber (despite the advice of EC VP Neelie Kroes). A European court instituted the ludicrous and dangerous Right to be Forgotten (what about the right to remember?). German government officials harassed Google over Street View so much that Google gave up photographing its streets (so much for Blurmany). German publishers got government to pass an ancillary copyright to go after Google quoting and linking to their content (but then lost a round in court). The German book industry gave technosceptic Jaron Lanier its big-deal peace prize and Dave Eggers’ dystopian novel is roaring up the charts. A German pol is threatening to break up Google (how?). Spain is looking to tax the link. The head of powerful German publisher Axel Springer raises the spectre of Google starting its own nation without laws. A German government agency is talking about declaring Google a utility and regulating it as such; I’d call that quasi-nationalization. “It is the core task of liberalism and social democracy to tame and restrain data capitalism gone wild,” declared Social Democratic Chairman Sigmar Gabriel in a German paper. “Either we defend our freedom and change our policies, or we become digitally hypnotised subjects of a digital rulership.” I could go on….

Would you invest in technology in Europe and specifically in Germany? I sure wouldn’t.

Some of this is about disrupted companies and institutions rallying to try to hobble their disruptor. Some of this is cultural technopanic. In either case, the damage to Europe and particularly Germany could be great.

At IFA, I plan to tell the technology executives there that they need to step up and defend progress or they might find themselves left behind.

Screenshot 2014-09-04 at 8.05.22 PM

The problem with “takes” is the business model of mass media

September 4, 2014 by Jeff Jarvis
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A very good take on why all news organizations think they “need a take on that” becomes a self-fulfilling prophecy, being followed by another take and then another take on the Awl’s take on takes. Shoot us all now.

No, shoot the business model and the presumptions of mass media economics. That is what is causing this ridiculous treadmill of making content for content’s sake to get audience for audience’s sake with any original reporting or original thinking being copied and copied again and again until it looks like a the fuzzy, unreadable, 87th Xerox copy of a bad carbon copy. That is what makes media companies think the answer to any business problem is to make more content because that’s what we content makers do.

The problem is that the old business model of mass media rewards volume not value. The problem is also that we mistake our job as content makers rather than as service providers.

Advertising is bought on eyeballs by the ton — that is, every 1,000 set of eyeballs a media site can deliver. Advertisers then deliver their messages to said eyeballs. That’s because that’s the way old, one-way, mass media had to work. That’s all that print and broadcast allowed. And we are still, two decades after the introduction of commercial web, trying to copy our old business models in a new media reality. Spoiler: It won’t work.

Why do you think, as illustrated in this handy chart provided by First Monday, that Google’s value has soared 1,000 percent in that time while news media companies’ value has swirled down the toilet bowl?

monday note chart

Easy: Google sells value. To users, it provides relevance. To advertisers, it promises performance. Meanwhile, media still sell mass. They deliver one-size-fits-all products (“come see our home page, all of you; we’ll bet one of the hundred or so headlines there will grab you!”) to users. They deliver mere impressions to advertisers. Shouldn’t we be asking [cough] what would Google do?

There’s another reason that journalists like to issue their own takes on takes: ego. Back in the day, reporters were assigned to “match” other publications’ reporting not because they were scientists replicating others’ research and adding value to it but mostly because they wanted their own bylines and their on brands over their own stories in their own pages. And that made a modicum of sense in paper economics. But it doesn’t make sense anymore. Indeed, we cannot afford to use precious journalistic resources parroting what others have already done, reporting what our readers already know. The net — as distinct from mass media — rewards specialization and quality, the thing people link to because it’s good. Quality. Value. As a dividend, the link also brings news organizations the opportunity to recognize efficiencies by not trying to do everything for everyone. Dare I repeat this, too: Do what you do best and link to the rest.

The lessons of this story are painfully obvious: Stop making content. Start delivering service and value. Stop copying others’ work. Link to it. And to advertisers: Stop buying impressions. Buy performance. And to all: Challenge old assumptions. Innovation over inertia. Value over volume.

So was this just another take on the takes on takes? So shoot me.

Absolution? Hell, no

August 11, 2014 by Jeff Jarvis
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sarducciovalThe good Reverend David Carr grants us absolution. “So whose fault is it?” he asks after chronicling the excommunication of newspapers and magazines from media companies casting off their old, print ancestors to starve and die. “No one’s,” Carr decrees.

Not so fast, preacher. It is our fault. Who else could be at fault? We journalists, publishers, and journalism schools have turned out to be irresponsible stewards of journalism. We squandered our trust and our cash flow. This was was our institution to nurture and protect and Carr says it’s all but dead.

Wait a minute, Father David. That depends on what you define as our institution. He sees it as print. Well, hell, I’ve spent years now begging my journalistic coreligionists to stop defining themselves by their medium — by their means of production and distribution — otherwise they’d all end up just where they are today: the baby swirling down the drain with the holy water.

But there was good news for media companies this weekend, wasn’t there? BuzzFeed got a $50 million investment from Andreessen Horowitz. I thought venture capitalists didn’t invest in content because it has cooties, no? But its new board member, Chris Dixon, says that’s because BuzzFeed’s not a media company. “We think of BuzzFeed as more of a technology company.”

cat baptismWell, hold on, you moneychanger in the temple, you (and mind you, sir, we’re glad to have you here; please make yourself at home). BuzzFeed is still a mass media company because it still operates by mass-media economics based on volume: the more people it can tempt into its harem with the siren call of its cats, the more people it can serve to advertisers (no matter what it calls its advertising). It is a last-gasp, clever (some might say cynical) exploitation of those old-media ways, grabbing the last dollars from the cold, dead hands of Carr’s congregation. It is the newest old-media company.

But I have faith that BuzzFeed’s founder, Jonah Peretti, can invent his way out of this — that’s why Andreessen Horowitz is not nuts to invest in him. He can use the cash flow the old ways bring him to invent something new. But he hasn’t yet. And that’s the point: There’s still time. Old media companies still have cash flow they, too, should be using to reinvent themselves.

But Brother Carr has renounced his vows right from inside the old scriptorium. Fucking Gutenberg. “Nothing is wrong in a fundamental sense,” he writes. “A free-market economy is moving to reallocate capital to its more productive uses, which happens all the time. Ask Kodak. Or Blockbuster. Or the makers of personal computers. Just because the product being manufactured is news in print does not make it sacrosanct or immune to the natural order.” Or how about asking Netflix?

No, market forces are not an excuse for fatalism and ultimately suicide. Market forces are an opportunity for — forgive me, for I do know I’m getting carried away with this religion thing — resurrection. There is still time as no one has yet challenged all our old-media assumptions about content and print and reinvented journalism as what it should be.

I’ve warned you that I’m about done with a 55,000-word tome about that reinvention. I’ll give you the tl;dr now: Journalism needs to rebuild itself as a service to individuals and communities, which requires having relationships with them as people, not a mass, helping them reach their own goals in new ways — not just with content — and sustaining this work with business models built on value over volume.

That’s not what newspapers — even the digital-first among them — are yet. That’s not what BuzzFeed or Huffington Post or Business Insider or Vox is … yet. I don’t know what that is yet (thus my tome is no prophecy) but I suggest a few paths to the promised land.

At the end of his eulogy, Carr writes: “It’s a measure of the basic problem that many people haven’t cared or noticed as their hometown newspapers have reduced staffing, days of circulation, delivery and coverage. Will they notice or care when those newspapers go away altogether? I’m not optimistic about that.” Ah, but it’s a poor shepherd who blames his sheep.

So I’ll end this as good sermons should, with a charge to the congregation: Go forth and figure it out, people. Stop whining. Stop looking for excuses and forgiveness. Stop giving up. Your flock needs informing. Go find new ways to do that. And I don’t want to see your prodigal asses back in these pews until you do. That goes for us in the seminary, too.

Amen.

The decootification of media companies

August 5, 2014 by Jeff Jarvis
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LOCALADV DIGITAL PHOTO BY JUSTIN BEST Cooties for a Kristi column.

This pretty much completes the circle: Now Gannett is ready to spin-off its print properties, following Scripps in 2007, Belo in 2008, News Corp. in 2013, Tribune Company in 2014, and Time-Warner in 2014 — not to mention the Graham family putting the Washington Post up for adoption by Jeff Bezos.

Thus ends the decootification of media companies: entertainment here/print there; future here/past there; profitable here/screwed there. In corporate transactions, an unnamed venture is called a newco. In these media transactions, the abandoning parents might as well have called each progeny a crapco. They are not only set off on ice floes like elderly Eskimos awaiting a cold death, but some of their abusive parents — namely Time-Warner and Tribune — saddled them with horrendous debt. A few didn’t. Gannett’s spin-off is to be debt-free. Give considerable credit to Rupert Murdoch — who does love newspapers — leaving News Corp. with no debut and $2.6 billion in cash.

This is happening because the bad news for news isn’t over. The last best category of advertising in newspapers is the distribution of FSIs, free-standing inserts — circulars and coupons — which by one account adds up to 30-50 percent of newspapers’ retail advertising (though retail advertising continues to plummet). The last, best reason to keep printing and distributing a newspaper is FSIs. When you see papers cut frequency of printing or distribution to a few days a week, those are not hot news days; those are the days that bring FSIs and their revenue.

I’ve been saying here for some time that FSIs will go away. About two years ago, I asked a big-box retailer that makes much money from its circulars (from charging brands for presence in them) how long it would be before the circulation of print newspapers would fall below critical mass. The reply: 24-36 months. Note how long ago that was. FSIs are holding on for now but they are bound to start dropping off (a cliff) when (1) newspaper penetration — now running about a third of the country — continues to die off and as (2) consumer adoption of digital and especially mobile couponing rises and as (3) retail itself suffers in the face of Amazon and now Amazon, Google, and eBay all experimenting with same-day local delivery. Add (4): At the PostalVision2020 conference a year ago, the postmaster general described the entire business model of the United States Post Service as an advertising delivery medium; it will compete with newspapers for those last printed circulars and coupons and it is just as desperate for them.

I’ve also been saying here for some time that the real goal of newspaper publishers should be to become sustainable digital enterprises before the day when print becomes unsustainable. I’ve worked with two companies that are trying. Digital First started down the path but hasn’t arrived; it is a more digital and more viable company but still has a way to go to reach the promised land. Advance has consolidated digital and print in its markets, reducing print frequency in some and in all markets making digital the primary product for consumers and advertisers as well as staff and print a byproduct that still produces cash. Other companies have gone for short-term cash-flow fixes — namely, paywalls, whose growth has stalled both at Gannett (about 1 percent after a year) and now at The New York Times (in its latest quarterly report, the paper said growth of core digital subscriptions — apart from new digital products that themselves didn’t sell so well — stalled at just over 1 percent).

The job of turning a legacy news organization into a new digital organization is both wrenching and expensive. It requires urgency. It also requires patience and patient capital to fund reorganizations but especially innovation, which entails experimentation and thus failure — in a word, risk.

What these spin-offs signals is that media companies do not have the stomach, patience, capital, or guts to do the hard work that is still needed to finish turning around legacy media. So they spin them off. What used to be Gannett, Tribune, Scripps, and Belo are now TV companies. What used to be News Corp. and Time Warner are now entertainment companies — companies that might merge not, in my opinion, because that’s such a wonderful deal but because the best path they see to growth is not innovation there either but instead cutting costs and consolidating negotiating power to outmaneuver (with help from legacy telcos) the Netflixes of the future.

I see something else happening here: the end of the mass-media business model built on reach and frequency (unique users and pageviews) — in a word, volume. Google, Facebook, retargeting, programmatic advertising, all the companies and trends that are growing in advertising focus on individuals over masses, on data over mere exposure. If news companies do not figure out how to know people as individuals and find value there, reconstituting themselves as relationship rather than merely content companies, then they will find the ice floes under them melting sooner than later.

: LATER: Here I am on Bloomberg TV Market Makers on this story today.