Posts about reboot

Did we ever pay for content?

In an essay that, on first blush, ranks near to Clay Shirky’s seminal thinking-the-unthinkable think piece, Paul Graham argues that we never paid for content:

In fact consumers never really were paying for content, and publishers weren’t really selling it either. If the content was what they were selling, why has the price of books or music or movies always depended mostly on the format? Why didn’t better content cost more?

A copy of Time costs $5 for 58 pages, or 8.6 cents a page. The Economist costs $7 for 86 pages, or 8.1 cents a page. Better journalism is actually slightly cheaper.

Almost every form of publishing has been organized as if the medium was what they were selling, and the content was irrelevant. Book publishers, for example, set prices based on the cost of producing and distributing books. They treat the words printed in the book the same way a textile manufacturer treats the patterns printed on its fabrics.

Information – Bloomberg terminals, stock newsletters – is a different business. Publishers flatter themselves when they argue they are in it.

What happens to publishing if you can’t sell content? You have two choices: give it away and make money from it indirectly, or find ways to embody it in things people will pay for.

The first is probably the future of most current media. Give music away and make money from concerts and t-shirts. Publish articles for free and make money from one of a dozen permutations of advertising. Both publishers and investors are down on advertising at the moment, but it has more potential than they realize.

I’m not claiming that potential will be realized by the existing players. The optimal ways to make money from the written word probably require different words written by different people….

The reason I’ve been writing about existing forms is that I don’t know what new forms will appear. But though I can’t predict specific winners, I can offer a recipe for recognizing them. When you see something that’s taking advantage of new technology to give people something they want that they couldn’t have before, you’re probably looking at a winner. And when you see something that’s merely reacting to new technology in an attempt to preserve some existing source of revenue, you’re probably looking at a loser.

Is journalism an industry?

Journalism is a business – that is how it is going to sustain itself; that is a key precept of the New Business Models for News Project. But is it still an industry dominated by companies and employment?

In the first part of his analysis of the news business, BusinessWeek chief economist Michael Mandel equates bad news about news with the number of journalists employed. He charts newspaper jobs falling from more than 450,000 in 1990 to fewer than 300,000 today and calls that depressing – which it is, if one of those lost jobs is yours. But it could also signal new efficiency and productivity, no? Looking at these numbers with the cold eye of an economist whose magazine and job aren’t on the block, perhaps it is nothing more than the path of an industry in restructuring. Perhaps it’s actually a signal of opportunity. Indeed, Mandel then laid that chart atop one for the loss of jobs in manufacturing and found them sinking in parallel, with newspapers just a bit ahead on the downward slope today. “Not good news, by any means,” he decreed.

But there is the nub of a much bigger trend: the fall news as an industry paralleling the end of the industrial economy. That’s not just about shedding the means of production and distribution now that they are cost burdens rather than barriers to entry. It’s about the decentralization of journalism as an industrial complex, about news no longer being based solely on employment.

A few months ago, I quibbled with Mandel’s BW cover story arguing that America has experienced an “innovation shortfall.” There, as here, I think he’s measuring the wrong economy: the old, centralized, big economy. In both cases, he misses new value elsewhere in the small economy of entrepreneurs and the noneconomy of volunteers.

I return again to the NewBizNews Project, where we modeled a sustainable economy of news at between 10-15% of a metro paper’s revenue – about as much as any of them bring online – with an equivalent amount of editorial staffing but those people are no longer all sitting under one roof; they work in – and oftentimes own – more than 100 separate enterprises. I return, too, to the Wikimedia Foundation calculating the value of time spent on edits alone with it adding up to hundreds of millions of dollars.

In both cases, tremendous value is created at tremendous efficiency outside of the company and in great measure outside of employment.

So is employment the measure of news? No. Is it the proper measure for every industry? Not necessarily. Is it the measure of the economy? Not as much as it used to be. Media is becoming the first major post-industry. Others will follow. You just have to know where to look.

* * *

It’s one matter when new value is created outside old companies in industries such as retail – in WWGD?, I cited $59.4 billion in sales from 547,000 merchants on eBay in 2007 vs. $26.3 billion in 853 Macy’s stores – but another matter when the employment is replaced in industries built around priesthoods: journalism, education, even government and medicine. Then not just economics but behaviors change.

Thus we see fretting about a “post-journalistic age” when new people perform some of the tasks journalism employees used to perform, whether that is advocates digging dirt or universities reporting their own scientific advances or sports teams funding their own reporting or volunteers organizing to report collaboratively. These are just a few of the latest examples from my pre-surgery tabs about voids being filled in new ways by new parties with new efficiencies. This is another reason it’s dangerous to calculate journalism’s size according to journalism’s jobs.

: LATER: Here’s Roy Greenslade still basing his analysis on staffing. Perhaps the better analysis is investment.

Google U

Zephyr Teachout has a good column in tomorrow’s Washington Post predicting the disaggregated university. It’s very much in harmony with what I wrote in What Would Google Do? – that complete chapter here. I also gave a talk on the topic via Skype to the Media Education Summit in Liverpool this week; the audio (not very good) is here. The bottom line of all this: Education will follow the path of newspapers, toward a disaggregated, distributed, more efficient future based on abundance rather than scarcity, with control at the edge.

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 to handle an ass (like me)

I want to love my cable company – honestly, I do. They bring me things I love and depend upon. I love TV. I really, really love the internet. (The phone? Well, I love that, too – but unfortunately for the cable company, it’s my iPhone I adore.)

So why don’t I love my cable company? We all know why: because it’s a marriage as ruined as the one in War of the Roses. It’s a relationship built entirely on aggression and passive aggression, on each party trying not to give the other one what it wants, on stonewalling or fighting. So how do you change that? I speculated in What Would Google Do? about what a cable or phone company run by Google (GT&T) would be like, but that’s only wishful thinking.

After my contretemps with Cablevision this week – and the ensuing lively discussion about it in the comments here, on other blogs, and in Twitter – I’ve been trying to think about it how this relationship can be rebuilt. Because I don’t like the relationship and I don’t like the way I am in it.

When my internet didn’t work. I called the company and its employee read off a script: ‘Sorry to hear that sir, let’s try this. Oh, that doesn’t work. We’ll see you in three days.’ I then operate off my script: ‘That’s unacceptable. I pay for the service. I want it fixed ASAP.’ Them: ‘No.’ Me: Get me a supervisor.’ Them, after much argument – because it always takes argument: ‘OK, tomorrow, but you have to wait home all day.’ Me: ‘That’s unacceptable. I have a life.’

I pay for the service to work and want it to work. They want to maximize customer service efficiency (is that a sufficiently nice way to say it?). We end up in a standoff that, in my experience, can be broken only by outlasting them and being angry. It’s still a script. But I don’t like the role I play. I don’t like myself. I’m an ass. Because it works. I end up victorious – the internet I paid for is working again – but sullied and embarrassed by what I had to say to get the service I need. How to break that cycle?

There are a few new factors in the cable business in recent times.

First, cable companies have competitors (yay!) – well, at least one competitor: the phone company. In Twitter, it took no time at all – less time, indeed, than it took Cablevision to respond – for Verizon people to smell the carrion of a dead marriage and to seduce me.

Second, we have Twitter (and blogs and YouTube). As I said in the comments on the post below, it doesn’t matter how many followers you have because your message can spread and so the smart company has to respond. The people formerly known as consumers are now media.

But the company also has Twitter. Witness what Frank Eliason (aka @comcastcares) has done to respond to customers and to humanize his company. Oh, Comcast still has problems – Eliason will confess that – but the fact that I got better service on my Cablevision account from a Comcast employee speaks volumes. It says there’s a lesson to be learned there.

At the end of my Dell contretemps, I wrote an open letter to Michael Dell with what I sincerely hoped would be helpful advice. They didn’t change their ways because of what I said. But what they did end up doing what I suggested and I’ve since written about that in BusinessWeek and in my book.

So I’ve been trying to think of advice for Cablevision.

First, throw out the script. Give employees the ability to take responsibility, to deal with us honestly, and to get things fixed. That’s one of the things Dell did and it made a huge difference.

Second, become human. Comcast’s Frank Eliason is a person. He’s not a bot with standard answers. We wouldn’t stand for that; as the Cluetrain Manifesto teaches, markets are conversations and we recognize when they are being held by man vs. machine. Microsoft, Dell, Sun, Comcast have all been enriched by enabling their people to talk with us as people. Not every employee will be capable of that; it’s the ones who are you want working and speaking for you.

Third, I’d invest in customer service as the best form of advertising possible. Zappos learned that lesson and it just earned them $900 million.

Fourth, create a service level agreement (SLA) so customers know what to expect when they call and so they can hold the company to it. That’s the real problem. We come loaded for bear because we know what’s going to happen, we know the script: the cable company is going to push us off as far as possible and we’re going to demand as soon as possible. The agreement becomes an assurance (natural disasters aside) we can count on and we know the consequences.

Fifth, you’re not going to believe that I’m saying this, but charge for better service. Yes, I would complain about that. But here’s the way I think it would play out: The cable company charges for a good SLA; its competitor, the phone company, sees the competitive advantage of advertising that you get that included with them; the cable company is then forced to meet the challenge. And we end up with the SLA. If we don’t, I predict that local governments and the FCC and FTC may impose them. So I suggest you figure out the way to get there on your own.

Sixth, make it a goal to have delighted customers. Yes, I know, that sound silly: fodder for needlepoint. But go back to the beginning: I want to love my cable company. If – surprise, surprise, surprise – I do, I’m going to talk about that. In the age of Twitter, that’s the best advertising you can get. This is how the investment in customer service will pay off: with advertising that’s better than anything you put in TV or newspapers … and it’s free. And it keeps customers from leaving for Verizon. That’s how a company takes advantage of the free economy.

This attitude also might motivate cable companies to change other policies that irk, like bundling in dozens of channels I have to pay that I never watch. But the issue that bothers most people about their cable companies is dealing with them for installation and service. That’s what I’d concentrate on first. Service isn’t a favor you do for customers, as various employees implied with me. It’s how you live up to your deal and delight customers.

You see, I’m not an ass. I only play one on the phone to get what I think I deserve in a business deal in which I have no power other than that. And, cable guys, I know you’re not lazy slugs trying to rip me off; that’s just the script they make you read from the policies they set in the front office. Can’t we all get along?