Monday Note

No predictions, just a few of many hot topics for the newborn year.

Paywalls. 2010 could see a significant number of newspapers jumping into the paid-for option. Among the conditions to be met:

- Grouping around a toll collector. It could be Journalism Online in the US, a big media group in Europe, or even Google — should a truce occur between the search giant and publishers. From the user’s standpoint, the payment intermediary must be friction free, able to operate on any platform (web, mobile) and across brands.
Publishers will have to devise a clever price structure. If a knee-jerk move takes them back to the tired basic-content vs. premium-content duality, they are doomed.
- State-of-the-art web analytics affords much more refined tactics around users, platforms segmentation, etc. In addition, a paid-for system must be able to deal with many sources of income, such as monthly subscriptions, pay by-the-click, metering system based on downloads, time spent, etc.
- Publishers must act in concert. In every market, the biggest players will have to carefully coordinate their move to paid-models: everybody must jump at the same time. This is easier said than done: there is always the risk a rogue player will “cheat”, that is break the pact in order to secure a better market position. Also, too much “coordination” could encourage a disgruntled competitor to sue on anti-trust grounds.Daily newspapers shifting to periodicals. How many dailies in the world will shift from seven or five issues a week to three or two? Undoubtedly, many. This is a better trend than it sounds. For breaking news, print is no longer relevant, but it will remain the medium of choice for long-form pieces. Newspapers publishing a few times a week will gain by becoming more magazine-like in their news coverage; they’ll save their story-breaking capabilities for web versions. In this regard, the mobile web will soon become bigger than the original, PC-based variant.
The “instant web” such as Twitter and its offspring will thrive in 2010. The likeliest offshoot is video-twittering as pocket size camcorders continue to spread (see Gizmodo comparison here). These will be supplemented by an upcoming generation of high-definition devices with Net connectivity through wifi or 3G networks.

Advertising Disintermediation. The media buying side is definitely not the sector to be in for the next decade. First of all, ad spending will continue its adjustment to the actual time spent on various medias. In 2008, print captured 20% of advertising dollars for only 8% of the time spent; in comparison, digital got 29% or our time but 8% of ad spending. Those numbers, those discrepancies tell us the correction is far from over.
Unless they devise smarter ways to analyze web audiences (see below, the audience measurement issue) and, as a result, clearly define the true value of each group of users, there is no longer a need for the media buyers’ costly intermediation. The trend is there: the most agile web sites will go directly to brands and advertisers, they will propose sophisticated integration mechanisms for their sites and mobile platforms. So do social networks such as the 25m users French Skyrock (see our case study).
Anyway, Google will settle the intermediation issue as its boss candidly puts it in Ken Auletta’s books (1): “Google wants to be the agent that sells the ads on all distribution platforms, whether it is print, television, radio or the internet. (…) As our technology gets better, we will be able to replace some of their [large companies] internal captive sales forces”. Media buyers, consider yourself notified: you’re toast.
As for the creative side, we hope advertising agencies will, at last, wake up and think of new ways to integrate their messages in digital media layouts (as in print), rather than trying to divert users away from media sites (see previous Monday Note on the inherent design flaws of the internet).

Audience Measurement. The mediocrity of internet audience measurement tools is largely responsible for the collapse of CPM (the cost per thousand page views). As long as the approximation level stays as high as it is today (30% – 40% margin of error), as long as the market keeps relying, for the most part, on a single stats providers (Nielsen) without further questioning its methodology, prices on the internet will remain low. Publishers’ passivity is just incomprehensible. The shrewdest ones manage to artificially inflate their audiences — but their games won’t last. Again, Google could settle the issue. The search engine is the biggest single repository of internet traffic data. It could decide overnight to team up with a panel-based system and give away web sites statistics, better numbers than the ones sold today at high prices. That day, Nielsen will be in serious trouble — and it won’t be mourned.

User-generated content and the blogosphere. For the “citizen production”, the most likely evolution is a clarification between an ever more corrupt amateurish ecosystem and an increasingly professional amateur segment. The former will become less and less credible. On the general news side, irrelevant “noise” is getting louder. And for the consumer news, a growing segment of the blogosphere is venal, i.e.: sold to brands. In the consumer electronic segment, for instance, the number of a good reviews a product gets is increasingly disconnected from its actual virtues; instead, such number is tied to the brand’s ability to carpet-bomb the blogosphere with free samples, which are lent, of course, but never claimed back (see our story Rotten Apples in the Reviews Barrel). In other words, you should trust Consumer Reports or your usual sources more than that the average “independent” soldier from the “blogger army” (the latest term of art devised by marketers).
On the other hand, the blogosphere will remain an endless supply of true expertise, analysis and opinions that will challenge and stimulate old media. But it might become trickier to sort the good from the bad. We can expect (and hope) to see this small segment of the blogosphere to become increasingly professional, with more fact-checking and editing. If only monetization could follow… (About the blog ecosystems, see Technorati annual State of the Blogosphere with tons of data and analysis).

Tablet Expectations. This Christmas season, Amazon sold more electronic books than physical ones. That’s a milestone, for sure. But today’s Kindle looks like the Trabant of the digital age. What seems to be the first iteration of the device might likely flourish in vertical markets such as education (see the Monday Note about The e-book tractor application). But to achieve mass adoption, an electronic reader for books and magazines might have to look like this spectacular concept envisioned by the Swedish publisher Bonnier with its “Mag+” project. Hence the high level of anticipation with the tablet expected to be introduced by Apple on January 26th. Two looming questions: a) How close could it come to the Bonnier Mag+ concept? b) For the publishing business, can Apple emerge as a disruptive force comparable to the one it became for the music industry? The introduction of a tablet or a slate is likely to be boosted by contents agreements with partners such as Condé Nast and other leading publishers. After all, Apple could come up with the killer technology, it already owns the content distribution and transaction platform: iTunes. This might turn out as our n°1 topic in 2010.

Finally, you are now about 3000 reading the Monday Note every week. Let me thank you all for your support and your insight and wish you a great year 2010 full of unexpected innovation.

—frederic.filloux@mondaynote.com

(1)Googled, the end of the world as we know it, by Ken Auletta, Penguin Press, 2009. In my view the best business book of the year.

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