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The Blogosphere’s Soft Corruption

The TechCrunch / Arrington saga is the perfect illustration for the stealthy corruption plaguing digital information. Skip this paragraph if you know the story. In a nutshell: on September 1st,  Michael Arrington, founder of the site TechCrunch, announced the launch of a venture fund (Fortune broke the story). Rather small token by Silicon Valley standards: $20 million (to put things in perspective, according to the National Venture Capital Association, 37 funds raised a total of $2.7 billion in Q2 2011, which gives an average of $72 million per fund). No big deal, except Arrington is also TechCrunch’s editor and he intends to continue writing about startups — startups his venture would fund. (To make things even weirder, one of the main contributors to the fund is AOL, TechCrunch’s owner since last year).

Even the most twisted ethicist would have detected a looming conflict of interest. Not Arrington. Because he is one of most arrogant pricks in this business. And because he lives elsewhere. He resides in the blogosphere, where the simplest ethical issues are distorted like space-time at the edge of the universe.
Back on Earth, a controversy erupted. The loudest shot was fired by Kara Swisher, the co-executive editor (along with Walter Mossberg) of All Things Digital, the Wall Street Journal Digital Technology site.

I can’t help but sharing with you the first graf of her 6:00am (Pacific) outburst:

Of course I have something to say about the news yesterday that AOL would be a key investor in a new early-stage venture fund being started by TechCrunch’s perpetually petulant editor Michael Arrington — with a big, fat and decidedly greasy assist from a panoply of Silicon Valley’s most powerful VC firms and angel investors.

As Alfred Hitchcock said, it starts with an earthquake and it’s getting worse. Then, she summed up :

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

Eventually, after a public, web-enhanced, dispute with his owner, Michael Arrington was fired. (On the matter, New York Times’ media columnist David Carr wrote the best piece, as usual, well-crafted and documented).

Now, here is why I find this subject interesting. Three things: the revolving door between journalism and industry; the blogosphere distortion field; the pervasive conflict of interest.

The switch. For one, I have nothing against switching from journalism to another kind of activity. In that respect, I disagree with most of my fellow journalists – especially those in France who like to believe journalism is an apostolate (both come with a vow of poverty.) Last week, I met a former London-based business reporter, who is now back in France; he is being offered a top communication job in a Fortune 500 company. He feared being marked with the seal of infamy and no longer allowed to come back as a journalist. I told him things have changed; after five years or so as a communication guy for a large conglomerate, a business news organization would be even more interested in hiring him because he would know his sector pretty well, and would be able to detect all the manipulation tricks of big corporate PR machines, which could be invaluable to his junior co-workers.

As for someone writing about startups, I find it perfectly understandable the desire to cross the Rubicon and to join or create a venture fund. Trying to detect what could be a great product or even the Next Big Thing, nurturing great teams of engineers, designers or marketers, is an enthralling occupation, which, in addition, is both intellectually stimulating and financially rewarding.

Unfortunately, Arrington doesn’t see things that way. He got drunk in a kind of power game, intoxicated with his supposed “make or break” power over startups. (By the way, I always found the alleged power of tech writers over the fate of a startup to be vastly overstated; unlike in the analog era, the disintermediated world allows every product to find its path to success – as long as it deserves one.)  Anyway: I do find the revolving door is a good thing. As long as the previous door has been properly locked.

Enter the blogosphere and its tolerance for conflicts of interest and — let’s use the word – soft corruption.

Ten years ago, Arrington’s case would have been a no-brainer. Neither for him or his employer. He would have simply been let go. Now, it seems to trigger a quarrel between Ancient and Modern, the former being – obviously – representatives of the old medias, the likes of the Swishers and the (David) Carrs and the latter being the tech blogosphere and is elastic value-system. Fine.

I’m not going to denigrate the blogosphere as a whole or TechCrunch itself, which harbors good reporters. Blogs are part of my daily media routine and, for the record, I’ll say many bloggers do a better job than presumed professional writers. Still, by construction, bloggers are more prone to serve third party agendas: many are penniless, young, untrained, unsupervised and their writing is unedited. A target of choice for manipulation.

A couple of years ago, I witness firsthand the blogosphere’s vulnerability. I was called by a non-profit organization to take a look at their digital strategy (I can’t be too specific, I’m still under NDA). The whole things was in the hands of a couple of communication agencies, which had detected a gold mine, loading the project with outrageously overpriced services. I pissed them off quite a bit by donning a bean-counter’s suit — which I found, in that case, enjoyable – and by suggesting many budget cuts. (When done, I quickly moved away from that fishy mission).
One of the promotional tools proposed by the flacks, was dubbed as “The Blogger Army”. In short, a few hundred bloggers worldwide, presented as “influencers” that would convey pre-packaged messages concocted by the communication agencies. The bloggers didn’t have to care about the product or its underlying value, they just had to cut and paste the material they were provided with. All of the above for a $100,000 budget paid to a firm specialized in deploying the “army” — including a couple of well-know “influencers”.
That very same year, as I dug a bit further, I realized how many bloggers are deluged with gifts from the tech industry and how, to that crowd, the notion of flashing a Visa card to pay for gadgetry was seen as utterly ridiculous…

In the information business, the conflict of interest is looming at every corner. All the time, someone is trying to buy you with something. It could be a product, “exclusive” access, the transcript of legal depositions, a heads-up to a report. Everything. The more vulnerable (or hungry, or ambitious) a writer is, the better target he’ll be for the corrupters. Years ago, as I was writing about Hollywood, a writer from The Los Angeles Times explained how an interview with an agent or a movie producer often ended up with a cajoling “… And what about you my friend, you must have a script buried somewhere, hmmm? Let’s discuss it someday…”

That’s why, when it comes to get an credible review of a tech product or service, I’ll trust Walt Mossberg’s Personal Technology column much more than any blogger.  Mossberg is a seasoned professional (he’s 63) who had developed his craft well before the tech boom. He actually sharpened his claws covering the brutal automobile industry, as recounted is this 2004 Wired profile. Mossberg lives by his reputation of independence, that’s why the Wall Street Journal (and AllThingsD) consider him as an important asset – and pays him accordingly. I took him as an example because I’ve been reading his column since he started it in 1991 (I was then living in New York).

His 1000 words ethics statement is an example of what should be the standard in journalism. Many news organizations, newspapers, magazines, websites, have adopted similar codes. Are they foolproof? No, certainly not. But it is worth considering having one.

frederic.filloux@mondaynote.com

Politico’s Way

To cover American politics, Politico deploys an editorial staff of 150. This is more than any news organization in the United States for the same beat. It all started five years ago: a niche website launched by three seasoned political reporters who sharpened their claws in mainstream medias. As envisioned by John Harris, Jim VandeHei and Mike Allen, Politico was to start with a kernel of 12 hardcore political reporters who would aggressively run after all the balls.

Four years later, as a new presidential campaign gears up, Politico owns the news cycle, from 4:30am to midnight, on all vectors: web, mobile, television and… print. And it does so in rapid-fire mode.

Last week, I chatted with Bill Nichols, Politico’s managing editor. Before Politico, he spent 24 years at USA Today. There, among the many items on his impressive résumé, he covered six presidential campaigns as well as the State Department. Bill was in Paris to deliver the inaugural lecture at the Journalism School of Sciences-Po where I happen to have a gig (highlight of the lecture summed up in French on Slate.fr). His talk provided the students with a great start for their year; they were listening to a fifty-plus journalist who didn’t hesitate to leave the comfort of a great newspaper to jump into the unknown. Even in 2007, going after the Washington media establishment with a website was quite a bold move. Today, Nichols is obviously having a lot of fun — which is the best message to convey to a crowd of aspiring journalists.

The lessons to draw from Politico’s success are connected journalistic and business ones.

Politico has literally sliced and diced the news cycle with an array of dedicated products fitting all possible subjects, reading time and formats. Anyone serious in politics or government affairs will begin his day with a peek at the mobile version of the Politico Playbook. Described as ” Must-read briefing on what’s driving the day in Washington”, it is written by Mike Allen, the chief White House correspondent. The site features eight other “tip sheets”:

  • Huddle A play-by-play preview of the day’s congressional news
  • Pulse The latest in health care policy every weekday morning
  • Morning Money Political intelligence on the intersection of D.C. and Wall Street
  • Morning Score A pre-dawn guide to the permanent campaign
  • Morning Tech Daily download of technology news from D.C. and Silicon Valley
  • Morning Defense A daily briefing from inside D.C.’s national security apparatus
  • Morning Energy The one-stop source for energy and environment news
  • Influence Intelligence and analysis on lobbying

The idea is to hook the reader on the day’s “must-follow” items. Then, developing stories will be made available in all possible forms: stream of stories as the news dictate, a great deal of support through countless TV appearances (Politico maintains its own studio linked to all networks and all reporters are required to promote their work). Many times a day, breaking news, alerts, warnings are pushed on mobile. Then, to maximize the impact, top stories will be re-edited to feed the eponymous daily. It is published five days a week, only when congress in in session, and its 34,000 (free) copies are distributed at various strategic spots in DC.

Then, the Politico tone. As Bill Nichols acknowledges, Politico’s pitch is slightly more tabloidish than mainstream media. It doesn’t pontificate, nor does it endlessly circle around a subject. It reflects internal newsroom discussions and the talk of the town.  A few days ago, recounts Nichols, the editorial staff was discussing Republican Texas governor Rick Perry’s intellectual ability to run for the presidency; instead of going for a convoluted story loaded with nuances, Politico went straight with this headline: Is Rick Perry Dumb? This treatment was later supplemented by an informative 1600 words piece about Perry’s 2010 book “Fed Up!”, itself a great gift to his opponents. (To nail it, Politico published a Nine questions for Perry article listing subjects the candidate will have hard time eluding.)

That’s Politico’s way: aggressive, relentless, fun, witty, but also dedicated to providing in-depth, well-reported journalism. Last year, the New York Observer ran an interesting story on how The Atlantic (great magazine, along with an equally great site) was fighting back Politico on the Washington scene. David Bradley, owner of Atlantic Media company, had this comment:

“It was much happier to do what we were doing until Politico arrived in the world. Politico introduced a whole new standard of, I wouldn’t say quality, but I would say velocity and metabolism. I responded way too slowly. (…) They are going to be at the more racy, tabloid end of the spectrum. That seems to be the position they have chosen. I think we’ll be more of the authoritative end.”

To which Jim VandeHei retorted

“People come to us because we break news, we are authoritative and we help readers understand how Washington really works. I think Bradley’s description is clearly motivated by business interests. That said, we take all competitors seriously.”

Business is important as well to Politico and its powerful backer, the Allbritton family. As a privately held company it does not disclose financial data. Even with its large staff of 200 in total, it is said to be profitable thanks to its multi-pronged product strategy:

–The web site had an audience of 4 million unique visitors last July, according to Comscore (it should triple during the 2012 campaign). This is rather small compared behemoth such as the Huffington Post or the NYTimes that are more into the 50 million UVs range. But the value extracted from each visitor is quite high.

– Around half of its revenue is coming from the newspaper which sells high premium ads. Thanks to the geographical concentration of the Washington elite, the paper does not cost too much to distribute and its pagination and printing costs are adjusted to the advertising load.

– Last November, Politico launched “Politico Pro”, an in-depth paid-for service focusing on three critical (and lobbying-intensive) issues: energy, technology and healthcare. The price is $2,500 per month (story in the Columbia Journalism Review). “Pro” relies on several dozens of reporters and editors integrated with the rest of the newsroom.

– Recently, Politico added an event department: get-togethers for the Happy Few with big political names, moderated by staffers. The guests don’t pay, but big sponsors do — happily it seems. Events will be organized not only in Washington but on the campaign trail as well.

– Last June, Politico announced an e-Book venture with Random House. The concept: quick accounts, 20,000 to 30,000 words (80-120 pages), of the 2012 campaign. Produced at little additional cost, promoted by the brand, these could be pure gravy.

Politico’s potential revenue pool is huge. According to the Center for Responsive  Politics, the 13,000 registered lobbyists in Washington spent $3.51 billion (!!) in 2010. This is an affluent market, highly concentrated, both geographically and interests wise.

On the surface, Politico’s method of squeezing money from every slice of its market looks logical and reproducible. But its unique ecosystem makes Politico’s success difficult to replicate elsewhere.

frederic.filloux@mondaynote.com

Getting More Bang For Our Bucks

(Includes correction with the right 3rd graph)

Two important questions in our times of large public debt and lagging economies: Is it effective to inject public money in support of the ailing media industry? And, in order to ensure the best readers’ bang for the taxpayer’s buck, are some models better than others?

Last week, I chatted with Rasmus Kleis Nielsen, a Research Fellow at the Reuters Institute for the Study of Journalism at the University of Oxford, and a communication professor in Denmark. With Geert Linnebank, a former editor-in-chief at Reuters, Rasmus wrote a compelling report on the subject: Public Support for the Media, A Six-Country Overview of Direct and Indirect Subsidies (PDF here). Together, they review public support systems for Finland, France, Germany, Italy, United Kingdom and the United States. A large part of the report looks at the funding of public radio and television channels, which varies widely from one country to another. In this column, I’ll limit myself to public sector funding for the print media.

When it comes to supporting its print press, Finland is a big spender. It invests 22 times more public funds per capita than the United States, nine times more than Germany, five times more than the United Kingdom, four times more than Italy, and three times more than France, see below:

Supporting the press sector is a big deal in Finland, then. In theory. Because, in Finland, like in all Scandinavian countries, newspapers enjoy a huge reach: 79% of the population. This might tempt you into thinking there is a direct relationship between subsidies and penetration. Actually, there is none: According to the report, Germany, which spends 11% of what Finland does, has a newspaper reach of 72%.

Using readership stats provided by the World Association of Newspapers, the picture looks like this:

Combining the two sets of numbers leads to a compelling result: While spending much more than any other country, the Finns get a much better performance. According to the Reuters Institute report, they perform 13 times better than Italy and France, the clear losers of the subsidies systems, as shown here:

We can draw three conclusions from these data sets.

1 / There are no Keynesian mechanisms in evidence when it comes to correlating public spending with print media penetration. The US spends only 16% more per capita than Italy, but have 94% more readers per thousand people. As for Germans, they spend 40% of what the Italians do, but have almost three times more readers. Practically, it means there is no hope to reverse the declining trend by beefing up subsidies.

2 / The Finnish performances is more a matter of editorial product than of public policy. I happen to know quite a bit about the kind of journalism practiced in Nordic countries. It is a fiercely independent, aggressive (in the best sense) kind or reporting. A couple of years ago, I was a jury member for the Schibsted Journalism Award (see my June 2009 column about it). I saw editors making choices, strategizing their coverage, assigning substantial resources to it, and striving to beat their competition. In addition, they provide very efficient public service journalism, lifting the veil on administrative shortfalls and occasional abuses by officials.

From a pure industrial perspective, Scandinavian media companies have once and for all decided competition had to stop right after the newsroom doorstep. For a long time, printing and distribution have been mutualized. Newspapers and magazines have not been spared by erosion, but they are in a much better shape than in most countries.

3 / Contrary to the cliché, internet growth doesn’t cause a decrease in print press penetration. Finland (again) and the UK have both strong readerships and a high number of online users (respectively 57% and 37%).

The Rasmus Nielsen report explains in great detail the complexity and diversity of public funding for media. In passing, it kills long lasting prejudices such as European media being massively state-funded, or an American public sector unsupportive of the media industry.

And there is no one-size-fits-all model.

Still, some ideas emerge — as long as you think media ought to be somewhat subsidized. Which I do, for several reasons:

  • Quality information plays a critical role in democracy.
  • Good reporting remains quite expensive to produce. Remaining able to preserve non-commercial formats (such as NPR or the BBC) leaves no choice but public support.
  • The industry — especially the print press — is in the midst of a radical and costly transformation, and many organizations don’t have enough capital to undertake it.
  • We are facing an historical wave of mediocrity in the information business with wealthy aggregators eager to repackage anything that fits their obsession with eyeballs. (I’m appalled to hear Le Monde is about to strike a deal with the Huffington Post.)

Having said that, for public support to work, critical conditions must be met:
1 / Tight management. Sounds obvious, but too often public money means outrageous waste (as often seen in public broadcasting).
2 / No open-bar. Meaning: no open-ended funding. If money is supposed to help a precise restructuring, it must be tied to measurable results.
3 / Sanitization. Subsidies should rather be indirect than direct. For instance, a tax break as opposed to a grant for a specific company falling below a certain level of advertising (as is the case in France).
4 / No life-support funding. Only support for transformation.

frederic.filloux@mondaynote.com

Innovation in turbulent times

News organizations have an innovation problem. Especially print media. As they gingerly wade into digital, their ability to foster innovation becomes more critical than ever. In today’s fast-changing landscape, they should view innovation as their main weapon against direct competitors and emerging players such as tech startups,.

Unfortunately, print media appears ill-equipped to innovate. The reasons are many.

– The weight of the past. Looking back ten years, making changes to a newspaper or magazine used to be a lengthy and complicated process, with technical, industrial as well as political implications. On the internet, by contrast, major changes are a only few lines of code away. Modern CMS (Content management systems) are designed to allow and sometimes encourage modifications and adaptation to rapidly changing needs. As for applications, a minuscule team needs only a couple of months to engineer an impactful product.

– The takeover of the bean-counters. In the newspaper industry, years of revenue depletion have shifted tremendous power to the financial guys. They performed as requested by shareholders (especially because journalist-bred managers lost their credibility).They cut, downsized, optimized. Not exactly the best petri dish for creativity.

– A risk averse culture. This is mostly a consequence of the previous point. Cost-centered management, added to gloomy business conditions, won’t foster initiative and risk-taking. The result is you will not see a group of journalists putting their job in play in order to launch a new product they believe in.

– No management reform. Each time I look at a newspaper’s org chart, I’m struck by the complexity of the management structure, by the level of red tape still remaining. Curiously enough, very little has been done about it. (In most cases, it has to do with a spreadsheet-driven management unwilling to fight organizational conservatism).

As a result, very few news organizations prepared themselves to switch to a genuine competitive innovation model, more comparable to the one used by technology companies. Having said that, questions arise: How to create an environment that will stimulate new ideas; how to restore a risk-taking culture; should innovation be mostly internalized or outsourced; how to select the best decision-making processes for the new digital-driven world?

Last week, the New York Times unveiled its Beta 620 initiative. As Matthew Ingram  puts it in Gigaom, the project is the NYT’s version of Google Labs, with selected projects presented to the public. Innovations involve social media, search, recommendation engines, etc. Let’s be clear: I can’t think of many news organizations with the courage and ability to devote anything close to what the Times is investing in its R&D effort. (To get an idea of the New York Times R&D Labs’s scope and ambition, see these videos shot by the Neiman Journalism Lab.) Still, some of their processes and ideas are worth considering. From what I’m told, Beta 620 is the visible part of a program started several years ago, one in which, once a year, everyone is encouraged to present a digital project. Even the least nerdy will be helped in his/her pitch. An ad hoc committee selects a couple of projects and the authors receive a small prize (a thousand dollars or so). More importantly, s/he will get appropriate resources and time to further develop it.

More broadly, the Times has a low-key but efficient way to stimulate innovation or improvements. Take its new CMS. Developed in cooperation with Infosys, it is carefully designed to be safe and robust. But, at the same time, it lets the nerdiest web producers tinker with the code to alter the layout of a page, or to adapt the rendering of the website to a specific need. When someone described how the improvement process was made available to so many, I was surprised by the level of trust the NYTimes is putting in its staff. (Needless to say: this accessibility comes with suitable precautions, tests procedures and so on).

Obviously,  very few news organizations facing a constant revenue depletion can afford a fully-staffed R&D Lab. Having said that, between its internal contest encouraging out-of-the-box thinking and the trusted approach for continuous improvement, The New York Times teaches us a lesson: Fostering innovation is a matter of creating the right environment as much as pouring tons of money in it.

The dominance of finance-driven management impacts innovation. It encourages a short-term approach. Today, an executive team will be much more inclined to spend money with the promise of a quick — even if small — return, as opposed to investing the same amount of cash in an actual new product. To them, the potential for the greater benefit of a truly new creation is outweighed by the risk of a more distant, more uncertain outcome. Investing $100,000 or $500,000 in a marketing campaign, aimed at boosting an existing digital audience, will get a greater consideration than making the same investment in a new app — especially since the performances of the former will be easier and quicker to measure.

Another side-effect is the alteration of the decision-making process. Ten or twenty years ago, sound businesses with decent margins and growth, along with predictable economic conditions, allowed gut-based decisions. Today is the opposite: with all key economic indicators blinking red, management will run for cover by asking for as much data as possible to justify their decision. And a landscape that changes faster than ever before makes getting reliable data a complicated task. Think about the changes we witnessed over the last two years. In a recent interview to McKinsey Quarterly,  Google’s CFO Patrick Pichette acknowledged that, every single day, 15% of the queries it handles are completely new and never seen before. This says a lot about the level of uncertainty the digital business now faces.

What is left to manage innovation? Based on my observations and discussions with project managers and executives, key recommendations emerge:

– Separate short-term tactics from medium-to-longer term strategy initiatives. Marketing is fine, but it doesn’t guarantee lasting results. A great product does.

– Dissociate production from innovation functions. Those who drive the train can’t be asked to design a new locomotive. Nor to oversee it construction.

– Stimulate creativity. Encouraging staff to come forward with new ideas, helping people formulate projects can be done inexpensively.

– Once a project is selected, assign clear objectives, scope, schedule and ways of measuring success or failure.

– Assign a small, dedicated team that will report to the top of the organization, not to middle management.

This sounds like basic and somewhat obvious rules. With one exception: very few news organizations have adopted them.

frederic.filloux@mondaynote.com

Gunning for the Copyright Reformers

Going after copyright reformers is risky business. To digital zealots, defending copyright is like advocating the return to the typewriter. (I personally like typewriters; I own several and I recommend a wonderful 1997 Atlantic piece on them at Longform.org). Going after sworn copyright opponents is what Robert Levine does in his just-published  book Free Ride — How the Internet is Destroying the Culture Business and How the Culture Business can Fight Back.

The pitch: Digital corporations are conspiring to promote the free ideology that has been plaguing the internet over the last decade. With their immense financial firepower, the Googles and the Apples and the Silicon Valley venture capital firms that funded Napster did whatever it took to undermine the concept of copyright. From lobbying the United States Congress to funding free-culture advocates, they created a groundswell for rip-and-burn products that would sell their MP3 devices. They got lawmakers and pundits to pave the way for a general ransacking of intellectual property — from music to journalistic content. Once Levine makes his point, he explores possible solutions to restore value to creativity (We’ll address these in a future column).

Needless to say, Robert Levine has produced a non-politically correct opus. And that’s what makes his book fascinating.

To start, the author reframes the famous quote, “Information wants to be free.” Free Ride recalls the complete sentence as far more nuanced. This is actually what tech writer Stewart Brand said at an 1984 a hacker conference:

“One one hand information wants to be expensive because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

Few quotes in recent history have been more twisted and misinterpreted than this one. Everyone jumped on Stewart Brand’s distinction between collecting information and making it available to the audience. While the cost of the former remains high — at least for those producing original information, or content — the marginal cost of broadcasting it fell dramatically, and that is what sparked the idea of a zero-cost culture. Yet, “media products have never been priced according to their marginal cost,” Levine says, and therefore, free is an idea that’s hard to defend.

As described in Free Ride, US lawmakers played a critical role in opening the floodgates of piracy and copyright violation on the internet. On October 28, 1998, Bill Clinton signed the Digital Millennium Copyright Act. That law, says Levine, gave a “safe harbor” to internet service providers and some online companies. No longer liable for copyright infringement based on the actions of users,  Levine writes that the “safe harbor made it easier for sites like YouTube to become valuable forums for amateur creativity. But it also let them build big businesses out of professional content they didn’t pay for.” That, he says, is how Congress created YouTube. (Google purchased it in 2006 for $1.65 billon).

The book’s most spectacular deconstruction involves Lawrence Lessig. The Harvard law professor is one of the most outspoken opponents of tough copyright. For years, he’s been criss-crossing the world delivering well-crafted, compelling presentations about the need to overhaul copyright. When, in 2007, Viacom sued YouTube for copyright infringement, seeking more than a billion dollars in damages, Lessig accused Viacom of trying to overturn the Digital Millennium Copyright Act. It was a de facto defense of Google by Lessig who at the time was head of the Center for Internet and Society at Stanford University. What Lessig failed to disclose is that two weeks after closing the deal to acquire YouTube, Google made a $2-million donation to the Stanford Center, and a year later gave another $1.5 million to Creative Commons, Lessig’s most famous intellectual baby. To be fair, Levine told me he didn’t believe Lessig’s positions on copyright were influenced by the grants from Google. Moreover, Google set aside $100 million to fight the Viacom lawsuit. Numerous examples throughout Free Ride show how technology companies are committed to influence public policy. Ironically, Lawrence Lessig’s newest crusade at Harvard is about corruption in Washington.

Robert Levine’s book could be disputed on a few items.

- One, he’s too kind to the music industry. (His view may have been influenced by his tenure as executive editor of Billboard magazine where he witnessed first-hand the self-inflicted deterioration of the music industry.) The music business missed all the trains: (a) it defended the physical model up to the last minute even as its annihilation seemed unavoidable; (b) it extended as long as it could the double screwing of consumers and artists alike (sadly, poor analog artists have been replaced by poor digital ones).

- Two, he tends to forget the general complacency of content creators toward all forms of digital looting. I’ve often described in the Monday Note how publishers – blinded by the short-term appeal of the eyeball count – became consenting victims of all sorts of aggregators (see my Lenin’s Rope series).

- Three, the advent of free content has in fact unleashed talent. Unknown authors have been able to rise from obscurity thanks to direct access to the audience. And some have found alternative ways to make money (more on this in another future column).

Lastly, the unfolding of technology made the relaxing of copyright unavoidable. The Digital Millennium Copyright Act may have accelerated the transition but it didn’t cause the upheaval. Today, BitTorrent file transfer for music and movies accounts for about 10-12% of the internet bandwidth consumption, and YouTube accounts for 11%. Pirated content represents almost 100% of the former and about a third of the latter. Huge numbers, indeed, and huge losses for the music and movie industries. But Netflix with its legitimate content now accounts for 30% of the entire internet traffic (Hulu has less than 2%) and iTunes is growing faster than ever. And some economists do consider that giving up a large quantity of content for free is the price that must be paid to preserve a marketable share.

The music industry paid a terrible price during the digital transition, with a drop of 50% of its sales in one decade. But it would be unfair to make lenient lawmakers and internet pirates the main culprits. Unbundling played a critical role as well, just as in the newspaper industry. Being able to buy a single song on iTunes (instead of an album), or hoping that a single article on a web page will generate enough viewers to pay for itself (instead or purchasing an entire bundled newspaper) caused a great deal of damage.

As plagued as it is by piracy, the movie industry is immune to the notion of unbundling, which partly explains why box office revenue between 2006 and 2010 rose by 30% outside the United States and by 15% in the US/Canada market. Although the number of moviegoers is slipping, the industry has been able to find its way into the digital world.

Robert Levine’s book is a must-read that reframes the debate on the evolution of copyright. In an unusual way, it encompasses a European view on the issue (Levine lives part-time in Berlin). That makes the book even more interesting as countries explore ways for content creators to finance their work while not killing the formidable creative freedom unleashed by the digital world.

frederic.filloux@mondaynote.com

Free Ride, By Robert Levine is published by Bodley Head in the UK (available now on Amazon UK)and by Doubleday in the US (available oct 25 on Amazon US) and is also available the iTunes iBook Store.

Catching the Cloud

When it comes to contracting for a computer service, there is little choice but hoping for the best. Small or mid-size companies, especially those located outside the United States, are betting they’ll never have to go to court – usually one located 11,000km and thousands of dollars in legal fees away. Let’s face it: contracting with a large American company is a jump into the unknown. Agreements are written in an obscure form of English, often presented in PDF format, transparently implying modifications are out of question. Should you consider litigating, be prepared to make your case before a judge located on the West Coast of the United States. The not-so-subliminal reading of such contracts: ‘Sue me…’, with a grin.

The Cloud’s rise to prominence makes things worse. A growing number of companies and individuals handle their data to a remote infrastructure offering little hope of any legal leverage. The Cloud is the ultimate form of the outsourcing cascade. A US-based company rents capacity wherever electric power is cheap, connections reliable, and climate friendly to server farms cooling towers. As world connectivity expands, so do eligible regions. (While doing research for this column, I found Greenland was for served by a 960 Gbps (Gigabit per second) undersea cable linked to Iceland. In turn, the volcano island is linked to the rest of the world via a the huge 5 Tbps “Danice” cable). Datacenters are sprinkled over a number of countries and workload moves from one server farm to another as capacity management dictates. At this point, no company knows for sure where its data reside. This raises further legal hurdles as Cloud operators might be tempted to deploy datacenters in less stable but cheaper countries with even looser contractual protections.

European lawyers are beginning to look at better ways to protect their clients’ interests. A couple of weeks ago, I discussed the legal implications of Cloud Computing with Guillaume Seligmann, the lead tech attorney at the law firm Cotty Vivant Marchisio & Lauzeral. (He is also an associate professor at l’Ecole Centrale a prominent French engineering school). ‘When it comes to Cloud Computing, the relationship between the service provider and the customer is by nature asymmetrical’, he says. ‘The former has thousands if not millions of customers and limited liability; in case of litigation, it will have entire control over elements of proof. As for the customer, he bears the risk of having his service interrupted, his data lost or corrupted — when not retained by the supplier, or accessed by third parties and government agencies)’.
In theory, the contract is the first line of defense. ‘It is, except there is usually little room for negotiation on contracts engineered by expert American attorneys, based on US legislation and destined to be handled by US judges. Our conclusion is that solely relying on contracts is largely insufficient because it may not offer efficient means of sanctioning breaches in the agreement’.

The CVML partner then laid out six critical elements to be implemented in European legislation. These would legally supersede US contractual terms and, as a result, better protect European customers.

1 / Transparency. Guillaume Seligmann suggests a set of standard indicators pertaining to service availability, backup arrangements and pricing – like in the banking industry for instance. In Europe, a bank must provide a borrower with the full extent of his commitments when underwriting a loan. (Some economists say this disposition played a significant role at containing the credit bubble that devastated the US economy).

2 / Incident notifications. Today, unless he is directly affected, the customer learns about outages from specialized medias, rarely though a detailed notification from the service provider. Again, says Seligmann, the Cloud operator should have the obligation to report in greater details all incidents as well as steps taken to contain damage. This would allow the customer to take all measures required to protect his business operations.

3 / Data restitution. On this crucial matter, most contracts remain vague. In many instances, the customer wanting to terminate his contract and to get back his precious data, will get a large dump of raw data, sometimes in the provider’s proprietary format. ‘That’s unacceptable’, says the attorney. ‘The customer should have the absolute guarantee that, at any moment of his choosing, he we have the right to get the latest backed-up version of his data, presented in a standard format immediately useable by another provider. By no means can data be held hostage in the event of a lawsuit’.

4 / Control and certification. Foreign-headquartered companies, themselves renting facilities in other countries, create a chain fraught with serious hazards. The only way to mitigate risks is to give customers the ability to monitor at all times the facility hosting their data. Probably not the easiest to implement for confidentiality and security reasons. At least, says Guillaume Seligmann, any Cloud provider should be certified by a third party entity in the same way many industries (energy, transportation, banking) get certifications and ratings from specialized agencies – think about how critical such provisions are for airlines or nuclear power plants.

5 / Governing laws. The idea is to avoid the usual clause: “For any dispute, the parties consent to personal jurisdiction in, and the exclusive venue of, the courts of Santa Clara County, California”. To many European companies, this sounds like preemptive surrender. According to Seligmann’s proposal, the end-user should have the option to take his case before his own national court and the local judge should have the power to order really effective remedies. This is the only way to make the prospect of litigation a realistic one.

6 / Enforceability. The credibility of the points stated above depends on their ability to supersede and to render ineffective conflicting contractual terms imposed by the service provider. In that respect, the European Union is well armed to impose such constraints, as it already did on personal data protection. In the US, imposing the same rules might be a different story.

The overall issue of regulating the cloud is far from anecdotal. Within a few years, we can bet the bulk of our hard drives – individual as well as collective ones – will be in other people’s large hands: Amazon S3 storage service now stores 339 billion objects – twice last year’s volume.
We’ll gain in terms of convenience and efficiency. We should also gain in security.

—  frederic.filloux@mondaynote.com

The ePresse Digital Kiosk: First Lessons

[correction added about Relay.com's rate]

On June 30th, the French consortium ePresse opened its digital kiosk. Six months of hard work for a very small team (the ePresse consortium is a three persons operation: a CTO, a marketing person, and a manager), and still a long way to go. ePresse brought up eight titles: five dailies (Le Figaro, Le Parisien and its national edition, Libération, the sports daily l’Equipe and the business paper Les Echos), and three newsweeklies (L’Express, Le Point, Le Nouvel Observateur). This is only the rocket’s first stage: an iPad/iPhone app allowing per-copy purchases within the App Store; more to come this Fall.

Knowing I’m charge of this development, editors and news executives abroad inquired about the experience. Here are a few early observations.

[English version of ePresse demo here]

First, the big question: Why build a digital newsstand? After all, there is no shortage of places for buying online editions: Zinio, deployed globally; Relay.com and LeKiosque.fr in France. And, of course, Apple, which will roll-out its own Newsstand before year-end.

The answer is of a strategic nature: we’re dealing with concerns over control and technology.

For publishers, retaining full control of all commercial aspects of their digital sales channels is a critical matter. They must safeguard their freedom to decide prices, marketing strategies, discounts, bundles, special deals. They must also protect their ability to collect valuable customer data, without having to beg permission from a third party to do so. Marketing being the tactical engine of the trade, it is also one of the most underdeveloped assets of the press — and not just in France. A kiosk owned and controlled by publishers will be immensely beneficial for all involved.

Now, let’s take a walk through a usage scenario. You start by downloading the (free) kiosk application on your mobile phone. Next, you launch the application. A welcome screen greets you: for one euro (or dollar, or pound), you get unlimited access to the entire kiosk for one (or two) weeks, all you can eat.
Publishers might not like this: it amounts to a “leak” of digital copy sales that won’t be counted by the Audit Bureau of Circulation. But savvy publishers will also consider the upside: (a) the customer leaves his name and credit card info (that’s what the one-euro thing is about); (b) he will leave a trail of data. Then, when the almost-free trial period ends, a tailored offer is pushed to each individual customer, based on his recorded readings. An individual’s preferred title would be well inspired to offer him/her a steep subscription discount.
Over time, as reading patterns build up in the customer database, it becomes easier and easier to push offers not only based on title preferences, but also on a predictable news cycle. A political newspaper might cook up special deals six months before an election; a sports paper might do the same with Olympics and similarly attractive events. Here, tactical flexibility provides inordinate payoffs. As for occasional customers sticking to per-digital-copy purchases, they should be offered an incentive to give an email address, the ultimate goal being to convert them into digital subscribers.

Now the reality check: this scenario doesn’t work for current kiosks; pricing policies are constrained, promotional offers are not possible (they will eat up the kiosk’s margin) and the newsstand keeps customer data for its own marketing purposes. Plus, most kiosks charge around 30%, roughly three times the cost of an efficient digital delivery system.

The same goes for bundles. Currently, platforms handle those rather crudely. For publishers, beside per-copy sales, subscription systems end up as value-killers. In France, the Hachette-operated Relay.com kiosk offers a 9.90€ a month digital bundle for up to 30 10 magazines. A great bargain indeed, but one that yields a mere 0.30€ for each publication — before the kiosk’s cut. In other words, nothing. One of Relay.com’s bestsellers is said to be the 19.90€ a month all-magazines-you-can-read, with a similarly puny outcome for magazines.

In contrast, a publisher-run kiosk can introduce more bundling refinements such as a combined daily + weekly subscriptions system or any other such combination that makes sense marketing-wise. Deploying such arrangements will require a great deal of cooperation among titles – something close to performing unnatural acts, a delicate aspect of the job.

Building the system also involves deploying multi-title CRM (Customer Relationship Management) systems. This, in turn, requires weaving together customer databases belonging to different and sometimes competing titles – again, plenty of diplomatic issues in sight. I might be a little naïve, but I think media groups have done a great deal of progress recently when it comes to understanding the benefits of building integrated systems. With this in mind, for a consortium such as ePresse, the goal is to yield more value that the sum of its parts.

Now let’s jump to the technology aspect. ePresse.fr, launched ten days ago, is but the first stage of a much larger setup. Today, we limit ourselves to proposing an iOS app with per-issue sales only, through the Apple app store (lower case ‘‘app store’’ with intent as it seems Apple won’t be able to own those words). Obvious next steps include other mobile platforms and, more importantly, a subscription system directly available to smartphones, tablets and, of course, the web. In the process, we’ll add a couple more titles, but we intend to remain selective.

Mobility is a critical component. Currently, digital kiosks offer mostly PDF-based editions. As  discussed in a previous Monday Note, PDF is by no means the future of digital media. PDF once was a fantastic invention, but it wasn’t designed for today’s task: encapsulating news.
With this in mind, during the first months of ePress development, we spent a great deal of time aligning the output of the different publications to what we knew was the right target for mobility: XML feeds for stories on top of a “zoned” PDF that defines the placement of a story in a page.  Such feeds were supposed to come directly from each publication’s CMS (Content Management System). Some were able to supply the correctly formatted feeds right from day one, other needed upgrades to their CMS output. At publications, tech teams were very cooperative. We also got serious help from EDD, a French company specialized in digitizing media contents (EDD indexes and distributes 50,000 articles per day). EDD collects publishers’ PDF files, send those to India where the files are taken apart in order to produce the required output, all of it done every night within two hours.

Once clean XML feeds (standardized for the eight titles) became finally available, we had to put those on our content-delivery platform. We did this by re-aggregating all the components (PDF, zoning/mapping files, XML files, summaries, graphic elements) within a transaction-tracking mechanism. For this, we picked miLibris, a French startup that provides reading tools and cataloging systems for publishers, and for the French ISP and mobile carrier Orange.

Again: the idea was to use native XML to publish each title we serve, fully formatted for each article.

Three reasons for this:

Readability. You don’t comfortably read by constantly zooming and pinching. The screen of smartphone covers only a 1/60th of a broadsheet newspaper. For a reading a “facsimile” rendering of a 30 pages publication you’d need 1800 pans and zooms. Insanely unrealistic. XML gives us the ability to automatically reformat the text to fit the device, smartphone, tablet or, eventually, PC browser. No more pinching and zooming, just scrolling.

Functionalities. Relying on XML and text opens the way to a broad set of additional features: font-size adjustment, social sharing of articles, ability to create users’ folders, search, recommendation engines, etc.

Future-proof. At some point, we’ll get rid of PDF. As mobility usage rises, readers will demand quicker downloads over 3G or Edge cellular network. Two obstacles remain: one is each title’s graphic identity; legitimately, publishers demand the preservation of the visual aspects of the publications. As shown below, we’re making progress; the PDF version of a page:

and its XML/HTML5 translation (click to enlarge both):

… But we aren’t yet able to translate the minute details of a refined newspaper layout in XML and HTML5.

The second aspect is more economical. In some countries (such as France), the entity in charge circulation audits (equivalent to ABC) refuses to take in account digital copies as long as they are not exactly identical to the print version. This outdated posture explains the remanence of PDF formatting: it is accepted as a ‘’carbon copy’’ of the print original. My take is this will evolve over time. Already, titles such as the Economist offer an encapsulated version of their print edition that carries the same editorial content, but with a different advertising setup in some parts.

The evolution of the “edition” concept of is indeed a key question. On the one hand, the notion is deeply associated with the idea of branded news encapsulated in a “cognitive container” – yesterday the paper, today the digital edition tied to an app. On the other hand, digital news also begs for real-time. This can be implemented through a variety of techniques: overlay real-time news display, or permanently updated editions, which, in turn, push hard in favor of a subscription model vs. per-copy sales, the latter a mere (but necessary) transition.

frederic.filloux@mondaynote.com

The New Faces of Digital Readers

First of all, note the evolving language: the term Online Readers is now passé as it morphed into Digital Readers. The shift reflects two trends: a broader range of device types and, in news consumption, the spectacular rise of mobility. Today, we’ll focus on a recent set of surveys that quantify these trends. And we’ll take a look at their impact on business models and strategies.

The first survey was released last week in Paris by Havas Media, a major European advertising player with a 25% market share in France. Last May, the polling company CSA surveyed a panel of 600 people reading 20 major French publications: national dailies and weeklies. Because the French rate of ownership for digital devices is comparable to what happens in other markets, the survey’s findings can be safely extrapolated outside of France.

Here are the key findings:

Respondents declare spending 37 minutes a day on digital publications as opposed to 22 minutes a day on print press. This number is astonishingly high. It shows the switch to digital has occurred – at least for readers of large national medias. It also confirms the segmentation of digital audiences. More broadly, when Nielsen finds that, on all mature markets, internet users spend no more than 30 minutes a month on digital newspapers, it also proves how important it is to go after the most loyal customers as opposed to collecting eyeballs – and flybys – for the sake of raw audience numbers that carry less and less economic meaning…)

How media consumption is distributed: according to the Havas Media survey, 51% of the respondents prefer web sites, 31% go for electronic editions, and 17% use applications. In these numbers, the web’s dominance reflects (a) the high volume of contents that are still free as many publications keep playing both sides of the fence, meaning both ad-supported and paid-for models, and (b) the importance of real time news.
In contrast, the lower score of digital editions stems from the fact most still use a basic PDF format. This doesn’t deliver the best reader experience, nor does it fit the needs of mobility: download speed and reading comfort on a smartphone screen. (I’ll come back to the future of digital editions in a next Monday Note by talking about the ePresse.fr kiosk we launched last week in France).
As for the poor scoring of apps, it can be explained by the lack of great interfaces for smartphones, and the still relatively small penetration of tablets.

When do people actually read their news on digital devices? Mid-morning breaks constitute the first of two prime times during which web consultation is favored by most users (36% of respondents), while digital editions and apps account each for 21-22%  (apps are doing quite well at lunch time). The second prime time occurs in the evening, after work, when use is evenly distributed between devices.

The Havas Media / CSA survey also points to the prime motives in news consumption:

#1: Real Time information, mentioned by 48% of the respondents.
#2: Free access. Not really surprising, it will be difficult to get people to pay for news. But there is hope: 29% say they’d be willing  to buy a digital edition. Interestingly enough (and sweet to Havas’ ears): 72% of respondents would be ready to trade a digital subscription in exchange for advertising, and 54% would trade the ability to get free downloads of digital contents in exchange for more advertising.
#3: Availability. A notion that encompasses accessibility and ease of use.
#4: Selectiveness is seen as print’s privilege and a key factor of for liking it.

As for the tablets, 56% of their use involves reading the branded press; that’s behind internet usage (77%), email (66%), or watching videos (62%). Respondents are not apps freaks: they have downloaded only 7 free apps and a bit less that 4 paid-for apps in their devices. These surprisingly low figures appear to be specific to the French market.
In the United States, according to recent Nielsen survey, the picture is different: iPhone/iPad users have an average of 48 apps of all kinds in their device, vs. 35 for Android users and 15 for RIM users (read Jean-Louis’s recent Monday Note to understand the Blackberry’s problem).
But if you factor the actual use of these apps by counting people who open them several times a day (68% of the users for iOS, 60% for Android and 45% for RIM), you’ll see what provides the best return on effort in the application business. In terms of numbers of app loaded and used, if we take a base of 100 for iOS,  Android will score 64 and the Blackberry 21.
Of course, the picture needs refinement: on the tablet market, Apple still dwarf Android by 100 to 2 but in the smartphone business, Android enjoy a 38% penetration (according to Nielsen), vs. 27% for the iPhone and 21% for RIM. Altogether, between a higher Android penetration and more usage by iPhone users, building apps for each platform will yield the same result in terms of market reach.

In conclusion, what does this mean for our media business?

1 / There is still a long way to go for applications to match browser adoption; it is mostly a question of interface quality.
2 / People expect real-time news, including in applications, or the added value needs to be outstanding.
3 /  Digital editions carry more of the brand attributes; but as long as they are not supported by better applications, and able to provide real time news updates, they will remain a relatively small market.
4 / The advertising model needs a bigger dose of creativity: a large chunk of readers would agree to more ads as long as their publication remains free — which paves the way to reinventing the sponsoring model for digital editions or for encapsulated contents.

frederic.filloux@mondaynote.com

It’s all about accountability

Compared to Anglo-Saxon journalism standards, French practices are regrettably lax. It doesn’t mean that France doesn’t have remarkable writers, editors or medias; but, too often, their practices are just sloppy. Here, journalists abuse anonymous quotes and are too cozy with their sources. Papers are insufficiently edited, reporters routinely go after a story with a pre-defined agenda – they know what they want to write and will twist facts, quotes and background accordingly.

In France, stories are never corrected. Or corrections can be used to further drill a point . If someone dares to exercise his legal “Droit de réponse” (the right to force the paper to publish a response to erroneous statements), he risks retribution. In 1984, as I was writing for Le Monde, some politician felt misrepresented and demanded a correction. My editor reacted:” Okay, we’ll publish his response. But we’ll append a “Six-bracket” that will make him cry…” He was referring to a small piece (typeface size: 6) appended below the response that usually blasts the righteous individual… That was my introduction to the ritual.

For the record, I’m not by any means putting myself above the crowd. I made my share of mistakes, I’ve not always acted in good faith and more… And, in management positions, I failed to go after the behaviors I just criticized – mostly by not hiring people eager to improve journalistic standards. The mistakes I made during my career still haunt me; we’ll see which ones resurface in this Monday Note’s Comments section…

The chain of command plays a key role in this collective failure, standards are set at the top. I know a couple of editors who encourage their reporters not to bother collecting the other side’s view on facts, as contradiction would impair the “mission”.
French editors have issued stupid rules such as the “journalism stops at the bedroom’s door”; read: beyond, it’s just muckraking. Sure thing. Except it encouraged the press to turn a blind eye on François Mitterrand’s morganatic family living in an opulent government-owned building and protected by a squad of dedicated gendarmes with their own rules. Or, until recently, French media chose to ignore that Dominique Strauss-Kahn was more a predator than a seducer. (Never wondered why DSK never go after female foreign correspondents? It’s because he knew they’d have reported any misbehavior, as opposed to France where her peers and her superiors will ask a harassed woman reporter to shut up). As for investigative reporting, it went down the drain a long time ago as police, magistrates and lawyers became extremely proficient at manipulating complacent reporters.

In 2009, Francois Dufour, the publisher and editor-in-chief of a successful set of publications for young readers (Mon Quotidien, see story in the New York Times), wrote a funny book titled: Are French Journalists Bad? (Les journalistes français sont-ils mauvais?) He didn’t answer the question directly, but the facts he presented were compelling.
French journalists are not genetically worse than others; it’s their culture, they are simply poorly trained and managed.
That year, I found myself involved in a debate with Dufour along with other journalists who had joined the cyber-zealots crowd. There, I got my first exposure to the “Permanent  correction” concept and to the “Publish first, check later and correct (PFCLC)” notion. Dufour and I took the same side, saying the ability to correct a story should not be a license to a kind of permanent approximation. After all, all-news medias have been around since the eighties; they always had the ability to permanently correct stories, but – even though they were far from perfect – they refrained from abusing the  PFCLC thing. (I don’t recall seeing a 7:00am news item airing rumors, unverified facts – at least to the best of the reporters’ ability – and issuing a correction an hour later).

The debate about the management of facts at “digital speed” is spurred by two important factors: the Distribution of responsibilities and the Merchant relationship.

1/  Along with social media comes the notion of distributed responsibility. As everyone reports what’s happening, no one will carry the full responsibility for it. In the event of a breaking or a developing news, when hundreds of people congregate around a Twitter feed hashtag, they don’t have – by definition – the safety net of someone with the role of deciding whether or not to publish (by asking basic questions, for instance). When everyone is in empowered to feed the echo chamber (sometimes with a pseudonym), no one is responsible.

2 / The absence of a merchant relationship also plays a significant role in the dilution of responsibility. In the digital cauldron, free is too often associated with a permission to be sloppy. A compulsive tweeter or blogger, propagating whatever s/he is able to grab, without any commercial relationship with readers, will feel no obligation whatsoever to quality. Being first becomes the main goal.
That is exactly the opposite for a newspaper, an online news organization, a TV or a radio network. Such organizations will (at least in theory) feel the obligation to respond to the trust that people are paying for – directly in the case of a paid-for service, or indirectly though advertising.

In the end, this is a matter of accountability. Having an entity, embodied by a group of people (an identifiable set of writers or editors), accountable for what is published or aired, is the best guarantee of acceptable standards. In the best cases, this accountability will apply to direct reporting. Or accountability will play a a key role in curating, in assessing the validity of third party contents coming from places unreachable by professionals.
One last thing, again, for the record. I was among the millions of people literally glued to live-blogging or Twitter feeds during major news events such as the Fukushima disaster, the Arab revolutions or the (less important) DSK affair. Therefore I’m NOT advocating some kind of regulation of the digital flow. For society, I’m still convinced its advantages far outweigh its drawbacks.

frederic.filloux@mondaynote.com

Losing value in the “Process”

Digital media zealots are confused: they mistake news activity for the health of the news business. Unfortunately, the two are not correlated. What they promote as a new kind of journalism carries almost no economic value. As great as they are from a user standpoint, live blogging / tweeting, crowdsourcing and hosting “experts” blogs bring very little money – if any, to the news organization that operates them. Advertising-wise and on a per page basis, these services yield only a fraction of what a premium content fetches. On some markets, a blog page will carry a CPM (Cost per Thousand page views) of one, while premium content will get 10 or 15 (euros or dollars). In net terms, the value can even be negative, as many such contents consume manpower in order to manage, moderate, curate or edit them.

More realistically, these contents also carry some indirect but worthy value: in a powerful way, they connect the brand to the user. Therefore, I still believe news organization should do more, no less of such coverage. But we should not blind ourselves: the economic value isn’t there. It lies in the genuine and unique added value of original journalism deployed by organizations of varying size and scope, ranging from traditional media painfully switching to the new world, to pure online players — all abiding by proven standards.

What’s behind the word standard is another area of disagreement with Jeff Jarvis, as he opposes the notion of standards to what he calls “process”, or “journalism in beta” (see his interesting post Product v. process journalism; The myth of perfection v. beta culture).  Personally, I’d rather stick to the quest for perfection rather than embrace the celebration of the “process”. The former is inherently more difficult to reach, more prone to the occasional ridicule (cf. the often quoted list of mishaps by large newspapers). As for the latter, it amounts to shielding behind the comfortable “We say this, but we are not sure; don’t worry, we’ll correct it over time”.

To some extent, such position condones mediocrity. It’s one thing to acknowledge live reporting or covering developing stories bear the risk of factual errors. But it is another to defend inaccuracies as a journalistic genre, as a French site did (until recently): it labeled its content with tags like “Verified”, “Readers’ info”, etc.

Approximation must remain accidental, it should not be advocated as a normal journalistic way.

In the digital world, the rise of the guesstimate is also a byproduct of the structure in which a professional reporter finds himself competing with the compulsive blogger or twitterer. Sometimes, the former will feel direct pressure from the latter (“Hey, Twitter is boiling with XY, could you quickly do something about it? — Not yet, I’m unable to verify… — Look pal, we need to do something, right?). Admittedly, such competition can be a good thing: we’ll never say enough how much the irruption of the reader benefited and stimulated the journalistic crowd.

Unfortunately, the craze of instant “churnalism” tends to accommodate all the trade’s deviances. Today, J-Schools consider following market demands and teaching the use of Twitter or live-blogging at the expense of learning more complex types of journalism. Twenty years ago, we were still hoping the trade of narrative writing could be taught in newsrooms populated with great editors, but this is no longer the case. Now, most of the 30-40 something who plunged into the live digital frenzy have already become unable to produce long form journalism. And the obsessive productivism of digital serfdom won’t make things better (as an illustration, see this tale of a burned-out AOL writer in Faster Times).

The business model will play an important role in solving this problem. Online organizations will soon realize there is little money to be made in “process-journalism”. But, as they find it is a formidable vector to drive traffic and to promote in-depth reporting, they will see it deserves careful strategizing.

Take Twitter. Its extraordinary growth makes it one of the most potent news referral engines. Two weeks ago, at the D9 conference, Twitter CEO Dick Costolo  (video here) released a stunning statistic: it took three years to send the first billion tweets; today, one billion tweets are send every six days.

No wonder many high profile journalists or writers enjoy tweeter audiences higher than many news organizations, or became a brand on their own, largely thanks to Twitter. The twice Pulitzer prize winner and NY Times columnist Nicholas Kristof has 1.1m followers, that is one third of the New York Times’ official Twitter accounts followers.  And Nobel Prize economist Paul Kurgman, who also writes for the New York Times, has more than 610,000 followers. Not bad for specialized writing.

In some cases, the journalist will have a larger Twitter audience that the section where he/she writes: again for the NY Times, the business reporter Andrew Ross Sorkin has 20 times more followers (370,000) than Dealbook, the sub-site he edits. According to its CEO Arthur Sulzberger, a NY Times story is tweeted every four seconds, and all Times Twitter accounts have four times more followers that any other paper in America. Similarly, the tech writer Kara Swisher has 50 times more Twitter followers (757,000) that her employer, the WSJ tech site AllThingsD .

There are several ways to read this. One can marvel at the power of a personal branding that thrives to the mother ship’s benefit. Then, on the bean counter floor, someone else will object this stream of  tweets is an unmonetized waste of time. Others, at the traffic analytic desk, will retort Twitter’s incoming traffic represents a sizable part of the audience, and can therefore be measured in hard currency. Well… your pick.

frederic.filloux@mondaynote.com