Data Schizophrenia

Let’s discuss a developing data management contradiction. People thinking in strategic terms about the monetization of digital medias, publishers, marketers, are unanimous. Collecting and poring over data has become more important than ever.
That’s one trend.

The other involves the gatekeepers. As I briefly explained last week, we now face a small club of high tech giants — Google, Microsoft, Amazon, Yahoo and Apple — who, over the years, acquired an unprecedented ability to gather and process data. As competition is heating up among them, the data they’ll be able to get will continue to increase in tactical and strategical value. As a corollary, they are increasingly inclined to keep such data close to the vest.

The latest example came up with the April 8th launch of Apple’s iAd initiative for the iPhone platform. As Steve Jobs delicately puts it, mobile ads “suck”, his own words for what we’ve been saying all along in the Monday Note (see The future of content navigation). Digital ads suffers from an inherent flaw: they are designed to take the viewer away from the content (again: see Jobs’ keynote speech for details, go directly to the 44 minutes mark to watch the ad chapter). Hence the solution envisioned by the Cupertino boys: embedding the ad within the application – which, in the process, becomes the commercial Trojan Horse of mobile computing. Next step: connecting the ad to a transaction system that will collect a 40% commission fee.

The data? Apple keeps them. Publisher, consider yourself lucky, you get the money and a set of basic numbers. As pointed out by Peter Kafka in The Wall Street Journal’s blog All Things D, contractually speaking, the terms are unambiguous.

Section 3.3.9 of the developer agreement, stipulates:

“Notwithstanding anything else in this Agreement, Device Data may not be provided or disclosed to a third party without Apple’s prior written consent. Accordingly, the use of third party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited.” More

The Numbers Behind the Paywall

Finally! The New York Times is coming out with its paid-for content strategy. A quick summary of the Gray Lady’s paywall plan: a monthly allotment of stories to be read  for free and, above that, a flat fee for full access. Subscribers to the print version (including those who only get the Sunday paper) will have free access. According to the official press release, the new system will be launched in January 2011. For now, that’s all we know.

Why such weird timing? For the biggest online newspaper in the United States, announcing such a move just a week before the likely roll-out of the Apple Tablet is bizarre. OK, we get it, the New York Times won’t join other publishers aboard the Apple bandwagon. As I’m writing this, there are persistent rumors that big players such as Condé Nast, Harper Collins, McGraw Hill, Hachette could sign up — but not Time Inc., according to All Things Digital. Then, either The NYTimes is showing its fierce independence or it is hedging its bets by preparing its own offer, competing with a putative Apple publishing hub. According to New York Magazine, the Times is not joining Journalism Online (see previous Monday Note How to make readers pay for news), nor is it teaming up with the Wall Street Journal in its effort to pressure Google for a better deal. Another question: Why wait so long to deploy the NYT’s paywall? A year to build a digital subscription system sounds quite a long time.

Let’s throw some numbers at the “metered model” – as it is now referred to.

Which part of its audience does the Times actually target? Last November, the Times got 16,5m unique visitors and 2.98 sessions per month, according to Nielsen. As for the number of pages viewed by each visitor, we must rely on a more global figure, again from Nielsen: for the top US newspapers, an average of 43 page views per month (1). More

The Death of Joe Average

Forget Joe Average, he’s dead. Ten or twenty years ago, analyzing audiences was much easier. Medias enjoyed well-defined and relatively unchanging target groups. For television, networks had a precise idea on who was watching what, and specialized cable outlets knew their viewers pretty well. Newspapers had their content structure sliced to fit various audiences by center of interests, age groups and opinions. At the time, contents were bundled together, delivered on a unique platform for a flat fee, on a per copy or subscription basis: the popular sport section, or classifieds did subsidize the expensive but more elitist foreign section, all for a dollar or the equivalent of a euro.

In today’s marketplace, every single piece of information lies the open, naked, stripped of a set value. People don’t buy contents by the bulk, they peck at it, leaving to a third party (the unstable advertising market), the burden of financing it. As the content scatters on the internet, so does the audience. The money has shifted as well, with an expense of $260 per US household per year for digital services (cell phones, cable, broadband, satellite) that didn’t exist a generation ago. (Even the poorest families still spend $180 a year). This, in itself, makes it hard to hope for an extra $20 a month for news content that is widely available for free.

But the real competition is now for time and attention. Last December, in the United States, people spent 64 hours online, but stayed only 57 seconds on each web page, according to Nielsen. OK, it’s an average, and I’m about to kill this very notion in a minute. But still, it points to the time allocation challenge we face. Again, last December, American web users spent 6:24hrs on Facebook, 2:56hrs on Yahoo properties, 2:21hrs on various Google sites and 2:03hrs on Microsoft sites. As for the time spent on newspapers, it remains stable: around 20 minutes a month, whether you look at US or the European markets.

The shift seems to accelerate towards Facebook, which is becoming the absolute internet attractor: the amount of time spent per person on Facebook has tripled in just one year; in the meantime, Google gained only 10% and Yahoo and Microsoft slipped slightly. Interestingly, the Facebook time explosion even occurred at the expense of online video: with 3:13hrs per user last December, it remains quite high but it is down slightly, by 3.4%. And the Facebook effect probably explains why people are visiting a smaller number of web sites: 83 domains visited last month, a surprising 23% drop in just a year.

The advertising spending is shifting as well. In the US market, between August 2008 and August 2009, the amount spent online by brands decreased by 2%, as  the money spent on top social networks and top blogging sites increased by 119%. Unfortunately, this is done on the cheap: based on 2009 revenue estimates, Facebook is grossing about $1.5 per user and per year in ad revenue. Just to put things in an unpleasant perspective, this compares to the $647 a newspaper such as the Washington Post gets from its print advertising for each of its buyers or subscribers. Make that $215 for each of its readers assuming a rate of three readers per copy. (This is based on the full 2008 year).

Coming back to the title of this column, analyzing trends has become more complicated: audiences are no longer monolithic, their breakdowns are hard to ascertain. This uncertainty makes an average a less and less relevant notion. More

The 2010 Media Watch List

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). More

Learning from free Classifieds

What can we learn from classifieds web sites? Are there some features, strategies that could apply to online news media? On, one of the most searched terms is “Le bon coin” (the good spot). (, is a free classifieds site that ranks n°7 on the French market. It generates stunning monthly numbers:

  • 4bn page views (a big news site makes between 100-300m pages views)
  • 9.4m unique visitors
  • 1:10 hour spent per visitor (vs. 16-20 minutes for online newspapers)
  • 38 pages views per visitor
  • for each visit, a viewer will look at 37 pages, and will stay 16 minutes on the site
  • every single day, 300,000 new classifieds are posted by 200,000 users
  • in a single month, more than 2m people will place a classified ad.
  • the site carries an inventory of 9.5m classifieds (vs. 0.8m for

All of this has been achieved in three years and by a team of 15. Leboncoin is part of a European strategy developed by the Norwegian media group Schibsted ASA: it started with Blocket in Sweden, and expanded to Segundamano in Spain, Subito in Italy, and more recently Custo Justo in Portugal. In France, Leboncoin is a co-owned with Spir Communication (2).

After a careful look at this business and lengthy discussions with Leboncoin’s general manager’s Olivier Aizac, here are some ideas worth considering for news sites. More

The web’s design problems

Applied to news, the web doesn’t suffer from one, but three flaws. Let’s call these the Rectangle, the Bottleneck, and the Diversion.  These flaws got built into the system from the very beginning and, now, their impact has become harder to deal with. For new sites, these unforeseen aftereffects have grown to become real obstacles to reader engagement and monetization.

Let’s have a closer look.

1. The Rectangle issue.

This is the main absurdity in internet design. It goes back to the web’s early days: a text tool,  brilliantly designed to organize scattered pieces of information — that was Tim Berners-Lee’s 1989 original work.  Understandably, he used the page as his metaphoric vector; that was the world he lived lived in. For news, since journalists controlled how the concept got implemented, the paper mentality, and even the vocabulary percolated down to the young generation of web designers. They still refer to “the fold”, pretty obvious for a newspaper (better have your story above the fold than below). On the web, the fold points to the part of the screen below the first scroll. This brings us to the main contradiction.

I’m writing this on a 13 inches MacBook. OK, I have attached to it a 24″ Apple Cinema Display to allow multiple windows, but, for a simple measurement, let’s stick to the realistic 13″.

For a selected list of websites, here are the numbers of scrolls required to go to the bottom of the home page:…3…3…4…4…4…4…5…5…6…8…12…16…21…23

Graphically, it looks like this :

Well, there are many theories about the size of scrolls. Advocates of long pages pitch the following advantages: better referencing; more impressions for banners, more transverse navigation.  Opponents retort: for referencing, you don’t fool Google for too long by serving large chunks of your site over and over. For ads and for transversality, suffice it to say you lose readers real fast if they need to scroll down; the probability for a banner to be viewed decreases exponentially: 10 scrolls divide the probability by 100 or more. As discussed in an earlier Monday Note (see  Measuring time spent on a web page ), a full 24% of all banners are not seen at all; a placement on the footer rates as low as 10% of what the header gets. More

Negative-sum games

As if current economic conditions weren’t dire enough, several forces conspire to push the media sector’s financial performance further downward. These factors are an obsession with market share, price wars, and first movers’ ability to set the tone, often for the worse.

Take the iPhone application market as an example. At first, publishers were elated: at last, a content distribution platform with an embedded transaction system. They saw it as the first step to make customers pay for content. Then, another idea took over: market share. Like “eyeballs”, the old Internet Bubble de rigueur metric, market share is today’s mirage: once you get it, profit is (almost) sure to follow. Never mind there are zillions of companies that have once and for all severed the connection between market share and profit (Apple for computers, BMW in the auto industry, Nucor in steel production, name but a few).

Unfortunately, the first one who shoots for market share sets the standard, sometimes with surprising twists and turns. Take the Wall Street Journal: first-rate web site, highly successful business-wise with one million paid subscriptions (about $100/yr). When it came to the iPhone opportunity, guess what: they went for a free application loaded with pathetic ads — apparently locked on the saturation mode, the same banner kept showing endlessly. Just a few weeks ago, seeing a steep drop in profits, the reversed itself and restricted access to its app. More

The End of Walled Gardens

If there is one side of Scandinavian medias’ strategy I find particularly convincing, it is their ability to cooperate as much as they can, and to compete on what matters most, that is the product, the user experience, the reader. To describe this, Americans, the world’s best neologists, invented the world “coopetition”, cooperation + competition. This is exactly the kind of attitude that should prevail in these difficult times. And, to a larger extent, the burgeoning world of online medias would be well advised to get rid of their antiquated close-to-the-vest thinking. Time to tear down some walls.
Many medias are, or will be integrated into hybrid models — with digital and paper products blended together. Therefore, distinctions by news vectors are pointless. Let’s consider four sectors where cooperation among competing entities will be critical in the coming years :

Advertising. Whether it is measured in inches, centimeters or pixels, newspapers or websites don’t sell ad space in the most optimized way. Commercial brands and their surrogates, the media buying agencies, keep increasing the pressure on medias to get higher discounts; in a country such as France (which roughly reflects the global marketplace), the net revenue per page sold went down 20% in the last twelve months. Even though French papers and magazines depend less on advertising for their survival than their Anglo-Saxon counterparts do, it’s a matter of concern.
There is no room for finger-pointing here: media buying people are doing their job, which is getting the best bang for their client’s buck. But medias can team up and propose (or impose) advertising packages based on socio-demographic structures, for instance. To a large extent, Rolex or Mercedes-Benz don’t give a damn whether they are favoring media X or Y as long as they are sure to reach the affluent people who might turn into customers. Or Nestlé’s baby food brands looking for child-rearing couples.

Logistics. When I’m traveling to New York, I’m always stunned to see half-empty delivery trucks emblazoned with the name of prominent newspapers, criss-crossing the city, sometimes twice a day (early and late edition). At the same time, I feel sorry for French publishers who have to deal with a distribution system so inefficient that it ends up with one point of sales for 2100 inhabitants versus Norway’s one for 360 people (no wonder why Norway’s rate of readership is four time higher than France’s). Up there, a cross-brands cooperation makes it economically viable to distribute newspapers in the most northern village during winter. In Paris, finding an open newsstand on a Saturday afternoon is an achievement. More

Rotten Apples in the Reviews Barrel

A few weeks ago, professional blogger Kevin Dixie received a strange proposition: a US‑based company offered to buy from him 30,000 reviews for a new iPhone application at $1 per review. Positive reviews, needless to say. Moreover, the marketing company proposed to extend the deal for 30 applications, about 10 to 20 times a month. A huge potential windfall for Kevin Dixie — who declined the offer. This British entrepreneur living in France created two specialized consumer products reviews sites: FuelMyblog, and its recent offspring launched in September.

In both cases, the idea is the the same: a casual blogger from the network writes whatever review he or she wants to in exchange for a free product. The item can be an electronic appliance worth a few dozens of dollars (sterling pounds actually, the company is UK based) or it can be a trip worth a thousand dollars. The brand pays FuelMyBlog 25£ ($40) per review, that’s how Dixie makes its money. (The process also results in those brands getting higher Google pageranks). With the explosion of the iPhone applications business, Dixie decided to roll out a dedicated site based on the same idea: the blogger purchases the app, tests it, writes a review and FuelMyApp reimburses him for the price of the application via its PayPal account. More

Monetizing a social network, the Skyrock case

In the social network business, the European success story is called Skyrock. Built on top of the #1 FM radio station for 18-25 year-olds, it first expanded into a blog platform, then into a full-blown social network making full use of links users waved between themselves. In Europe, according to ComScore, ranks #3 among social networks, right behind Facebook and MySpace, and #6 among conversational media including platforms such as WordPress or Blogger.

The key figures:

  • 39 million accounts, including :
  • 25,4 million active blogs with 33,000 new blogs added every day
  • 16 million individual profiles with 35,000 added every day (there is a small overlap between the two categories)
  • This online population has created more than 650 billion articles, loaded 580 million pictures and 37 million videos.
  • French monthly traffic is 8 million unique visitors (Nielsen), versus 13 million for Facebook
  • But Skyrock gets about half of its traffic from abroad: worldwide, its audience amounts to 23 million UV (ComScore). As a comparison, Facebook logs 275 million UV worldwide, approximately 100 million in Europe and 70 million in the US (ComScore).

Now let’s look at the money side. Unlike Facebook, Skyrock is a profitable company. Last year, Skyrock as a group made €38m in revenue; half coming from its radio operations, and half from the internet; with an ebitda of about €7m for the group and €5-6m for the internet alone (last year was not great for radio advertising). Even better, Skyrock doesn’t seem to be affected by the worst year in internet history: its internet operations revenue is up 42% for the first half of 2009 versus the same period last year (the radio side is up 22%). These numbers make its owners happy. The group is a privately held company owned by the private equity arm of French insurer Axa (for 70%) and by the founder and CEO Pierre Bellanger (30%); being blissfully private, it doesn’t release financials. Most of the data mentioned here come from interviews conducted with Pierre Bellanger and his staff in recent weeks. More