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The Capsule’s Price

online publishing By September 25, 2011 16 Comments

Do encapsulated digital editions make sense? Is the notion of having a “news container”, similar to a newspaper or magazine, a relic of the past or is it still associated with quality journalism? In an era of instant information, is it worth proposing a self-contained, stop-motion shot of the news cycle?

For some, the reflexive answer involves market research, readers samplings and the like. I don’t think so. I’d rather abide by one of Steve Jobs’ sayings:

“It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

He was only referring to electronic devices and the software that powers them, all being complicated indeed. But great news products have yet to be invented, and developing them can be quite involved, too: they combine interface design, contents structures and… technology (the latter’s importance being largely underestimated by legacy medias).

First of all, a matter of definition. By “encapsulated edition” I mean a decisive evolution away from the Zinio-like PDF replica of the paper product. Some publications have added XML layers that considerably improve the reading experience and allow numerous features — creating files, sharing on social medias. But very few are willing to get rid of the PDF’s bulkiness (for more on the subject, read a recent Monday Note Tear down this PDF). For “PDF-shovel” editions, the result is unsatisfactory: broadsheet newspapers that are six times larger than an iPad screen, 80-pages magazines loaded with ads that you must painstakingly leaf through.

Certainly not the right template for the future.

On the other hand, BloombergBusinessweek+ looks like a good start. I’m a long time reader of BusinessWeek magazine (when it belonged to McGraw Hill, before Bloomberg bought for a few million dollars). Then, last March, Bloomberg launched the weekly’s digital edition. I was curious to see how the switch to digital would look like.

Today, after a few dozens issues, let’s see what makes “BBW+” a great digital encapsulated product.

#1:  Investment in Design. BBW+ obviously gives design a great deal of thought, both in terms of graphics and structure.

Today’s web is plagued by cheap design. Many sites, especially in the tech field, use stock photographs or copyright-free Flickr pics ad nauseam, quickly messed with by some enslaved intern. No such thing is allowed in an app. And BBW invested a lot in graphic design for both print and the digital products. The short video introducing every issue usually features the editor, Josh Tyrangiel, and the creative director, Richard Turley, or Robert Vargas, the art director, as they explain their cover story choices for the two versions of the magazine. (See examples in Coverjunkie, a good graphic design blog). No stock photos in BBW+: most pictures are produced on spec, and it screams. As for infographics, they are redesigned for the digital version.


The (Overly Personal) Litmus Test

online publishing By September 18, 2011 19 Comments

Over the past three weeks, I’ve been followed. By advertising. Like many, week after week, I land on dozens of sites. Some visits originate from my set of bookmarks, others from the usual click hopping that defines internet serendipity.
In numerous instances, I get the same ad in different formats. The advertiser is called Litmus. I’m testing it. Since it sounds like a good product, I’m happy to link to it. Litmus is owned by Salted Services Inc., a Cambridge, Massachusetts company founded in 2005. It specializes in mass emailing analytics and optimization. You send it a test email, it previews your layout in numerous mail readers, flags any rendering issue, measures its ability to go through spam filters (a publisher’s nightmare for legit newsletters) and provides incredible analytics. (In the Monday Note’s case, these analytics are extremely encouraging and a good incentive for Jean-Louis Gassée and I to continue ruining our weekends.)

I’ve been testing Litmus for three weeks now, on advice from my friend Kim Gjerstad, a great WordPress and emailing specialist.  Now, Litmus wants me as a regular customer, and they are stalking me all over the web. Fair enough. How do they do it?  They — in fact, the digital marketing firm they hired — installed tracking devices in my computer. Since I subscribed to their service and since I’m professionally transparent on the internet, Litmus has been able to reconstruct my complete profile. Therefore, each time I visit one of its thousands of affiliates, the site will identify me as a potential Litmus customer and serve me the right ad. (As I write this, I discover I’m also targeted by Litmus competitors — some internet marketing arms merchant is making money on all sides).

After a while, I realized how saturated I was with Litmus ads when my synapses (slowly, I admit) finally added-up the number of pages I saw carrying the company’s rainbow logo. At the same time (but unrelated), I noticed how my advertising environment surreptitiously changed, depending upon the “freshness” of the browser I used. On one, I never delete cookies; on another I regularly flush tracking devices.


Innovation in turbulent times

newspapers, online publishing By August 21, 2011 21 Comments

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.


The ePresse Digital Kiosk: First Lessons

newspapers, online publishing By July 10, 2011 Tags: 9 Comments

[correction added about’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; and 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 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’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., 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.


Losing value in the “Process”

journalism, online publishing By June 19, 2011 Tags: , 29 Comments

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.


Analyzing the metered model

online publishing By June 5, 2011 Tags: 39 Comments

The metered model deserves a closer look. One the dirtiest little secrets of the online media business is the actual number of truly loyal readers — as opposed to fly-bys. No one really wants to know (let alone let anyone else know). Using a broad brush, about half of the audience is composed of casual users dropping by less than 3 times a month, or sent by search engines; 25% come more than 10 times a month. Over the years, as audience segmentation increased, media buyers (and publishers) selected the simplistic counting of Unique Visitors (UVs) as the metric of choice. In the meantime, all forms of Search Engine Optimization (SEO) and Search Engine Marketing (SEM) outfits have further elevated the collecting UVs as the primary goal for online publishers. Along with that practice came cheating. In order to inflate their UV numbers, many large news sites now rely on third party services such games that have nothing to do with their core business.

This distortion contributed to the erosion in advertising prices. Media buyers might by cynical, but they are not stupid. They know that a growing percentage of audiences is composed of accidental visitors with no brand loyalty whatsoever and who offer no attractive demographics. Combined to the “unlimited supply” factor inherent to the internet business, the result is a downward spiral for ad prices. These are important factors to keep in mind while considering paid-for systems.
News organization have implemented such systems in different gradations. At the far end of the spectrum, we have the Times of London: no access to the site without first paying. That’s is the riskiest option. The site ends up losing 90% of its audience (and the related advertising revenue) but hopes to offset the loss by gathering enough online subscribers. Without the promotional booster of free contents, this is a challenge – to say the least.
Others choose to give some of the site for free and put the most valuable contents — sometimes the digital version of the print edition — behind a paywall. This doesn’t always make economical sense as many readers are happy enough with the free content part. Editorially speaking, this leads to the creation of two categories: cheap fodder available for free (often created by junior staffers), and more “noble” content produced by the most senior members of the newsroom who also feed the print version.  This works fine for a brand associated with significant added value, or specialized (such as business news), or one that dominates its own market. The most successful paywall implementation has been the Wall Street Journal: it now has more than 1m paid subscribers, but it took 10 years to get there.

The third option involves a metered system. The principle is simple: once you’ve seen a certain number of stories in a given period of time, you need to become a paid subscriber to keep viewing the site. Some newspapers have been quite successful at deploying such a metered system.
For example, the Financial Times has set the cursor to 10 stories per month before hitting the paywall, after which the reader is asked to pay between € 4.99 and €7.49 (about $7.30 and $11) per month, depending on the package deal. A high price for really premium content. So far, has 3.4m registered users of which 224,000 have been converted to paid-for contents (+8% for Q1 2011). This translate into €20m to €25m extra revenue, only from subscribers (the service has been launched in October 2007). Currently, digital revenue (both ads and subscriptions) accounts for  30% of the FT’s revenue; according to FT execs, it is expected to reach 50% in 2013.

For the meter, finding the right setting is far from trivial. The trick is to decide how many free stories will be allowed before hitting the paywall, and how much to charge thereafter. In New York, three weeks ago, I spoke with Gordon Crovitz. With Steven Brill, Gordon co-founded Press+, which creates bespoke metered system for online medias. Press+ provides a complete set of e-commerce tools for publishers, from the access mechanism to the transaction system. It works with passes (daily, weekly), subscriptions plans (monthly or annual), topical packages, bundles and ancillary products.
Determining the right formula is usually done through A/B testing. Crovitz and Brill explain: the publisher will test two or three levels of free access (5, 10, 15 stories per month) and the same number of prices ($5 to $10 or maybe $15 a month). A few months of testing will determine the right formula. Typical ingredients are: the type of content, surrounding competition and possible alternative for the customers, the publisher’s willingness to bundle digital and print products. Metering can also be attractive for out-of-market audiences: an Australian newspaper will be free for its domestic audience but will charge overseas readers consuming more than 10 stories a month.

Another factor is the site’s advertising structure. The amount of inventory sold to advertisers varies widely. In the US market, the “sell-trough” ratio is about 60%, but it can go as low as 30% on some markets. This means the media can sustain some loss in page views due to the implementation of the metered system without losing ad revenue. An online media with a sell-trough rate of 55% can allow a 45% decrease in page views before eroding its ad revenue. According to Press+, traffic losses from implementing a meter are modest, ranging from 0% to 20% as counted in page views, and 0% to 7% in UVs.

Let’s try back-of-the-envelope calculations. A site gets 5m UVs and 100m page views per month; its yearly ARPU (Average Revenue Per User) coming from advertising is $3. This results in a yearly revenue of $15m. Now suppose only 20% of its audience reads more than 15 stories a month and one out of ten such readers are willing to pay $10 a month. The additional revenue will be: 5m UVs x 20% hitting the paywall x 10% willing to pay $100/year (discount included) = $10m in additional income — without depleting its advertising revenue. Actually, experience shows advertisers are now paying roughly 30% more for readers reached behind a paywall. All this before the 20% cut taken by Press+.

Naturally, as the saying goes, YMMV (Your Mileage May Vary), actual results will depend on many factors, one of them being how the pricing system is set (the simpler, the better).  Again, a rigorous test of all hypotheses is critical. Metered systems are the opposite of the one-size-fits-all.



Lessons from the Bin Laden coverage

journalism, online publishing By May 8, 2011 21 Comments

One after the other, the newscycles of momentous events keep reshaping the digital information landscape. The latest example of such alteration is the Bin Laden story, it just set a new reference point. For traditional media, this raises the pressure yet another notch; they must rethink everything: organizations and processes – as well as business strategies.

First, a quick recap of the Sunday May 1st events (all times Eastern Standard Time; add six hours for Western Europe and five hours for the UK):

4-4:30pm — 79 Navy Seals raid Osama Bin Laden’s compound in Abbottabad, Pakistan.

7:24pm — A former Navy intelligence officer name Keith Urbahn, currently Donald Rumsfeld’s chief of staff (we all discovered the former Defense secretary indeed has one) shot this tweet:

In Washington’s political game, this is a way to say: We, too, are in the know, we maintain our own network of sources within the military.
Within one minute Keith Urbahn’s shout was retweeted 80 times. Including by New York Times’ media reporter Brian Stelter. Another minute later, the original tweet had multiplied by 300, triggering instant global speculation.

9:46pm — The White House communication staff on duty sends a three word “Get to work” email to the press corps. At the same time, Dan Pfeiffer, the White House official serial twitterer sends the following:

10:40pm – As Barack Obama is still working on his speech, and after frantic phone calls to verify the story, the Times’ national security team and its Washington bureau decide to run a one line mention of Bin Laden’s Death. Ten minutes later, the website shows this:

10:45pm – All three TV networks interrupt their programming and break the news.

11:30pm – President Obama speaks live from the White House. 56.5 million viewers watch his address.

12:45am (May 2nd) — The East Coast edition of the New York Times closes. It contains a 10 pages section titled “The Death of Bin Laden” (NYT’s editor Bill Keller decided to drop the “Mr.”).

Observation #1: Twitter is king. A well-connected, politically driven staffer leaks the news first. No one knew Keith Urbahn before (see his profile in New York Observer), but his Twitter ID gave him credibility; for his Twitter followers, his post immediately raised a red flag: Rummy’s aide would not compromise his boss by leaking false information.

Between the White House’s first cryptic alert and Barack Obama’s actual announcement, about 15 million tweets has been exchanged. The number comes from Social Flow, a social media optimization platform. See their remarkable visual reconstruction of the tweets’ spread (below is the interaction between Urbahn and Stelter):

Incidentally, beat reporters now need a new skill: they must master the microblogging service in the most professional of ways. Tweeter has now reached a new status: main alert feed – as long as (and that is a big “if”) a proper credibility index is used to qualify the source. Such capability is supposed to be the key differentiation between a pro and an amateur.

For efficiency, several journalists I know are now morphing their social presence into a series of well-organized feeds streams. The same applies to their propagating scoops or promoting stories.  A smart use (both social and professional) of Twitter should be taught in J-Schools.

Observation #2: As notions, “edition” and deadline are dead. A newspaper editor’s worst nightmare is breaking news landing on a Sunday night at closing time. Such conjunction of content and timing carries a high risk of irrelevancy — if missed, or of good-faith false information hitting the streets the next day — if inaccurate. We all have memories of too-close-to-call elections, rumors of a personality’s death, etc.

Newspapers took time to make their mind up on the question of deadlines and editions (and many have yet to cross that Rubicon). But the leaders of the pack took the straightforward option: dump everything on the internet, as fast as you can and without regard for closing deadlines.

For the Bin Laden story, most big news organizations produced vast amounts of articles as their physical paper were being re-edited. By the time the updated edition hit the street, its had content been posted on the net, but every story had also been continuously updated and augmented.  Did it affect newsstand sales? Early data show this isn’t the case. Sales always rise, no matter how more up-to-date the publication website is. With high impact news, analyzing reader reactions shows people still enjoy the physical paper’s broad view — and, for those special occasions, there is the “collector’s item” feeling.

The fading notion of edition raises two questions: How should newspapers strategize their differentiation from the social wave?  And how could such evolution impact business strategies?

The answer to the first question lies in the ability to validate and confirm a piece of breaking news, followed by injecting exclusive coverage and expertise to the mix. For example, a national security specialist and a regional bureau will bring unparalleled added value.  This 2300 words  roundup story in the NY Times was assembled and filed in the hours following Obama’s speech; it carries no less than eight bylines, three seniors writers and five contributing reporters. Very few news organizations have the resources and the internal leadership to quickly deploy such journalistic firepower. For news organization,  survival rests on their ability to retain editorial capabilities, as opposed to succumbing to the aggregation temptation.

The coverage of Fukushima’s disaster provides another example of the increasing newscycle-deadline disconnect. I noticed every roundup story was indexed to the Tokyo bureau’s ability to produce articles – sometimes-sizable ones – in real time, not on a fixed newspaper production schedule.

Business wise, as many consider paid-for options to supplement the ailing advertising-model, the notion of paid-for editions also needs serious rethinking. Readers now expect live coverage, plus recap stories in a timely basis. Planning a commercial activity based on the sale of a single electronic edition becomes increasingly irrelevant. Readers might  prefer buying inexpensive access (preferably on a monthly basis, from a publisher’s perspective) to a sort of business class-equivalent content (I’m referring to Information Architects‘ Oliver Reichenstein’s analysis here). Alternatively, the most technologically advanced news organizations will develop hourly updated ePapers, encapsulated in an attractive layout. The Wall Street Journal provides a good example: on the iPad, it provides both a regular “As Printed” edition and a “Now” one.

Magazines are also likely to revisit the closed “edition”. No wonder Condé Nast plans to rethink its iPad strategy. As a longtime reader of Wired and Vanity Fair, I will stop purchasing issues online; not only do such editions download in the most painstaking of ways (with entire library vanishing with no reason), but I no longer see the added value it carries compared to the plain paper subscriptions coupled to an occasional look at their websites. (On this, readers actually voted with their feet.)

The way most news organizations are handling big news such as the Bin Laden killing or Japan’s tragedy is reassuring: these outfits demonstrate an ability to master social media as well as a will to cater to readers’ new needs. For once, editorial seems to evolve at a faster pace than the business side.


Read, Share and Destroy

online publishing, social networks By April 24, 2011 Tags: , , , , 24 Comments

The social web’s economics are paradoxical: The more it blossoms, the more it destroys value. In recent months, we’ve seen a flurry of innovative tools for reading and sharing contents. Or, even better, for basing one’s readings on other people’s shared contents. In Web 2.5 parlance, this is called Social Reading. For this, the obvious vector of choice is the iPad: it possesses a (so far) unparalleled ability to transform online reading into a cozy lean-back experience.

A year after the iPad’s launch, the app store is filled with a swarm of forcefully competitive offerings. Like everyone else in the business, I stuffed my device with about ten (and counting) such apps, gathered in a “Daily Me” folder.

Last week, I dissected Flipboard, one my favorites because of its simplicity, neat look and speed. But I’m also enjoying News360, a Russian crawler that scans more 100,000 sources (“200,000 in the next few months…”). News 360 adds a semantic layer whose purported goal, in short, is to increase relevancy.  Zite carries spectacular personalization features as well as Cease and Desists Letters from publishers (see Zite Response here).
Taptu is a more recent one. It takes a further step in customization by using the most advanced graphical features found in iOS. Many of these mobile aggregators are available on Android as well.

All of theses apps start with the same raw material. They collect and rearrange RSS feeds, they crawl Twitter or Facebook streams.  Unfortunately, from a news publisher vantage point, all these aggregating apps kill value by removing ads from the articles they assemble for our reading pleasure. In order to fit their elegant and efficient layout, these apps remove “visual noise”, that is all these “annoying” ads.

The paradoxical beauty of today’s web contents is this: On the one hand, 95% of all revenues are still ad-related. On the other, that same content becomes easier to read it without commercial distractions. Publishers didn’t merely accept it, they encouraged it. I already mentioned the negative effect of generous RSS feeds on the business: see RSS Lenin’s Rope. At first, the hijacking of RSS feeds by a new breed of apps was seen as an unfortunate consequence of publishers’ naïveté. After all, when the RSS mechanism was invented more than ten years ago, the idea of repurposing it into a bespoke e-journal wasn’t on anyone’s mind. Now, the media industry faces a completely different picture. Publishers of expensive contents can’t even console themselves by fantasizing their promiscuous supply of RSS links will bring back traffic. RSS super-readers are mostly self-contained and do not send any traffic to anyone else.


Flipboard: Threat and Opportunity

design, online publishing By April 17, 2011 Tags: , , 67 Comments

Every media company should be afraid of Flipboard. The Palo Alto startup epitomizes the best and the worst of the internet. The best is for the user. The worst is for the content providers that feed its stunning expansion without getting a dime in return. According to Kara Swisher ‘s AllThingsD, nine months after launching its first version, Flipboard’s new $50m financing round gives the company a €200m valuation.

Many newspapers or magazines carrying hundreds of journalists can’t get a €200m valuation today. Last year, for the Groupe Le Monde, an investment bank memo set a valuation of approximately $100m (net of its $86m debt at the time, to be precise). That was for a 644 journalists multimedia company – OK, one that had been badly managed for years. Still, Flipboard is a 32-people startup with a single product and no revenue yet.

So, what’s the fuss about?

The answer is a simple one: Flipboard is THE product any big media company or, better, any group of media companies should have invented. It’s an iPad application (soon to be supplemented by an iPhone version), it allows readers to aggregate any sources they want: social medias such as Twitter, Facebook, Flickr or any combination of RSS feeds. No need to remember the feed’s often-complicated URL, Flipboard searches it for you and puts the result in a neat eBook-like layout. A striking example: the Google Reader it connects you to suddenly morphs from its Icelandic look into a cozy and elegant set of pages that you actually flip. Flipboard most visible feature is an interface that transform this:

Into this:

All implemented with near perfection. No flickering, no hiccups when a page resizes or layouts adjust.


The NYT’s Melting Iceberg Syndrome

online publishing By March 27, 2011 Tags: , 22 Comments

Could the New York Times be viable as a digital-only operation? What a ridiculous question: With almost a million copies sold every day, why would this preeminent newspaper even consider such a drastic withdrawal from the physical world?

Truth is: there is no urgency, no need to initiate, nor to accelerate the switch — at this time. But, in the coming years, like other large dailies, The New York Times will be afflicted by the melting iceberg syndrome: no matter how large the iceberg is at the beginning, it inexorably dissolves as it drifts toward warmer latitudes. The progression is barely visible but, at some point, as the exposed part liquefies under the sun, the iceberg’s center of gravity moves upward and it suddenly capsizes without warning (that’s why there is no permanent manned base on icebergs): “As an iceberg melts, the resulting change of shape can cause it to list gradually or to become unstable and topple over suddenly”. (From The use of catastrophe theory to analyze the stability and toppling of icebergs Annals of Glaciology, 1980).

Granted, the metaphor is a bit over-the-top in a column about media economics. Still. Replace the heat and irregular currents that undermine the iceberg’s stability with readership erosion and advertising migration, and you see how it applies to large newspapers.
For the latest US market trends, consider the following, based on recent data from the  Newspaper Association of America :

  • Over the last five years (2005-2010) advertising expenditures (print + digital) for US newspapers have dropped by 48%.
  • For print-ads only, the drop is 52%.
  • Symmetrically, digital advertising spending rose by 50%.

Unfortunately, digital ads still represent a small fraction of the advertising revenue, one that grows slowly: it went from 4.1% of total ad spending in 2005 to 11.8% in 2010. (For further analysis of NAA’s stats, read Alan Mutter’s column titled Newspaper ad sales hit 25-year low in 2010).

By themselves, such numbers explain why publishers are obsessed with paywalls (see last week’s Monday Note about the NYT metered system). For the short to medium term, there is no hope digital advertising will offset the depletion of print. One way or the other, readers will have to contribute.
Coming back to the New York Times, the paper is good at extracting revenue from its readers. Last year, copy sales brought $684m, or 44% of total revenue, vs. $780m (50%)  for advertising. This ratio is way above the national average where newspapers rely on ads for 80% of their revenue. As for digital advertising, its revenue reached $160m last year, that is 20% of the NYT’s total ad revenue, and 10% of all sources of income.

Let’s stop a moment and behold the printed New York Times’ true gem: its Sunday edition. It changes everything in our look at the paper’s digital equation:

  • Sunday circulation is 54% higher than on weekdays (1.35m vs. 877,000).
  • It’s an expensive package: $5.00 in New York, $6.00 elsewhere in the country.
  • Sunday copy sales bring five times more money than any weekday.
  • Advertising-wise, some analysts say the Sunday NYT accounts for about 50% of the paper’s entire advertising revenue.

Altogether, between circulation revenue and ads, it is safe to say that NYTimes’ weekend edition makes the same amount of money as the rest of the week combined. (For a good analysis of the subject, read The newsonomics of Sunday paper/tablet subscriptions by Ken Doctor, on the Nieman Journalism Lab blog).
Just as important, reader engagement is much stronger on Sundays: with an average reading time of 53 minutes for the Sunday edition vs. 36 minutes on weekdays. In parallel, demographics are spectacular: the Sunday reader’s median household income is $112,154. A strong number for the sales team’s pitch to advertisers.

Now, suppose the NYT Co. keeps its Sunday cash-cow but stops printing on weekdays. Combined copy sales and print ads revenue is cut by half to $730m. On the internet side, the 32 million domestic monthly unique visitors will be growing as a result of the cut. By how much? Let’s assume the Times is able to convert one third of its former print readership (remember: no more weekday paper) into paid-for website users spending on average $15 a month or $180 a year. This is about 300,000 people, bringing roughly $50m in revenue. In the meantime, we can assume the non-paying audience will also rise. With each “freeloader” carrying an ad-related ARPU of about $5.00 per year like today, an extra 10m UV (which is conservative) would bring another $50m. To sum up this very rough back-of-the-envelope calculation:

I’m not touching the $92m revenue in the NYT’s Media group P&L. Nor am I projecting any circulation growth for the Sunday edition (and it will grow, obviously). Under these assumptions, the NYT would make roughly $1 billion a year in revenue versus $1.5bn today.

Turning to costs. How much the company would be able to save is difficult to say. Google’s chief economist Hal Varian says switching to full internet distribution could cut production costs by at least half. In our case, we are keeping the thick Sunday edition but the entire production organization would have to be reinvented. Dumping weekdays editions would lead to major staff reductions at every level. Printing contracts with third-party operators would replace to the current cathedrals owned by the company. This would result in a great deal of savings when replacing today’s heavily unionized machinists, mechanics, engravers, drivers, typographers, paper handlers, electrician, pressmen, mailers, etc.

Let’s simply say that a significant part of the current 3,094 employees of the New York Times Media Group won’t be needed anymore. The same will apply to the current 1150 editorial staff. Even with a sizable weekend edition and no compromises on the journalistic quality, a staff of 800 writers and editors would be sufficient for both the digital operations and the Sunday paper.

A 1500-1800 persons company, reaching about 50m readers/viewers worldwide, making a billion per year sounds doable. Whatever the timeline is, the move will happen eventually. And preparations have to start now. The iceberg won’t stop melting.