online publishing

Profitable Long Form Journalism

Over the last month, I’ve been stuffing my iPad with books purchased online, long PDF files and other documents for later reading sessions. I’m waiting for the mind-blowing media applications, they’re still in the making. Several prototypes of French newspapers I have seen are quite promising. We have to be patient. This is just the start of the runway.

Compared to my computer, I realize I’m using the device in a different way. No mail (too clumsy), no writing, no twittering. Just reading stuff, the longer the better.

And I wonder: Can tablet computing be the missing link, the one that could rehabilitate (or rather introduce) long form reading in digital format — in a profitable way?

Let’s project ourselves two years from now. And let’s put the iPad aside for a while. It’s 2012. Tablets have become a cell-phone-like commodity, competition is strong. Aside of Apple, devices from Samsung or HTC running Android or god knows what operating systems are thriving. Standards for digital formats have emerged and e-books are heading toward a 25% market share in Europe and the United States. The digital publishing chain is running smoothly and efficiently with the following characteristics.

  • The old production and distribution system that was eating 65% to 70% of the retail price is now down to a 30% fee taken by publishing platforms. They get this 30% for putting the publications on their virtual shelves and for collecting the money.
  • These inventories are served by clever search and recommendation engines (not the Trabant-like system of the iTunes/iBooks store).
  • To reflect decreasing distribution costs when compared to physical books, e-books retail prices are down by at least 30%.
  • Authors also take advantage of the technological shift, they get higher royalties.
  • New formats have emerged; the old dichotomy between hardcover, priced at $25, and paper back, at $10, is gone, replaced a by a more diversified pricing structure.

Hence the question: What will the impact be on journalism and on the bottom line of media companies?

Before attempting an answer, let’s reframe this in the dual context of the current business situation and of the newscycle. Managing a newsroom within today’s constraints is a difficult exercise. In daily newspapers, physical editorial space (i.e. column inches) is scarce, making long pieces a hard-sell to the editor-in-chief. The web is more welcoming, although we all know that beyond a 600 words story, reader attention tends to fade — especially for younger audiences.

As for the newscycle, it accelerates and becomes increasingly complex, requiring more expertise and, in theory, more editorial resources — should editors decide to go below the surface. Take the debt crisis in Europe, for instance. The general framework is pretty simple: thirty years-old traders in shark-frenzy mode, going against sixty years-old politicians. The sharks prey on the politicians who have failed to build decent economic leadership since the introduction of the euro system (coins and banknotes entered in circulation January 1st 2002). More

Balkanizing the Web

Creeping Balkanization is the internet’s worst enemy. As worldwide literacy grows exponentially, for the web, such expansion results in increasing pressure from corporate interests and regulatory nationalisms. Rising from its arcane beginnings as a DARPA research project, the net has become a symbol of borderless communication between individuals and of unlimited access to knowledge. Unfortunately, the net is about to become a heavily controlled environment, serving two classes of citizens: a dominant class that sets the rules (technological, legal and commercial) and the underclass of citizens and consumers.

Consider these two macro trends:

The first one stems from the world’s linguistic evolution. As of today, there are about one billion English-speaking people worldwide, half of which are native speakers. This latter proportion keeps growing as education improves; this growth reinforces the prevalence of English as the main internet lingua. With 500m people, English accounts for 27.5% of the connected population. Chinese makes the second language group with 400m people, 22.6% of the net population (and the mother of all government-mandated restrictions).

Beyond that, only the Spanish group (7.8% of the internet population) and the Japanese (5.3%) are above the 5% threshold. French accounts for 3.2% of internet users, with a global number of 57m.
Asia’s expanding literacy involves not only national languages (such as Mandarin or Hindi), but also the learning of English. In fact, the “use” of English could be much larger than shown in official statistics. Back in 2006, according to linguistics professor Braj Kachru, the “use” of English, as he called it, involved more than 500m people in India and China combined (see story in the Asian Times).

In many European countries, teenagers’ exposure to the English-speaking internet (for example through illegal downloads of movies and series) is a powerful learning vector.

The second trend involves the telecommunication infrastructure. The physical world is increasingly connected. Take optical fiber: its 2009 global market (outside China) represented 171m of fiber-kilometers, a 22% growth versus 2008 ; and that doesn’t reflect each fiber’s capacity to carry more data as carriers use more sophisticated modulation/demodulation circuitry. More

iPad: Publishers look for the winning formula

Among Australian media executives, like everywhere else, the talk of the town is the iPad. I was in Sydney this week, giving a talk at the Media 2010 conference. This gave rise to vibrant discussions of the ways in which the Apple device could transform our industry.
Among the group of speakers, the most enthusiastic one about the opportunity was Marc Frons, the chief technology officer of New York Times Digital. (Marc oversees a huge team of 150 tech people in New York). Three weeks before Steve Jobs’ January 27th iPad keynote, Marc dispatched a team of developers to Cupertino to crash code an iPad application. According to Marc, the quality of the interface, the speed of the iPad, its software will make it a game changer for the media industry. From a commercial perspective, The New York Times still hasn’t decided how to deal with its upcoming iPad bizmodel: charging or not, and how much. The context is the Times’ recent announcement of a paywall based on a metered system: a few pages a month for free; then you pay. See our recent story The Numbers behind the Paywall).

For all publishers, many obstacles remain. The first one is dealing with Apple. Media executives I talked to in Sydney are unanimous: Steve Jobs’ company is difficult to work with. It is utterly secretive, willing to give only minimal information to content providers. “When we met with the Apple people here, said an executive of Fairfax Digital, they didn’t bring an iPad with them, they were telling things like “it has a ten hours battery life“… C’mon guys…” Fairfax Digital operates 284 websites in Australia, including the two big dailies’s sites – The Sydney Morning Herald and The Age – viewed by 24m uniques visitors each month, which is not bad in a 21m people country.

Apple needs the publishing industry, it should treat it better. When it launched the iPhone in January 2007, the device was a revolutionary product just in itself, one that could wait for more than a year to open its platform to third party applicatios. This isn’t true of the iPad. Unlike the iPhone, the iPad will leave or die by the content it will deliver. Especially for a device priced between $500 and $800.  As for today, everyone is excited by the platform’s technological promise. But being able to offer a reader experience such as the Bonnier Mag+ concept or the recently released Wired demo is one thing. Finding the right economic model is another. More

Cashing in on stolen contents

For publishers: How much money is lost because of stolen contents? Of that, how much can be realistically reclaimed? Before getting into numbers, an overview.

In recent weeks, I’ve gained a first-hand media perspective on anti-piracy technology. The technology is Attributor’s, and the media is Agence France-Presse, one of the big three global newswires along with AP and Reuters. (Disclosure: I produced recently a 15,000 words report for AFP covering its strategy and its future. I’m no longer working for AFP but I keep close links with this news company).

Every day, AFP sends about 400 news items to Attributor – a fraction of its daily production. These items are then matched against a set of web sites, both subscribers and non subscribers of the newswire’s services. Using a simple interface, Attributor ranks the sites by their propensity to reuse contents. For regular clients, the system shows how stories are used, what percentage is utilized and if they are properly credited or even linked. For non-clients if offers a great way to track down stolen content and to make the distinction between minor abuses, honest mistakes and systematic infringement, since the data are viewed from statistical and time-related angles.

For obvious reasons, I can’t disclose the medias I’ve been reviewing in detail. Let’s simply say that results are stunning. AFP material is widespread. To make it short, there are three types of abuses of copyrighted material.

- The first one is insufficient attribution by a client. Typically, a journalist puts his or her byline on a story largely taken from a newswire. On most cases, the byline will be reduced to initials along with “avec agence” (with newswire) mention, like this one for instance where the borrowed text form AFP is automatically highlighted….

For this piece, we can safely say that “M.D.’s” input was minimal and it would have been nicer to simply put the mention “AFP” at the bottom of this cut & paste performance. (It that particular case, the newswire story is itself an explicit recycling of a scoop by Le Figaro, a typical illustration of the Internet’s endless content loop). From a legal perspective, there is no particular issue. It’s only an ethical matter.

Another case involves misuse of contents by bloggers. In most case, bloggers have no clues about the meaning and use of copyright. And big medias who host them don’t really help. Typically, a young an passionate blogger “covering” his beat will simply take in good faith an entire AFP (or AP or Reuters) story and paste it on his blog, this time with a proper attribution. Except that he has no right whatsoever to do so. I’ve seen one big French site, whose boss loathes the AFP, ending up with 60% of its content illegally “borrowed” from the AFP (confronted with facts, the site has made serious efforts to correct the situation). Hypocritically, many sites shield themselves behind the fine print of the term of services buried deep in their site reminding bloggers not to steal copyrighted content. Fact is, most of them, including big medias, do not properly educate their legally challenged blogging contributors. More

The iParanoid Scenario

I’m not through with the iPad. Actually, I’m just warming up. For today’s column, let’s focus on the perils of a closed system.

I live in a country (France) where censorship is a big deal. It comes mostly from greedy celebrities (sorry for the truism); they use a legal system that largely favors them. Often, they find a compassionate judge when it comes to extracting money as compensation for a supposed privacy violation or for some other unauthorized disclosure. Convictions are frequent and expensive; they can lead to the seizure of a magazine or even of a book. France has a long history of such practices. In the early sixties, the country was waging a colonial war in Algeria. Then, for the most avid news readers, the game was to get the weekly magazine l’Express at the kiosk as early as possible before French authorities seized it. (No such risk with today’s Gallic newsmagazines).

Let me reframe this in the context of an upcoming iPad era. An iPad newsmagazine publishes an investigative piece that triggers a legal injunction: remove that from the publication or face a $10,000 penalty per day. No, says the publisher, who has guts and money (proof this is a fiction), we want to fight in court. The plaintiff then turns to Apple. Same talk: face a huge fine, or remove the offending content. Furthermore, says the plaintiff’s attorneys, thanks to your permanent and unique electronic link to your proprietary devices and the fact that the electronic kiosk now resides on the device – yes we can argue that point, they say– , you must extend the deletion to each user’s tablet. C’mon, you keep pushing updates, and various contents bits to these gizmos, you can push a delete instruction code.

What would Apple do? This is a question of balance of power. If the legal action involves some neuron-challenged celebrity, chances are Apple won’t balk. But what if Nicolas Sarkozy or his whispering-singer wife are the plaintiffs? Truth is, given the pattern of legal actions against the press in France, it is more than certain a French judge will be tempted to request an immediate remote deletion of a presumed infringing content. Then we’ll see a replay of what happened last summer in the 1984 case, when Amazon remotely deleted a copy of George Orwell’s novel in the Kindle of buyers for copyrights issues. Amazon’s founder Jeff Bezos apologized profusely for the mishap (plus it involved 1984 not Alice in Wonderland, tough luck). 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

A New Gallic Idea: Taxing Google

The French cultural elite has come up with a bunch of ideas to stimulate the legal consumption of digital goods. The basic principles are stunningly original: subsidize and tax. These creations are detailed in a report ordered by the Président de la République to the Ministry of Culture. This is the way it works here: when a problem plagues the private sector, the executive branch tasks clever, carefully picked-up fellows with writing a report. It involves hearings —about a hundred in that case — held behind closed-door, off-the-record; no one can figure out who is standing for what.

This time, the selected authors of the report titled “Création et Internet(available here) are: Patrick Zelnik, a music producer, Jacques Toubon, a 69 years-old former all-purpose minister (including Culture in1993-1995) and Guillaume Cerutti, the CEO of Sotheby’s France. Not exactly digital front-runners. As a music producer, Zelnik has brilliantly missed the digital train; Toubon has seen more mice in government offices than on his desk and Cerutti is running an auction house where sales are concluded with a hammer blow, not a touchpad click.

One of the most spectacular strokes of inspiration involves the creation of a taxpayer-subsidized “Online Music Card”. It could work like this: a young internet user, compulsive music downloader, buys a card for €20-€25. But the card carries a face value of €50. Then, after a while — expect a few years for roughly a million of young people above 24 — the magic happens: this crowd mutates into legal download addicts and forgets the appeal of illegal Net music (which, in France, is 20 times more important than the legal variety). That’s a hell of a good news for Apple, its iTunes cards could be bought by the bulk using French taxpayers’ money. Bear with me: that’s Christopher Columbus’ Egg. How come we didn’t think of it earlier? Flooding the young addicted-to-free generation with subsidies to reverse the anything goes, culture-copyright-looting tsunami! You know what? Sometimes, I’m proud of my country.

Second idea, my favorite: taxing Google. The concept, so to speak, is the following. 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 Google.fr, one of the most searched terms is “Le bon coin” (the good spot). (1Leboncoin.fr, 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 ebay.fr).

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

Not on the same page. Ever.

Could Google and Publishers one day understand each other? Frankly, I doubt it. Two weeks ago I was in Hyderabad for the dual assembly of the World Association of Newspapers and the World Editors Forums (1).
There, Google-bashing was the life of the party. As I told in last week’s Monday Note (see The Misdirected Revolt of the Dinosaurs) the climax was the “debate” between WAN’s president Gavin O’Reilly and Google’s top lawyer Dave Drummond. One comes from Alpha Centauri, the other from, say, Pandora. For those who want to get to the bottom of the argument, the publisher’s statement is here and Google’s top lawyer defense is here.

Dave Drummond after his speech (photo FF)

In a nutshell, publishers keep complaining about Google’s relentless copyright violations. Tireless Google robots crawl the internet, indexing and displaying snippets in Google News, without paying a red cent for the content they post. As a result, said Gavin O’Reilly, “Google makes tons of money on our back”.
Dave Drummond’s reply: “We send online news publishers of all types a billion clicks a month from Google News and more than 3 billion additional visits from Search and other Google services. That’s about 100,000 business opportunities – to serve ads or offer subscriptions – every minute. And we don’t charge anything for that!” He added that Google practices were fully compliant with the Fair Use principle.
Fair Use is “A tired rhetoric”, snapped O’Reilly.

At this point the discussion gets technical. And interesting. At stake is this a crucial evolution of copyright, from a binary form (authorized ≠ forbidden) to a more fuzzy concept (use is allowed but restrictions apply). This evolution of copyright is tied to the Creative Commons (coined by Law professor Lawrence Lessig), which define a sort of shape-adjustable notion of intellectual property. More