Wednesday, January 22, 2014

Death by Blogs: Is the News Business Ready for Its Final Dismemberment?

It's a refrain that's been familiar in the media business for many years. A star gets famous enough to be no longer just one in a small army of contributors to a major brand and sets out on their own to make a name for themselves. Frank Sinatra split with Tommy Dorsey's orchestra to build a solo career. Groucho Marx became a celebrity separate from his brothers on television. The Beatles all went their separate ways. And so on. Often it's new opportunities through new distribution channels, other times it's a new generation that's ready for a new style, or just egos that get too big for team sports. Whatever the motives, it's nothing new.

However, what's new in the news business is that many of its core stars are jumping ship in greater numbers than ever before to create their own online news brands and to recreate old brands via new channels. David Pogue, formerly +The New York Times' lead tech blogger and reporter, and television's Katie Kouric moved over to Yahoo. Kara Swisher and Walt Mossberg moved from The Wall Street Journal and their All Things Digital group to found re/code, their own coverage of the tech world. And according to Columbia Journalism Review, Ezra Klein is in talks to get funding for a new kind of news organization. The list goes on, but you get the picture: talent that's not having fun in the cutback-crazy world of mainstream journalism is looking at the risks of major changes or indie careers and making the jump enthusiastically. This is a shift that I forecasted many years ago on ContentBlogger, and the finances and technology of online news have progressed to the point that it's now a pandemic trend.

What's fueling this change is not only the superstars itching to keep in the limelight but also the technologies that pick up their media. Mobile news readers such as +Flipboard+Zite Media and Google Newsstand promise easy auto-curation of news from various sources in slick apps that enable content producers to make money. So for every interesting new news Web site coming along on the Web, there's a posey of pretty and highly functional ways to consume the news with, not to mention social media channels in which to promote it. A tweet on Twitter from the NYT looks pretty much the same as a tweet from you or me, so the value of personal brands to promote news stories virally only helps to amplify this trend.

In some ways this trend is reminiscent of a much earlier phase of the news industry. In the early days of newspapers, dozens of publishing outlets flourished in major cities in places like London's Fleet Street. That fit the scale of that era's printing capabilities, first and foremost, so there was a very level playing field for news technology. Then came along telegraphs, massive printing presses and delivery advantages via trucks that favored heavy capital investment, and the news became more centralized.

Competition from new technologies such as radio and television provided further centralization in the 20th century. But now in the 21st century the Web has reduced radically the capital requirements for news startups, and so our news choices resemble the old world of Fleet Street much more than the world of news a few decades ago.

And therein lies the real core problem with the news business: lack of capital investment. Or, to be a bit more fair, capital investment in new media technologies on a massive scale by new competitors that was unmatched by news organizations more interested in refining old technologies. While major newspapers like The New York Times were pushing out huge new color printing presses for mass production, investment in Web infrastructure by companies both large and small shifted the technology advantage from the consumer's perspective away from news organizations permanently. News companies were left with little more than a brand, lots of intellectual property management and a dwindling cadre of increasingly undistinguished journalists. With so much focus on defending IP in recent years, the news media world lost sight of how to create more IP value in a distributed world of publishers and mobile news consumers.

To be fair, some of the leading news companies like the NYT have done a reasonable job of experimenting in all of these new technologies. But across the board, you cannot name one instance in which any major news organization has led the industry in radical transformation of news technologies. Why? Back to scale: since the new technologies enabled success for individual publishers with less capital investment, it just didn't compute in the traditional minds of news organizations how this could spell a win for them. You may as well have asked them to define a full-color world in gray-tone.

As long as existing news organizations focus on trying to keep its capital focused on empowering centralized publishing organizations, then this trend will continue. It's the key to many pseudo-distributed publishing efforts' failures: AOL's "hyperlocal" Patch didn't enable technology to empower one single independent publisher - just a sadly underpaid smattering of overworked local journalists. By contrast, AOL's stable of acquired blogs and online news outlets are doing pretty well as independent and well-differentiated brands. They don't go out of their way to help people invent new brands independently, but at least they have some apples-to-apples ways to compare methodologies. In the trade magazine world, there has been enormous centralization of infrastructure and a reasonable amount of consolidated capital investment, but that's more about squeezing more profit from largely diminished operations: there's no real thought about how to help people to walk up to their platforms and start publishing.

So will every one of these superstars gone indie or nu-skool succeed? Of course not. But that's not the point. The point is that a publishing system that does not enable them to follow their dreams more effectively is one that's likely to continue to lose brand value and capital resources. Until then, as long as these folks can park their dreams on WordPress and Google AdSense, the slow dismemberment of major news media companies will continue.

Friday, January 17, 2014

Yahoo at the Crossroads - Again: What Does Marissa Mayer Do Next to Get Signal?

Executives sometimes hire to complement their own skills, sometimes to extend them. For +Marissa Mayer, her recent dismissal of former Google exec Henrique de Castro after 15 months of trying to turn around Yahoo's ad business as their COO seems to point to the latter. Mayer presents well to the public, to be sure, and has more than a few good ideas about innovation, but at her core she's a numbers person, focused on the details of getting things right.

There's only so much that a CEO can do that and still show up for those keynote addresses, so it seems that de Castro got one arm of what Mayer would have otherwise taken on herself, and with much the same outlook. Apparently de Castro was not a "people person," which, in the world of big display ad deals formed over power lunches and the like, is not an asset. At all. Tack on the recent embarrassment from Yahoo ads that carried malware to hundreds of thousands of their users, and it was time for a fresh start.

So while de Castro's departure is perhaps a better-now-than-later admission that Yahoo needs a people person at the helm of its ad operation, it's also an admission that Yahoo has a very complex mission ahead of itself in trying to turn the company around. And it's a mission that requires Yahoo to consider whether it's really on track for achieving its core goals. While its web site claims that Yahoo is in business "to create deeply personal digital experiences," somehow CPM rates for display ads and the content that's likely to be carry them are not necessarily a good match for that mission. So while big-name advertisers may say "Yay" when they hear of big-media folks like Katie Couric and David Pogue signing on to beef up Yahoo content, 90-plus percent of the Web audience probably went, "Huh?"

Let's put it another way: in The Signal Economy, big media doesn't generate signal, it consumes it. Mainstream media provides a platform for interaction with people, but it is very narrow-band signal, signal that revolves around that specific topic or event. That's fine for folks selling mass-market goods, and credit sites like AOL's Huffington Post for refining today's online model for aggregating and generating such content to a fine art. But while HuffPo's +Arianna Huffington is a media star in her own right, you'd be hard-pressed to think of one HuffPoster staffer who you would call a "media star" - some columnists, perhaps, but they're toe-to-toe with Web superstars. In HuffPo-land the content is the star, and its star rises and falls in a matter of moments if it doesn't go viral and gets promoted like the dickens for brief moments of Web fame when it does. You don't get to that level of high-quality audience engagement by shuffling around feeds from the usual mainstream news suspects and hiring on big-name media stars to eat up your margins producing mediocre gossip, or tech content focused on "boomer" tastes that most any blogger or +YouTube star like +Marques Brownlee could outclass in a heartbeat.

No, the truth is that while Mayer has assembled some very good bits of technology recently to push Yahoo forward and has done a very credible job reinventing the brand, the heart of Yahoo's revenues are largely an anachronism. Yes, it's important to be in the middle of "smart TV" viewing, but you're not going to do that with blogging niche player Tumblr in tow. For the time being, Twitter has sewn up the marketing hearts and minds of TV advertisers - at least until +Google+ begins to mount a credible assault on the living room via its now-popular Chromecast TV appliance and emerging Android TV efforts. You're not going to do it by spiffing up Yahoo Mail, even though having a credible messaging system of some kind is important. None of this is really going to increase Yahoo's signal-gathering or signal-deploying capabilities enormously. And while the new Yahoo News Digest app introduced at this year's CES show has good design and utility, the "why" of using it versus +Flipboard, Google Newsstand or any number of news aggregation services is not a slam-dunker by any shot. It's competent, making the right moves, but not setting the pace - or gathering much of any personal value to support that "deeply personal" mission statement.

And pace is what it's all about in developing personal online services that generate truly personal signal. While Mayer has been busy trying to reconstitute the semblance of a profitable online media business, companies like Google - well, mostly Google, really - have been out inventing new sources of signal and new contexts in which to exploit it. Google CEO +Larry Page noted recently at a conference that Google's refined mission is "to create beautiful, intuitive services and technologies that are so incredibly useful for people that people use them twice a day, like you might use a toothbrush." While Yahoo is trying to invent new media, Google is out inventing new activities - new verbs that provide a whole new array of signals to process and new contexts into which to drop media services for marketers. As far as I can see, there's nothing remotely like that on the docket for Yahoo. And it's the lack of such activity-related signals that will restrain the further growth of companies like AOL, and the core reason that their Patch hyperlocal publishing initiative failed.

So where does Yahoo go from here? I am sure that there's good product in the pipeline to some degree that will provide us with some surprises, but the core challenge is to find some better ways to get better signal for marketers. That's going to be hard to do with just mainstream media, and even not all that easy with just social media in tow from Tumbr or Flickr. Where are new  and unique Web-driven "dos" in the Yahoo lexicon? What are the new attitudes coming out of Yahoo that the mainstream media elements cannot embrace easily and which can power the interest of younger audiences? What is it about Yahoo that can attract Web-generation trendsetters - people who will probably never appear on CNN, and who may have never even watched it or heard of it? Without answers to those questions, Yahoo is chasing a graying demographic with less sex appeal than Huffpost manages in the same pursuit, and needs to come up with content, services and positioning that takes Yahoo out of its 1990s doldrums and into the forefront of exploiting 21st century signal in ways that really turn on both its audiences and its marketing customers.

Always glad to help, Marissa. Just give a call. Or send me a Hangout invite. Sorry, had to say it.

Thursday, January 16, 2014

ASCAP for eBooks? Norway Tries a National Broadcast Model for Royalties

With the Author's Guild continuing to keep its lawsuit against Google's library book digitization festering, much of the book industry seems to have dozed off into complacency when it comes to dealing with monetization models for digital books. DRM works just fine, thank you very much, and life-plus-a-lifetime global copyrights for books is now an accepted norm. Amazon? Hey, if you can't beat 'em, sell on 'em, and charge 'em the same for a twenty-year old book as for a new one, because, well, that's what we do, don't you know.

Hmm.

Well, that's all well and good, but fortunately some folks who are concerned with issues such as the vibrancy of our culture and affordable learning to boost productivity are taking a bit of a different tack on licensing book content. Enter the National Library of Norway, which is embarking on a project to digitize tens of thousands of older in-copyright Norwegian book titles, from masterworks by Nobel laureate Knut Hamsun to the first detective novels by Nordic noir king Jo Nesboe. The outlet for this effort is called bokhylla.no ("bookshelf"), an online ebook portal that's not notable for its design but rather for how it's making these digitized in-copyright books available. The price to the consumer: free.

Now, before publishers and authors start jumping into their dragon boats to mount an assault on Norway, put your horned helmets aside long enough to hear the good news for copyright holders: the Library of Norway is paying rights holders good royalty money to do this. Six cents per page view, to be exact, which, if you look at the length of a typical book, is a pretty good pricing scheme for more-than-fair-use content exposure. In essence, the Library of Norway is trading in savings for collections management for the ability to get valuable content that's a critical part of its culture into its citizens' hands with as little friction as possible - a key factor for many nations and cultures whose long-standing traditions and identity are beginning to sink beneath an increasingly global media culture. Social media links in each ebook's display page help the content to be publicized on the Web, helping to drive up book content "viewership."

We've seen this kind of business model before in a semi-public venue: broadcast radio and video. Whenever a song is played on the radio, an organization such as ASCAP or BMI increments a few pennies' worth of royalty revenues due for payout to a song's rights holders, extracting bulk payments from broadcast outlets in exchange for dealing with the back end of royalty payouts. Number-one hits on the airwaves get the same income per play as obscure songwriters, but since the hits are played more often, it all adds up. This has worked since pretty much the dawn of the radio industry, and has enabled public venues such as government-licensed radio frequencies to serve the public with free content, paid for indirectly by advertisers, in this instance.

The free broadcast model with a royalty back end is perfect for helping books of all ages go viral much more quickly, of course, but short of countries like Norway smart enough to turn local culture into a key national asset, I doubt that the book industry will be moving towards this model any time soon. However, there are some variations on this theme that may yet stand a chance in today's fast-moving digital media markets. Exhibit A for alternatives would be Netflix, which corrals a boatload of old movies and TV shows for all-you-can-eat viewing for a nominal monthly subscription fee. Pandora, Spotify, Google Play All Access Music and other services do likewise for audio content. It's a private approach, and one that tends to crowd out lots of good alternative content, but they are successful business models. There are ad-based variants mixed into these models as well, of course, so consumers can approach copyrighted content from another of payment angles.

The point is this: whether you're a smaller nation or a local economy trying to find a place for your unique culture and knowledge assets in a global marketplace or an up-and-coming book publisher trying to brain out better ways to expose new authors, they back-end royalty model for per-page viewing could be a lifesaver for the book industry. Polls by Pew Research and other trusted sources are showing that a new generation of TL;DR online readers (too long; didn't read) just aren't picking up the book reading habit as younger generations have. Payment models must shift, therefore, to ensure that artists have diverse revenue options. We've seen this before, of course: before radio, music royalties flowed through the sales of phonograph records and sheet music. Once radio came along, record sales soared as this content got mass exposure on free airwaves equipped with a royalty back end. Convenience and experience quality of personal media trumped free radio for enough people to make the difference. New technologies may challenge old business models, but that's no reason to dilly-dally when they come along. If record and sheet music producers had been boycotting radio stations instead of working out royalty schemes, the recording industry would have missed out on decades of lucrative growth.

So fine, Author's Guild, get mucky all you want with Google, but the truth of the matter is that if you spent a fraction of the effort that you've put into this lawsuit into working out a Web-wide standard for per-page-view royalty back ends, you'd all be wealthier and have not missed out on reaching a generation of readers now largely ignoring books. The world is a culturally poorer place as the result of this misguided energy, I fear, but hopefully some late-in-the-game rethinking of royalties on the Web can set things right. Always glad to help, of course.

Tuesday, January 14, 2014

While You Were Out, The Signal Economy Trumped The Content Industry. Again.

I am sure that there are some folks who won't like to hear that they're missing the boat yet again as they start a new year. I am sure that there are some folks who are especially tired of hearing that Google is the one who jumped in to the boat before they even had a clue that there was a boat worth jumping into. I am sure that there are some people who are very tired of hearing that the content industry is being redefined by +The Second Web, the confluence of the Internet and trillions of sensors and Web-based analytics that are transforming everyday, humdrum objects and processes into vital contributors to a vastly expanded world of personalized and global services.

Well, I am sorry for those people who are tired of hearing this, because they're going to hear a lot more about it in the months and years ahead. It's called The Signal Economy, the huge boost in economic opportunity emerging from the reinvention of many basic human and machine processes based on this confluence of signals from a vastly expanded definition of what the Web touches and our vastly expanded ability to respond to those signals with valuable products and services. Research by Cisco indicates that there is a $14 trillion potential for The Signal Economy, so it's time for the content industry to understand more clearly that "the Internet of things" is not about selling gadgets, it's about redefining what people pay for to have a good life.

And yes, Google gets it, and, chances are, your company doesn't. Chances are, your company is scratching its head as to how to apply technologies like semantic processing to the same old intellectual property that you've been selling for decades or centuries. It probably didn't even make its way onto any of the slides that executives actually hang around for in a management presentation that The Signal Economy just blew away your definition of the market pie of the content industry yet again. Two decades ago, the Web redefined the market pie for the content industry by saying that anyone could publish media to a global audience for next to nothing. Now, The Second Web challenges us with a market pie that encompasses not just computers but billions of mobile devices and practically every nook and cranny of the world that can have a Web-connected sensor applied to it and create more contextually aware content than anyone can imagine easily - but that semantically-aware Web services can imagine.

But here's the thing: this is not just a Silicon Valley story. Major industrial players like +General Motors and +Ford Motor Company get it. Major medical services get it. Consumer goods companies get it. And, as always, financial institutions get it - the same financial institutions that revolutionized securities markets by turning humdrum stock tickers, databases, Web sites and news feeds into input for enormously powerful financial analysis engines which created and exploited huge economic opportunities before a human could blink, much less think about them. Anything that the Web touches becomes a platform for signal-driven services, and in The Signal Economy, anything is now becoming everything.

Marketing in The Signal Economy is no longer waiting for your intellectual property to flow through a pipe to someone's desk or mobile device. The Signal Economy wants three-dimensional insights based on what's happening in the real world now, and it wants to find the most valuable answers to marketing and social problems before others even get around to testing a hypothesis about what might be worth doing. And it's starting to happen now.

So it's in this light that I ask content executives to look at why Google would spend more that $3 billion on +Nest, a funky little company that sells $100 Web-aware thermostats and smoke detectors that can be controlled by their mobile apps and that feed analytics on how to use them better. This is not about gadgets, but about understanding what's happening in people's lives in more intimate detail than ever before. Nest devices are sensor-equipped computers on a chip, and they work in part by understanding people's movements in and out of rooms. In an era in which the media industry can barely figure out how to get a TV to respond to who's sitting in front of a screen, Nest is helping services to bloom based on sensors in all parts of the home. Nest equipment also now talks to you, as well: if you have a problem with smoke or carbon monoxide in one part of the house, a Nest gadget in another room where you're located will tell you what's happening in which room.

So what you have in Nest is a technology based on emerging home appliance networking standards that can talk to people, the Web and other appliances. Today, we have Google Now, a digital concierge service that pushes information, reminders and suggestions proactively to Google users on mobile devices based on predictive analytics. You looked up a place on Google Maps, for example, or you traveled there recently to meet people who communicated with you through other channels; Google Now pushes up the travel time to that destination for you at the times when it thinks that you may be ready to go there again. And so on. Now, multiply that kind of concept by the size of the market pie defined by talking, sensing, Web-aware gizmos in every room in your home.

If you thought that marketing was about print or Web page inventory, you just lost, the same way that financial institutions and information services lost when they couldn't manage the transition to a redefined pie of relevant signal for finance. If you thought that market research was about pulling together a statistically significant sample to represent a targeted population, you just lost; The Signal Economy just beat you to the punch and ate your bacon by filling your customers' needs intuitively with better and more immediate targeting of what they needed, often inventing it on the fly instead of mass-marketing it. If you thought that business information was about selling database subscriptions, you just lost, because business information in The Signal Economy is about identifying and responding to emerging patterns in complex markets and research environments before your customers even had a chance to look at information in your database.

What do we make of the content industry in The Signal Economy? Well, before I get into the usual dinosaur lecture, I know that some of the more advanced companies in the content industry are aware of the emergence of The Signal Economy and wrestling to come up with better strategies to respond to it. But they're a minority, to be sure. You can extend your intellectual property rights for life plus 180 years, if you want, but ultimately the world has its own right to its own data. What people pay for are actionable insights that apply to specific valuable contexts. How are your services evolving from "workflow" or other sorts of basic productivity tools into tools that look at massive amounts of information and come up with automated, actionable insights faster and more precisely than any one else, regardless of whether the result is in a nice, glossy product package? How are you using your subject matter experts not to push out "Too long, didn't read" blocks of prose when they could be collaborating in the analysis of their fields of expertise with as much immediate awareness and insight into what's happening in the world today, both inside and outside "the box?"

And, of course, how much are you willing to redefine what your market is in the context of The Signal Economy? Maybe you aren't - maybe you don't have the capital, staff or desire to reinvent your company for this new era in information services value. But at minimum you have to be able to redefine your marketing channels in the context of The Signal Economy. The same-old licensing deals will buy you fractions of potential growth when smart alliances with signal giants might help your content to get in far more valuable contexts than a banner or sidebar ad could ever manage. You resist such redefinitions of your market pie at your own peril. Every moment that you wait to try something new is a moment that someone else meets needs in The Signal Economy that will draw signal away from you and your content.

So yes, it's just a bunch of thermostats and fire detectors that Google bought, right? Not. Time to jump in the boat - or at least to start looking for the dock. Let us know if we can help.