Category End Users

So, saving the media. How?

Finally the emperor has no clothes. The creative media will never be able to adapt to the internet the way it is now. More and more people are saying it. Media is dying.

Why? Because it’s starving. There simply isn’t enough money to pay for everything. However good the media has been at garnering audiences and data, the impossibility of trading those things for meaningful amounts of money has become apparent to even the most optimistic enthusiasts.

Without money, media withers and dies. Newspapers, with a few stand-out exceptions, are withering away at an alarming rate. Magazines, long dependent on their print editions to keep going, have hit a wall.

The simple and seductive idea that advertising could translate internet popularity into money has proved itself wrong. We need not dwell on the reasons other than to observe that that advertising isn’t working, and has never really worked, as a sustainable revenue source for online media. After roughly twenty years waiting and hoping that things might change, the patience and financial reserves of the media have begun to run out.

Which leaves a gloriously simple problem. The media needs to make more money. It needs to translate audience into revenue.

If advertising can’t do it, what can?

There’s only one other source of money and that is the audience themselves. The stand-out exceptions I mentioned above are thriving because they’re charging for access. The London Times, the Washington Post, the Economist and so on.

For them, subscriptions are the central focus. The Times of London is profitable for the first time in living memory as a result of its obsessive, long term, subscription focus.

The only way customers can be persuaded to pay, and keep paying, is if The Times focuses on nothing more than producing a product which entertains, informs, delights and surprises them. That is great news for customers. The Times has to be trustworthy. It has to be consistent. It has to be, and to stay, excellent or people will simply decide not to pay for it.

The same is not true of free products, which need to capture enough readers to generate data to sell to advertisers.  They often do this by generating “click-bait” stories, which, as the name indicates, are a form of con and hostile to readers.  Free products need to display as many ads as they possibly can to maximise the (still pitiful) revenue that data can generate. They need to cut their investment in content and the creators who make it, to try to make ends meet, thereby short-serving their readers.

So even if being asked to pay seems, initially, like a bad option, it turns out that for a significant numbers of users it is not. But only if the product is good enough to justify the cost.

That’s an important factor for publishing people to consider when they find themselves thinking “but nobody will be willing to pay”. It is surely true that persuading people to pay for a product which has been optimised for being free, and in the process become unsatisfying and hostile, is tough. But it’s not a generic truth that people won’t pay.

People will pay. They’ll pay for anything for which their desire exceeds the cost being demanded – whether it’s media, groceries, cars or jewellery. The amount of desire, the acceptable cost and the product might vary from person to person, but it is that basic equation which drives all consumer markets.

The task of the media is to bring cost and desire for their products into line.

If the cost has to be more than zero in order to remain in business, what has to happen to the product to make it viable? Self-evidently it has to be attractive to enough customers. That probably involves more change than simply putting a price sticker on it. But where there’s a return there’s a business plan. Investment to make the product better is justified by the improved bottom line that stands to be gained.

Lastly, what about the cost? The Times and others have shown the way by creating a high value product that sells, to hundreds of thousands of people. They have found a lot of people willing to part with a fair amount of money every month because their desire for the The Times exceeds the cost being asked.

It isn’t cheap, though. The Times is most certainly a high-end product aimed at affluent individuals. That’s why the subscription base is somewhere below 10% of the people who want might otherwise choose to read their product. The other 90+% just have to be ignored, or, in some cases given a certain amount of free content in order to tempt them in.

For other publishers, with larger and less affluent or less committed audiences, the investment in making the product more desirable has to be justified by a price much, much lower than the subscriptions currently doing so well at the very top of the market which appeals to a much broader demographic.

Lowering that cost and creating really huge new sources of revenue and profit is the next challenge.

Which will be the subject of the next blog…

 

Were newspapers wrong about online? Kinda…

Were newspapers wrong to go digital? asks Roy Greenslade, reporting on some very interesting research from the USA. He points out that many, if not most, newspapers could be more profitable if they closed their websites and just focused on print instead.

I don’t think the mistake was going digital, unless any newspaper had obsolescence as its long term plan. However, it’s hard to ignore the unvarnished reality that almost everything newspapers have done in the digital sphere has been a commercial failure.

The challenge now is not to ruminate on what could have been, but to recognise the mistakes so they can be learned from. They can still be corrected.

Two key imperatives

There are two key strategic imperatives which can help answer the conundrum. They are generally valid not just for newspapers and not, in fact, just in the digital sphere, but all media products.

Firstly, popularity must lead to success. In the case of newspapers, that needs to mean that the more you’re read, the more money you make.

Secondly, you must maintain reasonable control over terms of trade. You need to decide how much you sell your product for to the next person in the value chain. If someone else decides whether, and how much, you get paid you cannot build any kind of sustainable business.

So, for newspapers, the mis-steps are obvious when viewed with these two imperatives in mind.

There’s nothing wrong with the idea of charging

Newspapers, nearly universally, abandoned the idea of charging for their online products. Although this led to a huge increase in consumption, it did not (and still does not) lead to a commensurate increase in revenue. Popularity no longer delivers revenue, yet they keep chasing popularity as if it does – frequently making their product horrible for readers as they go.

Looking for the reasons for this,  a big one is easy to find in the way the online advertising market works. Newspapers have next-to no influence over the quantity of advertising their sites can sell, nor the price it gets sold for. Achieving flat revenues year-over-year is regarded as a decent outcome by most of them, even if traffic has increased.

Can it be fixed? Yes it can!

What could they do differently, even at this late stage of despair? Sustainable success is still achievable if they can re-build the link between popularity and revenue, and regain control over their terms of trade/

One thing, obvious I think, is to charge for access to their products. There are loads of reasons why this is a good idea not just for newspapers but also for their readers, starting with the fact that it can deliver both strategic imperatives.

Before this seems like the right, even obvious, thing to do, newspaper managers have to accept that traffic is not the same as money and stop judging themselves by meaningless and mostly implausible numbers of “uniques” or other similar metrics. They need to train their staff and their investors to look somewhere else for measures of success, starting with the bottom line. Profit is not a tawdry or embarrassing objective.

Make something worth paying for

Having done this they need to come up with an attractive product. This means more than just slapping a price sticker on the thing they have now.

Current products have evolved in a search-optimised, ad-funded, traffic-hungry, revenue poor environment They aren’t really built with the readers’ delight in mind and are, as the US research points out, almost universally “less-than-satisfactory”.

Newspaper reading has traditionally been driven by habit. Making a habit-forming product, rather than just a data feed for search and social, which people return to every day, is central to success.

A big re-think is needed to create truly engaging, habit-forming, delightful products. There are already products which show the way. Subscribers to The Times, a subscription product built around the needs of users above all else, wlll tell you how much they like and enjoy it. That’s in no small part because a product created with the goal of delighting humans instead of search engines and social platforms is, well… delightful. People want to go back to it.

Price it right

When they have worked out their nice new product, newspapers will have to come up with an attractive price as well. The question is not whether customers are prepared to pay, but how and how much are crucial.

Subscriptions are a dreadful solution to this because they demand commitment from a group of notoriously mercurial customers. Newspaper readership is a casual thing, people change their minds, they switch around, they read more than one thing.

Even if someone forms a habit around a single newspaper, they don’t like to feel that they’re locked-in. So, demanding commitment, making your customers promise to pay you not just now but into the future as well, is unattractive to most readers.

You can achieve a measure of success with subscriptions, as The Times among others has shown. But you leave an awful lot of opportunity and audience on the table. There are better ways, and I’m building one of them.

Have a business plan you can believe in

Once you have your attractive, reader-centric, product, and you’ve got your pricing sorted out, and you have a nice user experience, and you have stopped talking about your product as if it’s a high security zone (a “pay wall” to keep the riff-raff out), you will discover you can write a fairly confident investment case.

Knowing how much revenue you stand to gain as your product builds popularity means you can work out how much to invest in the product, in marketing it, in the content.

In other words, you have a business.

Not only that, you have the ad revenue on top. Unpredictable it will remain, but it will also in future be secondary. You can put it towards the christmas party.

Be confident

“Ah yes”, I hear the cry. “All sounds very nice but if it was that easy it would have happened by now”.

Whoever is shouting that is committing the greatest sin that the newspaper business has been guilty of in the digital era: a lack of self-confidence and an obliviousness to its own power and influence.

Perhaps because the print market was so mature and didn’t offer much incentive to take risks, perhaps because there have been no genuine strategic challenges for decades, perhaps because the intense short-term focus of the newspapers distracts everyone from thinking about the future, but the newspaper sector has developed an actual aversion to innovation.

They claim to be innovative, like all businesses, but they are not. For newspapers, innovation means following the herd, jumping on bandwagons, doing what everyone else is doing. Copying a seemingly successful tactic you have seen elsewhere. Buying a drone for your CEO and saying “look boss, this is what the cool kids are doing, do you feel cool now?”. It’s fun to play with others people’s toys but ultimately it hasn’t worked.

If there is one reason above all others for the mess they have got in, it is a lack of courage to believe in themselves, an instinct to treat with suspicion any idea which someone else hasn’t already delivered.

This is what has put newspapers in thrall to new platforms whose interests are in no way aligned, but who are younger, cooler and richer.

Doing something to shape the digital landscape into one which works for them is something newspapers haven’t really tried to do because they don’t think they can. But the landscape others have built isn’t one in which they have thrived.

Yes, you can. Really.

If newspapers are finally ready to abandon their defeatist self-pity and act confidently they can still reverse their misfortune. On the other side of it they will find a far richer opportunity than they have ever imagined.

They need to believe in themselves and their ability to product great products which – human – customers love and will pay for.

One more thing…

There’s one other bit to making this work, of course. They all need mechanisms capable of delivering the money in a way which doesn’t make paying for their products more trouble than its worth.

I’ll help…

That’s what I’m working on. I can see the money, the opportunity and the way to deliver it. I’m working with a group of gratifyingly receptive and non-defeatist publishers, as well as some other media companies, to develop it in partnership. We will be launching the first products in the new year.

If you’re a publisher of any kind of media product, or a creator, you will love it because it will connect your popularity with revenue and give you an opportunity to develop, grow and attract investment to your business.

If you’re a user you will love it too because you’ll be in charge – you’ll be able to access everything and because everyone will be competing for your money, they’ll also be competing to make the product and offer you love enough to pay. You’ll be the customer again.

If you don’t believe me, or want to pick holes in my logic, or want to understand my reasoning in more detail, or want to just tell me how wrong I am, get in touch and lets talk.

So, Roy, going digital was not a mistake for newspapers, but the failure to innovate and drive their business rationally most certainly was. That, however, can change.

Permissions, babies and bathwater

A few months ago I started seeing this when I went to Google sites…

 

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Kind of funny, the privacy reminder. I’m guessing most people don’t see this because most people are logged in to Google most of the time and so have accepted their terms explicitly when they log in. But I’m not. As you can see I did a bit of investigating, and about a week later the message changed…

 

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I’m actually banned from using Google unless I accept their terms. I still don’t fancy this so it has given me an incentive to try out other search providers and – guess what – I get along fine. Great.

But it’s a bit more annoying than that because sometimes other people use Google to host things (YouTube videos, maps, documents etc) and so I’m not really using Google when I want to look at those things, Google just happens to be hosting. The price for me to watch the video, view the document, see the map is to make an agreement with Google to collect information about me. A quick look at their privacy policy confirms this is quite a long list of things they want permission to collect.

So… I can work around that if I try – “incognito” browser window (I get the “privacy reminder” message, still, but I’m not blocked), different computer, etc. But it’s annoying.

But look at this:

 

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And this

 

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Really strange. My browser can’t connect to Google sites at all. Now perhaps this was some weird technical thing – but the internet was working fine for other sites (you can see that the second one is a YouTube video embedded in a Bing search result) and I didn’t get the same error in other browsers.

So I can’t help wondering if Google’s servers are now refusing to talk to me at all. Sent my computer to Coventry. Pretending not to be there.

Whether or not that’s what happened it makes me think about the whole issue of permission, Google’s insistence that users must explcitly agree to give them data as a condition of being able to use their service brings the whole issue of “free” into clear sight.

Google isn’t free. They require quite a lot in return for being able to use their services. A quick summary from their privacy policy:

  • Information you give them such as “name, email address, telephone number or credit card to store with your account… photo”
  • Information they just gather from your machine such as device information – “hardware model, operating system version, unique device identifiers, and mobile network information including phone number”
  • Usage information such as “details of how you used our service, such as your search queries; telephony log information like your phone number, calling-party number, forwarding numbers, time and date of calls, duration of calls, SMS routing information and types of calls; Internet protocol address; device event information such as crashes, system activity, hardware settings, browser type, browser language, the date and time of your request and referral URL; cookies that may uniquely identify your browser or your Google Account”
  • Location information

And so on. Lots of stuff you have to give them before they’ll let you use their service. And they use it for a pretty broad range of things, also explained (although not, in my view, very clearly) in their privacy policy.

None of this is a criticism of Google. I think this is rather great, actually. I like that the deal is being made clear – at least to people who aren’t logged into Google, and that they can make their own choice about whether to click the “accept” button.

But it does highlight the issue. Permission matters – and not just in copyright.

It highlights another issue too which I alluded to above. It’s all very well asking me to opt in as a condition of using Google’s services, and all very well for me to decide not to and live without them if I want.

But what about when I’m NOT using Google’s services? I’m using someone else’s and it just so happens that THEY have decided to use Google to help?

Look at this email I got today from a company called Brewbot who make a cool device I will probably never own which brews beer for lazy people like me.

 

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I’m a sucker for a chance to win some swag, so I clicked the link to their survey and this is what I got…

 

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It’s a Google doc and it doesn’t work for me. It does if I use another browser, or an incognito window, but in my normal browser I get this inability to connect to Google. Whether or not this is related to the privacy policy issue I don’t know but there does seem to be a pattern here.

So Brewbot, it turns out, seem to have been unwittingly recruited as a data gatherer for Google. Before I can offer my survey results to Brewbot I have to agree to silently give Google the long list of stuff I described above.

Or, to look at it another way, companies using Google to host their surveys, documents, videos, whatever, are actually only able to offer those things to opted-in Google users. Not to everyone. As long as Google remains ubiquitous perhaps the distinction isn’t obvious, but who is aware of it?

This seems dysfunctional to me, and unfair. It seems a high price to pay, for users and for companies who are using Google’s services (and may well be paying for them) for reasons that are nothing to do with Google’s core consumer services.

At its heart it highlights the conundrum which is central to so many of the issues which copyright people – as well as the internet at large – need to sort out. This silent, unknowing, pervasive process which takes the place of permission and transparency is not, in the end, serving the broad interests of the users of the internet.

I’m unusual in not having accepted Google’s terms, which means I am also unusual in seeing these messages which make what’s going on slightly more explicit to me.

But isn’t this an interesting perspective from which to consider the question of price and value on the internet. While money often doesn’t change hands, rendering lots of internet services nominally “free”, lots of other valuable stuff is still given in return – and if it’s not, the service is withdrawn.

At the heart of it all, value is being exchanged for permission. The same thing that happens in the copyright world. It needs to be done better.

What do you use, in the end? End (re)users and the evolution of licensing

End users are the focus of everyone in the creative industries. But they’re strangely neglected. It’s time to think of them as active, not passive, customers.

The customer is always, um, licenced

End users are strange beasts, in the copyright world. They’re the ultimate goal of all creative endeavours… what’s the point of creating something nobody wants to see?

But in terms of their interaction with the actual nuts-and-bolts of how copyright works they’re treated almost as an afterthought. They’re the passive recipients of content and they are expected to stay passive.

So while the business of passing copyright around, licensing and trading, is a very active, involved and evolved one for everyone else in the chain – the creators, the publishers, the distributors and others – it’s curiously ossified for End Users.

“Not to be shown on oil rigs”, the warning sternly says at the start of a DVD. That’s a licence, of sorts, but not one you get much say in. “Not to be stored in a retrieval system” say books before you get to the actual story.

You’re not allowed to do anything other than what they say, you’re positively discouraged from doing so. I have no idea what is involved in legally showing a DVD on an oil rig, and the warning notice doesn’t explain, but I’m sure it’s not simple and not cheap.

Previously passive

There are good reasons for this. Principal among them the fact that in the past end users only wanted to consume things. They were naturally passive creatures in a disconnected world. Which is good, because managing the complexity of everyone needing a slightly different licence was way too expensive for the mass market. It all came together in what management consultants would call a virtuous circle, passive consumption leading to a mass market for cheap products, leading to a huge diversity of products and generally falling prices.

But it has changed now. End users are no longer passive. They do things other than just sit and stare. They tweet, they blog, they email, they chat, they link, they post, they comment, they mash-up. They include the content they consume in the output of their online life.

The era of End Re-users

They – we – are not End Users any more. We’re End Re-users.

As far as I know, the term “End Re-user” was coined in the News Corporation submission to the Hargreaves Review of Intellectual Property in the UK (I had a hand in drafting this submission).

I think it’s a useful concept, because it encapsulates both the challenge and the opportunity for the future.

The challenge: End Re-users are often accidental infringers

The challenge is the obvious one. If users want to do all sorts of “use” of content, they’re no longer passive and they’re straying outside the boundaries of the licences they have been given. That makes them infringers. And that fact alone gives rise to a range of proposals from legislators, anti-copyright activists and an assortment of thinly disguised vested interests to change the law. It can’t, many say, be a good law if it throws so many people into breach of it.

Considering this from the point of view of the law is the wrong perspective, though. The law gives end users virtually no rights at all. The thing which allows a user to do something with a piece of content is the licence from the content owner, not the law. The problem isn’t with the law, it’s with the paperwork.

The opportunity: more use of content creates a new market

Which leads to the opportunity. Very few businesses have become really successful by refusing to give their customers what they want. This emergent generation of End Re-users should represent a huge new business goldmine.

All these people who want to user material in different ways are potentially more valuable customers. Every time they want to do something beyond just sit and consume, they’re creating value.

They might not be worth much individually, but there are millions of them out there. And as long as you can collect it simply, even a few pence can be profitable. Just ask The Sun.

The practical barrier to treating them as an opportunity, the complexity of managing all those licences and payments, ought to be eliminated by technology.

A quick word about cost vs value

Some people argue that technology, because it drives the cost of copying content to zero, will inevitably lead to content being valued at zero.

I would make a different argument. In freeing ourselves from the limitations of the physical supply chain for creative products we have also freed ourselves from the mass market constraint that every customer has to want, and get, the same thing.

The real liberation of the move from atoms to bits isn’t the end of cost and price, but the end of the need for one size – and one price – to fit all. It ought to be feasible to cater for the blogger, the passive consumer and the large scale commercial publisher individually and cheaply.

The advent  of the zero-cost copy frees the creative industries, and their customers. from the straitjacket of mass production. Technology creates the opportunity for fabulous growth and innovation, with everyone’s needs met by the right content and a fair price for them.

Meanwhile, back in the real world…

All of which sounds wonderful, but it doesn’t bear much resemblance to the real world of the internet today. If this huge opportunity is lurking in the shadows, why hasn’t it come out into the open yet?

Surprisingly, the answer is only partly that the technology doesn’t yet exist. Most of it does, and what’s left really needs a market to evolve around, at which point it will begin a symbiotic flourishing along with the market.

Perhaps the same could be said of many of the existing media businesses. Incumbent players are rarely the best innovators – they need to be shown the way forward, usually by younger, nimbler competitors snapping at their heels.

But those new entrants don’t really exist, leaving the existing media companies and their still substantial existing businesses with the classic innovators’ dilemma. The absence of these new entrants is another signal that all is not as it should be.

So things grind on, slowly

So evolution online, when it comes to content businesses, has moved at a glacial pace in the last ten years.

New entrants restrict themselves, by and large, to gaming the advertising market with low content costs and clever search optimisation.

Older players, with their high investment in content, struggle to find success to match their huge online audiences.

The underlying issues

In my view the enemies of change in this area are the vested interests of the dominant players on the internet and to some extent the law.

Many companies which make fortunes from the internet depend on the chaotic and un-evolved market of today remaining.

What is needed is technology to manage billions of complex licences, at low cost, on behalf of millions of creators and hundreds of millions of consumers.

The potential of technology to manage these relationships remains unfulfilled not least because it would damage the business of Google (whose aggressive lobbying against the Automated Content Access Protocol betrays their real fears in this area). And without Google’s support, or at least compliance, anything which affects the web broadly has little chance of getting established.

Anyone making billions of dollars a year from the ability to treat the whole internet as a free resource understandably wants to maintain the status quo. As the ultimate re-user they would have lots to lose, and at first glance little to gain, in a world where their use, along with everyone else’s, could be properly licenced.

The law, often, doesn’t help

The law, in the form of various internetfriendly statutes enacted to protect the then nascent ISPs and search engines, to a great extent enshrines and protects this status quo. So it shares the blame.

While copyright law may remain largely intact, the law creates perverse incentives which, my providing immunity for ISP and service providers, effectively protect the interests of infringers. As long as the law makes infringing use of content free and virtually risk-free, it will be hard for competitive new markets to emerge. So the law preserves and protects the new status quo.

But the status quo, while serving a narrow range of limited interests well, serves everyone else badly. End Re-users, the obvious big opportunity online, are un-served by antiquated processes and approaches to licensing. A range of entrepreneurs who would like to be able to use content more easily in their businesses, find it difficult and frustrating to do so. And content owners are wilting in the harsh reality of a digital environment in which audiences generate pitiful returns.

The End Re-user is always an opportunity

So I think we should all keep the End Re-user in mind when we consider the online landscape. Their interests are paramount not just to them, because they want to be able to do what they want with the content they like, but to everyone in the digital ecosystem because well-served end-users will be the generators and beneficiaries of much of the unfulfilled potential of the internet.

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