Category Journalism

Blocking the blockers is a waste of a good crisis

Back when my day job involved worrying about such things, I didn’t much like the online advertising market. As a publisher, it’s quite hard to love.

Advertising works for publishers when they can charge a premium price for their ads, establish and defend a meaningful market share, turn a larger audience into higher yields and more revenue. None of these things are easy, or even possible, for most publishers in the online advertising market.

That’s why huge sites with massive audiences (by publishing standards anyway) are unable to be profitable, and it’s why cutting costs is better than investing in product.

Enter the ad-blocker

Recently, ad blocking has entered the mainstream thanks to players like Apple and Three, and everyone is up in arms. The publishing industry is crying foul, demanding that something be done, predicting dire consequences if they are cut off from their income source.

Now I’m not defending or celebrating ad-blocking. Some of it does indeed, as John Whittingdale said, seem like a protection racket.

But from the point of view of a publisher shouldn’t it be more a call-to-action than a call-to-whinge?

The truth is that the advertising income stream has never been enough to sustain them, and the situation has got worse not better over time. Ad blocking potentially accelerates but doesn’t fundamentally change the ultimate consequence of this.

So now, surely, is the time to start to focus industry thinking not on how to preserve the starvation regimen offered by online advertising, but how move past it? To tap into the much richer, much bigger, much fairer and more sustainable opportunities offered by the content itself rather than the annoying, uncontrollable and, as more and more users now know, block-able ads around the edges of it.

Can’t pay, won’t pay

Ah, I can hear the chorus of groans already.

“Consumers won’t pay” it rumbles.

“You can’t compete with free, subscriptions don’t work, paywalls go against the grain of the internet, micro-payments are impossible”.

It’s as if people actually take comfort from defeatist aphorisms, as an alternative to actually trying to change anything. It certainly makes life easier: if everybody expects the worst then it’s hard to disappoint them.

But it’s nonsense, and it’s feeble, and it leaves one the cultural and creative industries, together many times bigger than the advertising market, marooned by their own despair.

Perhaps one of the reasons people won’t pay, is because they can’t pay.

I don’t mean they can’t afford it. I mean there’s no simple way of handing over money. They literally can’t pay. That’s at least partly why they won’t.

Obviously, even if they could, they would have to want to – the challenge would be to make products good enough and to price them right.

That’s a creative challenge: know your user, make something that strongly appeals to them, charge a price they’re willing to pay without much thought. The same challenge which defines, effectively, the whole of the creative sector whether making films, music, books, newspapers, photography, games or anything else.

Can every page pay?

OK stop for a moment before you start groaning. Think about it. Don’t get defeated by the frustration of the years of trying to make micro-payments and subscriptions work. Look past that.

Imagine a world where every time your creative product or its content gets consumed you benefit. On terms which you have set. Imagine if every page could pay. What would it do to products, to revenues, to relationships with users?

When I ask content producers this question, most of them get quite excited. They see a world in which their focus becomes clearer. Pleasing their readers, viewers, listeners and players rather than the robots which deliver people to ad-serving systems. More consumption. More revenue. More investment in product leading to more popularity. What management consultants call a virtuous circle.

“Be popular” is the goal. The more popular, the more successful. Every page pays, predictably. Investing in creativity and creative products becomes rational again, innovating to better serve your audience becomes a key imperative, beating your competition drives the urgent need to keep evolving.

But what about the masters in the middle?

Of course there are lots of intermediaries on the internet, sitting in various places in between the content owners and the users. Search engines, ISPs, ad networks, mobile companies, aggregators, countless others.

Very often they’re the gatekeepers as well. To get to users you have to go through them, and on the way through they limit the rewards you can hope for.

But they’re also the people who can provide an answer to the payment conundrum. They are retailers. Many of them are already collecting money from your users for various things.

Just as newspaper publishers never tried to collect 25p individually from every person buying their papers, but instead got newsagents to do it in return for a share of the money, the solution to the payment problem might lie in getting other people to do it for you. As long as what’s good for them is also good for you, and vice versa, there are lots of reasons to work together.

Aligning incentives

The key, as the creative sector has known for centuries, is to have control over the terms under which you offer your work. The law has given creators this control ever since the advent of copyright.

Making this possible requires some new technical plumbing, to allow copyright to work as efficiently as advertising and websites themselves.

After that it’s down to the innovators, the creative companies and anyone who doesn’t want to rely on a failing ad-driven business model, to come up with a much more rapid evolution and new ways to please consumers and share rewards.

Since what we’re talking about her is supplementing ad revenues, not replacing them this doesn’t need to involve huge controversy. For the creative industries to win, the ad industry doesn’t have to lose (they’re doing that on their own anyway). New opportunity is something everyone can move towards

Never waste a good crisis

What’s needed is a spark to trigger all this movement. I think ad-blocking might be it. Something to move away from, a failing model for ad-based revenues. Projects like The Copyright Hub and the Linked Content Coalition are creating the basis for building a new value layer for the internet. This will lead to the emergence of new players who will make it easier for everyone to find new sources of revenue from users and others.

Who will these new players be?

Watch this space.

 

 

Tis but a flesh wound

Much has been written in the last week or two about the death of newspapers. The announcement that the Independent will cease its print edition has prompted this hand-wringing and outpouring. The Independent’s hobbyist owner, Evgeny Lebedev, has offered up his own wisdom about the situation. In an interview with the Guardian he claims his rivals are “in denial” about print.

“I genuinely believe that the future is digital and that the industry is in denial…” he says, positioning himself as the pioneering leader of an otherwise moribund pack.

I chuckled when I read this, in the patronising way only a long-in-the-tooth, seen-it-all-before old dinosaur can. Evgeny is not to be ignored, and he has done some interesting and innovative things, but he could easily be accused of a certain amount of denial himself.

While print might be a rapidly declining market in both circulation and advertising terms, it remains the case that for certain newspapers print is still profitable.

Not, I agree, for everyone, and if you were the proprietor of a newspaper selling around 50,000 copies a day in a national newspaper market which manages to sell nearly 7m copies daily, carrying on would have started to seem irrational quite some time ago. Being in last place, with under 1%, isn’t exactly a glorious place to be in any market. In a declining market, less so. In a declining market with high overheads and reducing yields, less still.

So fine, Evgeny, shut down your print titles. Can’t imagine why you didn’t do it years ago (unless, of course, the reason why a mysteriously wealthy Russian former spy buys a failing British newspaper isn’t just because he’s interested in the bottom line).

But Evgeny’s digital dream is almost comical. For the Independent to have a future, digital or otherwise, it has to have an income. Ideally, unless it plans to rely on charity, it should have more income than expenditure. Which as countless newspapers have found, is a bit of a challenge in the digital domain.

It’s not like the Independent is the first to try this, but the precedents are not good. Going “digital only” is a usually prelude to going bust or carrying on in name only, trying to attract enough traffic to bring in a dribble of cash. That’s because “digital only” tends to mean, other than in niche areas, ad-funded.

Unfortunately ad-funded means a rather unreliable revenue stream, since increased traffic only converts a fraction of the increase into meaningful ad revenue. It also means a rather uncertain future because the online ad marketplace is one largely out of the control of any site which is seeking ad revenues. If you’re running to stand still, you’re doing rather well.

So success as an online newspaper is elusive. As so many have shown, it’s relatively easy to drive audiences to numbers which dwarf print circulations. What’s much harder is to convert those audiences into profitable or even meaningful revenue streams. So the usual approach is to try to cut costs, to acquire audience for the minimum possible investment, or keep spending and produce a fantastic product sustained by the hope that popularity will eventually deliver meaningful revenues. Just ask the Guardian and the Daily Mail how well that works out in practice.

Which means Evgeny’s high-minded promises to retain the services of high priced journalists and foreign bureaux are unlikely to survive the brutal reality of the digital only world for long. If he really believes that this transition, and the promised re-investment of freed-up capital, will lead to growth then he’s either talking about growing something other than profit, or he’s a fantasist.

The truth is that until the internet grows up enough to deliver meaningful, reliable revenue from online audiences, this sort of transition will continue to end in failure. Giving up print is simply giving up. For the Independent, which has struggled to commercially viable for much of its existence, it might be finally succumbing to the inevitable

It’s a very sad day because for all its failure the Independent has been a great newspaper, editorially proud and brave and with lots to admire. At least that’s what plenty of people I respect say. Personally I never read it much. Which I think probably explains the problem – I wasn’t alone.

Not enough people wanted to read the Independent. That’s why it failed. When the digital life support machine is finally turned off it will be the end of a painfully prolonged death. If Evgeny wants to invest in anything, in the meantime, he should try to make it something which might actually change the online marketplace into one where it’s possible for newspapers and other content businesses to thrive. That’s what I have been working on.

But that requires a strategic vision which extends beyond just brave and unrealistic rhetoric.

Farewell, the Independent. You were great. Rest in peace whenever you are finally allowed to.

Content farms: slave labour or green shoots of hope?

Several people have drawn my attention to this article on GigaOm talking about content farms as a democratising force for journalism.

Content farms have been criticised for turning content into a commodity, where quantity and optimisation matter more than quality. I think this is, to quite a large extent, right. Anyone can churn out articles and see them appear in various places as long as they’re prepared to write about whatever the algorithms say they should and accept very low remuneration.

The article highlights an interesting flip-side to this though. Content farms can lead to as what the article rather grandly calls “the democatisation” of journalism. Where talent shines through and is spotted, the content farms can act as a sort of talent pool.

To me this is what the media business has always done. In various ways it has found and promoted those with talent and rejected those without it. It has done so imperfectly and unfairly in many cases, but it’s obvious that the people who float to the top of the old-media ecosystem are there for a reason. It is an effective talent-filter.

However getting your foot on the first rung of the ladder is very very hard and many people give up before they have even done it. One hope we might all have for the internet is that it makes that first rung easier to reach. Another hope, so far thwarted, is that the rewards for reaching the very highest levels are greater too.

Surely that matters most. Without greater opportunity, which can support more professional creators. where will that first rung lead to? Where will Matt Miller, highlighted in the article as having been plucked from the ranks of zero experience would-be sports writers to a paid staff job, go next?

It would be great if the answer was that he could reasonably expect a long and lucrative career in online journalism which lasts as long as his talent and enthusiasm. Even better if the same could be said for thousands of other would-be writers. Better yet if a healthy and competitive marketplace made them valued superstars by their employers.

If that were true then the undoubted and hugely valuable potential the internet has to reduce the lowest rung of the ladder and allow talent to shine would be all the more exciting.

As it is, though, it’s hard to get excited about the “democratisation” of journalism. The article in GigaOm, in defending content farms, makes a good point about creating opportunity. But at the moment those opportunities are few and far between, and if democratising journalism means displacing overpaid old-guard journalists with newer, cheaper, version (however talented) it’s not a very compelling vision of the future.

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