Category Media

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Were newspapers wrong about online? Kinda…

Oct 19, 16 10:32 PM

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.

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Tis but a flesh wound

Feb 18, 16 4:51 PM

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.

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A turning point: is professional creativity under threat?

Feb 8, 13 12:06 PM

There has been a lot going on, and I have been keeping my thoughts to myself. For the most part, it’s a bit depressing.

The UK government (PDF link) is still seeking to change the law so that new exceptions (aka appropriations) to copyright can be introduced whimsically by politicians without bothering to trouble parliament for a discussion first.

The wrong-headedness of this is obvious to anyone who understands how copyright works, and thank goodness it is being challenged legally by Thomson Reuters and others.

Then the French threw in the towel in their Google challenge. Having started the fight, perhaps unwisely, on a point of principle, they have given it up, utterly feebly, thanks to Google waving a cheque around. Not even a big cheque (about 14 hours of revenue for Google, I reckon – and given that they said the original proposal was a “threat to their very existence” that’s a bargain by anyone’s reckoning).

They have ended up in a situation even worse than the status quo they were challenging. The money won’t last long but the legacy of a crippled business model will continue indefinitely. They would have been much better off simply withdrawing their content.

Now, extraordinarily, the European Court of Human Rights has ruled that copyright itself is illegal. Well, sort of. They seem to be saying that in many cases it is trumped by human rights law. A sort of general exception to copyright, bigger and broader than any dreamed up by even the most moronic and wilful governments.

It all seems to be getting a bit out of hand. What started as a ridiculous demonisation of copyright by people with a vested interest in being able to use other people’s stuff for free (and, in the process, grow to be among the biggest and richest companies in the world) has gone through the phase of being taken seriously by craven, populist and dim-witted politicians into a sort of orthodoxy which pervades legislative and judicial thinkers.

It’s important for everyone to step back, when they’re thinking about copyright, and consider what it’s really all about. It’s not about media corporations, monopolies, ripping off consumers, interfering with freedom of expression or otherwise damaging the cultural or economic interests of society and individuals.

At its heart, it’s about enabling people with the talent, energy and motivation to make a living from being creative.

If their work – your work maybe – effectively becomes common property as soon as its created, it’s going to make professional creativity – already in decline in many sectors – an even more perilous and penniless career choice.

We’re not there yet. Creative work isn’t quite common property. But the ability to control it, commercially and otherwise, is being chipped away at.

The UK government wants to be able to give people a right to use your stuff, whether you like it or not, whenever they feel like it.

The ECHR says that sharing your work can sometimes amount to a human right, more important than any rights you might have.

The French government, having actually stood up for its creative sector and pointed the finger at the legality and fairness of what Google do, threw their concerns aside in return for a trivial sum of money and a fleeting moment of ego-puffery for their president.

It’s not clear where the counterbalancing opportunity is going to come from. Creativity in all its forms has been one of the most revered and important facets of our society, and its most accomplished practitioners have earned respect and wealth in proportion to their achievements, and it has spawned a huge cultural and economic sector driven by the simple connection of popular success to reward.

Thanks to governments, courts and huge industrial opponents, the reward is going to be harder to come by in the future. What impact will that have on the creativity?

 

(updated 10th February 2013)

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Some “facts” from the myth-busting Europeans

Oct 26, 12 11:38 AM

Here’s an odd press release put out by the European Commission. It contains what it says are ten “facts” about the media and content industries.

Strangely, the release doesn’t back up any of these “facts” with “evidence”, “research” or “sources” (other than a tiny link to this page which in turn puffs a report which says it aims to “offer a reliable set of data and analysis” about the media and content industries).

The recipent of the press release is presumably required to read the 167 page report for themselves in order to understand the basis for the “facts” it contains. Or, more likely, not bother and just accept the “facts” at face value.

That doesn’t mean they’re wrong, although one or two of them seem odd to me based on my own knowledge and experience.

Some seem depressingly plausible (“fact” 3: 70% of music sales are digital, but only 35% of revenues, source unexplained; “fact” 8: power has shifted from production of content to distribution) and should worry anyone who cares about creativity.

Others seem completely vague and strange (“face” 6: In most cases [the decline of the printed press] started earlier due to changing patterns of consumption and may also be the result of a more competitive market with reduced profit margins and decreasing prices) and offer no actual facts to even attempt to verify.

This seems strange coming from the European Commission, an institution so sensitive about inaccurate or mis-interpreted “facts” about itself and its behaviour that its UK office has a prominent “Mythbusters” section on its website to try to rebut such stuff.

I wonder why they thought these “facts” would be helpful and what they are supposed to achieve. Heaven forfend that they might result in vague assertions being presented as actual “facts” as a consequence of having the Comission’s good name attached to them.

Perhaps they might care to update their website with sources of the data they have used to compile their “facts” and remove any which are, in reality, just opinions or assertions.

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