Monday, August 23, 2010
Wednesday, June 9, 2010
Is the iPad the Savior of publishing?
I bought my 3G iPad about two weeks ago and have been playing with it every day since. That's what you do with it. Play with it. It's a fun toy.
But is it a revolutionary way for the publishing business to survive? Many pundits seem to think the answer to that question depends on how much and whether readers will pay for content on the device--but they are asking the wrong question. The right question is about advertising.
Most of what I've read so far is that the iPad will revolutionize the publishing world because it will change the way readers interact with "magazines." See "Magazines look to iPad for new life." There is this hope on the part of traditional magazine publishers, that millions of readers will pay $5 for one iPad edition of the magazine. But why would readers do that when they can subscribe to the print edition for $14.99 for a year? Apparently, over 72,000 readers bought the Wired iPad app but my guess is that much of that is because of the novelty of it, and readers won't regularly pay that kind of price for a single issue.
So the early reader pricing is bound to change. I just don't think we are going to see streams of new revenue from readers who will pay top dollar for an iPad app. Just check out the comments from readers who bought the Wired and Popular Science iPad apps--the biggest single complaint seems to be the price. Unless publications start holding back content on the web, and only releasing it on the iPad app, why should readers pay a lot more when they can jump to the web site on the iPad anyway?
So if new user generated circulation revenue from the iPad is not the savior for the magazine industry, what is?
The real business question is all about advertising revenues. Will newspaper and magazine iPad editions generate new and significant ad dollars to publishers? In order for that to happen, iPad ad pricing will have to be much more lucrative than online advertising, where the CPM, the cost per thousand, is notoriously low because of the vast and almost unlimited inventory of ad slots on the web. In short, will advertisers only pay the online modest CPM or will they pay something closer to the print CPM (which is where most of a magazine's profit resides)?
The early signs are positive. USA Today, for one, is charging much higher rates for advertising on its iPad app than for its online web site. "Jason Fulmines, director of products for USA Today owner Gannett, said the publication charges Mariott about $50 for every thousand ad impressions, while the going rate on the newspaper's website is less than $10." That's still not as high as the print CPM, which runs over $100, but it's a major step in the right direction, from the perspective of publishers. The theory seems to be that iPad users will spend more time with the publication, pay more attention to the advertisement, and that the advertiser has the potential to be more creative with its presentation. There is also the hope that the inventory of ad slots will be more limited, but as more and more publishers develop iPad apps, I'm not sure why that would remain true. I'm not overly optimistic but willing to wait and see.
In order for the iPad to be the financial panacea publishing execs yearn for, advertising pricing and reader interaction with iPad based advertising will have to grow, improve and differentiate itself from web advertising. That's the key, not how much readers will pay for content. That's where the potential pot of gold lies.
But is it a revolutionary way for the publishing business to survive? Many pundits seem to think the answer to that question depends on how much and whether readers will pay for content on the device--but they are asking the wrong question. The right question is about advertising.
Most of what I've read so far is that the iPad will revolutionize the publishing world because it will change the way readers interact with "magazines." See "Magazines look to iPad for new life." There is this hope on the part of traditional magazine publishers, that millions of readers will pay $5 for one iPad edition of the magazine. But why would readers do that when they can subscribe to the print edition for $14.99 for a year? Apparently, over 72,000 readers bought the Wired iPad app but my guess is that much of that is because of the novelty of it, and readers won't regularly pay that kind of price for a single issue.
So the early reader pricing is bound to change. I just don't think we are going to see streams of new revenue from readers who will pay top dollar for an iPad app. Just check out the comments from readers who bought the Wired and Popular Science iPad apps--the biggest single complaint seems to be the price. Unless publications start holding back content on the web, and only releasing it on the iPad app, why should readers pay a lot more when they can jump to the web site on the iPad anyway?
So if new user generated circulation revenue from the iPad is not the savior for the magazine industry, what is?
The real business question is all about advertising revenues. Will newspaper and magazine iPad editions generate new and significant ad dollars to publishers? In order for that to happen, iPad ad pricing will have to be much more lucrative than online advertising, where the CPM, the cost per thousand, is notoriously low because of the vast and almost unlimited inventory of ad slots on the web. In short, will advertisers only pay the online modest CPM or will they pay something closer to the print CPM (which is where most of a magazine's profit resides)?
The early signs are positive. USA Today, for one, is charging much higher rates for advertising on its iPad app than for its online web site. "Jason Fulmines, director of products for USA Today owner Gannett, said the publication charges Mariott about $50 for every thousand ad impressions, while the going rate on the newspaper's website is less than $10." That's still not as high as the print CPM, which runs over $100, but it's a major step in the right direction, from the perspective of publishers. The theory seems to be that iPad users will spend more time with the publication, pay more attention to the advertisement, and that the advertiser has the potential to be more creative with its presentation. There is also the hope that the inventory of ad slots will be more limited, but as more and more publishers develop iPad apps, I'm not sure why that would remain true. I'm not overly optimistic but willing to wait and see.
In order for the iPad to be the financial panacea publishing execs yearn for, advertising pricing and reader interaction with iPad based advertising will have to grow, improve and differentiate itself from web advertising. That's the key, not how much readers will pay for content. That's where the potential pot of gold lies.
Thursday, June 3, 2010
Thursday, May 27, 2010
Boot Camp for Journalism Entrepreneurs
Last week, I was an instructor at the News Entrepreneur Boot Camp 2010 at USC. Sponsored by the Knight Digital Media Center, USC Greif Center for Entrepreneurial Studies, the Annenberg Center for Communication Leadership and Public Policy(CCLP), and the Online Journalism Review, the camp brought together about 20 aspiring entrepreneurs, almost all former journalists, who are trying to create new news/information enterprises in the digital world.
If you'd like to watch a video of my session, click here, or take a look at my power point slides.
As part of the preparation for the lecture, my research associate at CCLP, Maria Vazquez, developed an excellent resource guide for anyone interested in starting a new community news web site, or for anyone who is interested in learning more about the growing phenomenon. It includes links for legal and financial resources as well as case studies and teaching materials.
Tom Davidson, Vice President of Growth Spur, a former journalist who has successfully transitioned to the "evil" business side, had some excellent insights. Here is Growth Spur's advice on how to budget for a news start-up.
It's still very early in the learning curve. Lisa Williams, of Placebloogger, another speaker at the boot camp, says she has links to more than 7000 community news sites on the web. We don't yet know if these start-ups will survive, in the short term or the long term. But if the "students" at the boot camp were any indication, there is a huge amount of talent and enthusiasm out there trying to make it work.
The clear weakness on the part of most of these aspiring entrepreneurs is business skills. But they've got a passion, and they can learn the business skills, by actually doing it, and making mistakes--paying too much or not paying enough, thinking too short term, or not long term enough. The trick is just not to make too many serious mistakes early on that can derail the business.
As I told the campers, in this world, content is not king. Cash is king. The old rules don't apply any more. We're still learning how to monetize news and information in new and different and sustainable ways. (See Emerging Trends among news start-ups.) But something is gonna work. It's exciting to see and scary to do.
If you'd like to watch a video of my session, click here, or take a look at my power point slides.
As part of the preparation for the lecture, my research associate at CCLP, Maria Vazquez, developed an excellent resource guide for anyone interested in starting a new community news web site, or for anyone who is interested in learning more about the growing phenomenon. It includes links for legal and financial resources as well as case studies and teaching materials.
Tom Davidson, Vice President of Growth Spur, a former journalist who has successfully transitioned to the "evil" business side, had some excellent insights. Here is Growth Spur's advice on how to budget for a news start-up.
It's still very early in the learning curve. Lisa Williams, of Placebloogger, another speaker at the boot camp, says she has links to more than 7000 community news sites on the web. We don't yet know if these start-ups will survive, in the short term or the long term. But if the "students" at the boot camp were any indication, there is a huge amount of talent and enthusiasm out there trying to make it work.
The clear weakness on the part of most of these aspiring entrepreneurs is business skills. But they've got a passion, and they can learn the business skills, by actually doing it, and making mistakes--paying too much or not paying enough, thinking too short term, or not long term enough. The trick is just not to make too many serious mistakes early on that can derail the business.
As I told the campers, in this world, content is not king. Cash is king. The old rules don't apply any more. We're still learning how to monetize news and information in new and different and sustainable ways. (See Emerging Trends among news start-ups.) But something is gonna work. It's exciting to see and scary to do.
Community News Case Studies Wanted
I recently joined the USC Annenberg Center on Communication Leadership and Policy as "executive in residence." Along with my research associate Maria Vazquez, we are looking for examples of community news sites that have made it past the start up phase and are sustainable enterprises. We'd like to create multi media case studies to teach others the lessons learned. If you know of any good examples, please let us know.
Saturday, December 12, 2009
Online Community News: Can It Work?
The online community news space is heating up. But until someone figures out an effective sales strategy, it won't catch fire.
There are several startups trying to figure out how to make hyperlocal news on the web profitable.
--There is Growthspur, which was launched with the slogan, "You Cover Your Community—We Help You Make a Business Out of It" and provides "tools, training, and networks" to local community news sites.
--There is Totalpaas, which is marketing its technology as a platform for use by community web sites.
--CNN just invested in a startup called Outside.In, which feeds neighborhood information to news sites.
-- Last summer, MSNBC acquired Everyblock, which feeds data like crime statistics to web sites.
--AOL owns the local news network, Patch.
Two weeks ago, I attended a conference at USC "Entrepreneurship and the Community Web" . In attendance were folks from more than a dozen community web sites across California. They ranged from the parent company of the San Diego News Network, which has raised $2 million to launch 50 networked local nets sites across the country, to a one man operation called Coastsider, where Barry Parr covers the community around Half Moon Bay, California, sells advertising, and even invites readers over for his annual holiday party.
It was exciting to see so much hands on experimentation and innovation going on.
The market is ripe, or so everyone seems to believe. There are certainly plenty of former unemployed newspaper journalists looking to become entrepreneurs, lots of online readers interested in news about their neighbors and their community, and loads and loads of local merchants who want to drive new customers to their outlets.
But is there a business model that works?
Can a local web site be profitable driven solely by traditional advertising dollars? I don't think so. Community Web publishers will have to be much more creative on the revenue side.
Most of the community news sites represented at the USC conference are barely breaking even, many are losing money.
Jonathan Weber, the former editor of defunct B2B magazine, The Industry Standard, and keynote speaker at the USC conference, was one of the early pioneers in local online news. He launched his New West site, covering portions of the Rocky Mountain states back in 2005. After four years, the company is now at breakeven. He drives significant revenue and profit from the event side of the business, sponsoring about four conferences a year. The events include continuing education credits in certain fields like real estate. But, local advertising, he said, is a "tough, tough game... We haven't cracked that yet."
Weber's experience in the B2B world taught him that revenue can come in all shapes and sizes, not only advertising: conferences, trade shows, webinars, rental of email lists, custom publishing, Continuing Education credits--these are all things that the B2B world routinely includes in its panoply of services, but are strangely absent or low priority in the B2C world of newspapers and magazines.
There are tens of billions of dollars being spent by local retailers on "traditional" products: direct mail, newspaper inserts, bus bench advertising, hand-delivered coupons, yellow pages, and specialized print publications. All of this money is up for grabs, and everyone is going after it--Yahoo, Google, restaurant.com, online coupon companies like savings.com and bogopod.com, or user review sites like Yelp. (Just today WSJ's All Things Digital reported that Google was in talks to purchase Yelp for more than $500 million.)
No one has quite figured out how to move all that revenue from print products to digital products. Keyword, cost-per-click advertising is certainly taking a big hunk of it already, and that has the advantage of being a "self-serve" advertising buy, with vendors bidding for spots online. But for the rest of it to move to community news sites, or restaurant review sites, or online couponing plays, there is one crucial element: SALES.
It's all about sales. Sales, Sales, Sales.
With small and medium size businesses, the owner is often the marketing director, the sales manager, and the HR specialist all in one. For example, a restaurant owner probably works most nights in the restaurant, and can't afford the time to do a serious analysis of the most cost effective marketing efforts. So that person buys an ad in the local throwaway, or a newspaper or a coupon magazine. If it works--whatever that means--they stay with it for awhile. The critical ingredient in all this is the sales person representing the media outlet. The sales person becomes the marketing consultant, the adviser who helps the business person sort through the options.
All those print outlets use sales people,usually both "inside" and "outside" representatives. The sales cost is high (as a percentage) but the price of the advertising is high also so it works. On the web, the price of the advertising is low, and it's difficult to make the sales equation work. That's the real challenge all these community news sites will face--not gathering local news, not collecting crime statistics, not finding good writers to contribute--but making sure the sales operation runs well and is cost efficient.
So here are a few tips from my years of overseeing advertising sales organizations:
--There is high turnover of sales people. It's a difficult job, and the good ones often leave for greener pastures;
--Relationships are important. Even with the enhanced measurability of response from the Internet, you are still selling an intangible, and the buyer needs help understanding what he's getting;
--Use the telephone. A lot of selling can get done on the phone. You don't have to always meet in person.
--The only way to sell a lot is to sell a lot. You've got to make a lot of calls and be prepared for a lot of rejections.
--Advertiser churn is a given. Advertisers stop spending for a while, begin again, change advertising vehicles, try something new, and come back. That's why relationships are so important.
--There is a lot more to sell than advertising. You are educating the advertiser about how advertising works, the most effective way to market, the right pitch, and even the need for marketing in the first place.
Great sales teams and creative ways for local merchants to spend money--not just relying on traditional banner advertising--will be the key to success.
There are several startups trying to figure out how to make hyperlocal news on the web profitable.
--There is Growthspur, which was launched with the slogan, "You Cover Your Community—We Help You Make a Business Out of It" and provides "tools, training, and networks" to local community news sites.
--There is Totalpaas, which is marketing its technology as a platform for use by community web sites.
--CNN just invested in a startup called Outside.In, which feeds neighborhood information to news sites.
-- Last summer, MSNBC acquired Everyblock, which feeds data like crime statistics to web sites.
--AOL owns the local news network, Patch.
Two weeks ago, I attended a conference at USC "Entrepreneurship and the Community Web" . In attendance were folks from more than a dozen community web sites across California. They ranged from the parent company of the San Diego News Network, which has raised $2 million to launch 50 networked local nets sites across the country, to a one man operation called Coastsider, where Barry Parr covers the community around Half Moon Bay, California, sells advertising, and even invites readers over for his annual holiday party.
It was exciting to see so much hands on experimentation and innovation going on.
The market is ripe, or so everyone seems to believe. There are certainly plenty of former unemployed newspaper journalists looking to become entrepreneurs, lots of online readers interested in news about their neighbors and their community, and loads and loads of local merchants who want to drive new customers to their outlets.
But is there a business model that works?
Can a local web site be profitable driven solely by traditional advertising dollars? I don't think so. Community Web publishers will have to be much more creative on the revenue side.
Most of the community news sites represented at the USC conference are barely breaking even, many are losing money.
Jonathan Weber, the former editor of defunct B2B magazine, The Industry Standard, and keynote speaker at the USC conference, was one of the early pioneers in local online news. He launched his New West site, covering portions of the Rocky Mountain states back in 2005. After four years, the company is now at breakeven. He drives significant revenue and profit from the event side of the business, sponsoring about four conferences a year. The events include continuing education credits in certain fields like real estate. But, local advertising, he said, is a "tough, tough game... We haven't cracked that yet."
Weber's experience in the B2B world taught him that revenue can come in all shapes and sizes, not only advertising: conferences, trade shows, webinars, rental of email lists, custom publishing, Continuing Education credits--these are all things that the B2B world routinely includes in its panoply of services, but are strangely absent or low priority in the B2C world of newspapers and magazines.
There are tens of billions of dollars being spent by local retailers on "traditional" products: direct mail, newspaper inserts, bus bench advertising, hand-delivered coupons, yellow pages, and specialized print publications. All of this money is up for grabs, and everyone is going after it--Yahoo, Google, restaurant.com, online coupon companies like savings.com and bogopod.com, or user review sites like Yelp. (Just today WSJ's All Things Digital reported that Google was in talks to purchase Yelp for more than $500 million.)
No one has quite figured out how to move all that revenue from print products to digital products. Keyword, cost-per-click advertising is certainly taking a big hunk of it already, and that has the advantage of being a "self-serve" advertising buy, with vendors bidding for spots online. But for the rest of it to move to community news sites, or restaurant review sites, or online couponing plays, there is one crucial element: SALES.
It's all about sales. Sales, Sales, Sales.
With small and medium size businesses, the owner is often the marketing director, the sales manager, and the HR specialist all in one. For example, a restaurant owner probably works most nights in the restaurant, and can't afford the time to do a serious analysis of the most cost effective marketing efforts. So that person buys an ad in the local throwaway, or a newspaper or a coupon magazine. If it works--whatever that means--they stay with it for awhile. The critical ingredient in all this is the sales person representing the media outlet. The sales person becomes the marketing consultant, the adviser who helps the business person sort through the options.
All those print outlets use sales people,usually both "inside" and "outside" representatives. The sales cost is high (as a percentage) but the price of the advertising is high also so it works. On the web, the price of the advertising is low, and it's difficult to make the sales equation work. That's the real challenge all these community news sites will face--not gathering local news, not collecting crime statistics, not finding good writers to contribute--but making sure the sales operation runs well and is cost efficient.
So here are a few tips from my years of overseeing advertising sales organizations:
--There is high turnover of sales people. It's a difficult job, and the good ones often leave for greener pastures;
--Relationships are important. Even with the enhanced measurability of response from the Internet, you are still selling an intangible, and the buyer needs help understanding what he's getting;
--Use the telephone. A lot of selling can get done on the phone. You don't have to always meet in person.
--The only way to sell a lot is to sell a lot. You've got to make a lot of calls and be prepared for a lot of rejections.
--Advertiser churn is a given. Advertisers stop spending for a while, begin again, change advertising vehicles, try something new, and come back. That's why relationships are so important.
--There is a lot more to sell than advertising. You are educating the advertiser about how advertising works, the most effective way to market, the right pitch, and even the need for marketing in the first place.
Great sales teams and creative ways for local merchants to spend money--not just relying on traditional banner advertising--will be the key to success.
Wednesday, November 4, 2009
TIVO AND TV RATINGS
I just don't believe it.
Under the headline "DVR, Once TV’s Mortal Foe, Helps Ratings," the New York Times reports that "nearly half" of all people who watched DVR-recorded shows still watch the commercials. With DVR penetration at about 33%, this is a very meaningful issue to television advertisers. I've said for a long time that when the DVR penetration passes 50% the TV industry is going to face a massive profitability crisis based on declining revenues (driven both by price and volume).
The source for this nonsense is Nielsen, whose spokesman says it all makes sense because TV is a "passive media", thus explaining why so many people would not press the fast forward button to skip the ads.
I know it's dangerous to take your own behavior and extrapolate it to all others. But I know I record shows PRECISELY so that I don't have to watch the commercials, and only pause to see the latest ones from Apple because they are so entertaining.
And my guess is that almost everyone else is doing the same thing, no matter what Nielsen has to say about it.
What do you do?
Under the headline "DVR, Once TV’s Mortal Foe, Helps Ratings," the New York Times reports that "nearly half" of all people who watched DVR-recorded shows still watch the commercials. With DVR penetration at about 33%, this is a very meaningful issue to television advertisers. I've said for a long time that when the DVR penetration passes 50% the TV industry is going to face a massive profitability crisis based on declining revenues (driven both by price and volume).
The source for this nonsense is Nielsen, whose spokesman says it all makes sense because TV is a "passive media", thus explaining why so many people would not press the fast forward button to skip the ads.
I know it's dangerous to take your own behavior and extrapolate it to all others. But I know I record shows PRECISELY so that I don't have to watch the commercials, and only pause to see the latest ones from Apple because they are so entertaining.
And my guess is that almost everyone else is doing the same thing, no matter what Nielsen has to say about it.
What do you do?
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