Challenge & Possibilities
Prepared by Terry Garrett (see last slide for contact info)
This presentation is directed to traditional media
players, primarily print publishers.
The ideas and concepts represent a synthesis of
the thoughts, opinions and research, which
many have contributed.
I hope this provides an overview of the current
situation that leads to quick and furious
invention and innovation.
There have been many good ideas floated by
earnest efforts of Newspaper Next, Pew
Center and AJR.
There’s too much toe in the water and not
enough baptism for implementation of those
Fairly simple and stable
• You knew how the game was played.
• You acted accordingly.
• Supply and demand were fairly stable.
• Mild disruptions produced new ideas
and you could adapt without much
effort or pain.
Too many levels happening aggregate seamless e‐
simultaneously: Drying up of sticky users…HA!
financing, deep budget cutbacks,
disappearing sales and audience…
You don’t know what to do.
• You react constantly and lose
sense of being proactive.
• You want time to sort it out.
• You have to try new things, but
Market driven economy over past fifty years
Consumer spending 73% of US economy
Drives advertising spending and proliferation
of media channels and players
Consumer spending rose rapidly
Advertising spending followed and increased
10X pre‐1980 levels…
Media channels became over‐saturated with
Mature players profit harvest,
but make less investment in
content quality, slower growth,
lose market share gradually.
Start‐ups show heady growth,
invest in marketing, make less
profits than incumbent
• Move from gorging on the “media buffet” to post‐
consumption fatigue, over‐whelmed, over
stimulated, too much of a good thing
• Diminished engagement, indifference set in…
Then consumers begin
• Mental sorting of most media channels and
players into ‘all about the same’, lumpy mass
Or into a slimmer ‘must have’ niches
1908 average newspaper costs 5¢
(for news content, pre‐mass advertising era)
2008 average newspaper costs 50¢
Adjust 1908 costs to 2008
for equivalent price:
$2.67 per copy
In 100 years, News content
was devalued in price 400%
Content Device Device costs Perception of content
TV TV sets *Relative FREE (except cable)
Radio Multi‐sets Relative FREE
Daily newspaper Paper Nominal recurring Paid, but necessary
Magazines Paper Nominal ‘+’ recurring Paid, necessary luxury
Other print Paper None recurring FREE
* Expense of acquiring device was relative to consumer’s income
Two devices can deliver all forms of
media anywhere, anytime
Perception: FREE content Device and service Cost:
relative to consumer’s income
▼ Traditional media players bundled content
(many articles became daily packaged product)
▼ Web unbundles content packages [atomizes it]
▼ Web players [search, aggregators,
reconstructors] re‐bundle content into new
packages under their brand, which dilutes
originator’s brand based on single package idea
▼ oogle, Yahoo atomizes advertising and change
price/value metric and buy/sell methodology.
• New players capture new web ad
income, device and distribution income
and reduce the income potential for
traditional media players…who lack
ability to scale.
• Consumers get a freer free ride Tell me
New models for content and
advertising are urgently necessary.
There is no going back.
Major overhaul is required.
1 Will consumers pay a price above FREE for
2 Will ad sales alone yield enough income to
support a news operation?
3 Does ‘quality of content’ matter to
4 How do consumers participate in creating the
context of news?
5 Does brand of news content provider matter
6 How important is distribution of content to
Name at least three consumer items
that were once paid, but are now FREE.
No fair saying news content, or
anything related to the web.
as a loss leader
Free checking accounts to writing bad
The point is there are few instances of converting consumer
products or services to free.
The reason is obvious, it’s a damn tough economic model to
The problem is that it’s been priced at FREE by
traditional players for so long now they believe it’s
worthless and consumers expect it.
Traditional players are motivated to think news
content has value now, because the advertising sales
rug has been pulled out from under them and online
They haven’t figured out the new value created for
content when consumers, bloggers and others rate it,
share it, comment on it, re‐bundle it. As a matter of
fact, they have resisted this practice when they
should work it and see the value. It creates context
for news consumption.
Commodity Is this true?
“Undifferentiated quality” o News content publishers have been
“All info is equal” told and some believe that news is a
“Info = News” commodity that is valueless in and of
o It is valuable only as a means to
attract audience and sell advertising.
Even commodities have value at a price above
gold silver soybeans corn
copper pork bellies (yum, yum)
Commodities are things fairly simple to identify
and value based on simpler supply and demand
News content is rapidly becoming more complex.
It is based on thoughts and ideas about events
and things, and subjectively valued.
Commodity is the wrong noun to associate with
news. It oversimplifies its true meaning and
Value depends upon how well news is:
▼ here and how it’s delivered
▼ hen it’s delivered
▼ redible source
FREE rattlers, all you can eat!
“I don’t think I can eat all this
on me lunch break”
What gives them more enjoyment for less time
▼ ublishers must know the utility of news for
consumers [think Newspaper Next ‘Jobs to be done’ list]
▼ elp them find it—make it readily available
via computer and mobile
▼ elp them share it, rate it, evaluate it in a new
context—connected consumption factor
Consumers share content they value Connected consumption helps
with selected others or to the commons. them filter and discover content.
News content providers must exploit and leverage this to great advantage for all.
‘Link economy’ Devices
▼ dds to content value by providing a new measure
of community‐propagated context…community tells
one another what the news is worth and why.
▼ ot fixed, but constantly mutable and elastic.
▼ ontext and content are no longer one‐way,
▼ hich means, it alters the nature and value of
content in a meaningful and positive way for
consumers and content providers
From the Pew Center’s State of the News Media 2008 report
“A survey of journalists from different media ... Majorities
think such things as journalists writing blogs, the ranking of
stories on their Web sites, citizens posting comments or
ranking stories, even citizen news sites, are making
journalism better — a perspective hard to imagine even a
few years ago. These new technologies are seen as less a
threat to values or a demand on time than a way to
reconnect with audiences. News people also are less anxious
about credibility, the focus of concern a few years ago.”
Free content Free & Paid Paid content
Donor supported No ads No ads
Ad supported Ads too Ads too
Free content Free & Paid Paid content
Mass advertising model
to a mass Targeted advertising
Created bid pricing and
Innovation self‐admin advertising to a
very targeted audience.
New York World 1890
Adjusted to 2007 dollars Google’s World 2007
Net Income $916 million Net Income $5 billion
Google’s innovation reshapes all advertising‐
based media, not just online.
It is disrupting an established marketplace and
converting vast sums of market share to itself.
The magnitude of operating income at 5 times
the level of the previously dominating model
shows it’s power—a massive reshaping
The nature of the disruption is so severe and
share conversion so quick that it will wipe out
a significant number of traditional media
players, including major ad agencies.
Players need an
Entirely new approach to selling, distribution and
• Banner ads: some income but not enough to
support an organization
• Classifieds: ditto
• Affiliate: lots of room for growth
• Mobile: nascent stage with lots of upside
this has been ignored by traditional players.
1. Locally‐dominated or niche‐dominated
2. Networked globally
3. High‐utility for consumers and advertisers
4. Integrated well online and with mobile
But brand value is generated differently
Connected consumption plus atomized
distribution play a big role in brand
A lot about brand worth based on the value they
• Make it easy for them to convey that
information and help them spread the word.
• Consumers can promote or kill a brand in quick
• The more transparency and the more players
facilitate consumer communication about their
products and services, the higher the brand value
New value chain based on one of the six
Quality of content matters more or less
depending on the model selected
Ad income from many small streams
Web is the hub for content management
Connected consumption is the new
Traditional players have adapted and
adopted practices—poorly in most
It’s urgent to be innovative instead.
That demands new models based
upon being a shaper, not a follower.
With an organizational culture that fosters:
cooperation and direct communication
traditional players have a chance.
If I want your
opinion by God I’ll
give it to you!
Wanna go for a run
after we finish
coding that new
I’m creating a complete analysis of each model (6)
including requirements for each value chain node and the
relationship between them. Additionally, I’ll create pro forma
budgets for a few of the more promising models that apply to
I’m convinced that traditional players must start this
transitional process with the attitude that says, “If we started
a new media company today, what would it look like?”
It’s the only approach that removes the bias of which
resources are valuable and which aren’t.
If you’re interested in learning more about
what you can do by reviewing the analysis of
the models mentioned, please contact me:
Management and Web Consulting: Business As If
Content Management Systems: Oasis Web Logistics
http://bizasif.com and http://oasiscms.com