News Content Economics
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News Content Economics

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Overview of current situation for news publishers primarily print, but will apply to all providers. Suggests models and strategy will follow up.

Overview of current situation for news publishers primarily print, but will apply to all providers. Suggests models and strategy will follow up.

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News Content Economics News Content Economics Presentation Transcript

  • 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
 ideas.


  • 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.

  • iterate
intuitive
 relationships…
 Too
many
levels
happening
 aggregate
seamless
e‐ services…reinvent
 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
 what?

 •  
WTF?

  • 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
 AND
 Advertising
spending
followed
and
increased
 10X
pre‐1980
levels…
 Media
channels
became
over‐saturated
with
 players

  • 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
 players…

  • •
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 
  VE
 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
 G 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
 something
I
 don’t
know!

  • 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
 news
content?
 2  Will
ad
sales
alone
yield
enough
income
to
 support
a
news
operation?
 3  Does
‘quality
of
content’
matter
to
 consumers?
 4  How
do
consumers
participate
in
creating
the
 context
of
news?
 5  Does
brand
of
news
content
provider
matter
 to
consumers?
 6  How
important
is
distribution
of
content
to
 consumers?

  • 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.

  • FREE
checking
 as
a
loss
leader
 Free
checking
accounts
 to
writing
bad
 mortgages?
 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
 make
work.

  • 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
 prices
suck.
   
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.
  • News
content
 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
 itself.
 o It
is
valuable
only as
a
means
to
 
 attract
audience
and
sell
advertising.

  • Even
commodities
have
value
at
a
price
above
 FREE.
 
 gold
 
 silver

 soybeans


corn
 
 
 copper
 

 


pork
bellies
(yum,
yum)

  • How
so?
 Commodities
are
things
fairly
simple
to
identify
 and
value
based
on
simpler
supply
and
demand
 variables.
 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.

  • Value
depends
upon
how
well
news
is:
 ▼  onceptualized
 C ▼  ontextualized
 C ▼  here
and
how
it’s
delivered
 W ▼  hen
it’s
delivered
 W ▼  redible
source
 C
  • 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
 invested?
 ▼  ublishers
must
know
the
utility
of
news
for
 P consumers
[think
Newspaper
Next
‘Jobs
to
be
done’
list]
 ▼  elp
them
find
it—make
it
readily
available
 H via
computer
and
mobile
 ▼  elp
them
share
it,
rate
it,
evaluate
it
in
a
new
 H 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.
 Did
you
 hear…?
 Bloggers
 Think
 ‐like
 Consumers
 News
 X
 Aggregators
 ‘Link
economy’
 Devices
 strategy
 and
 Sharing
apps

  • ▼  dds
to
content
value
by
providing
a
new
measure
 A of
community‐propagated
context…community
tells
 one
another
what
the
news
is
worth
and
why.
 ▼  ot
fixed,
but
constantly
mutable
and
elastic.
 N ▼  ontext
and
content
are
no
longer
one‐way,
 C Editor/writer



consumer.
 ▼  hich
means,
it
alters
the
nature
and
value
of
 W 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

  • A
Word
from
Our
 Sponsor

  • Mass
advertising
model
 Created
 advertising
 to
a
mass
 Targeted
advertising
 audience
 model
 Created
bid
pricing
and
 Innovation
 self‐admin
advertising
to
a
 very
targeted
audience.
 Joseph
Pulitzer's
 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
 strategy.

  • 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
 business
administration. 
 THINK
MANY
 $mall$$$$$$$$$$$$$$$treams$$$$$$$$$$$$$$$$$$$$$$$$$
 vs. 
 $$$

  • •  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

  • Unbelievable
 this
has
been
ignored
by
traditional
players. 
 Can
be:
 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
 than
before.
 Connected
consumption
plus
atomized
 distribution
play
a
big
role
in
brand
 value.

  • A
lot
about
brand
worth
based
on
the
value
they
 receive.
 • 
Make
it
easy
for
them
to
convey
that
 
 information
and
help
them
spread
the
word.
 • 
Consumers
can
promote
or
kill
a
brand
in
quick
 
 fashion.
 • 
The
more
transparency
and
the
more
players
 
 facilitate
consumer
communication
about
their
 products
and
services,
the
higher
the
brand
value
 probability.

  •  New
value
chain
based
on
one
of
the
six
 models
selected
  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
 and
distribution
  Connected
consumption
is
the
new
 brand
driver

  • Traditional
players
have
adapted
and
 adopted
practices—poorly
in
most
 cases.
 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:
  self‐responsibility
  creativity
  enthusiasm
  experimentation
  innovation
  integrity
  cooperation
and
direct
communication
 traditional
players
have
a
chance.

  • Gotta
make
 the
donuts
 If
I
want
your
 opinion
by
God
I’ll
 Traditional
 give
it
to
you!
 Players

  • Wanna
go
for
a
run
 after
we
finish
 coding
that
new
 feature?

  • 
 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
 transitioning
players.
 
 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:
 Terry
Garrett
 Garrett.tm@gmail.com
 415.302.9583
 Management
and
Web
Consulting:
Business
As
If
 Content
Management
Systems:
Oasis
Web
Logistics
 http://bizasif.com
and
http://oasiscms.com