The Survival of Newspapers
May. 25th, 2010 04:00 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
drploktaThe survival of newspapers in the Internet age is back in the news, with the Murdoch titles starting their suicidal move to lock their content out of the ongoing dialogue that is the Internet. So here's my view.
There is still a role for newspapers, and they can thrive online by filling that role. What they have to do is to cut their costs dramatically -- probably by 95% or more -- by stopping doing everything that someone else, anywhere in the world, is doing better. Why would I want to read the Guardian's coverage of the US elections when there's fivethirtyeight.com? Why would I want to read the Times's technology column when there's ArsTechnica? Why are newspapers still paying journalists to lightly rehash press releases that they don't even understand (of which I have lots of personal experience from looking at the generally appalling house price journalism in the UK)? I don't need a newspaper to compile the news for me any more; I have an RSS reader.
So, my advice to newspapers, and to journalists, is to specialise. Journalists have to do a 180° turn -- it used to be that a good journalist was one who could write shallowly about anything; now a good journalist is one who can write in depth about one topic better than anyone else in the world. Identify what content you have that's better than anyone else, and keep it; ditch the rest. Your advertising revenues should then seem quite reasonable. If you can still make money by printing a generalist publication on paper, then stick with it, but don't expect the Internet to work the same way, and don't destroy your Internet presence to try to save your old business model. We will end up with a lot fewer journalists doing a much better job.
There is still a role for newspapers, and they can thrive online by filling that role. What they have to do is to cut their costs dramatically -- probably by 95% or more -- by stopping doing everything that someone else, anywhere in the world, is doing better. Why would I want to read the Guardian's coverage of the US elections when there's fivethirtyeight.com? Why would I want to read the Times's technology column when there's ArsTechnica? Why are newspapers still paying journalists to lightly rehash press releases that they don't even understand (of which I have lots of personal experience from looking at the generally appalling house price journalism in the UK)? I don't need a newspaper to compile the news for me any more; I have an RSS reader.
So, my advice to newspapers, and to journalists, is to specialise. Journalists have to do a 180° turn -- it used to be that a good journalist was one who could write shallowly about anything; now a good journalist is one who can write in depth about one topic better than anyone else in the world. Identify what content you have that's better than anyone else, and keep it; ditch the rest. Your advertising revenues should then seem quite reasonable. If you can still make money by printing a generalist publication on paper, then stick with it, but don't expect the Internet to work the same way, and don't destroy your Internet presence to try to save your old business model. We will end up with a lot fewer journalists doing a much better job.
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(no subject)
Date: 2010-05-25 03:14 pm (UTC)Now, if they were to move to that more formally, so that The Guardian supplies the British news that's supplied in the New York Times, and vice versa for US news, then that's got a lot of potential. You cut down on the number of journalists dramatically, and get a mixture of the best reporting on whatever subject you want.
Mind you, isn't supplying that kind of thing what Reuters does?
(no subject)
Date: 2010-05-25 04:24 pm (UTC)Likewise, a good, generalist piece on a political situation in Neverheadofitstan and it's geopolitical relations beats the hell out of trying to make sense of stuff on the RSS feeds I read.
So for me, as an example, The Times technical column can be more useful than ArsTechnica.
they just can't do it..
Date: 2010-05-25 04:34 pm (UTC)It's too late to say it now but way way back when the newspapers should have cut a deal with Google re Ads for their nascent online sections. Too late now so they're dead. Tho you'd be surprised how open the law is on this still cf Belgian Copieprese case to recent Google adwords case (ECJ) .
However did you see this today - a different story? 99% of social media links are to old media http://bit.ly/b9YxAF - so new media NOT killing print/tv but advrtising it? says @sdjohns
(no subject)
Date: 2010-05-25 05:02 pm (UTC)(no subject)
Date: 2010-05-25 05:30 pm (UTC)(no subject)
Date: 2010-05-25 07:11 pm (UTC)It's the serendipity ... I read the Metro in the morning ... sometimes only a page or two (depends on how crowded the train is, and how difficult the sudoku) but I end up reading a cross-section of stories that I'd never assemble myself ...
... the point of a *good* paper (as opposed to the Metro (grin!)) is that there's editors picking out articles and other editors putting the paper together to produce a package. I haven't found a non-newspaper site that manages that well on the internet (even the BBC News website which I return to several times a day).
(no subject)
Date: 2010-05-26 01:36 pm (UTC)(no subject)
Date: 2010-05-25 07:56 pm (UTC)This is where you show you're so obviously Not the Demographic. Because while RSS readers are popular among the techies, if they have more than 15% penetration among all internet users, I'd be very surprised. I have yet to see an RSS reader that works as cleanly and effectively as the LJ friends list.
I get the "blogs are where the sources migrated to" approach you're advocating here. I just maintain editorial choice and taste among those sources as an aggregator still has value.
"Your advertising revenues should then seem quite reasonable."
Advertising revenues are on a race to zero. Any business model based on advertising essentially is one based on fraud, since advertising doesn't work -- and the net now provides the empirical data to show advertising doesn't work. That's the real way the net is killing newspapers -- by showing to the punters every single dollar, pound, or euro they spend on advertising gets results within the margin of error, so they might as well save their money.
Again, this is why Google flails about endlessly trying to find something, anything beyond ads to make money. They know advertising is in a Wile-E-Coyote-off-the-cliff-and-about-to-fall-once-he-notices moment.
(no subject)
Date: 2010-05-25 08:44 pm (UTC)The problem is they have stolen all the advertising revenue from the REST of the Internet - since targeted advertising backed by the entirety of the google db gets a clickthrough of 3 to 10 times other types of online ads depending what source you read. This is what is drivin the likes of Phorm - the rest of the Internet despertealy tris to get in on the Google cake and fails. It is also probably what is contributing to this desperate paywall gamble by the Times.
(no subject)
Date: 2010-05-25 08:58 pm (UTC)Google's done the same thing. They've taken the "tiny little ads" model of 1980s scams, and written it large. By having such a diverse base of customers, it means their exposure to individual ones figuring out ads don't work and walking away is vastly reduced -- especially compared to a typical newspaper, who have a base of no more than 2-300 customers, and only that big in a large metropolitan area.
"(T)argeted advertising backed by the entirety of the google db gets a clickthrough of 3 to 10 times other types of online ads depending what source you read."
Which means instead of 99.9999% not clicking through, as many as 99.9997 to 99.999 don't.
Whee.
(no subject)
Date: 2010-05-25 09:08 pm (UTC)I somehow feel some reasonable percent of their advertisers will be auditing if Google ads are worth their money. Google may have a million tiny advertisers but they also have all the big ones. If it didn't work for them they'd desert and go back eclusively to TV or paper ads. Instead online advertising - mainly Google (70% acc to one article I quickly found, think is now higher) - is now the biggest sector of the ad pie, having overtaken at a ripping pace all other media in last couple years. Certainly in selling academic PGT circles not advertising via Google is now basically suicide.
(no subject)
Date: 2010-05-25 09:31 pm (UTC)It happens. Enron had revenues of $101 billion in 2000. Lehman Brothers had in excess of $275 billion in assets under management and net revenues of $19.2 billion. And?
"Google may have a million tiny advertisers but they also have all the big ones."
Here's Nielsen's Top 10 advertisers of 2008 (the most recent time they've released such a list I can find). I realize it's anecdotal, but I can't recall ever seeing a Google ad from any of them.
And that's before we get into, if there's a strong correlation between advertising and revenues, why isn't the list of Top 10 Advertisers equal to the Fortune 10? The relationship appears to be random.
This report from the OECD in 2008 relays the report that Google's single largest customer is WPP (who own the Grey Group, Ogilvy & Mather Worldwide, Young & Rubicam, and JWT) but also that they have only about 1.5% of Google's sales.
(no subject)
Date: 2010-05-25 10:04 pm (UTC)(no subject)
Date: 2010-05-25 10:20 pm (UTC)(no subject)
Date: 2010-05-25 10:47 pm (UTC)Honestly, you're consistently using classic language from a bubble: "Millions of customers can't be wrong! Everybody's doing it! It's suicide if you don't buy in along with the rest of us! Somebody must be checking if this actually works (though not me, of course)!"
I keep waiting for you to say, "This time it's different!" just to complete the cycle.
(no subject)
Date: 2010-05-26 01:14 am (UTC)(no subject)
Date: 2010-05-26 06:54 pm (UTC)Nowhere did I say that Google was anything as specific as, "a dot.com bubble merchant." What I said was, the language you're using to justify the premise Google is permanently robust is language that is common to all economic bubbles -- be it tulip mania in the early 1600's, the South Seas bubble in 1720, stocks/equities in the 1920's, stocks/equities circa 1990's/2000's, real estate in the 2000's, and gold today.
See, in general, This Time Is Different, Reinhart and Rogoff, 2009; Panics, Manias, and Crashes, Kindleberger, 2005 reprint; The Myth of the Rational Market, Fox, 2009. See the FT's Lex column of May 13th re: gold.
(no subject)
Date: 2010-05-26 08:04 pm (UTC)(no subject)
Date: 2010-05-26 08:24 pm (UTC)To remind you of your earlier post:
"Google are and will continue to make a fucking fortune from advertising - pardon my french but this is just so so wrong. AdWords is pure gold. Notice that every new Google enterprise is just another excuse to serve more ads and add more data. They know exactly what they are doing."
Were you using "will continue to make" in some idiosyncratic way native speakers of English might not be familiar with? Do you have amnesia? Do you pursue arguments any which way, and hang the idea of rigor or consistency?
Because it's true -- you did agree with him on a statement that was the "EXACT OPPOSITE" of what you had earlier said. And this shows what, exactly?
(no subject)
Date: 2010-05-26 12:51 am (UTC)But I'm with Hal on this, it's fragile.
I've done hundreds of business analysis for using advertising to fund operations and there isn't a single model that makes any money that I can find unless you have the shear volume of internet traffic that Google has. Google is making money from volume.
Adwords can work for certain types of business but I'm left wondering what the actual returns are in reality - as somebody whose name I can't remember once said - I know half my advertising works, I just wish I knew which half.
(no subject)
Date: 2010-05-26 01:04 am (UTC)What you can't do is replicate that micro targeting for any other business that isn't Google, yes. Which is why I started this thread by saying Google was doing ok at this online ads business model and no one else was. Not because they're dot.com whizz kids (the salient fesature of dot.com bubble businesses was they had hype but zero actual profits - hardly true of Google which makes all its money, I repeat, from SELLING ADS - what it says on the tin as their business, not venture capital..) And yes when they aren't the overwhelmingly incumbent dominator of the search mkt, Google won't have that model right either (in the snes etheir db will become partial, like everyone else'), so in that sense yes they are fragile but in Eu at least that's a helluva way away.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1435105 explains some of why I had to swot up on this.
(no subject)
Date: 2010-05-26 02:01 am (UTC)Adwords is really simple to run and really effective for niche businesses.
I'd argue that Facebook is actually a far far more dangerous enemy of Google's than anything else at this stage.
Where I agree with Hal is they are really throwing crap all over the wall trying to figure out how they can protect the business that works and ensure that nobody destroys their market.
(no subject)
Date: 2010-05-26 08:05 pm (UTC)(no subject)
Date: 2010-05-26 07:00 pm (UTC)I'll go along with "best," although that's damning with faint praise. Until such time as they get clickthrough rates above 50% -- which would be, you know, random chance -- any link between their actions and deliberate causality is speculative at best. If their predictions fail 92% of the time -- which, given the most charitable reading of the data you've presented, they do -- they are substantially underperforming random chance.
See Fooled by Randomness, Taleb, 2001.
(no subject)
Date: 2010-05-26 07:50 am (UTC)(no subject)
Date: 2010-05-26 04:10 pm (UTC)Stateside Property is probably one where you could still do it, but the margins/charges on real estate sales in the US are mind bogglingly insane - Typically you're looking at 6% of sale price split between various sources. There's at least two Seattle startups who've managed to enter this market.
Jobs: I'll waggle my hand on that one. Based on the shear amount of advertising the "premier" jobsites are doing on traditional media they're spending a lot on getting more traction. Plus more and more recruitment is moving onto Craigslist where it's extremely commeditised.
Cars? Craigslist - at least for North America.
That's not to say that there won't be alternative advertising models, but if you think of one, let me know :) - trying to build a business plan that actually makes money for a startup which isn't blessed with a huge marketing budget is something that really really interests me.
(no subject)
Date: 2010-05-26 08:06 pm (UTC)(no subject)
Date: 2010-05-26 11:04 am (UTC)John Wanamaker - http://en.wikiquote.org/wiki/Advertising
(no subject)
Date: 2010-05-26 04:10 pm (UTC)(no subject)
Date: 2010-05-26 01:27 pm (UTC)I also have a cast iron example of purchasing an item that I didn't know existed because of a poster ad on the Underground.
So clearly some advertising works for me.
(no subject)
Date: 2010-05-26 06:41 pm (UTC)(no subject)
Date: 2010-05-26 07:25 pm (UTC)I split advertising into two groups: "New products" vs "Maintenance."
"New products" advertising generally lets the public be aware of something actually novel, and brought out for the first time. They would never have learned of it any other way. It's like Tim O'Reilly's line, "Obscurity is a far greater threat to authors and creative artists than piracy." New products adverts fight obscurity. As such, they have a chance to make a difference, until the public forms an impression of what the product is.
That only takes about six months or so, though (I'm guessing wildly here, and I'm partly leaning on experience with political ads, which are sui generis, but hey). After those six months, you're left with "maintenance" ads, which are usually the equivalent of, "I'm not dead yet!" The problem is, once the impression of the public is set, it tends to be set for a loooong time.
No one on this list (of top advertisers) is really in the "new products" camp. A new flavor of Pespsi? Who cares.
So when you say you, "purchas(ed) an item that (you) didn't know existed," that's exactly the type of "new products" ad I think has the best chance of working, and is probably worth the shareholder's equity.
But the nth Guinness ad? Not so much.
(no subject)
Date: 2010-05-26 08:14 pm (UTC)On the other hand, most Apple advertising is in the first (maintaining market share) camp, and nevertheless I get a warm feeling every time I see it. I don't really mind that Steve Jobs is spending my hard-earned money on carpet-bombing Victoria Underground station, for example. Though I accept the iPad is a new product, but truly -- is there anyone in the target market who isn't already familiar with it?
(no subject)
Date: 2010-05-27 12:25 am (UTC)Garry Trudeau had a wonderful Doonesbury a few years back. It was a Sunday strip, so more than the usual number of panels, most of which featured snippets of overheard commercials done in the political style: "Don't believe Pepsi's lies!" "What does GM have to hide?" "Walmart -- Bad for Connecticut; bad for America." This ends with the lead character doing a facepalm and asking himself, "My god -- What have we done?"
I thought it was great because it showed the perfect counterexample to the idea, "They sell candidates just like they sell toothpaste." No, not really. Hardly anybody does the negative campaign-style ad for everyday household products.
The exception, of course, is Apple.
I'm thinking here particularly of the "Mac vs. PC" ads, which could be showing any two opposing candidates in an election.
So Apple's iPad commercials, I think, have a very political aim: To whip up support among the base, and to convince the press a marginal niche product is somehow mass-market. ("Hey, I saw the ad last night; they must be everywhere!")
The iPhone, for example, has a market share of about 3% among global cell phone sales in Q1 2010. (Smartphones sold 54.7 mil units; they're 18.8% of global sales; that yields global sales of 290.96 mil units; of which Apple sold 8.8 mil). 97% of the market looks at the iPhone -- and buys something else. Yet the iPhone retains mindshare all out of proportion to its less-than-Linux market share. That's partly due to Apple's marketing, but it's also due to the fervor of its acolytes. Apple isn't a "normal" company, in that sense. {shrug}
(no subject)
Date: 2010-05-28 03:36 am (UTC)The LJ friends list is an RSS reader.
That clarified, I agree with you - it puts all the others to shame.
(no subject)
Date: 2010-05-28 04:00 am (UTC)(Created on 2001-01-31 15:37:32 (#50517))
That's substantially pre-RSS 2.0 -- and I've been reading Dave Winer long enough to remember that in those days, Dave and Netscape were about the only people using the spec.
(no subject)
Date: 2010-05-26 01:33 am (UTC)