Recent Goodnight, Gutenberg Posts

The Case Against the Case Against Paywalls

Marion Maneker — Wed, 28 Jul 2010 20:36:01 +0000

Late last week, I wrote a post about the fears many commentators seem to have about the New York Times creating a paywall around its content. Even though the Times’ proposed paywall will allow occasional readers to access stories without paying a subscription, a slew of press observers find the idea of a paywall unsettling.

The surprise announcement last week that the Times had increased its revenue from digital ads caused Jeff Bercovici of AOL’s Daily Finance to wonder if the news outlet would reconsider its paywall plans. Never mind that a 21 percent jump in digital ad revenue barely covered the 6 percent decline in print ad revenue, which is not exactly a winning strategy.

When I tried to point out that the Times must continue to look for new sources of revenue despite the blip in digital ads, Bercovici good-naturedly called me out on Twitter. Unfortunately, the vagaries of cell service in New Hampshire’s White Mountains made it hard for us to have a full-throated debate.

So let me rehearse some of it here. To be fair to Jeff, he’s hardly the most vociferous or doctrinaire proponent of the Times remaining free. But his position, like others who see free as a powerful way to generate value, is that the organization should aspire to the broadest possible reach. Creating a paywall would limit the readership—if the numbers coming out of the Times of London are any indication—it would substantially reduce the overall number of readers by something like two-thirds.

For the New York Times, that would mean a loss of 10 million readers or more. Logically, the freetarians see this huge audience getting locked out as loss of advertising revenue and more.

Last year, Wired's editor, Chris Anderson, articulated this point of view in a book called Free. And with the massive successes of Google, Twitter, and Facebook, it's not hard to see why Silicon Valley and the Web 2.0 beneficiaries take free as an axiomatic idea.

At one point, a few months ago, I tried to meld two of Anderson’s ideas by saying the Long Tail is free. In The Long Tail, another Anderson book, he said that blockbusters draw all of our attention, but we ignore the massive amount of content that is created by small producers. The effortless distribution of the Internet, Anderson proposed, would create more and more content from those small producers diminishing the importance of blockbuster hits.

Again, looking at Facebook and Twitter, it’s hard not to see the foresight of those comments. However, the content created by Web 2.0 users on YouTube or any other sharing site remains economically inert. Long Tail content—free content—becomes extremely difficult to monetize. (Yes, I saw this, which only proves my point.)

Contrast this with the cultural products we’re willing to pay for: the books, movies, and songs we simply have to have and will pay good money to see as soon as possible to have social currency. So hits are what we value and everything else—the Long Tail—is free.

Which is why I don’t agree with Chris Anderson’s idea that free is just another price. Free is the absence of price. It’s the lack of cost. We use things that are free to our benefit, like the unlimited bandwidth that Google gives the average Gmail user—but that doesn’t mean we value them.

Who among you would pay for Twitter? That doesn’t mean Twitter isn’t useful.

Anderson’s free concept is about the economics of abundance. Making a service free is what creates its abundant use and the abundant content that comes from that use. But information is still built upon the economics of scarcity. Unlimited access to cultural products doesn’t enhance their value, it makes that value evaporate.

The cultural enterprises that thrive in this environment are the ones that find other ways to create scarcity: through conferences or having print magazines or finding other ways to limit access and turn readership into ownership.

This last bit is important because it came to pass on Monday, when Pearson, the Financial Times’s parent company, released its earnings, that the FT was seeing strong growth in subscription and nonadvertising-related digital revenues. Here’s how Pearson put it:

In 2009 digital services accounted for 36% of FT Group revenues [...], up from 13% in 2000; in 2009 advertising accounted for 45% of FT Group revenues, down from 74% in 2000. [...] Strong growth in the FT’s digital readership including: digital subscriptions up 27% to 149,000 [...] ; registered users up 77% to 2.5m; and almost 250,000 downloads of the FT’s new iPad app[...] Across print and online, the FT’s average daily audience reached 1.9 million.

When I brandished these facts at Bercovici—over Twitter, of course—he responded by asking, “NYT is not FT. Can we agree on that much?”

I concurred but waved him off the hoary excuse that business readers just charge the newspaper to their expense accounts. (As if, in these days of corporate austerity.) “It's not about biz vs. gen'l interest,” Bercovici tweeted. “It's about niche vs. mass. NYT's reach is a huge asset.”

And that’s the nub of what this post is about: the assumption that the New York Times has a mass audience and should preserve that mass audience by remaining free and open without a paywall.

To me, the Times is a niche newspaper. Its audience is circumscribed culturally and in terms of class. The paper appeals to a globally defined group. That’s why the paper is such a constant target. It represents something distinct and identifiable even to those who envy it or are simply bemused by it.

You don’t have to be a fan of everything artisanal and curated to know that the Times readers are a society of folks who value things that are artisanal and curated. And many of those folks will pay for access to that equally artisanal and curated content. (Probably not enough to sustain the current size of the newsroom, but that's something for Henry Blodget to bang on about.)

The Times has a lot of traffic, almost enough to make you think it reaches a mass audience. In 2009, there were reports of 20 million unique visitors a month. In December of 2009, an internal memo claimed nearly 15 million uniques a month. Sounds like a lot. But that’s not mass. The sheer quantity of content the Times puts out between the newspaper’s report and the dozens of blogs it hosts means those 15 million users are diluted over thousands of posts each month. In contrast, the nightly news is still drawing 7 million viewers each night to NBC and ABC each.

Let that sink in. TV news, which only old people without computers watch, has more viewers in one night when you combine the three networks, than the New York Times has in a month. Now that’s mass.

Where the anti-paywall folks have a point isn’t with these two ginormous generators of reporting and lifestyle coverage. It's with the newspapers that cannot get big enough to justify themselves as a true niche player. The Washington Post and the Los Angeles Times will have to follow another path to financial stability.

What’s so curious about the anti-paywall stance is that it defies evidence. Not only is the Financial Times thriving behind its paywall, but the Wall Street Journal, the original paywall success story, is doing everything it can to make itself into a general interest newspaper without abandoning the toll booth.

With every hire and newly launched section, the Journal aspires to be an alternative to the Times—with a paywall intact.

The Weird Logic of Paywall Challengers

Marion Maneker — Fri, 23 Jul 2010 14:13:05 +0000

There's a deep psychological force at work in the anti-newspaper paywall camp. The movement, best represented among folks in the media, has strong emotional commitment to the idea that papers and content should be supported by advertising dollars. That tendency came into almost involuntary view yesterday as writers responded to the New York Times' earnings report with its strong growth in digital ad revenue. (All revenue was up 1.2 percent and digital ads jumped 21 percent to an all time high of 26 percent of ad revenues.)

In almost the blink of an eye, Jeff Bercovici took to DailyFinance.com to shout "Stop the paywall!" He argues: "It's a bad idea to go grocery shopping when you're hungry, and it also may be a bad idea to make major strategic decisions about your revenue model in the midst of an advertising recession."

Bercovici goes on to suggest the Times should shelve its paywall plans because things are looking up. Not to pick on Bercovici, because he's hardly the standard-bearer for the anti-paywall forces, but this piece betrays a bizarre thought process that's worth examining. First, the New York Times is a large corporation that should be doing everything it can to diversify its revenue. Its failure to make better use of its capital through its real estate dealings and unwillingness to reverse bad acquisitions—nicely illustrated by Roben Farzad a few months ago in Bloomberg BusinessWeek—has resulted in a heavy burden of interest charges.

The CEO would be incompetent if she made strategic decisions based on quarterly jumps in revenue. So the hasty decision here would be scrapping the paywall just because there was a quarter that halted a sickening slide instead of several quarters of high-growth.

Second, even if digital ads were on a hockey-stick growth curve, the Times ought to be exploring the paywall. Paying for content has always been part of its long-term strategy. The newspaper was hounded and embarrassed into dropping TimesSelect. The decision was more about the vanity of the paper's leading voices than it was about corporate strategy.

TimesSelect may have been the wrong way to accomplish the goal of charging for content, but for its entire history, the Gray Lady has charged readers to get what's inside the paper. So the decision to put everything on the site for free is more fitting with Bercovici's hasty scenario than continuing with the paywall.

Finally, and most important, central to any media strategy should be the idea of charging for some content. Advertising is a fickle thing for everyone involved. The Internet teaches us daily that advertising is not nearly as effective or valuable as we spent the 20^th century imagining. With ads unmasked for all but the hardest-core marketing executive, content must re-establish its own value.

Digital distribution should make content much cheaper—but it shouldn't make it free. The long-term health and quality of journalism, literature, information, and creativity depends upon finding an economic basis. We still pay for distribution in the form of our cell plans, ISPs and cable bills. But those distribution dollars don't get transmitted back to the Times the way they do to ESPN or CNN.

It may never be possible to re-establish the economic link between distribution and content in a way that hides the charge from the consumer, but that shouldn't mean the Times or any other paper should give up on reclaiming that revenue in some other fashion. That's the strategic decision the Times is making. The ad recession has only done the paper the favor of not allowing it to avoid the necessary experiment as it had done for too long.

Why Agents Will Morph Into Electronic Publishers

Marion Maneker — Thu, 22 Jul 2010 15:33:34 +0000

Once you remove the complexities of distribution from the book equation, an author has to ask herself what she gets from a publisher. After all, publicity is a function of the author's own fame, talent, or personal story. And publishing is, at its very core, nothing more than publicity plus distribution.

In the contemporary book business, the publishing house's role is really one of risk displacement. A publisher puts up a guarantee in exchange for a portion of the profits if the book sells better than the author or her agent expected. Remember, that's what an advance is: The author and agents bet that more money is to be had up front than over time. (Yes, they still get royalties, but at a lower rate than the effective royalty rate for all but a few advances.)

Most times, the agent gets it right because most books fail in the marketplace. A few times, agents and authors get it wrong. Their book becomes a big hit and they have to give the publisher a greater share of the proceeds than they might like. In other words, the publisher gets to make a profit. Don't feel bad for the agents and authors, though. They usually make it back on the next deal when expectations run higher.

Well, that's the way publishing used to work. But as the marketplace shrinks and publishers are forced to become more selective, agents are having a harder time placing work. They're also waking up to the fact that distribution is easy to accomplish with e-books. So a number of agents or former agents have gotten into the e-book business, including Arthur Klebanoff, Richard Curtis, and Scott Waxman.

Today, in a nice feat of publicity leverage, Andrew Wylie announces in the New York Times that he, too, is becoming an e-book publisher:

Odyssey Editions will begin modestly, with 20 titles that have never been available in e-book format. Among them are “Invisible Man” by Ralph Ellison, “The Naked and the Dead” by Norman Mailer, “Midnight’s Children” by Salman Rushdie, “Lolita” by Vladimir Nabokov and “Fear and Loathing in Las Vegas,” by Hunter S. Thompson.

All of the books will be priced at $9.99 at the Kindle store, said Russ Grandinetti, the vice president of Kindle content for Amazon.

Mr. Wylie said on Wednesday that he had not discussed the project directly with the publishers who own the rights to produce in print many of the books on his list. Stuart Applebaum, a spokesman for Random House, said in a statement:

“We can’t comment on this matter, in part because we have not been made directly aware of any plans affecting specific Random House Inc.

What Wylie is doing here is something different. Having built his international business around exploiting the backlist rights of literary writers, often through their estates, Wylie's core business is mature and somewhat threatened by the global transition away from print. If the future of reading, especially in college courses, is on tablets, Wylie needs to get his substantial backlists in a broad range of languages selling in digital form. And he can't accept the publishing house's meager e-book royalties. The decline of backlist sales makes it unsustainable for his estates.

So Wylie is absolutely right to circumvent the publishers. There is precious little marketing done to promote backlist literary titles. All the work has been done over the lifetime of the author or posthumously by the culture that validates a writer. A publisher, in this instance, is only making sure the books are printed and arrive at the bookstores on time. With e-books, the publisher really has no role.

However, Wylie's backlist business in author estates is somewhat unique in the publishing world. Once he has established a digital publishing house—and by giving Amazon (AMZN) an exclusive he really hasn't created a publishing company so much as given the books to Amazon to publish—will Wylie be willing to risk his own capital as a publisher?

Once all such backlist books are released in electronic form, what's next for the evolution from agent to electronic publisher? Will any of the agencies be willing to risk their own capital when an author needs some money to pay the bills while she takes time off to write?

Behind the Times of London Paywall

Marion Maneker — Wed, 21 Jul 2010 15:38:44 +0000

You could have seen this one coming. Everyone has been rushing to jump on the news that Rupert Murdoch's paywall experiment in the U.K. has cost the Times of London a substantial portion of its readers, a full two-thirds.

But the Financial Times explains that the paywall hasn't been as bad as some expected and that much of the traffic loss is about retraining Times readers:

According to figures collated by Experian Hitwise, which monitors internet traffic, the most significant fall in visits was in the weeks just before the paywall went up, when visitors were asked to register before viewing Times articles. Traffic fell 58 per cent in the five weeks between May 22 and June 26, with The Times’ share of UK news and media web traffic falling from 4.37 per cent to 1.83 per cent.

In the week after charging began on July 2, the rate of decline moderated, although World Cup news might have boosted web visits. Between July 3 and July 10, visits fell to 33 per cent of The Times’ pre-registration level, or 1.43 per cent of the market. “The big drop off was actually during the registration period,” said Robin Goad, research director at Experian Hitwise, who collated the data. “But since the site has gone to fully paid there hasn’t been much more of a fall.”

The FT has it a little backwards there about the World Cup. Big events are exactly what drive paid media. You can't take the Times' strength away from it by saying the World Cup was on. In fact, you have to look at the numbers as a base from which the newspaper can rebuild its brand value (the idea that it's worth paying to read the journalists who appear in the Times).

Much has also been made of the fact that the Times is the first general interest paper to charge for content, as if the Wall Street Journal and Financial Times are successful in charging on the Web only because they're business papers. That's a fallacy that everyone passes off without examination or waves on with the idea that everyone expenses their WSJ or FT. Really? Where? What company hasn't cut those costs yet in this recession?

No, the reason those papers can charge for their content online is that they've been charging for it online for a long time. They trained their readers to believe the content was inherently valuable and not a commodity. The readers responded with loyalty and subscription fees.

There was a good case for grabbing readership during the expansion of the Web. But now it looks like the smart move was to hold back your best content and make sure it remained accessible only to those willing to pay for it. In that sense, general interest newspapers undermined their own value.

But the Times of London's initial experience shows that value can be regained in relatively short order (if the product itself is worthwhile).

Amazon Touts Kindle Sales, Reveals Little

Marion Maneker — Mon, 19 Jul 2010 21:13:11 +0000

Here's a riddle for you: At what point will Amazon (AMZN) have to quit being so coy with its sales figures of Kindle editions and start offering the world real information? Today, newspapers, blogs, and magazines are afire with Amazon's latest cryptic report.

Jeff Bezos says that cutting the price of the Kindle readers has accelerated sales. He calls the move to $189—provoked by other players—a "tipping point" that has tripled sales of the reading device. With three times as many Kindles selling, the number of Kindle editions is growing at a geometric rate to the increase in device sales.

The company also claims that more Kindle editions are sold than hardcover books. But instead of hard numbers, we get this summation from the New York Times:

In the quarter, Amazon said it sold 143 Kindle books for every 100 hardcover books, including hardcovers for which there is no Kindle edition. That number includes the last four weeks, when sales increased to 180 electronic books for every 100 hardcover copies.

Yes. These are impressive numbers that do suggest we're approaching a point where digital publishing can become a significant medium all its own. (Though a digital-first hit would be the best way to announce that.) But let's not overlook a few facts about what we're being told.

Are hardcover sales falling or remaining the same? If we look at the numbers from bookstores, we know they're falling. We also know that Kindle owners tend to be heavy consumers of books. We also presume that Kindle owners are loyal Amazon customers. They're buying a Kindle because they trust Amazon to deliver the same quality of service they've received over the years.

So every gain in Kindle sales most likely results in a lost hardcover sale. Amazon still benefits from the transition but it skews the real meaning of the advantage that Kindle editions are showing.

Juding by the way the story has ricocheted around the media world, Amazon has played its cards very well. But because it's being so coy, we have to assume that the numbers are not as good as they might be when reported simply as, well, numbers.

Presented By:

Mon, 19 Jul 2010 21:13:11 +0000

A Publishing Plum Sours

Marion Maneker — Thu, 15 Jul 2010 15:28:47 +0000

The latest standoff between big publisher and big author involving Janet Evanovich has provoked a flurry of speculation that Evanovich might publish her next few books directly, presumably using a publishing house as a distributor but not to finance the printing, production, or marketing.

In many ways, Evanovich would be an ideal candidate for this sort of experiment because her team—read: family—runs most of the effort already, with a strong connection to her powerful fan base. Entertainment news site Deadline.com started the speculation with its report that St. Martin's Press had declined to meet Evanovich's rumored $50m asking price for her next four books (a 25 percent increase from her last deal, according to Publishersmarketplace.com).

Michael Cader explains that there's another way of looking at this if you take the self-publishing angle out of it:

What that means is if the Plum series is in play, there may not be too many publishers able or willing to meet Evanovich's reported asking price. Of the Big Six, only Penguin and Random House have no prior business relationship with her.

Weakened by the rapid shift in retail sales and hampered by a declining market, publishers might have reached a crucial point where their weakness becomes a negotiating strength. Calling a big author's bluff puts a brand-name author in a bind. Even with the tools available to a self-publisher, building a successful infrastructure will take time, talent, and tenacity on the author's part. That daunting prospect may be the publisher's last card to play. And Evanovich tells Publishersmarketplace.com that Deadline's report was "inaccurate."

Guess What? Students Want E-Readers

Marion Maneker — Tue, 13 Jul 2010 17:24:09 +0000

The Independent in London makes a lot out of a report by youth-marketing expert Alloy on the purchasing intent among college students:

Consumer group Alloy Media + Marketing released a report on July 7 detailing a 13% rise in ‘back to school' spending by US college students, giving a combined total of $306 billion.

According to Alloy media + marketing, the students will spend an average of $361 per person on non-essential or non-compulsory items, such as games, when they return to school in autumn.

Although currently only 2% of students own an e-reader device, 50% of those surveyed plan to buy one within the next year.

Barnes & Noble (BKS) and Amazon (AMZN) have already cut their prices to get the e-readers well under the $361 average budget. We'll see soon whether these survey numbers are borne out in actual sales. But the data does suggest that E-ink readers still have a market position into which they can grow and expand.

Will Hachette Be the Last Publisher Standing?

Marion Maneker — Mon, 12 Jul 2010 14:49:00 +0000

The Bookseller, the U.K.'s book publishing trade magazine, has these interesting figures showing the way the dramatic drop of 5.7 percent in overall sales in the country has allowed Hachette to increase its market share:

Victoria Barnsley was speaking as figures from Nielsen BookScan, for the first 24 weeks of the year, revealed a fall in the total value of book sales of 5.7%.

She said: “Our business needs to change, regardless of whether there is a recession or not. The economic situation has merely hurried the process along . . . To be honest, I don’t anticipate the market ever returning to pre-recession levels in its current form.”

Barnsley, whose company saw sales fall 13.3%, the largest drop among the top 10 and despite Hilary Mantel’s Booker-winner Wolf Hall, explained it had been necessary to take “a lot of cost out of the business”, including cutting the number of titles published by 20%. “We are focusing more on profit than on market share [now at 7.3%],” she said. “Most publishers over-publish for today’s market.”

Random House also suffered, with sales dropping 9.8% and market share falling from 13.1% to 12.5%—creating the greatest gap yet between it and Hachette’s increased 16.2% share.

In the United States, Hachette doesn't have quite the same market share. But it performs better than any of the other houses because of the strengths of the Patterson and Meyer publishing franchises. As secular changes batter the industry overall, Hachette may benefit from its more efficient publishing operations—few titles that generate more sales and greater profits—to become the only vibrant, healthy publishing house.

Book Trailers: The Secret to Sales

Marion Maneker — Fri, 09 Jul 2010 16:28:12 +0000

What's Stopping Print Content on the iPad?

Marion Maneker — Fri, 09 Jul 2010 15:17:55 +0000

Venture Capitalist David Pakman, a partner at Venrock, doesn't understand why legacy media isn't rushing to get on the iPad. He points out that only six of the top 20 magazines have iPad apps and that most media outlets have been hanging back from embracing the new platform:

I think the iPad is actually under-hyped as a device that will transform media consumption. I think, thanks to the forthcoming wave of tablet devices and better netbooks, the consumer PC is basically dead within the next three years (not so for PCs for the enterprise). But with this new opportunity comes the need for content companies to be aggressive in adapting to and adopting new platforms. We have seen countless examples of how native (i.e., purpose-built) applications prosper on new platforms whereas those migrated from a legacy platform never quite work. Doodlejump is the best selling game on iPhone, not Halo. Farmville is the biggest game on Facebook, not Mario Bros. Early adopters of new platforms tend to reap the rewards more quickly than the late entrants. Given the rapid pace of technology adoption (Steve Jobs says iPad is the best selling product Apple has ever released), consumers build loyalty to new brands more easily when they are the only ones available on a new platform. I advise our companies to be aggressive in adopting new platforms. Crunchyroll, a leader in the anime video space online, had a great iPad app available days after the device shipped. It is this level of aggressiveness that the traditional media companies must adopt in order to build consumer mindshare on these platforms.

It is easy to say, “Only 3MM iPads have been sold.” But given there are only 13,000 apps for iPad written so far, there is plenty of room for best-in-class apps to reach audiences much larger than their analog print equivalents. NPR, for example, has a great app that has been downloaded more than 350,000 times (as of mid-June).

The problem is that pre-existing businesses need to be defended. Very few managers have the guts to cut into their revenue in the hopes of building future revenue. NPR is a counterpoint because of the unique nature of the enterprise. It wants to expand as a media source and the iPad app is a great opportunity for NPR—which doesn't want to be known as National Public Radio now—to run for daylight.

The iPad is a great reading device, but it's also a great viewing platform. You don't see many cable channels or pay-per-view services creating direct-access apps. That's because they'll face retaliation from Comcast and the other cable operators. They're locked into the business that they have.

Netflix (NFLX) is free to cut a deal with Relativity because both sides are looking to overturn the table and take advantage of the chaos. Print has fewer disruptive tendencies right now. It would make more sense for some of the stronger Web sites to start using the iPad as a route toward a revenue stream than it does for newspapers and magazines to race toward undercutting their print advertising revenues.

So the question isn't really that mystifying. And we're going to have to wait for some time before the standoff between the entrenched distribution channels and the promise of the new direct distribution through the iPad breaks. But like DVDs, once it does, it will change the economics of the filmed entertainment industry, for both both TV and movies. And since everything with the iPad seems to be happening at an accelerated pace (because it's deja vu all over again) there's a chance that Pakman will see the dam break much sooner than even he realizes. 2011 is shaping up to be quite the year in the content business.

Content Farms Are Slaughtering Books

Marion Maneker — Fri, 09 Jul 2010 15:02:05 +0000

Much overlooked in the recent fixation on the transition from physical books to e-books has been the cratering sales of backlist books. One of the mainstays of the six big publishing houses is the massive amount of subject nonfiction they produce.

For many years, Barnes & Noble (BKS) was attacking that base by producing its own no-name how-to, advice, and travel books under the Sterling imprint owned by B&N. But just as the bookselling giant was trying to undercut publishers, a new threat to these bread-and-butter books emerged in the form of the Internet.

For the first time, the head of a so-called content farm explicitly states that his company is gunning for the publisher's backlist. He does this to insulate his industry from the accusation that it has destroyed the news business. Here's Suite101.com CEO Peter Berger making his case in Ad Age:

We need to remember that content-generation sites such as Demand Media and my own, Suite101.com, offer something very different than the news media does, and that the reason for that lies in fundamental differences in their respective audiences.

Consumers like news sites for their ability to simplify the day's noteworthy events into a digestible and well-researched selection of reads -- ideally, in today's environment, with editorial edge and a clear angle. Consumer trust is built by the focus and predictability of those qualities. [...]

New content publishers like Demand Media, Associated Content and Suite101.com don't compete with traditional news content. We have some news content, like this article on the Tour de France or this report on U.S. exports development, but it's not our bread and butter.

It's non-fiction book publishers that we really compete with.

In the past, consumers would buy a book to learn how to interpret a particular piece of music or when to plant specific bulbs. Now consumers can go online and find this information with no direct charge. The value we are offering is not the timely editorial "nose" of a newspaper, but rather an identification of the search demand for content and writers and guidance to assure quality at scale.

So while being named a "competitor" by news journalists is creating curiosity about our space, it is not a correct characterization. Our real competitors have to wake up to the seismic shifts we are seeing online and see that they are already at grave risk of becoming marginalized in the digital age. We're still waiting for the McGraw-Hills, the Random Houses, Harper Collins' and Simon & Schusters of the world to get active serving their traditional audiences online and entering the marketplace.

Sun Valley: Where Media Goes to Die

Marion Maneker — Thu, 08 Jul 2010 21:34:11 +0000

There's no better gauge of the state of the media—however broadly you might choose to define that—than the lack of any sort of story line to set up the Allen & Co. Sun Valley Conference. Things are so bad that the Wrap's Sharon Waxman had to resort to this kind of reporting to post anything about the conference at all:

"And here, looking all romantic, comes Paramount chief Brad Grey, hand in hand with his girlfriend, Cassandra Huysentruyt. Did I say girlfriend? That girl is wearing a great big sparkly rock on her finger and the couple confirms that, yes, they just got engaged in France.

"We push for details. Grey demurs. WaxWord persists and gets this much out of him: He proposed at the Hotel du Cap in Cap d'Antibes.

"Cassandra has a conundrum. Will she change her name? Or stick with the Danish-origin Huysentruyt? (I can't say it.) She says she's not sure yet.

"Well, that's some news, anyway."

If that's media news, we might as well all pack it in. Sure, a big part of the problem is the conference itself, which, whatever the original purpose, has become just a red-carpet photo opportunity for media owners and executives. Stars have the Oscars, Emmys and Grammys; why can't the suits have their own awards-show-style event?

Even as a pseudo-event, this year is seriously lacking in anything that might be exciting. Last year, Twitter was the belle of the ball. The service dutifully pulled through in the following 12 months proving the power of the conference to at least invite the hot new start up. Allen & Co. achieved this a few years before with YouTube which was subsequently acquired by Google.

Deals are supposed to be the point of Sun Valley. Some even credit talks last year between Steve Burke and Jeff Zucker as starting the ball rolling toward Comcast's purchase of NBCU from GE.

This year there's nothing to hype—Foursquare is hardly a media property—and nothing to buy. You almost wonder whether the Roberts wish they'd waited a year before pulling the trigger on NBCU.

Hovering in the background of Sun Valley is the launch of the iPad and the ominous threat to the media industry of further dislocation in the economics of production and distribution. Organically generated, cheap and widespread distribution of content through apps is a real potential outcome of the 25 million iPads projected to be sold next year.

By July of 2011, we may see app makers at Sun Valley but the initial experience of the mobile revolution is that creativity doesn't scale into bigger companies. App makers tend to be small shops of quirky and creative types. If they become the next moguls—or what passes for moguls—it will be like the writers taking over Hollywood. Which is kind of a funny thought—until you really start thinking about it.

Quit Huffing at Time's Paywall. It's Smart.

Marion Maneker — Wed, 07 Jul 2010 19:10:45 +0000

There's been a bit of huffy finger-pointing now that Time has embarked on a truly sensible Web strategy that emphasizes the original content on Time.com and keeps the content from the magazine exclusive to the magazine and iPad app.

Why is this so sensible? In the first instance, the overall direction of content is toward finding the appropriate delivery mechanism for news, opinion, and argumentation. With the success of the iPad and widespread emergence of smartphones, we now have a landscape content producers can navigate.

Time is right to want to segment its content in ways that optimize their value. In other words, it's smart to produce content that is appropriate to each delivery channel that makes the most of the advertising opportunities available.

Instead of being surprised or disappointed that Time has removed the magazine content from the Web, we should ask why it was ever available there in the first place. The answer is because it was the cheapest way to generate Web traffic. Only now, that traffic does harm to the magazine's franchise.

But with the iPad, Time can offer subscribers and advertisers magazine content while producing Web content at a lower price. Each channel is getting mature enough to support a predictable cost structure.

Yes, this does bring us back to the two-tiered publishing world of 2005 when no self-respecting writer wanted to be on the Web. But that's partly because Time is really the wrong vehicle to pursue this strategy.

The organizations that would benefit more from the Time strategy are newspapers and magazines with a distinctive niche or world view. Wired comes quickly to mind. New York magazine has shown that you can have your Internet cake and eat your feature well, too. (It would be very smart of New York to follow Time down this road and keep its features off the Web. Though it would have to have an iPad app to do that.) Several lifestyle magazines ought to be able to make some something out of this three-tiered structure of Web, mobile, and iPad/print.

At TBM's Untethered conference on profitable media in the tablet era, Conde Nast's Sarah Chubb made the point that Conde wants to own its readers, however they choose to access content. Indeed, this is what everyone says they want to do. And Time, Inc. is clearly taking some steps toward that by segmenting its content. The next step for Time is to figure out what it can send to mobile customers that resonates with its brand.

Obviously, when you're dealing with content there's overlap. As we move further into a tri-partite media world, everyone will have to create their own Chinese menu of information services. Some readers will want only one or two of these options.

If all readers are using all three, your strategy will have undershot the audience. The point is to make it easier to bring peripheral readers into the brand fold. Quick data and images will do well on both the Web and on handhelds. Some readers will be happy to access longer-form stories on the smartphones as well as a tablet or in print.

But owning the reader means more than just preserving the value of your print ads. It means finding different types of content to give the reader so they identify with the brand. Magazines have been dealing with this issue for more than a generation. Before the Internet was a credible threat, magazine editors and designers were looking for ways to create multiple points of entry to the magazine.

They tried all sorts of innovations to generate more ads against content in the front of the book. That gave birth to charticles and clever photo-based featurettes. Going forward, editors are just going to have to apply the same sort of ingenuity toward different devices and distribution channels. We've already seen some magazines do very good jobs of playing their content off the different media available.

Unfortunately, having two distribution channels doesn't change the way that Time is trapped in the No Man's Land of the news cycle. The organizations that would benefit more from the Time strategy are newspapers and magazines with a distinctive niche or world view. Thomson Reuters buying Newsweek would make a great deal of sense in this context.

Sometime in the future, we may look back on the summer of 2010 and identify Time's move as a milestone in the evolution of news organizations.

Painting on the iPad

Marion Maneker — Fri, 02 Jul 2010 15:37:51 +0000

How the Hell Can Google Save Indie Bookstores?

Marion Maneker — Wed, 30 Jun 2010 16:36:27 +0000

The latest strange twist in the e-book saga comes from the still-mysterious Google Books project which the New York Times tells us will leverage the nation's 1,400 independent bookstores to break into the e-book business. (You can't make this stuff up!) It would be nice to know if indie stores have much in the way of online traffic that would make them influential in the e-book market.

But the meat of the story isn't in the headline. Rather, it's in the later assertion that Google is promoting its e-book service as agnostic on devices:

Here's what the Times says in today's story:

Google is promoting its e-book plan as a fundamentally different and more “open” alternative to its rivals’ stores. Though it will act as a retailer and sell books from its own site, it will also behave like a wholesaler and allow independent bookstores and other partners to sell its e-books on their own sites.

People who buy Google e-books will not be locked into any particular reading devices or book formats, the company said. Books bought from Apple’s iBookstore, by contrast, can be read only on Apple devices.

“I don’t think anyone who has bought an e-reader in the last several years has really intended to only buy their digital books from one provider for life,” said Tom Turvey, Google’s director of strategic partnerships, who heads the Google Editions project.

Now, let's not be dismissive of Google's entry into e-books. Its overwhelming position in search gives it a huge advantage in satisfying demand, by making it effortless to convert curiosity into commerce. And the Google brand offers a big canopy to secure users who will want to store their purchases in Google's billowing cloud.

The question that raises is whether Google can use its brand strength to drive its e-book business without having a device of its own. In that sense, Turvey seems confused about how the developing e-books business works.

What we've already seen is that buyers flock to a device that is attached to an established and trustworthy brand. No-name readers like Irex and Plastic Logic have been still-born; brand-name devices from Apple, Amazon, and Barnes & Noble have been hits.

Following that logic, it doesn't seem likely that consumers care much about having device freedom. Most seem to recognize that the cloud service is persistent but the device is transient. How long do any of us expect to own an e-reader? Longer than we'll own our current cellphones? And when we upgrade, we know that our content will have to migrate with us.

In that sense, Google seems to be offering the e-book version of cell-number portability. It's a nice option to have (the ability to move your library to a new device), but not really one that seems to drive purchasing decisions. (Otherwise, we'd probably see more emphasis placed on the open e-pub format that already exists.)

When Google's e-book store finally arrives, it will be the perfect test case to discover what's really driving the e-books market. Though its success will probably have no effect on the fate of independent bookstores.

Presented By:

Wed, 30 Jun 2010 16:36:27 +0000