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Ken Doctor’s work centers on the transformation of consumer media in the digital age. He is the author of “Newsonomics: Twelve New Trends That Will Shape the News You Get,” which has been translated into Mandarin Chinese, Korean and Portuguese. He contributes to his own Newsonomics.com website... More
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  • The Newsonomics of All-Access -- Apple's Subscription Policy

    First published Dec. 14, 2010, at the Nieman Journalism Lab

    Don’t wait for the white smoke to waft over America’s tech consumer Vatican, the Cupertino headquarters of Apple. The electronic elves are too busy shipping Christmas iPads, and figuring stock-option payouts based on 2011-12 sales projections. Those projections, newly minted by eMarketer, call for another 50 million iPads to be sold in the U.S. alone over the next two years, atop the eight million they think will sell by year’s end. (Other manufacturers would only sell another 20 million tablets in the U.S. over the same period.)

    The white smoke? That would be the signal to news and magazine publishers of how Apple is going to allow access to the tablet kingdom. We’ve seen lots of debate, quasi-information, and mixed signals out of Apple about how digital subscriptions will work, including who will keep which revenue and who will partake of user data, the new digital gold. Apple execs talk regularly to publishers, under threat of severe NDA. Those discussions and the back and forth of dealing with Apple on how apps must be configured to get approved are described as an exercise in Kremlinology — trying to divine how things are really working and will work, without actually being told.

    After talking with numerous people in and around the tablet/apps industry, I think we can divine the 2011 policy and clear away the smoke and mirrors. Simply put, this is what the de facto Apple policy on digital news subscriptions appears to be:

    • Publishers can charge their digital readers for tablet — and smartphone — subscriptions, and keep the generated revenue stream.
    • Publishers can offer “free” apps in the Apple store — iTunes for now, iNewsstand maybe not too far away.
    • Publishers must — and here’s the rub — restrict browser access is some form. In other words, you can’t simply charge for digital content on the tablet and the smartphone and let it run freely wild through a browser. The pay models may not have to be the same, tablet to smartphone to browser (that’s unclear), but publishers can’t two use two opposite approaches and use the iTunes stores an initial access point to gain customers and keep all the resulting revenue.
    • Publishers must do their own authentication of users and their own e-commerce outside the Apple interface, to make the program work.

    Importantly, numerous news players are acting on the belief that the above will be the policy, given their conversations with Apple. If that seemingly de facto policy becomes formal — with the announcement of the iPad 2? — it will have far-reaching implications. In fact, it gives a rocket boost to the “paid content” (meaning new streams of digital reader revenue) revolution now in front of us. Why? It marks the convergence — maybe the ratification — of three big things happening as we enter 2011. Put them together, and you have the Newsonomics of all-access.

    Number one: The tablet. It’s a reader’s product, and therefore a news publishers’ dream. Longer session times. Longer reading forms embraced. A greater willingness among consumers to pay. Print-like advertising experiences — and rates. All of those results, reported privately by the big news companies that are first to market with tablet products and also in a user survey just released by the University of Missouri’s Reynolds Journalism Institute here, are preliminary. (More on the recent Roger Fidler-led Digital Publishing Alliance conference, at which I spoke, here.)

    As the iPad moves from Apple lovers to mass market, those numbers should moderate. Yet the very nature of the tablet is telling us that digital news reading isn’t what we thought it was — only a Kibbles ‘n Bits, check-in-on-the-briefs-and-scoot reading experience. It looks like a lot of what we thought were huge changes in news reading behavior may have had as much to do with what the nature of a computer (desktop, laptop) reading experience, and not with a change in the nature of humans themselves. We’ll see, but meanwhile, it looks like a good fifth of the country will have a tablet by 2014.

    Number two: That paid content push. 2010 has been prologue, as The New York Times took the year to lay extensive plans, connecting pivotal technology, and Journalism Online traversed the country (and lately other continents) preaching from the pulpit of the Holy Church of Freemium and the practice of metering. Don’t erect a paywall, like News Corp. did in London with the Times; start the meter, track it, and charge accordingly. That’s the Financial Times model, and the one The New York Times and Journalism Online cite as a bible, along with learnings from The Wall Street Journal’s freemium experience, a pivotal education for JO principal Gordon Crovitz, who served as WSJ publisher. The digital reader revenue payment was born out of abject frustration, as publishers concluded that digital advertising itself would never support the large news enterprises they wanted to maintain. They were tired of unicycling into the future; digital reader revenue restores the “circulation” leg of the business, providing (in the abstract) two strong legs to stand out going forward.

    Number three: The arrival — finally, o Lord — of the news-anywhere, multi-platform, multi-device world that we’ve been envisioning for more than a decade (“The Newsonomics of News Anywhere“). For more than a decade, it was a print/online world, in the minds of publishers. Now it’s a print/online (desktop, laptop), smartphone, tablet — and soon Apple TV for news — world. That changes everything in how product is thought out, created, presented and sold.

    Put these three phenomena together — a multi-platform world in which the tablet becomes a prime part of daily news reading, reading that will be partly charged for — and you have the shiny new business model of 2011: all-access. I’ve written about all-access and exhorted those publishers with high-quality, differentiated news products to embrace it (see “The Newsonomics of the Fading 80/20 rule“, on Time Warner moves). Now, the forces of the times seem to have conspired to bring it forward and make it dominant.

    No, there has been no announcement of a warm all-access embrace, but consider:

    • It’s the model used by the paid-content champ FT (“The Newsonomics of FT as an Internet Retailer“) and The Economist.
    • It’s the model just embraced, without fanfare, by The Wall Street Journal, which had throughout the year priced each new digital platform separately. In its recent announcement of an Android tablet product, it said: “A full digital subscription is available for $3.99 per week, which provides access to WSJ Tablet Edition for Android and iPad, WSJ.com, and WSJ Mobile Reader for BlackBerry and iPhone. Current Journal subscribers receive full access to the WSJ Tablet Edition for free for a limited time.”
    • The New York Times model will follow the same across-platform approach when it launches metered pricing early next year.
    • And, it’s not just the big guys. Take Morris’ Augusta Chronicle, a new Journalism Online customer, which just went metered– and all-access, including its upcoming tablet product in the subscription bundle. Expect to see other Journalism Online customers — a few dozen to start — follow this model next year, along with a number of other dailies that tell me they are planning a similar approach.

    The big idea? Cement the relationship with those readers who really want your news, delivered by your brand, global, national or local. Say simply: We’ll make it easy for you to read the news however, wherever, on whatever you want and offer it at a single bundled price. Expect three basic offers: Everything (Print + all digital forms), Print Only and the Digital Bundle (probably including the odd cousin of the digital group, the e-edition), plus some by-the-device (iPhone, iPad, Blackberry, etc.) pricing. It’s certainly not a news-only idea, as Netflix, HBO, and Comcast build out the same model.

    It’s a tablet-fed, Apple-polished tablet do-over, and for many news publishers, really a do-or-die effort to reassert brand and product value, reassembling a new business model and building what will sooner-than-later be a digital-mainly business. Will they succeed? Some — those with substantial product offerings that are not commoditized — who move the meter dials smartly, picking off the top five percent or so of their mostly digital visitors for payment will. In a twist on the now-legendary Jeff Jarvisism: Charge the best. Market ads to the rest. (And don’t scare them off with a paywall.) Other legacy publishers have cut too much to make the new math work, and still other newer publishers will find all-access works for them as well.

    There are many more twists, turns, issues — many of them requiring technology lacking among many publishers — and obstacles yet to work through, but we’ll get to those into the new year. Apple’s own role certainly won’t be to remove itself from the new equation, but to find numerous ways — iAds anyone? — to harvest value.

    For now, consider all-access the model to be tested in 2011.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 19 6:12 PM | Link | Comment!
  • Reuters America Claims New Territory; First Stop, Chicago & Tribune

    On the surface, it looks like the tale of new bedfellows, Reuters and Tribune, has a couple of great storylines. Number one would be that Reuters, the Brit insurgent, having rallied its forces makes another foray into the U.S. market. Number two would be that Sam Zell, never a comfortable presence at Associated Press meetings when he served as CEO of Tribune, was able to wreak one last bit of havoc on his way out the door.

    Great storylines both, but unfortunately more fiction than fact.

    In fact, the new launch of the Reuters America product and Tribune Company's embrace of it have more basic truths to tell us about fast the news marketplace is now beginning to change.

    The deal itself is a straightforward one. Tribune is taking the newly announced Reuters America news service and halving its annual spend with AP. So that's a twofer for Thomson Reuters. It takes in somewhere in the neighborhood of $4 million a year in new revenue, while depriving its direct competitor, the AP, of about the same sum. Tribune's been spending close to $9 million a year with the AP, and now is cutting that ancestral baby in half.

    It's easy to read the deal as a big loss for AP. The newspaper-owned cooperative sees one of its main members defect to the competition, further wounding the AP budget, already subject to serial cuts, and raising new questions about the stability of the 164-year telegraph-birthed coop. And yet: it could have been worse.

    AP's been bracing for Tribune's decision for a long time. Two years ago, Tribune, under the Zell regime, gave its first notice of cancellation, when cancellation then required two years' notice. Since then, the parties have been negotiating, aiming for a new deal, with the current one ending Jan. 31. It's been no secret that Tribune might bolt, though the dispatching of much of the Zell team from the Tribune Tower raised the question of what new direction the company might take in regards to AP.

    Tribune could have decided to jettison AP altogether, but it didn't. Seven Tribune papers will take AP Limited, a lesser AP service, while the Los Angeles Times will take the big package, AP Complete. Tribune Broadcasting, already getting significant content from CNN, will drop AP coverage entirely. So Tribune is halving its annual spend with AP, but it is keeping its membership and sounds genuinely to be in a testing phase, testing out the new Reuters relationships alongside the chance of a new romance with AP, if the old suitor can rise to the competition.

    The Tribune deal is a significant crack in the foundation, but it's not a clean break, which would have been far worse for AP. As CEO Tom Curley and the AP leadership aim to restructure and re-energize the company for the next digital age (its Digital Rights clearinghouse is the latest shot in that war), there's now a still-heightened urgency to get it right. Get it right, and members stay. If not, we could see further defections that will raise the specter of whether AP will go the way of its northern cousin, CP. Just last month, Canadian Press passed from being a publisher-owned coop to a private, for-profit company, owned by three major publishers. Why? Two major Canadian publishers had left the CP, forcing a reshuffling.

    If this all seems like a game of News Chess, it's simply a recognition of the changing nature and economics of the business, says Gerry Kern, editor of the Tribune and VP/editorial for the Tribune Company.

    "Sam Zell has nothing to do with this," Kern tells me. "This was my project. I've been thinking about this for years." Kern served as vp/news for Tribune 2004-2008, and he advocated "shared content."  Even in pre-recession times, that made economic sense. Instead of each of the Tribune papers producing its own nation/world pages, why not do it once, create templated pages and have the papers use those templates. Then, each Tribune paper could use the labor savings to concentrate on the remaining strategic news priority of every daily (save the New York Times, the Wall Street Journal and USA Today) in the country: local news.

    Media on Demand -- MODs -- was born. Now 40 staffers at the Chicago Tribune produce 240 modules a week for Tribune papers -- and Tribune is starting to sell the modules to others, with Schurz Communcations its first client.

    So here's how shared content, budget cutbacks and the emerging potential of new content players come together in this deal.

    Kern applied some metrics to the news offerings of the Tribune papers. At his Chicago Tribune, he computed a 60%/local news-40%/other percentage ratio.

    Kern found that the Tribune company -- through its foreign bureaus (20 staffers), its DC bureau (32), the entertainment/features/sports offerings of Tribune Media Services and its own McClatchy Tribune Wire -- supplied three-quarters of the non-local content. That left a quarter of the 40%, or 10% of the total content, needing to be supplied by others.  (At the other seven Tribune papers, these percentages vary to some degree, but are in the same ballpark.)

    So the question became: how valuable was the annual AP spend for what the papers need to do now, in print and online, and into the next couple of years? As of May, the Chicago Tribune says it essentially stopped running AP content, as a live test, seeing what it could substitute and what holes appeared. "We got zero calls from the public, and I don't think many people in the newsroom noticed," says Kern.  The experiment validated the theory that a wire reshuffling could work.

    Enter aggressive Reuters, buoyed by its merger with Thomson in 2007, and under New York-based Reuters Media President Chris Ahearn's leadership, a forward-grabbing news presence worldwide, with new models of syndication, flexible packaging and pricing and eye for a deal that might break loose the U.S. market, a market in which it's long been a distant #2. Where Kern says AP told him it was unable to provide sufficient new models and staffing flexibility, Reuters said yes, resulting in the new deal. Among the details: Reuters content will be found in the Tribune's MODs. Mix and match and mix.

    What is Reuters America, and what is it offering Tribune, and now others, as it aims to benefit from newspapers' occasional family squabbles with AP? The new product is plainly aimed to be a replacement for AP.  The new news service combines lots of elements to try to do that:

    • Reuters says it is committing to staffing 103 U.S. cities, though at unspecified levels. The staffing will be a mix of full-timers and stringers. The offices will share daily budgets with Tribune (and future customers), and offers to do on-demand stories, maybe as many as two to three a day, as requested by clients.
    • A beefed-up sports offering, intended to shore up a long-time Reuters deficiency in the U.S. market. Cricket and rugby coverage just doesn't cut it here, so Reuters has partnered with Sports Direct, the Sports Xchange and SB Nation to pump up coverage.
    • It's adding The Wrap News for more entertainment content.
    • It's partnering with Pro-Am Examiner.com, harvesting the work of those contributors.

    Kern believes the new service (plus the more limited AP offering) will fill up that 10% of newshole well, and will save the company a little money, the savings being a secondary objective to right-sizing the content, he says.

    The proof, of course, will be in the execution. While Reuters' 2900 journalists (about the same number as AP's) is proficient at global and business news, it remains to be seen whether the new staffing will produce enough high-quality news with an American accent. It choice of partners, especially Examiner.com (roasted in many quarters for its treatment of writers and quality of its content) will raise a red flag.

    Still, it will be an intriguing test. Beyond the immediate test, we're seeing how flexible news content delivery is getting to be. Demand Media is selling content to USA Today and Hearst papers, while Reuters and Tribune buddy up to Examiner. Mix and match is the order of the day and un-bundling, just like what cable consumers are asking for, is happening. News companies, seemingly on the fly, are more and more becoming more discerning buyers, and sellers, witness Tribune's new sales of its MODs products.

    It's content chaos, and in the new, heightened chaos that AP must regroup even quicker, as it plots its own way in the contemporary news wilderness.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 19 6:08 PM | Link | Comment!
  • The Newsonomics of Do Not Track
    First published Dec. 9, 2010, at Nieman Journalism Lab

    Just in time for Christmas, we have cookie madness. No, not the sugared kind — the tracking kind. With pugnacious FTC Chair Jon Leibowitz taking on yet another big topic (saving media, net neutrality), we’re talking about tracking technologies — what’s fair, what’s legal, and what’s right.

    On Dec. 1, Leibowitz put forward a 122-page Do Not Track proposal, officially inviting public comment due Jan. 31. Industry groups of many kinds, including the Online Publishers Association, are busily preparing responses. It’s unclear, as often the case with things digital, where the FTC jurisdiction ends and where Congress’ assent is required. There will be all kinds of twists and turns in the politics of Do Not Track (where, for instance, will the Tea Partiers stand, pro-unfettered individual liberty or anti-government regulation?), but when the dust settles, expect the following:

    • It’ll be easier for consumers to opt out of being tracked. That may be a simple one-click cookie, or something still a little complicated, but considerably easier than the multi-step approach required today. (I asked a group at NewsFoo, a tech-savvy bunch, how many knew how to turn off tracking. Only five out of 40 raised their hands.)
    • The advertising industry will seek to find new ways to further target, no matter what new hurdles are put in front them.

    This isn’t an abstract debate about consumer rights or Big Brother. It’s a debate that could have profound implications for news media. If rules are re-written, we could see a re-balancing of power among news media, advertisers, ad agencies, and the ad networks. Therein may lie billions of dollars in ad spending — and revenue splits — in the years ahead.

    If you attend an digital ad conference or talk to leaders in the industry, you’ll see the same PowerPoint (or Keynote): The perfection of commerce is coming soon. Ad-targeting technologies are getting smarter each day, creating better analytics about…us, collectively and individually. The coming perfection: I only get the kinds of commercial messages that make sense to deliver to me, based on all the known info about me, my reading patterns, and shopping habits. Sure, some mass branding — Coke in both Times Square and Tokyo’s Shibuya Crossing — will always be valuable. Most advertising messages, though, will be targeted. Targeted advertising is more effective, cheaper to deliver, and cuts out waste.

    In that paradigm, media isn’t an enemy, exactly. It’s just friction. Media that helped deliver audiences for many decades now is a kind of friction. In the last several years, particularly, old media brands have eschewed ad networks as much as they thought they could, selling “premium” inventory. That means leveraging the authority of the news brand and its association with the deep pockets of affluent readers. We’ve seen some success there, but have to wonder how long it might last as targeting technologies get better and better. Why deal with the friction of separate media buys, if you can cherry-pick the audiences you want wherever they may be at the moment?

    In classic web theory, it’s disintermediation: The connection between media and consumers is dissolving, with marketers able to reach end users more directly.

    Enter a new age of Do Not Track. Maybe, in that world, news media’s role — and its engagement with audiences — becomes much more valuable. Maybe, it’s a reintermediation of a kind, as news media’s role in the shopping/buying lives of its readers re-emerges, digitally.

    How might this happen? If we look at the potential newsonomics of Do Not Track, we can see at least two ways that real revenue can be driven out of the reordering of the tracking world.

    First, the FTC proposal treats first-party tracking differently than third-party tracking. First-party tracking means that media, or really any company, tracks the behavior of its customers, those who have chosen to have a relationship with the brand. First-party tracking would allow online publishers to use analytics, drawn from web usage and registration data, to better target content for readers and viewers. And first-party tracking should allow some ad targeting of readers by a publisher on its own site — though that question will get muddier, depending on how Do Not Track actually works.

    If publishers — especially big publishers, with the scale of audience of the Times, the Journal, Reuters, and portals — can help advertisers target consumers, then their audiences may become relatively more valuable, and advertising messaging higher priced. The “relative” here is relative to what advertisers can do off big brand sites. If Do Not Track constrains that in a significant way, that big news brands can offer relatively better targeting. That means a $10 CPM ad may be instead sold for $16, for instance, and the value of targeting can add up to tens of millions for each company annually. For a U.S. online ad industry now galloping to 17 percent 3Q growth (and expected similar growth next year) to a $25.8 billion expected 2010 final number, that targeting advantage could mean billions.

    Second, publishers might further monetize the voluminous data they are harvesting. They could sell it. Data, media have come to understand, isn’t exhaust — it’s gold, if properly mined, and deeply valuable to advertisers and agencies.

    Krux Digital, which works with publishers to track data usage, recently put out a report saying that “data skimming” by third-party networks was costing “premium publishers” $850 million a year. In other words, networks were placing cookies on publisher sites, alighting with lots of data that they then used to target other advertising. The number could be high (Krux has an interest in a high number; the higher the number, the more apparent need for its services), but there’s significant money left under some table, largely unbeknownst to publishers. If Do Not Track puts more power back into the hands of the publisher, then publishers may be help to re-sell the information — and that could help build toward the new business model news publishers’ need.

    The FTC, of course, isn’t setting out to provide publishers with a new revenue stream. It’s trying to protect consumers.

    Consequently, in industry responses to the FTC, OPA and other news industry groups have to be smart. They have to not only give lip service to being pro-consumer. They have to talk about how they can be pro-consumer, and much more transparent about how they use consumer data. They can proudly talk about delivering better news products. They can talk about improving the researching/shopping/buying experience. They can get beyond what some note as the “creepiness factor” of tracking, by offering up fundamental rules about how they’d be clear with their readers and viewers about what is being shared, what’s not and about consumer choices. They could also offer consumers incentives to share info.

    They can re-establish, and reinforce, new stronger relationships with readers, in perfect synchronicity with the efforts of some to charge for digital news content.

    The big opportunity, perhaps, is the ability of news publishers to transparently offer reader/consumers the opportunity to “opt in” to a wider world of reading and shopping targeting. Then, they could re-emerge, in the tablet era no less, as community and national centers of news — and commerce. Forget Foursquare; readers could check into their favorite news companies.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Dec 19 6:04 PM | Link | Comment!
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