Seeking Alpha

Ken Doctor's  Instablog

Ken Doctor
Send Message
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
My company:
Content Bridges
My blog:
My book:
Newsonomics
  • The Newsonomics of the Emerging 1, 2, 3, 4 News Business Model 1 comment
    Sep 23, 2011 1:20 AM | about stocks: AOL, MSFT, NYT, TWX, NWS, DIS, YHOO, NFLX, CMCSA, GOOG, GCI

    Ah, the joys of print — and real world — serendipity.

    Arriving in Berlin to speak at the annual Medienwoche, part of the IFA 2011 content-meets-tech conference, I took a post-flight stroll around my hotel. I picked up a Wired U.K. at a local newsstand (newsstands chock-full of magazines and newspapers seem ubiquitous in Germany, their big-city absence in America made more noticeable). It’s a good issue, exploring the top digital entrepreneurial hotspots across Europe, from a U.K. perspective.

    Across from p. 82, my eye caught a house ad. It was selling all things Wired U.K., but selling them in a customer-centric way I hadn’t before seen. Reproduced below, you see how it focused on how customers may variously access Wired. It speaks “multi-platform,” “multimedia” and “news anywhere” much better than those compounded nouns (which, when you think of it, are starting to sound like multisyllabic German constructions).

    It’s masterful in telling the reader simply, and with a bit of fun, what the Wired U.K. brand stands for, how you can pick your timeliness (now to annual), mode of ingestion (reading, listening, or attending conferences) and more.

    In a second bit of terrestrial serendipity, it turned out that Wired U.K. Editor David Rowan was speaking at IFA two hours after my talk. He and his art director, Andrew Diprose, had already supplied a digital copy of the house ad. I told him how well I thought the ad captured a business model in the making, with a clear customer-centric approach. He thanked me for the comment, and added, “It’s just something we tossed together when we had an extra page.” Well, it may have been, but it shows how this Wired crew is thinking of their business, eating some of the digital dog food it dishes out in each issue.

    The ad had particular resonance this week as I’ve been thinking about the question on everyone’s minds in the newspaper and magazine businesses: What’s the newbusiness model — that hybrid print/digital or digital/print — going to look like? It’s clear to everyone at this point that while print has a significant role for as far forward as we can see, it’s receding in importance, and revenue, and that digital is the growth engine on which to focus.

    It’s one thing to say that and quite another to say what the new business model will look like. How much revenue will come from what, when, and who?

    Now approaching 2012, we see that 2011 has provided a few clues to that new business model. No one, though, even the world’s digital revenue news leader, Oslo-based Schibsted (with 30 percent of overall revenues driven by digital) will tell you that even the industry’s leader has not yet found a big, sustainable model able to support a large newsroom.

    Let me propose a model I’m testing out, as we watch the rollicking developments in the industry. As paid digital-access plans roll out weekly, as Digital First becomes not just a catchphrase but a company, as tablet development moves to the front burner and as the TV business continues to outpace both newspapers and magazines, what are the common threads we can see?

    It’s purposely a simplified, bare-bones structure. I call it the newsonomics of 1, 2, 3, 4 and welcome flesh to be added to the skeleton — and/or chiropractic adjustment as well.

    It’s 1, 2, 3, 4, as in:

    • 1 brand
    • 2 major sources of revenue, advertiser and reader
    • 3 products: print, computer, and mobile
    • 4G, as in the coming of faster connectivity

    Let’s look at each one, briefly:

    1 brand

    The first decade-plus of the web was all about collecting, bringing things together. That meant major wins (63 percent of U.S. digital ad revenue in 2011 is going to Google, Yahoo, AOL, Microsoft — and Facebook) for those who aggregated. The act of collecting (curating if you prefer) was rewarded at the expense of those being aggregated. Now, as we approach 2012, we’re seeing a major re-assertion of brand, and its primacy.

    Steve Jobs’ tablet-launching assertion that search is so yesterday was part sales pitch, part prophecy. The app is nothing if not the re-ascendance of brand, encapsulated in a few pixels. These tiny apps — from ESPN, The Atlantic, Time, the Guardian, and Berliner Morgenpost to The Boston Globe, The New York Times and the Wall Street Journal — all convey new promise. That promise has found a business model — all-access — to accompany. After years of wandering in the wilderness of customer confusion and self-doubt, news companies are saying: “You know us, you know our brand; you value us. Pay us once and we’ll get you our stuff wherever, whenever, however you want it”. Call it “entertainment everywhere” or “news anywhere,” or “TV Everywhere,” major media are now re-training their core audiences to expect — and pay for — ubiquity.

    News companies are following the lead of Netflix, HBO, and Comcast (Xfinity), all now basing their hybrid old world (TV/cable/post office) and new world (smartphone, tablet, computer, and connected TV) on the same simple idea. In the first digital decade, news and entertainment was atomized by aggregators, dis-branded, as readers and viewers often flipped through Google, YouTube, or Yahoo without knowing who actually produced news or entertainment.

    Now, we see brand re-emerging to signal top-of-mind awareness — and to earn those one-click credit card payments. These are friendlier brands, attempting to leverage and master the new social curation of news and entertainment.

    2 major sources of revenue, advertiser and reader

    For that first decade plus of the web, news publishers relied on one revenue source — digital advertising. That’s been like wheeling into the future on a unicycle, lots of careening and too little forward progress. As publishers have taken a long-term view of the business, the conclusion from Arthur Sulzberger and Rupert Murdoch to Dallas’ Jim Moroney and Morris’ Michael Romaner has been the same: We have little hope of creating a successful digital business without robust digital reader revenue. Reader revenue doesn’t have to be mean only digital subscriptions. Schibsted and Australia’s Fairfax are pioneering “services,” with Schibsted’s story-aided weight-loss programs prototypical. Newbies Texas Tribune and MinnPost are showing how reader-attended eventsare moneymakers. The tablet will spawn lots of new one-off paid reader products.

    And advertising doesn’t mean just selling space. Most major news chains, from Advance to Gannett to Hearst, are becoming regional ad agencies, selling and re-selling everything from deals to Yahoo (or in Advance’s case, Microsoft) to search engine marketing to Facebook and Google to local merchants large and small. The New York Times pulled Lincoln “ad” money into digital circulation push. Sponsorships are coming back in a big way for mobile.

    So, two revenues, tried, true, but twisting new. Will they be 50/50 supports of new models? Too early to say, but they provide us the rivers and tributaries to build new revenue stream models.

    3 products: print, computer, and mobile

    “Online,” of course, was first re-purposed print. Too much of mobile is, again, re-purposed online. Yet, the smarter all-access players, mostly national, are looking at their audience data and seeing how different usage is by device or platform. There are new products — MediaNews’ TapIn is emblematic — that are made for the tablet, with even smartphone utility in question and desktop a distant third. We’ll see three distinct ways of thinking about product: print, lean-forward desktop/laptop and lean-back tablet/on-the-move smartphone. Newspaper print becomes just another platform. This triad becomes more than a smart way to think about product development — it becomes a way of measuring costs, revenues, and metrics like ARPU.

    4G, as in the coming of faster connectivity

    Only in the last couple of years have we passed 50 percent broadband access in the U.S., which currently ranks ninth worldwide at 63 percent of households. We’ve forgotten the days when pressing on the play button on a website’s video player was a crapshoot. Between buffering and bumbling of all sorts, video only sometimes worked. Now, take a look at the just-launched WSJ Live on the iPad, and you see how far we’ve come. 4G is now on the mainstream horizon, and with it comes the higher valuing of news video. That’s a challenge for text-based newspaper companies, most of whom have taken only first steps to becoming truly multimedia companies. You can see the 4G glow in the eyes of John Paton’s new Digital First Media company. I’m told his New Haven Register now outproduces the local TV stations in digital video news creation; few newspaper peers can yet say the same. With ad rates for news video are still markedly higher than for text stories, any successful model must put video at the center of new products.

    So, it’s 1, 2, 3 and 4, good tests of evaluating new company strategies — from the inside or out.

Back To Ken Doctor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • billbennettnz
    , contributor
    Comment (1) | Send Message
     
    Would it be possible to show a scan of the Wired ad?
    28 Sep 2011, 11:45 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.