Will Ferrell in Davenport

In any case, I digress. Let’s get down to the show itself…

How Investors Reward Greed Instead of Risk

In the first segment, we discuss whether “greed is good.” Specifically, we’re talking about how the web seems to reward bad behaviour. Just look at how the 4 big web IPOs of the year:

• LinkedIn IPOd at $84/share and dropped to $74/share
• Demand Media IPOd at $22/share and has dropped to $7/share
• Groupon IPOd at at $26/share and dropped to $21/share
• and Pandora at $17/share and dropped to $11/share

Newspapers Still Experimenting with Pay Models

In the second instalment of episode 18, we turn to newspapers and how they’re still trying to charge for content. Specifically, we address how Sun Media is rolling out a metered pay plan.

Personally, I think that you need to offer something really unique/special to charge for it, and Ash chimes in to point out how the Wall Street Journal and New York Times have gotten away with paid content because they do just that.

Paid Distribution, Facebook Memology, Will Ferrell, and Gowalla

In this final segment of episode 18, we enter the lighting round and then turn to the email of the week. During the lightning round, we discuss:

• Paid Distribution
• Why Will Ferrell is doing ads for Old Milwaukee
• How Facebook Memology is a PR response to Google Zeitgeist
• and Gowalla selling out to Facebook

Then we turn to the email of the week, Ash chimes in on whether we’ll see more or less web IPOs over the coming year.

Read or Download the "Social News Organizations" White Paper

One of the most troubling things for me about watching newspapers go through what they’re going through is that none of it is really necessary. I mean, yeah, I’m really upset that so many of the watchdog’s of democracy are dying off, but I’m even more upset that there’s so much they can do save themselves. In fact, I even spoke about it at PodCamp Toronto 2010.

Well, I’ve decided to prepare a white paper on how the news media could adapt proven strategies and adopt their distribution and revenue models to the modern digital landscape. Each of my suggestions, moreover, are backed up with hard data and/or case studies. The things that I cover include:

1. Social News Organizations: Public Parks vs Walled Gardens - the new news media will rely on subscriptions, but registration/subscription will be free.
2. News Organizations & SEO - rather than blocking search engines from their content, news media can be using them to attract new readers and drive registrations.
3. News Organizations & Social Media - there are a number of tools and APIs that news media can (1) be using to engage, acquire, and retain new users, and (2) access data on those users that can be used to guide editorial and bolster ad targeting.
4. News Organizations & Mobile Apps - the mobile web is not only growing exponentially, but offers news media an opportunity to (1) retain users, and (2) target their content and advertising by geo-location.
5. News Organizations & Diversified Ad Offers - with the data and targeting abilities available to them through social media and the mobile web, news media outlets are in an excellent position to offer advertisers much more flexible and targeted ad placements.

Of course, these five bullet points don’t do the paper justice. It’s over 5,000 words in length and support by 11 research sources. And with that being said, I’ll let you read or download “Social News Organization: How Search & Social are Changing the News Media.”

The session I gave at Podcamp Toronto 2010 was titled Saving Newspapers Using Search & Social. It was all about how newspapers could use a blend of SEO, social media, and mobile apps to increase their audience and offer more diversified and targeted ad buys. Some of the audience seemed to thinks that I was on to something, and some of the audience thought I was dreaming.

On the last day of PCTO, I met Dave Coleman. He’s the Director of Marketing for Spreed Inc, a company that’s already working with newspapers to provide the mobile component of what I recommended in my presentation. Spreed is working with some major newspapers, such as the Globe & Mail, which served up 7.5 million page views a month last month through their iPhone App alone.

iPhone Version

So it looks like newspapers aren’t f**ked, after all. They just need to start looking at themselves as Social News Organizations rather than suppliers of physical, printed artifacts. Because, frankly, their business model hinges on providing authority, printed content, and there’s nothing in that which stipulates that that content has to be delivered via a berliner, tabloid, or broadsheet format.

A couple of weeks ago, Rupert Murdoch announced that Newscorp is likely to make its content unfindable to users on Google when it launches its paid content strategy. To me, Murdoch’s decision sounds like stubborn chauvinism. I mean, NewsCorp isn’t the only name in news, and I think in the midst of so many Google News results, most users are unlikely to notice that Newscorp results are missing.

A Solution

What Murdoch, and all publishers, should be doing if they want to charge for content, is letting only Google in and locking out its users. What I’m talking about is Google’s first click free feature whereby Google is let in behind the wall to index content and searchers can then access only the content of their search result — if they try to navigate anywhere else on the site, they’re prompted to login, register, or whatever…

An Imperfect World in Flux

Now, I understand that this still poses a problem for news outlets whose bread and butter is being able to monetize timely content, but bear with me: what if newspapers blocked Google from accessing their full-length content, and had “news briefs” accessible via first-click-free so when users clicked through, they only got one or two paragraphs and then had to subscribe/register to access full-length content?

Granted, even this is an imperfect scenario: (1) users will likely just seek out the rest of the story elsewhere, (2) most news consumers only read the first couple of paragraphs anyway, and (3) Google favors lengthy content. But even these three realities should stand as a lesson for Murdoch and his contemporaries: the times are a-changin’, but it might not even be that much of a problem because the average mass-consumers only wants the headline, lead, and few extra words anyway.

Go (Back) To Market Strategy

The strangest thing about Murdoch’s decision isn’t that no search marketing specialist seems to have been consulted, but that the majority of Newscorp newspaper holdings are local, and if I want local news, I’ll go directly to my local Newscorp publication rather than bothering with Google news. So Google isn’t all that much of a problem for Newscorp there.

The problem that Newscorp is facing is the same one that all newspapers are facing: they are in the business of distributing original, authority content, still have that content, but were too slow to adapt to new distribution technologies and channels. Trying to eschew how that that technology is now mainstream is tantamount to refusing to understand the fundamentals of the industry you’re in: content distribution.

What Murdoch and other newspapers should be doing is swallowing sunk costs (and pride) like big boys and girls, and start running that long, uphill rat-race to catch up while they still have a chance of qualifying for survival.

Maybe what Murdoch thinks he’s doing, here, is opting out of all the traffic that Google News can send for searches on more national and international level stories, but that’s gonna f**king hurt his visits and page views, and drive the value of his ad space down into the cellar.

I just hope that the WSJ is able to survive in tact long enough for Murdoch to realize that he’s being a cranky old humbug, and reverse his decision, ’cause let’s face it: North American democracy needs publications like the WSJ, and it’d be a crying f**king shame if it got tanked because Murdoch is too set in his anachronistic ways of thinking to accept that distribution channels have changed and that publishing is about leveraging the most cost-efficient channels available than it is about monetizing any particular one.

Print publishing is seen as a lot more authoritative than blogs because of the investment put into it.

With a blog, you just write and publish. With a piece of print, someone was hired to assign the story/beat to someone who was hired to write it, and when the writer files it, it’s then vetted by people who were hired to proof it, fact check it, and edit it for length and tone. And then, the publishers pays to have it printed and distributed to points-of-sale and subscribers.

A lot of capital is invested in bringing a piece of printed content to market, and that’s a cue for consumers that that content is at least worth considering. This also goes for both consumer magazine, which do less editing and fact checking, and online newspapers, which have all the same costs minus the actual printing/distribution ones.

The content may be good or bad, but a lot of paid professionals were involved in creating it. And that says something to the audience.

The way that interwebs have eroded the barriers to publishing, it has also eroded the gage that consumers use to gage authority and credibility. To publish now requires no capital beyond an internet connection.

Publishers don’t need to focus on ROI anymore. They can be hobbyists or activists or sycophants, and their content can still be very well trafficked. They can game the game, and consumers are left with fewer and fewer ways to gage what content is worth trusting.

This is a problem for everyone: consumers, publishers, advertisers, and PR folks.

An over-saturated publishing market is drowning authoritative content. Consumers are less sure who to trust. Advertisers are losing the consumer reach that authority channels once offered. And PR folks have less and less access to authoritative, unbiased third-parties.

Over all, there’s just a lost less beach front mind share than there used to be. Attention spans are fleeting, so even if you can measure the effectiveness of an online campaign much more accurately than you can an offline one, it doesn’t run as deep.

Realtime life in the stream is just a little too fast paced to make an enduring impression. Brands end up having to run a rat-race, and as Lily Tomlin put it: “The problem with winning the rat race is you’re still a rat.”

The more we vie for consumers’ attention, the more we might be pushing them toward entrenched cynicism, apathy, and possibly outright nihilism. So the question becomes, what can brands do to prevent their consumers from losing faith and interest, and falling victim to social media exhaustion.

Credit: Messiaen

The root problem facing newspapers (and other mainstream publishers) isn’t so much falling ad revenues. That’s just a symptom of a greater problem. The bigger problem facing mainstream publishers is that ad technology hasn’t caught up with content technology.

Right now, there are so many ways to publish and distribute content. But there really aren’t that many way to distribute and target advertising. The result is that the ad space that’s up for sale is worth a whole lot less than the content it appears alongside, and that means that publishers have to operate at a loss and advertisers have a demand for ad space that no one’s offering.

The upside to this, of course, is that there’s a considerable market opportunity for anyone who figures out how to fill this unmet demand (and, in turn, possibly save mainstream publishers). And that oppotunity isn’t that far out of reach because everything needed to fill that demand is readily available. There is so much user data floating around the social web that cloudvertising might just be a viable solution to help publishers help advertisers reach audiences that’ll actually convert.

Between the data that a portal can collect directly from their users and the data trail that those users leave all over the world wide web, everything that advertisers need to hyper-target consumers is already in the cloud. All that’s needed is a reliable way to aggregate and mine it so that users can be shown advertising they actually give a sh*t about.

Cloudvertising

Credit: becker&julie

“Mining the cloud” is part and parcel of what social news organizations (SNO) will do as they evolve. By integrating social media features into its content, both internally and through third party APIs (such as sharing features via Twitter and Facebook), an SNO can actually use users to target advertisers.

The idea behind cloudvertising is that publishers approach readers as users, and then collect data (1) directly from their activity on their site and (2) indirectly from their activity elsewhere on the social web. In a nutshell, publishers leverage third party APIs so that they can profile users/readers and make sure they show them offers that are relevant to them. Although it offers the advertiser less control to pick and choose their audience, it does offer them better targeting and refined results.

By leveraging third party, social media APIs, publishers can develop more comprehensive profiles of their users because they can more easily monitor their users’ activity on social networks. While some APIs will offer them direct access to user data, all APIs will help them (1) identify user profiles, (2) index the activity and content on those profiles, (3) read users’ cookies when they return, and (4) hyper-target offers according to users’ actual interests and recent behavior.

Mining the Cloud

An ad platform that could hyper-target according to both an internal user database and user-data aggregated via a third party APIs is something that could rival Google (or maybe even only be developed by them). So it’s unlikely to be developed by a content organization, so matter how social they are, or what kind of R&D ad lab they have.

What publishers can do, however, is start (1) replacing their ad-sales departments with a comprehensive, internal marketing agencies (like Vice Magazine has) that can (2) start mining user data, (3) diversify ad offerings accordingly, and then (4) collaborate with editorial to develop symbiotic content model.

Mining tends to be a dirty (and dangerous) business that doesn’t yield returns until considerable investment have been made. But it’s also the only way to access critical resources. So while ad technology companies might want to start thinking about cloudvertising so that they don’t end up in a plight similar to where publishers are now, publishers might consider doing what little small-scale mining that they can manage on their own.

The transition from mere a newspaper to full-blown social news organizations (SNO) requires a significant investement in technological infrastructre. That’s not an easy bullet to bite when ad-revenues are falling and potential investors are increasingly wary of a fledgling industry. So perhaps print publishers should be looking at technology VCs, rather than the more conventional sources of capital.

After all, becoming a social news organization is more of a technological undertaking than an editorial one. After all, an SNO requires more than just taking on technical infrastructure. It also requires internalizing tech culture and making sure that you have the resources and people and over see it.

Just consider how (1) approaching readers as users so that you can (2) offer them cross platform interaction through APIs to (3) can collect behavioral data, and (4) replace your ad-sales departments with a comprehensive marketing agencies (like Vice Magazine) that can (5) help mine that user database, and then (6) use your users to target advertisers and (7) diversify their ad offerings accordingly and (7) subsequently collaborate with editorial to develop symbiotic content model.

Internalizing a tech culture is so important for a newspaper to survive because it’s technology and new media that have eaten in to readerships, ad sales, and classifieds revenue. Simply put, it’s adapt and overcome. This is more than a media revolution. It’s evolution, and if outlets don’t evolve into media entities, they will simply go extinct.

Consider, recent comments by Vanity Fair‘s editor Graydon Carter:

The Internet is partly to blame for all of this, and perhaps micro-pricing or gated content will be part of the solution. “Youthing” down a paper to attract 21-year-olds isn’t the answer: the only way you’re ever going to get the average 21-year-old to read a daily newspaper is to wait 9 years until he’s 30. My suggestion to newspapers everywhere is to give the public a reason to read them again. So here’s an idea: get on a big story with widespread public appeal, devote your best resources to it, say a quiet prayer, and swing for the fences. [emphasis my own]

Say a prayer, indeed! While original and compelling content is part of the solution (something that both Nick Denton and Tom foremski agree with), it’s only part of the solution.

Where Carter is kinda wrong is in “youthing down” a paper, and I say “kinda wrong” because papers should actually be “youthing up rather than down. You see, content devlivery is another integral part of the solution, and if newspapers are going to survive, they have to start accommodating the 30-year-olds of 5 years from now — not necessarily the 30-year-olds of 9 years from now, but definitely the 30-year-olds of 5 years from now. ‘Cause if they don’t, the 25 year-olds of today are going to get into the habit of going elsewhere for their (less authoritative) content, and we’re all going to be the worse for it.

This is why social media APIs are so much part an parcel of a symbiotic editorial model: because readers are now users, and users interact with content. They don’t just consume it. As Alan Rusbridger, the Editor-in-Chief of The Guardian, noted in a recent interview, there is a blurring between the reader and the journalist, so it’s become necessary to involve the reader more and create a community around your journalist core.

And everything from approaching your readers as user to diversifying your revenue stream and targeting advertisers through user-data is a technological undertaking. So tech VCs may not only provide newspapers with the financial resources to make the transition to an SNO, they might also provide access to a network of resources and people who can help ensure that the transition goes more smoothly.

Credit: Gina Argentina

Considering how the New York Times is coping with the the plight of the publishing industry and news media better than most, it’s not surprising to see that they might be pursuing a more symbiotic editorial model. Granted, when it comes to weathering the storm, the NYT is a lot larger in both scope and scale (size, authority, and audience) than many of its contemporaries, so it has a definite edge. But its continual efforts to reinvent its content model are plain.

In addition to everything it’s done with blogs and Times Wire (a real time news feed), it seems to be pursuing all three facets of a symbiotic editorial model. Most recently, not only has it started thinking of its readers as users, but it’s implemented a diversified ad-revenue model to go with it. As Adage reports:

[...] Derek Gottfrid, senior software architect and product technologist at The New York Times, said the company has quit calling online readers “readers,” instead referring to them as users. [...]

“When we think traditionally about creation [at The New York Times] it was limited to people within the Times,” [said Derek Gottfrid, senior software architect and product technologist at NYT]. “We created for readers … [for whom] it was a passive experience. But as we moved online, we wanted to move people from readers to users.”

This shift to users-instead-of-readers is an important part of the transition toward becoming a social news organization. As Alan Rusbridger, the Editor-in-Chief of an equally auhtoritative newspaper, The Guardian, noted in a recent interview, there is a blurring between the reader and the journalist, so it’s become necessary to involve the reader more and create a community around your journalist core.

But more importantly, the NYT’s shift toward users-instead-of-readers is also seen in its integration of apps and what those apps might mean for its revenues. Overall, it looks to be evolving into a veritable social news organization. As the AdAge article elaborates, to coax people from being readers to being users:

[...] the company has opened up its [APIs]. The Times has taken content and data — both internally created material, such as movie reviews and best-seller lists, and external data, such as campaign-finance and legislative information — and opened up the APIs so that outside developers can create tools for its consumers.

Among the results: Instantwatcher mashes up the “Watch Instantly” program from online movie-rental service Netflix with Times movie critics’ top choices. Another app, called NYTExplorer, provides an alternative article-search function to the one that exists on NYTimes.com.

These apps demonstrate how the NYT is diversifying their ad-revenue model. The “Watch Instantly” app, for instance, seems a lot like an affiliate marketing tactic — i.e. a performance-based referral marketing model.

Purusing this kind of ad-revenue diversification and the technology to implement it is 2/3 of the symbiotic editorial equation. The reaming third is integrating a full-sevice marketing agency into your organization (as Vice Magazine has), and as the Nieman Journalism Lab recently documented, the NYT has an advertising R&D lab that seems poised to evolve into just such a full-sevice marketing agency.

Credit: OliverAlex

First, a publication provides two products: content and a medium. The content is for your readers/consumers/users, and the medium is for advertisers looking to reach them.

Your editorial becomes symbiotic when you cross-sell those two products, and you do that by strategically develop content items that complement the offers of advertisers that you proactively scouted. But it’s not about churning out biased content that will help advertisers sell their products. Rather, it’s about having an editorial format, knowing your readers demographics, and understanding what kind of consumers they also happen to be. So a big part of it is making sure that your advertisers actually have product offers that appeal to your readers’ consumer interests.

This, of course, raises the question of how you figure that out. It’s one thing to replace your ad-sales department with a fully integrated marketing agency, like Vice Magazine does, but it’s quite another to analyze your readers in a non-intrusive, non-obstructive way. And that’s where understanding them as users comes in.

Credit: Alex Glickman

But then there’s the technology side to treating your readers as users. Basically, if you’re going to provider your readers with the content that they each find most relevant, you’re going to have to collect data on them. And you do that by becoming a social news organization (or just plain-ol’ social content organization).

By leveraging popular APIs so that your readers can seamlessly aggregate, syndicate, and share your content, you achieve so much more than just increasing page views. You also gain insight into their behavior as users and consumers. Integrated with personal profiles/logins within your portal, this allows you target them with the most relevant content.

More importantly, it allows you to target them with offers that actually appeal to them. And when you do that, you not only increase conversions and value of your ad-space; you also build trust with your readers by demonstrating that you understand and appreciate their interests (as consumers and users). In a word, you use your users to target advertisers.

Of course, doing so effectively require that you (1) have a fully integrated marketing agency in-house (like Vice Magazine) that can (2) help you understand your users, (3) collaborate with your editorial to develop symbiotic content, (4) scout appropriate advertisers, and (5) diversify your ad-revenue stream so that you’re not relying on a single, limited model that might coax you into compromising user-experience. In other words, your in-house marketing agency has to market your editorial product first, and your advertisers second.

Image: "Newspaper dispensers" by MY Montreal

Maybe what’s plaguing so many local newspapers these days is that they aren’t so “local” anymore. I mean, one of the ideas that Tom Foremski had about how newspapers, especially local ones, could reinvent themselves was by owning their local stories — from community reporting to business and political stories that originate within their beat. The crux of this approach is that it’d allow newspapers to offer wholly original content, something that people might be willing to keep paying for (whether through subscriptions or their eye-balls).

After all, most of what online media has done to over-saturated the content market has been through regurgitation. Even though the mainstream media (MSM) has lost revenues, it’s not like the up-and-comers have captured their marketing sure. These up-and-comers are costing the MSM more than the up-and-comers themselves are worth (i.e. generating in revenue).

So there’s still a demand for oringinal content if only because it seems even scarcer on the high-seas of content-up-chuck. Consider a recent AdAge interview with Nick Denton , the founder of Gawker Media:

On his way to the bunker, Mr. Denton sold two non-core blogs, Consumerist and Idolator; folded Valleywag and Defamer into Gawker itself; and shed some staff. Now he’s hired some new journalists at Kotaku and Gawker, and while they’ll still live and die (or at least dine) by their page views, Mr. Denton said he believes traffic rewards scoops and original reporting over snarky reheats. [emphasis my own.]

Why should we listen to Denton? Well, because he seems to have pulled up Gawker’s boot straps and gotten its head above the water while the undertow was pulling a lot of other publishers down by those very same boots.

So how does a local paper focus more on original content? Well, maybe by becoming more verticalized. And since no media does “vertical” better than blogs, maybe successful blogs offer a clue on how to save local newspapers.

Blogs have verticals. Well, so do local papers. Their veritcal is the municipality. And where blogs have categories, local papers can also learn a lesson. Instead of categories, local papers could have neighbourhoods.

Right now, the majority of local papers syndicate their national/international news to cut costs, and they are failing there because news off the wire doesn’t put it into the context of the community. Providing that “community context” will be an integral part to becoming news media organizations rather than mere “papers” (as Tom suggests), and will make it all that more viable to reinvent their revenue model for an increasingly mobile and personalized web.