Michael Chrichton as newspaper visionary

Slate published an interesting article on a fifteen year old discourse written by Michael Chrichton for Wired on the future of media. It is absolutly amazing on how predicitve it was, and more important to recognize that it was written at a time well before the commercialzation of the internet.

Of particular note is the need for the complete customization of interesting stories through the use of technology, and the lack of editorial "experts" deciding what is most important.

With information ubiquity, and ever improving algorithms and personal profiling this 15 year old vision is getting closer to reality. Unfortunately, I seriously doubt that newspaper sites will be the ones that bring the vision to light. Perhaps an information aggregator like Topix, but this would seem to be yet another advantage for Google. It's nearly imposible for a single source to fulfil all of the information needs for an individual user, so yet again the power lies with the aggregators.

What old media does that the internet has yet to trump.

After all of my recent lamentations and dire posts, I do have something nice to say about the old guard media. TV and newspapers are still some of the best places for serendipitous content discovery. Flipping through the paper or turning stations can cause us to pause and notice things we might otherwise never encounter. The internet is quite the opposite. Users are often laser focused on their goal, and leave a site once they find it. This study indicates that users are even getting better about their focus.

Youtube and others have tried to foster some of this by showing videos that others are watching, but its still not ideal for discovery. Amazon and similar have taken efforts to filter their massive catalogs down to similar items for previous purchases. Social networks are full of information that is shared about the latest posting or activity of its members. None of these are quite as good as the old fashioned methods just yet.

Perhaps its part of the idiom, but I think that goes for the ads as well. Numerous eyetracking studies have shown how efficient users are at ignoring the ads on a content page. However, the ads are still part of the newspaper experience in print. It may be a focus group of one, but I'm more likely to notice something in print than online. Perhaps this is due to the irregularity of the layout from page to page, or the mode of my experience.

Note that I am not saying that print ads are more effective or less effective than internet ads. Poor measurablity in print makes the comparison difficult at best. There is some indication in studies by google and the NAA that they two may work together quite well, but the data could be self serving and thus biased.

I am saying that for newspapers to translate well online they should consider adding some of the best features of the print product that go beyond just the content. They need to aid in discovery in clever ways that go beyond "most read"

My issue with the AP

The associated press is an institution as venerable as the newspapers themselves. Founded as a non-profit collective, it functions to reduce the expenses of news gathering by centralizing some functions and cross-publishing others. The ability to republish member journalism goes beyond the cash contributed by members and helps further defray costs. They set the standards for basic professional journalism in more ways than one. In short, it enables an easy way to limit the number of reporters covering a given story, thus reducing costs for the entire industry. Newspapers would be in even worse shape if it weren't for the AP.

However, I personally believe that the AP is as responsible for newspaper demise as it is keeping them alive. It comes down to the focus of cost reduction. Take this press release as an exhibit. There are two key points there. Cost reduction and a new technology platform. The reduction of member fees is mentioned several times.

The AP is a non-profit and a well run one at that. It has been pretty forward looking in signing deals with Google and other platforms for distribution of content. My guess, however, is that these deals aren't as lucrative as a "for profit" would demand, thanks to the focus on expense reduction. Even if they are, there's a solid chance that ala carte distribution may not be in anyone's long term best interests.

Here are three potential deal structures:

1. Pay per read - This could either be through a revenue split or just via a flat fee. Either way it will only be a portion of the value created by the content purchaser.
2. Subscription basis - Could be a full feed or a partial feed. Again, a purchaser is only likely to pay a portion of the value created, and usually less in this case since the purchase is of uncorrelated value to actual usage
3. Pay per article - While unlikely for automated systems like Google, this would allow a content acquirer to cherry pick only the most relevant articles.

All three deal structures come down to one question - who can monetize the content the best? Is a link to a member site more lucrative than the entire article published on a third party site? For the local information that most newspapers publish, and given the high rates and ad volume on most NP sites, the answer would seem to be the member newspaper site rather than a third party, even the almighty Google. If that's the case, then giving it up to a less efficient monetization channel for only a portion of the value is a VERY bad long term decision.

The second factor is allowing the aggregator additional power. Much like search has become dominated by habit and a single brand, it is easy to imagine the same thing occurring on portals for news. In the long term this runs the risk of cutting out the "discovery" on an individual newspaper site and moving it to the content acquirer. In essence, newspapers might be giving up considerable web audience as a result.

I don't want to pretend that the decision is this clear cut. Search engines and content portals have created a wedge between monetization and content creation. Content is becoming more and more a la carte, and consumers need numerous ways to find relevant content. Search and content portals are great at this. Some revenue is far better than no revenue, as the record industry is finding out, but struggling with as well.

If I were to make a change, it would be to turn the AP into a for profit entity. Let them run with the notion of value maximization rather than cost minimization. Convert members from financial backers into equity partners. At least then there is a chance that the AP could one day actually return dividends to content producers, rather than merely worrying about reducing its member's subscription price.

Newspapers as Brands

One of my personal heroes has been Seth Godin. In a recent blog posting he calls out the difficulty of newspapers to do what they are best at. He states that the Times needs to write about things that are true and important. In essence, he's saying that they need to be true to their brand and do it well.

As an insider, I can't even begin to explain how hard this is for the paper. Their commitment to serve EVERYONE is exactly the opposite of what a good brand does. They want to target the average, and thus think they will be serving everyone. I call this a diaper solution.

The nomencature doesn't derive from how excretive this notion is, but from the fallacy of targeting the average. It turns out that the average age of a diaper wearer is around 32. If you wanted to build a diaper for everyone, some people would try to make a product for the average user. You could make a more fashionable diaper for the average user and then put ads up on VH1. Clearly this would be doomed to failure, since common sense tells us there are two very distinct groups of diaper wearers - very young and very old. Brands and products have to choose, but newspapers have refused to.

It takes real bravery to spike an article that has little appeal to a targeted reader, especially given the climate of declining readership. However, competition is now article by article and each and every one has to have an appeal. If it doesn't its just a diaper for a 32 year old.

More bad news in Minnesota

The Star-Tribune in Minneapolis this week posted an article about their parent company's distress with the purchase. They have had to mark down the value of the company by quite a bit.

Here are recent market values of the paper.

1998 = $1.2 B when it is bought by McClatchy
2007 = $580M when sold by McClatchy
2008 = #225M as marked to market by Avista, including the market value of the debt.

I'd even suspect that the marked value might be a bit high, given the market values of public comparables.