Using Free to Sell Paid

Here’s the latest in my on-going essay series, Local Media in a Postmodern World.

I’ve been reading Chris Anderson’s work for many years. He’s the editor of Wired magazine and author of “The Long Tail” in economics. His latest effort is a new book based on a theme he’s been exploring for the past couple of years on his blog and in the magazine: the economy of “free.” Free. The future of a radical price is an in-depth look at the many faces of free, and I suspect it will be as eye-opening as was his book on the long tail.

In this essay, we examine the value of disseminating a free news model and using it to drive people to that which we can monetize. Most readers will assume up front that this is already practiced, but it’s not. The best we currently do is “tease” people, and that’s actually the opposite of what’s proposed here. I’m talking about a rich and satisfying online stream of news throughout the day that leads people to more in-depth articles and videos, even all the way back to our legacy platforms.

Using Free to Sell Paid

In this model, marketing is the principal mission, although money can certainly be made in the process. It’s my belief that, as media companies, we may have a deep understanding of the concepts of marketing, but we don’t practice marketing to the level we could online. There are two reasons for this: one, we don’t understand the back-end nature of the Web and, two, we just don’t believe in it.

Introducing: Literal Video Versions

On the heels of the creative genius known as Kutiman on YouTube comes a new genre of entertainment, Literal Videos, or “Literal Video Versions” of music videos. The clever people who make these strip away the music and replace it with their own, which includes audio-video linked lyrics. The result is highly comedic.

What’ll those kids do next, huh? Here are a couple of favorites, “You’re Beautiful,” followed by “With Arms Wide Open.”

Would you be covered under a Federal shield law?

In case you’re unaware, another attempt at a federal shield law for reporters is underway in Congress. Here’s the bill (H.R. 985). The House Judiciary Committee passed the bill Wednesday. Next comes the full House. Previous attempts to create a federal privileged status for reporters have all failed, and there’s little indication this one will be any different.

But I’m terribly curious about this, because of the phenomenon of independent blogs and neighborhood websites that are popping up. Many of these are run by “former journalists” — a term I find oxymoronic (but that’s another story). Access is the privilege of journalists, and what’s a police chief to do, for example, when confronted with potentially hundreds of such sites seeking credentials? Like it or not, our culture will have to find a way to accommodate this, as the institution of journalism is being reinvented.

So who would qualify under this shield law? Here’s the definition of “covered person” in the language of H.R. 985:

The term ‘covered person’ means a person who regularly gathers, prepares, collects, photographs, records, writes, edits, reports, or publishes news or information that concerns local, national, or international events or other matters of public interest for dissemination to the public for a substantial portion of the person’s livelihood or for substantial financial gain and includes a supervisor, employer, parent, subsidiary, or affiliate of such covered person.

This is the sticky wicket, for I believe many journalists will need a “day job” in order to practice their trade, at least for a season. Absent the privileges of those who work for, say, the local newspaper (how long will THEY be around?), how can such journalists do their jobs?

This will become an increasingly important issue as the disruption to institutional media continues.

Borrell: TV stations still losing, in of all places, video!

comScore chairman and CEO, Gian FulgoniGian Fulgoni is a major player in the world of web advertising. As chairman and co-founder of comScore, he has played a leadership role in the commodification of online display advertising (not necessarily a good thing, of course) and is a keeper of the metrics used to drive the advertising business. When he speaks, it’s important to listen, and what he’s saying these days is that video is the bomb!

In a Monday speech to the OMMA Hollywood conference in Los Angeles, Fulgoni admitted that clicks aren’t what they used to be. According to NewTeeVee.com, Fulgoni said, “We have to get off the idea that a click is a valid metric. There are many other ways of measuring the effectiveness of ads.” The new biggie, he said, is video.

ComScore can track the impact of online video ads by measuring whether Internet users who saw an online video ad then went on to visit a site or buy a product, for instance, he said. Brands using online video ads have seen lifts of anywhere from 20 percent to 40 percent or higher in terms of incremental buying with online video and rich media over other ad forms, he said. “The reason advertising works well on TV is it has sight, sound and motion, and you have that in online video. It’s easier to communicate a message and easier to persuade people,” he said.

The growth in viewing of long-form content online is also a boon for the growing online video ad market, he said. The longer people watch, the more advertising opportunities there are. The average online Internet user is watching 3.5 minutes at a time, and that keeps increasing. “That’s a really important metric because if we just stick with three-minute video clips that limits the number of ads,” he said. “You want these longer-running shows so you can maximize ad dollars. This is one of the key components of the future of online advertising.”

Borrell projects growth in videoFulgoni didn’t say whether the ideal format was pre-roll, post-roll or something else, only that video was the place to be for growth. This syncs with data from Borrell Associates that projects video, email and local search as the three growth vehicles for online advertising over the next five years.

For television stations, video advertising should be a logical extension of existing knowledge, but newspapers continue to dominate in the local online video advertising category. Gordon Borrell told me this morning that new 2008 numbers (due out in a couple of weeks) reveal that newspapers made about $165 million last year from streaming video advertising, while TV stations made $105 million. Interestingly, streaming video was just 5% of newspaper website revenues, but 10% of TV website revenues.

Meanwhile, and even more amazingly, yellow pages companies made between $85–100 million last year from streaming video. Think about that for a second. Online, yellow pages companies are making nearly as much local money with video as television stations. This is insane, and, as my partner Steve Safran so famously said a few years ago, “You’d think that the one place video companies could win in is, well, video!”

Gordon BorrellFor Gordon Borrell, this issue has been a real sore spot for a very long time.

The online video-advertising story reads like a page out of “The Innovator’s Dilemma.” It’s another situation where being an expert can actually work against you. The vast majority of video advertising isn’t what TV managers know — high-quality, slickly produced, 10– or 15-second commercials. It’s good-enough quality, and its more of an infomercial. Unfortunately, broadcasters are still relying on TV managers to understand this wildly innovative environment. It takes a separate staff, with divergent ideas.

TV stations are locked into thinking that monetizing THEIR videos is where it’s at, but the truth is that small and medium-size local businesses are making their own videos, and that’s what they want their potential customers to see. Advertising is content in the Media 2.0 world. If they can’t make their own videos, there are plenty of companies out there that will make them for them. And I hate to keep beating an old drum, but this an essential clue to “enabling commerce” in the future, the new role for local media companies today and tomorrow.

For broadcasters, this ought to be a no-brainer, but the evidence, once again, suggests it is not.

The unintended consequences of airport rules

In humankind’s quest to be God, we run into a significant dilemma. We can close the gaps on time and distance. We can become all-knowing, omni-present and powerful beyond our imagination. We can be god-like, in certain situations — masters of our own fate.

But we cannot be simultaneously just and merciful, and this is our problem. While each of us contains the ability to be each, we default to one side or the other of these opposite values. There may be times when it is just to be merciful, and there may be times when it is merciful to be just, but we cannot sustain such for long.

In Psalms, it say, “Justice and judgment [are] the habitation of thy throne: mercy and truth shall go before thy face.” In Deuteronomy, we find, “The LORD God, merciful and gracious, longsuffering, and abundant in goodness and truth.” And in Jeremiah, “…they have sinned against the LORD, the habitation of justice.”

This conflict exists in the human soul, and we encounter it every day in our lives, for the left brain governs rules, while the right brain governs mercy. I’ve often written that we’ve gone too far down the rule-based side of culture, and that it’s time for a right-brain renaissance. Experience-driven postmodernism is too chaotic for left-brain modernism. Let me explain using two events from this weekend at airports in different parts of the country.

We all know that the TSA must abide by strict rules in order to maintain a level of safety against threats of terrorists who like to use airplanes as weapons. Nobody argues with that, myself included. I do have issues, however, with how far down the rule-bound road we’ve gone, especially as it relates to logic and common sense (which, I think, is very logical).

My daughter Larissa went home Sunday from Spring Break, and I took her to the DFW airport. I asked for a boarding pass to clear security, so I could accompany her to the Admiral’s Club and then the gate. She just turned 18. I was informed that age 17 was the cut-off, and I could not obtain a boarding pass. Bear in mind that I’ve done this many, many times and for many causes. I’m a Platinum level member with American Airlines, so they know me — at least their computers do. Why the arbitrary line? What difference does it make? I pitched a fit and got a pass, but I was told it would be the last one. Nice way to treat a very frequent customer, and, again, what difference does it make to anybody that I get past security to be with my scared and sad daughter? This is example one of the unintended consequences of rules. I should add that American Airlines will graciously provide “unaccompanied minor” privileges, for an extra $200. Nice.

Now let’s go over to Dulles, where my girlfriend’s 15-year old daughter was about to get on a plane to return home to Dallas this morning. She was visiting her 21-year old sister, who’s married to a Marine in Virginia. The older sister requested and obtained a boarding pass to accompany her little sister to the gate. Dulles is a big place. They got to security, and the younger sister was carrying a bottle of expensive perfume she’d received as a gift. Not knowing the 3 ounce rule, she had put it in her handbag. Despite pleas, the TSA agents would not hold the bottle of perfume, so that the older sister could retrieve it upon returning through security. Rather than just give away (to some TSA guard) a brand new bottle of expensive perfume, they decided to split. Consequently, the very scared 15-year old got lost in the terminal and had to be helped to her gate.

These are examples, I think, of the unintended consequences of our rule-bound lives. Airport security is a touchy subject, one that you dare not criticize. In neither of these cases, however, would security have been endangered whatsoever, but rules are rules. These illustrations are the feces of a culture that’s happy to consider only one side of human nature, and I’m not the only one with such stories to share. Only at airports do the citizens of the United States feel like we’re living in a police state, one governed by people given responsibility but no authority.

It’s all about justice, mercy be damned.

What to do with The Chronicle

So editor John Diaz says that everybody has an idea for saving the San Francisco Chronicle (or killing it), but here’s the only one that works:

Let the newspaper be the newspaper. Do the best you can with it. But as a local media company, separate your ability to make money online from the newspaper. Convergence is a fantasy, the dream of those who think you can get away with pouring new wine into old wineskins.

The parent must have the courage to give the children permission to destroy it.