Archives for January 2011

Revolutions are about people

While Clay Shirky and Malcolm Gladwell debate technology’s role in political and cultural protests around the world, it’s time to restate a fundamental belief of the age of participation: technology is the servant of people who have sat silent as pawns in the modern era. It has always been about people, not technology. From tycoons to ranking members of the press, those who are beyond the line of the “haves” use what they have to manipulate the rest in an endless, colonialist game of “the poor need us.” The anger in the herded masses has always been there, but technology has create a horizontal connection between everyone that allows them to organize and talk to each other without going through a microphone controlled by the status quo. It is the stuff of revolutions, and it will not go away simply by some government shutting down the pipe. Once having tasted such freedom, it’s impossible for this generation to go back.

The Web is indeed a marvel. It’s spawning the second Gutenberg moment, but we must never forget that it is people who are using the tools of modernity to scrape and claw their way to something better, not technology that’s doing the leading. That’s why the action of Egypt in shutting itself off from the world is so incredibly significant. The action proves only one thing: that taking to the streets in protest is justified, and this will only strengthen the resolve of the protesters. Moreover, Egypt’s wanton killing of its citizens in the name of quelling anarchy does likewise, for what kind of country will be left when the killing stops? Totalitarian law and order serves only the government that gives the orders, and any attempt to justify it as on behalf of the people is ludicrous.

As the world watches events unfold in the Middle East, we must all be mindful that this is just the beginning, because horizontal connectivity impacts every institution that exists based on protected knowledge or by herding citizens in the name of taking care of them. It’s over, people. Dylan’s prophetic words are coming to be.

Get ready, because we might be next.

It’s all about the ad market

Wash, rinse, repeatIt’s not about content; it’s about advertising. Rinse. Repeat.

The downward slope of the local media landscape continues despite a pretty good year for some sectors in 2010. Of course, those whose ox is being gored by business disruptions are doing their best to proclaim radiant glory, while those in the crowd gasp that the emperor has no clothes. Take, for example, the latest from comScore and the Newspaper Association of America (NAA), the trade association representing the newspaper business. A new study reported in reveals that newspaper websites reached, on average, 62% of adult Americans during the fourth quarter of 2010, including 58% of 25-to-34-year-olds and 73% of individuals in households earning more than $100,000 a year on average. Wow.

“Newspaper Web sites stand out in today’s online environment, with trusted brands and high-quality journalism attracting an impressive audience that sets them apart from other players in the digital space,” NAA president and CEO John Sturm said in a release. “As publishers continue to reinvent their business models, digital is at the forefront of a multiplatform transition that has seen steady growth in online advertising revenue.”

The NAA is just doing its job here, but the truth is these impressive stats are meaningless in the revolution that is advertising. They’re but a vague reminder of the way things used to be, back when reach and frequency were what really mattered and when sales departments moved blue smoke and mirrors along with their statistics. This is, in fact, reach without frequency, which is both the beauty and the curse of online stats. Anybody who has run a media website and paid close attention to the data knows that in any given month, a third of “unique visitors” visited the site less than three times, usually just once. If you’re lucky, the core readership (more than 9 times a month) of a legacy media site is about half of total unique visitors, but you can’t run sales emphasizing that. Precision is a two-edged sword. Add in banner blindness, and you begin to understand the futility of betting the ranch on a display advertising paradigm.

It’s not about content; it’s about advertising. Rinse. Repeat.

While this is going on, pureplay Web companies are stealing real dollars from the markets of newspapers (over half of all money spent locally), because they’ve taken the time and spent the resources to create better, cheaper mousetraps for local merchants. Look at Groupon or Reach Local or Foursquare or Google, and there are tons of others. Each offers a unique value proposition that takes much of the guesswork out of advertising, and this is where everything is heading. Those who continue to emphasize only impressions of ads placed adjacent to or interrupting content are doomed.

Here’s another example of futility from the newspaper industry, via Mathew Ingram at GigaOm:

In what feels like another attempt to put the Internet genie back in the bottle, three traditional media companies — the New York Times, the Washington Post and the Gannett chain, publisher of USA Today — have launched a new service called Ongo that they hope will convince readers to pay for their content, even though much of that content is already available for free. Although it has some interesting features aimed at compensating readers for sharing content, Ongo seems like yet another Hail Mary pass aimed at trying to rewind the clock and impose scarcity on media content, and one that will likely fail just as quickly as others have.

…The only way something like Ongo would really work is if everyone decided to put their content behind a paywall, and cut off their RSS feeds. Even if that were to happen, other sites or individual users would just log in to the pay service and copy the content and the post it somewhere, which others would then link to. Just like iPad apps and other similar approaches, Ongo is yet another attempt to reimpose the scarcity model that newspapers lost when the web first arrived. Although it might seem presumptuous to condemn something on the day it launches, this latest attempt seems almost certain to fail.

I would add that if newspapers did what Ongo offers, people would just move to other portals that are free. Legacy media doesn’t have a lock on the news anymore, because anybody can be a media company. Look at the success of MinnPost, the Web-only “newspaper” in Minneapolis. The company this week announced it had run a surplus, after just three years of operation. Its unique blend of contributions and advertising has turned a corner that many didn’t expect we’d see.

A $17,594 surplus on spending of $1.261 million may not sound like much. But this is tremendous vindication for our business model, because it resulted from 18 percent revenue growth, not budget-cutting.

We ran deficits of $605,000 in 2008, our first full year of operation, and $126,915 in 2009. (We were spending down the start-up funds we raised in 2007.) So it has taken us just three years to reach break-even.

Most notably, our advertising and sponsorship revenue rose 42 percent, from $217,734 in 2009 to $309,508 in 2010. That’s on top of a 35 percent increase the previous year.

MinnPost was a Web start-up, at a time when only start-ups could afford to experiment with new and different business models. It proves the point that while traditionalists are circling the wagons, pioneers are staking out claims in the new world. Free news and information will always be available, but more importantly, the money that used to support traditional reach and frequency is shifting to concepts that provide better bang for the advertiser buck. Media companies need to separate their passion for creating content from their ability to make money, or risk irrelevance downstream.

For a fascinating look about how pureplays view local revenue, read this article from TechCrunch. It’s an interview with the CEOs of Groupon and Foursquare called “Foursquare And Groupon CEOs On Cracking The Local Commerce Nut.” These are two well-funded pureplays who view your market as a nut to crack. Will we just stand by and let them?

Nobody knows the online ad business better than Dave Morgan. In an Online Spin commentary this week, the founder of Tacoda and Real Media painted a very real picture for everybody:

Everybody, from Google to micro-bloggers to smartphone companies, wants a piece of the local ad market, and a share of the $150+ billion annually that has typically been claimed by local newspapers, TV and radio stations, yellow pages and direct mail. That’s nothing new. Lots of folks drooled over the local ad market 20 years ago, too, but without getting any real traction. Today, however, it looks like we’re finally going to see a changing of the guard in local media.

To restate one of my controversial “Heatonisms,” legacy media is not in the content business; we’re in the advertising business. If we could just accept that, then we’d be free to move forward with creative solutions for local merchants instead of trying to hold mass marketing’s head above water. When I’ve said that to some media executives, I hear, “You’ll have a hard time convincing people around here of that.” Yep, and that’s the problem, precisely.

Replacing my hip replacement

I’ve been neglectful of my blog in recent weeks, and at least some of it is due to a nagging personal health issue. In October of 2009, I had my right hip replaced. I went through all the usual recovery issues and began exercising in January of last year. I started experiencing pain issues almost immediately after that, something that my doctor attributed to bursitis, a common inflammation of the hip bursa.

It got systematically worse as the months passed. My white blood cell count went up and gradually the pain shifted to my groin. Turns out — we think — that my body is rejecting the implant, because of the shedding of metal ions from the metal-on-metal socket. So I’ve been undergoing tests and am now on the schedule to have the implant replaced with one that is ceramic and plastic.

The company that makes the socket recalled a bunch of a different model, mostly due to similar problems with other people. I’m not a law suit guy, especially not the kind that the ambulance chasers love, but I’d like not to have any out-of-pocket costs here either. Tough decision.

Meanwhile, it’s influencing my quality of life. I’m always tired and have little energy for walks or other exercise. It’s impacted my writing and my ability to think, because I can only get comfortable for little bursts at a time. In plain English, it sucks.

More later.

The ethics of hyperconnected media

My ethics class, fall 2010Most of you know that I teach media ethics at the University of North Texas. I do it to be around young people and their thinking, because it keeps me fresh. We should all be so lucky. The course is actually titled: Ethical Decision-Making in the Media, but I call it “Ethics for Journalism in a Networked World.” I do so, because they are different subjects, and the latter is what is required of anybody entering (or in) the field these days.

I’m writing about this today, because the question of ethics has been raised in the story of the firing of NPR’s Juan Williams over statements he made on his other job as a commentator on Fox News. An internal investigation by NPR resulted in one long-time employee resigning and an announcement that the network was reviewing its ethics policies. This has the usual head-scratchers scratching their heads. Poynter’s Kelly McBride wrote that NPR isn’t the only news organization in need of modern, realistic ethics guidelines for its journalists, and I agree. Why? Because things are changing.

Journalism is a profession rife with stars who get away with a lot. And in this new environment, stars tend to have more opportunities than ever, while newsrooms leaders don’t always have the resources to pay their stars enough money to lock them down exclusively or the time to manage their potential conflicts of interest and competing loyalties.

“The climate has changed a whole bunch,” Bill Marimow told me Friday in a phone conversation. Besides once being a senior news executive at NPR, he was editor of The (Baltimore) Sun and The Philadelphia Inquirer.

“In some cases, people who were truly outstanding become almost like franchises,” said Marimow…

The problem with these kinds of dissections is that they cling to tradition as a guide. That’s evident when Ms. McBride gets into solutions.

I’ve no doubt that they will have significant discussions about how journalists uphold traditional standards while they thrive and stay relevant in the modern world.

It will be tough to write guidelines that allow the rock stars of journalism to pursue opportunity and extend their influence, while preserving their primary loyalty to one central newsroom. “They have to get the language just right,” Marimow said.

Here we have the essential conflict, and it’s why I’ve chosen to teach media ethics at the university. The conflict is between the individual and the stage (one central newsroom). Remembering for a minute that the stage is all about economics and providing an environment conducive to advertising — this is exactly what it is — here’s what I teach my students:

The stage is what matters to traditional media, the driver of its pursuit of “impartiality.” An impartial stage, after all, is home to all, including advertisers. This is no accident.

Journalistic ethics are all about the impartiality of the stage, not the individual journalists. Without an impartial stage, advertisers will bolt, so the decision is about business.

The people formerly known as the audience (TPFKATA) expect an impartial stage. Why? Because we’ve told them it’s supposed to be that way. The problem is that people don’t believe it anymore.

Without a stage, there is no institutional wall of ethical protection. One, therefore, cannot pretend to be what one is not. This is the truth and the challenge of ethics in a networked world.

The stage says, “I am impartial.”

The individual says, “I’m trying to be fair.”

Artificiality is a curse in the Network.

Your personal brand is everything.

And so, I prepare ethical dilemmas based on scenarios where individuals have to make decisions based on their own brands, which is very different than learning to protect the artificial marketing of the stage. These people will go forward into the hyperconnected universe and do good, ethical work, and not because they follow a set of elitist canons that are in conflict with the culture. Why we cling to this as an industry is beyond me.

The biggest practical difference between one practicing journalism from a stage versus a personal brand has everything to do with the role of publisher-journalist. Business and journalism aren’t separate entities with those who run their own brands, and that’s where the ethical admonitions of industrial age journalism become impossible today. Conflicts of interest must be handled transparently and not be avoided altogether. This, I believe, is where NPR made its mistake.

Ironically, I find many of our old ethical beliefs to be in sync with today, things like accuracy, verification, and fairness. To these have been added, however, speed, transparency, and authenticity. We’re still discovering what all of it means, and until we get there, we’re going to have problems like Juan Williams or telling people that a congresswoman is dead when she’s not.

Meanwhile, let’s not be silent.

Keep your long-term glasses on

Keep your long term glasses onWhen I was a news director, I was often hired in turn-around situations, where a company was dissatisfied with something involving the news department, usually the news ratings. Not every one of my appointments fell into this category, but I always enjoyed the challenge of competing with entrenched winners. I had a few rules that I’m sure the talented people who worked for me remember. Rule number one: there are no rules. We wouldn’t let ANYTHING hold us back from disrupting the status quo. Another rule was: keep your long-term glasses on. We needed to know that taking the mountain was a process that wouldn’t happen overnight.

This rule about long-term focus applies to traditional media, I think, in these times of change, because we’re on a path illuminated not by short-term fads but by long-term trends. It’s vitally more important, therefore, that we always act on behalf of those trends but always question the short term whirligigs that come along every day. I learned in the Coast Guard that the way to avoid sea sickness in rough weather is to keep your focus on the horizon, not on the waves or the view that keeps rising and falling. That’s good advice in any time of change.

But the problem is that many can’t see the horizon. We’ve either got our heads down, buried in day-to-day operations, or we’re trying to make ends meet. The horizon, however — our destination point — is what we need most, because if we can see the goal, we can create the processes needed to get us there. This does require, however, fixating our gaze forward instead of down or to the side.

Take, for example, Twitter. To properly view this wonderful notification system, we must begin with AOL. In fact, you’ll always be safe if AOL sits in the back of your mind as a red flag. AOL was training wheels for the Web, but it was its walled garden approach — building a web within the Web — that eventually spelled trouble, the same kind of trouble that Twitter, Facebook and other proprietary, closed systems provide today. What are the broader strokes that Twitter is providing? This is the important question.

This is why AR&D is writing a new book, 2015: The Future of Local Media. Nobody who reads this newsletter regularly will be surprised by anything in the book, because the book merely advances our vision. In the interim — and in the name of our long-term glasses — I thought I’d publish a list of five of the broad trends that we’re following. We’re all just overwhelmed with options these days, so use this list as a filter to keep yourself focused on what’s really important for tomorrow.

  1. The shift to real time news and information. Dave Winer wrote recently that Twitter is a dress rehearsal for what’s coming, and I think that’s true. During my interview with Kevin Kelly for the book, he noted that THE most important trend to follow is the move from a static Web to “the real time flows and streams” inherent in the living or “Live” Web. Let’s not think of real time as necessarily replacing that which is “finished, vetted and complete,” but rather as a new entity that is evolving before our eyes. Journalists must consider a commitment to real time as a part of doing their jobs, because the stream is the process of gathering news itself. It’s also important to understand that the stream is bigger than anything we put into it. Monetizing the stream, we believe, will come from curating the fire hose for individual consumption and from organizing separate streams from merchants wishing to get messages out to existing or potential customers.
  2. Portability. This is the year that analysts project more portable computing devices will be sold than those that are hard-wired to an Internet connection. 2011 is a tipping point, because portability brings proximity into the media equation, and that brings opportunity in the form of hyperlocal relevance, not only for news and information but also for making money. But don’t be fooled into thinking that portability is something other than just the good old Web. It’s not. Magazine apps for the iPad, for example, have been a bust, because the iPad is just a presentation layer on top of the Web. If it didn’t work on the Web, it won’t work via a portable device. Portability/proximity also brings a heightened sense of “local” into the information equation, almost a redefinition of the term and one with which we will have to contend in the years ahead.
  3. Unbundled content. In 2004, then FCC Chairman Michael Powell noted that “application separation is the most important paradigm change in the history of communications, and it will change things forever.” Media hasn’t fully caught on yet, because the act of “application separation” means, in large part, the unbolting of media content from the original source in which it was presented. Just as it was with the music industry, so it will be with media, because people not only object to our packaging as inefficient and time-wasting but also as self-serving despite claims of the opposite. There’s an old adage among successful bloggers that “if you send people away, they’ll come back,” which influences many strategic decisions about content, including full-feed RSS and outbound linking. Legacy media doesn’t get this, because it’s counterintuitive to its fundamental need to corral and maintain large audiences. Make no mistake, though, content distribution in the future will be unbundled, and the sooner we get there, the better.
  4. Consumers rule. This is perhaps the most overlooked and underestimated new reality for business in the 21st Century. The industrial age was all about a Mad Men sort of “warfare” in which brilliant marketers attacked the minds of people to move them to buy products. How heroic! The problem is nobody asked people if they could play with them this way, and now we have a problem. Consumers can not only talk back, but they can talk to each other, and this is a serious issue for those who need a one-way mechanism to change our minds. How have we responded? I just read in Online Media Dialy of “new video pre-roll units” that will leverage a “variety of targeting methods to deliver high-quality audiences more efficiently than the typical online video campaign.” People as “targets” aren’t really people, so we can put 15-30 second pre-rolls in front of 90-second videos and think that’s tolerable. Everybody knows that the optimum for pre-rolls is 7-10 seconds, but Madison Avenue refuses to believe that it no longer has carte blanche in messing with the lives of consumers. Starcomm’s Rishad Tobaccowala said many years ago that “we’ve entered an empowered era in which humans are God, because technology allows them to be godlike. He asks, “How will you engage God?” It’s a question we should be asking.
  5. Video, video, video. By 2014, Cisco projects that the average downbound bandwidth of the Web will be 14.4 megs and that nearly all of the growth in traffic will be video. Much, if not most of that video will be advertising of one form or the other (if you don’t believe this, spend a little time on YouTube), and this is something local media companies are ideally suited to provide. At many local TV stations, we have whole production departments sitting around twirling their thumbs while waiting for the next commercial shoot when they could be on-the-street making YouTube and other videos for online consumption. We don’t see this, because we’re too busy waiting for the next ad agency to come along with a new pre-roll. We’re so stuck on attaching ads to OUR content as the only source of revenue, but a whole new world is opening for us to pursue. Newspapers could (and are) easily steal this right out from under the noses of TV stations. The online video world has just begun, and we’re stuck waiting for somebody to show us the way rather than attacking it head-on today.

What, Terry, no “deals” application? Perhaps. There are many other trends we’ll be examining in the book, in addition to putting it all together for you in a “here’s what it’ll look like” view of local media, circa 2015. Meanwhile, though, if we’ll run anything that’s presented to us through these filters, we’ll be on solid ground for tomorrow. Is it video-centric? Is it pro-consumer? Is it unbundled and free to be passed around? Is it meant for portable Web consumption? Is it a part of the real time flows and streams? If that which is before you provides a “yes” to those, then take it to the bank that you’re on solid ground. If not, you might want to proceed cautiously.

And keep your long-term glasses on.

What’s more valuable, time or money?

time is moneyA few years ago, J. Walter Thompson CEO Bob Jeffrey announced that “time is the new currency,” and that’s proving to be among the most prescient and profound statements of the early 21st Century. I’ll be 65 this year, so the relativity of my time is noticeably accelerating, but Jeffrey wasn’t talking about that. He means that we’re all awakening to the old reality that time IS money, and that a good way to view life is through the importance you place on your time. More importantly, he’s making reference to the reality that people can actually do something about their time these days.

This is a major reason why the television business model faces an uncertain future. We take for granted that people will tolerate giving us their time for our commercials, and in today’s marketplace, that’s a pretty dangerous assumption. I recall the first person I ever met who had a TiVo, a young man who worked in an electronics store. I asked if he skipped commercials and why. His response stunned me, because I was expecting something else. “I work 60 hours a week,” he said. “I don’t have time for commercials.” So I did some research and found a Roper study revealing that so-called leisure time for Americans had shrunk from 26 hours a week in 1973 to 19 hours a week in 2007. I also took a look at one of the longest running crime dramas on television, Law and Order, and discovered that the length of the program had shrunk from 47 minutes in 1990 to 43 minutes in 2007. So against a backdrop of fewer hours to watch TV, commercial time per hour had increased by four minutes. Today, one-third of prime-time programming is commercials. The young man was right. Who has time for that?

I was reminded of this recently by my friend Holly, who cut her cable cord a few years ago. Her best friend is Hulu, the website that provides streaming video of TV shows and movies from NBC, Fox, ABC, and other networks and studios. She was so happy with Hulu that she signed up for Hulu Plus, “More wherever. More whenever. Than ever.” Hulu Plus is advertised as THE way to cut cable’s cord, because it provides streaming cable programming for just $7.99 a month. Hulu fans, like Holly, are disappointed to find, however, that the streams come with a full commercial load, just like cable. As Holly told me in an email after she discontinued the service, “They can have my time or my money, not both.”

Hulu knows this is a problem, too. In discontinuing the Hulu Plus service, users are surveyed as to why, and one of the choices is “I don’t want to watch advertising.” Who knew? As Doc Searls wrote many years ago, “There is no demand for unwanted messages.”

This “money or time” sentiment is one deeply held by many, but the idea of them being joined is at the core of the assumptions that hold the TV model together. The business of broadcasting is based on toleration, what viewers will tolerate to get to “their” programs. Determining that tolerance level is a whole cottage industry, but one that always pushes in favor of more and more. That’s on a collision course with consumers, who are increasingly able to manage their entertainment time, and in so doing, reply “one or the other, but not both.” We should not assume a captive audience anymore.

Time IS the new currency, and those who respect it will be rewarded. In terms of new value creation for media, we should already be looking at ways to save people time by aggregating and curating the real time fire hose that is the Web. And it’s looking more like we should be aggregating and curating more than just news content; we should be looking at the real time commercial announcements coming from the people formerly known as the advertisers, too.