Left Bay’s Musings on the Media
Searching for answers in sales and marketingWho Will Pay For News?
President Obama recently weighed in on the crisis in journalism.
“Journalistic integrity, you know, fact-based reporting, serious investigative reporting, how to retain those ethics in all these different new media and how to make sure that it’s paid for, is really a challenge,” Mr. Obama told a reporter from the Toledo Blade. “But it’s something that I think is absolutely critical to the health of our democracy.”
About the same time I was reading this article, I came across another — this one quoting the results of a Harris Interactive Survey on who would pay for news.
The research, commissioned by paidContent:UK shows that most readers would, in their words, “run a mile” and NOT pay. Nearly 75% would switch to free sites, 8% would read only the headlines and move on, and 12% weren’t sure. That left a measly 5% who would actually pay for content.
As reporter Robert Andrews asks, “The big question for publishers: Is five percent of your readership enough to offset the decline in advertising revenue that would come with putting your content behind a pay wall?”
Actually, that 5% would choose to pay is in line with the anecdotal evidence we’ve heard at Kachingle, which is that between 5% to 10% of readers would pay for content. Journalism Online is using the higher number. NYTimes said they received 12% for their failed effort called “Times Select.” Others in the business I talk with seem to think you can get at least 5% to pay. So in and of itself, the numbers are not surprising, and reinforce what we’ve been hearing.
What’s surprising, and frankly somewhat baffling, are the results broken out by age. Harris reports that 13% of 16-24 year olds and 6% of 25-34 year olds said they would pay; as opposed to only 1% of 45-54 year olds. Harris Interactive is a big name in polling, but these results go against everything we’ve seen, and seem totally out of whack. If anyone is going to be willing to pay, it’s the baby-boomers, not the “kids.”
But the big picture remains true: “As long as free alternatives exist, consumers will turn to them for their daily information.”
At Kachingle, we get asked a lot about statistics like these. There’s some comfort in knowing that some percentage of users will pay for content. What’s disconcerting is that so few actually will.
We’re not about getting users to pay for content; we’re about getting them to build online personas. They’ll Kachingle in order to associate themselves with sites and build their personal brand. That’s why in our demos, we show side-by-sides of a Yugo and a Porsche. What does contributing say about YOU? Our question hasn’t been asked yet. But it will, soon…
Why 15-Year-Olds Won’t Pay For News
There’s a terrific journalist for the Financial Times by the name of Andrew Edgecliffe-Johnson whose articles on the media appear in my inbox with some frequency. Today, he wrote a piece, quoting a Morgan Stanley report, on the media habits of 15-year-olds that will come as no shock to newspaper publishers. These teens will find ways to ignore ads, and pretty much won’t pay for anything, from music to news.
Coincidentally, Edgecliffe-Johnson was also referenced in a separate story published in Slovenia’s Delo Saturday Supplement that lays out the global challenges content providers face in finding alternatives to advertising (and among other things, has some nice references to Kachingle). Reporter Sonja Merljak provides an overview of how charging for online content hasn’t yet worked, citing the New York Times “Times Select” attempt to charge access to its opinion writers, only to abandon it 17 months later.
But given the new desperation and fortitude of publishers, can they now get users to “pay for content?” Merljak asks. This is where it gets interesting. She pulls from Edgecliffe-Johnson piece How much would you pay an article online? Edgecliffe-Johnson figured out that it should cost about “10 cents” for the cost of his 2,000 word online article. How’d he come up with that?
“At about 2,000 of the 50,000 or so words in the printed version of the Financial Times, it should in theory be worth about 4 percent of the newspaper’s cover price – 10 US cents, 17½ euro cents or 8p.” He acknowledges that for some people, an article will be worth more than that; for others, less.
“Micropayments will be only a small part of the solution, but the fact that such ideas are being pursued demonstrates the extent to which online advertising, media owners’ current dominant business model, is failing to live up to its promise.”
In our own informal surveys, most users can’t tell you if an article is going to be worth 10 cents — or more or less — until after they’ve read it. But that’s not how most proposed micropayment systems will work. You’ll get a two or three line synaposis upfront and then be asked to pay. Will you click, or like the 15-year-olds, look somewhere else?
Says Edgecliffe-Johnson: ‘Digital delivery encouraged the unbundling of the album, allowing consumers to buy only their favourite music tracks. Now other media owners face the threat that customers will want to pay for just the online equivalent of the sports section or their prime-time hits, leaving them struggling to sell less valued parts of the paper or broadcast schedule.”
Who has the time to figure what an article is worth? A different model — a better model — would automatically distribute funds you’ve already set aside for paid content. It would allow you to mark the stories and sites you liked, and then at the end of the month, split up your $5, $10 or however much, fairly. With Kachingle, we’re building such an easy-to-use approach. Sign in once and tell the world what you support. Stay tuned.
Why Pay Walls Won’t Save Newspapers
I’m reading an online New York Times article about how “Pay Walls Alone Won’t Save Newspapers.” Of course I’m not paying anything to read this piece, or any other, as I peruse today’s headlines. But will I in the future? Author Eric Pfanner argues that though the case for charging for online content seems pretty clear, “if only because publishers have nothing to lose.“ But pay walls, he predicts, will only likely be a “transitional step.” Why? There are too many advertising dollars to lose, and too few people willing to pay for content.
Look to the music industry for an analogy, he says: In spite of iTunes and laws against unauthorized sharing of digital music, industry analysts suggest that 95% of music is still pirated “and record industry sales are still falling at double-digit rates.”
Pfanner says that while pay walls may be a start, few people are going to want to dozens of newspapers online. Instead, it might be possible to get people to pay if access to newspapers were bundled with other things people want from the Internet, like “films, music, games, and social networking.”
I think we’re going to have to try lots of different options. But what we’re creating at Kachingle seems the most simple of all. Erect no pay walls. Continue allowing articles to be freely distributed in order to maximize advertising. At the same time, put the power to choose to pay in the hands of the users. Put aside a fix amount of money each month. Allocate it fairly by the percentage of daily visits to Kachingle-enabled sites.
Above all, make it easy to use.
Still Trying to “Save” Journalism
There are a lot of ideas being floated about for “saving journalism.” None alone may work, but all should be tried. We at Kachingle are developing our own model, of course, one that combines an easy contribution approach with social recognition.
A lot of folks believe a subscription approach may still work. In mid-April, we heard about JournalismOnline, which will be a subscription model with a passport key to access member-publisher’s websites. “The website will provide a way for publishers of quality journalism to charge whatever they believe is a reasonable amount for their content in ways that are seamlessly convenient for readers,” explained co-founder Leo Hindery.
The challenge with such a model is that most users have shown they won’t pay for something they haven’t read. That’s the problem with all subscription-based models – there are too many free alternatives. Clearly, JournalismOnline wants to get a critical mass of publishers signed up. The question is, can they do it?
Now comes word that News Corp’s Rupert Murdoch has assembled a high level team that is devising a system to charge for web content. The New York Post reports that the team is looking to create a “user-friendly device akin to Amazon’s Kindle“ to deliver content from News Corp newspapers, like the Wall Street Journal, The Times of London and the New York Post.
Traditionally, print advertisers have preferred paid subscribers to free recipients because there’s a higher perceived value if someone is paying for the product. However, one of those perceived advantages – demographic data – has diminished as online cookie-based behavior-tracking has allowed publishers to back out data about its visitors, which in turn, has helped advertisers better target their message.
It’ll be a neat trick if they can make it all work.
Do Newspapers Matter?
There’s a been a lot of talk about the death of newspapers, and how this impacts the very foundations of our democracy. The thinking goes something like this: Newspapers are the watchdogs over government. If newspapers go away, so too, will responsible government. Not all of it, of course. Just the few who might otherwise be smoked out by aggressive reporting.
But do newspapers also encourage citizens to get involved with local government? That seems to be the conclusion of a study by Princeton University’s Sam Schulhofer-Wohl and Miguel Garrido. Their study, Do Newspapers Matter? Evidence from the Closure of the Cincinnati Post suggests “fewer candidates ran for municipal office in the suburbs most reliant on the Post, incumbents became more likely to win re-election, and voter turnout fell.”
The authors are careful to note that their results are “statistically imprecise,” and that they simply looked at one suburban municipality, and that more work needs to be done. Nonetheless, it does give us a data point to begin a discussion. Also, as other others are suggesting, “It would also be interesting to see of the trends continued or were simply short-lived effects until new information sources filled the void.”
What might replace the newspapers? Bloggers, perhaps. The problem I see is that while bloggers offer an alternative voice to newspapers, it’s akin to reading only the editorial page: there’s no original research. Who’s going to do the work of digging into courthouse records and filing stories, ie, who’s going to “create” the news, unless they’re paid for it? Advertising is providing some of that revenue, but not enough. There have to be other means for journalists to get paid.
One such solution might be Kachingle, one of the companies I’m working with. It provides a credible, crowd-funding alternative that allows users to support any site they want, and get social recognition for doing so. If open source sites like Wikipedia can be supported with voluntary dollars, then maybe journalists can, also.
Facebook’s Terms of Service
I’ve been watching the discussions about Facebook’s process for revising their Terms of Service, and I have to say, I’m impressed with the manner in which they’ve solicited user input. For those who haven’t been following the matter, the uproar started in February when Facebook made changes in their TOS that made it seem it was claiming a perpetual license to material uploaded to the social network. After a huge backlash by bloggers and others, the company backed off and said that wasn’t really what they meant. What evolved was a new process that included soliciting input from users.
On the company blog, Facebook’s Simon Axten says that on April 16, the company will post revised versions of the documents based on the feedback they’ve received. “We’ll also be sharing a written response to the main concerns people have expressed. This will explain in clear language why we did — or did not — make certain changes. This is similar to how U.S. federal agencies create regulations.
“At the same time, we’ll be asking people to vote on the new revised documents.”
Terms of Services are amazing documents. I’m writing one now for one of my clients. Basically, they set out the site rules — what users can expect by accessing a site and what they have to give up by doing so. While I’ve found it fairly straight-forward addressing privacy concerns like the use of cookies, I’ve been more challenged deciding how content can be used when it wasn’t originally created by my client. Heck, can I even say that I have specific customers who are using my client’s product? While good manners would suggest that I always ask for their permission to use or say anything about them, can I do so anyway? To me, that’s the crux of the Facebook problem: Who owns what’s posted on their site?
In the case of Facebook, you have from April 16 to April 23 to comment on it.
Huffington Post Announces Launch of Investigative Fund
On Monday, the Huffington Post announced the launch of The Huffington Post Investigative Fund. According to Ariana Huffington, the nonprofit Fund will produce a wide-range of investigative journalism created by both staff reporters and freelance writers.
“We’ll start with a budget of $1.75 million — and continue to raise funds and expand the project as we move forward,” she said.
Fantastic! This is the kind of support journalists need. But I also wonder, how does $1.75 million compare to what major newspapers used to budget for investigative journalism? It seems like a pretty big number, but I honestly don’t know how to measure it. There was a time when some newspapers sponsored investigative units. They were the exception, however. Most often, investigative stories would just evolve…as beat reporters uncovered parts to a story that hadn’t been told. How does “investigative journalism” differ from writing a really interesting story, of national or local interest? Is the real story of the Huffington Post’s announcement simply that they’re supporting journalism, investigative or otherwise?
Looking for Alternatives to Paid Ads
There’s a pretty good back and forth going over a TechCrunch guest article that opined that most ad models will “fail” on the internet. The article, by Eric Clemens, a Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania, takes aim at paid search in particular, because we “no longer need advertising to obtain the information” we want. Clemens says we can find what we want, when we want it, through more trusted sources than paid advertising. And most of us, he says, don’t even want to view advertising.
Clemens says that “conventional search,” such as a regular Google query, “misdirects” us to sites other than the ones for which we’re looking. “Monetization of misdirection frequently takes the form of charging companies for keywords and threatening to divert their customers to a competitor if they fail to pay adequately for keywords that the customer is likely to use in searches for the companies’ products; that is, misdirection works best when it is threatened rather than actually imposed, and when companies actually do pay the fees demanded for their keywords.”
I get it. Google is making money by providing search results for misspelled keywords and ambiguous searches. But misdirection? I don’t think so. How does Google know precisely what someone is looking for?
And I guess I wasn’t alone with these thoughts. “Search advertising is one of the most powerful forms of advertising precisely because it does not misdirect searchers, nor interrupt them but instead provides answers that they seek,” retorts Search Engine Land’s Danny Sullivan.
“If I do a search for ‘alaskan fishing trips,’ how is it that a search ad alongside the editorial listings misdirected me? What was that ‘exact’ thing I was supposed to get in the first place? Was it a government document? An Alaskan tourist office? One particular fishing company?
“In plain language, online advertising isn’t failing — the economy overall is failing.”
But that’s precisely the problem. Sites cannot survive on advertising alone. Which both Clemens and Sullivan recognize:
“The net will find monetization models and these will be different from the advertising models used by mass media,” says Clemens. Agrees Sullivan: “Charging for content gets trotted out as a solution. Well duh. People have been charging for content online for ages, and successfully so. Personal sidenote, don’t go banking on micro-payments to be the magic solution. But many sites, in my view, backed away from charging for content because the online ad revenues cranked up. Now newspapers that opened pages up to anyone to increase ad views are having to reconsider that much access. The balance will be found.”
Exactly. That’s why I think a monetizing model like “Kachingle” will eventually be among those working alongside advertising. Kachingle hasn’t launched yet, but when it does, it promises to offer readers a sustainable, easy-to-use way for supporting content sites. Stay tuned for more information.
Tools For Saving Journalism
I attended a conference over the weekend at the UC Berkeley Graduate School of Journalism titled “Tools for Saving Journalism.” There were about 125 of us in all, and I gotta say, it felt a little like attending a wake. It seemed to a person, everyone was worried, and even fearful, what lay next for journalists.
For instance, Alex Cohen, the host of NPR’s daily news program “Day to Day,” and who moderated a session called “Active Innovators,” began by saying she’ll know soon what it’s like to be unemployed: This coming Friday will be the last for Day to Day, a victim of budget cuts at NPR. Later in the day, we heard how the union representing journalists and others at Hearst Corporation’s San Francisco Chronicle voted to allow the company to cut more than 150 jobs, in a desperation attempt to save the paper. Ouch!
Yet like at any funeral, there was plenty of hope for the future. David Cohn, of Spot.us explained how the public can now “commission” journalists to do investigations on important and perhaps overlooked stories. Monika Bauerlein from Mother Jones Magazine talked about their use of a “tip jar” so readers can show their appreciation for an article they read. Andy Bowers from Slate and a former NPR reporter, talked about the podcasts that slate has created with NPR.
Also speaking was Cynthia Typaldos, the CEO of the start-up “Kachingle,” which is an online monetizing solution for content sites. I’m now consulting for Kachingle and will write more about them in a future post.
Some of my favorite quotes:
Why journalists should get over their fears about becoming business people: “When you’ve knocked on the door of a parent whose kid has been shot and killed, making cold calls should be easy.”
“Journalism is the first line in history.”
The three biggest stories missed by journalists in the last 40 years: The truth behind the Vietnam War, the false government “evidence” of Weapons of Mass Destruction in Iraq; the economic meltdown.
“It’s a lot cheaper to pay for a good newspaper than a bad war.”
How Building a User Interface Can Put the “User” First
I heard a talk last night by Glen Lipka of Marketo, a start-up whose software automatically organizes marketing tasks like lead gen, email, lead nurturing, and combines well with Salesforce. Glen is Marketo’s Director of User Experience and Product Management. What impressed me wasn’t his product — he really didn’t talk about it — but what he said about creating stronger user interfaces.
For instance, he mentioned that he follows the “Halloween Principle” in everything he designs. Imagine it’s October 31, you’re at your home computer, and the doorbell rings. After giving candy to kids, you come back to your computer — now where was I? A good user interface helps you remember, for we’re always being interrupted, be it because we’re going in and out of meetings, we’re IMing, or just generally multitasking in general.
He said he always tries to think like the user, knowing that most of us don’t always like to follow one path. He cited the example of how many ways there are to print a document, from Command P to finding “Print” in the pull-down menu to right-clicking on a mouse. Too many engineers like to find the preferred way only. A good product manager tries to anticipate the many ways one might want to go, and build it into the specs from the beginning.
I particularly liked two examples of managing upward. He mentioned Avinash Kaushik’s reference to the “HIghest Paid Person’s Opinion,” or “HIPPO.” While Avinash’s post is beautifully written, Glen summed it up by saying that it comes down to figuring out what’s important to the HIPPO and driving your responses so they make the right decisions. Bring the voice of the customer to your arguments to help shape the HIPPO’s opinion. But don’t ever fall in love with your own work, as the HIPPO has the final say.
The other example I liked is that users don’t rely on sales people the way they once did. Glen cited Microsoft’s visionary, Ray Ozzie, who says customers now surf to “research, try and buy,” and often never interact with a sales person. To Glen, that means the user experience better be right.
Finally, and this is something I’ve always incorporated in my own business experience, Glen reminded everyone to “have a sense of humor.” Humor can deflect a lot of heat. In all, a good talk.
