Content Matters

Burn the Boats: Marc Andreessen's advice to old media

Eric Schonfeld at TechCrunch has a fascinating post today, based upon an interview conducted with web innovator Marc Andreesen.

Andreessen's advice to traditional media companies: burn the boats, a reference to the legend that Cortes ordered his men to burn their ships upon arrival in Mexico, so there was no option of going back. Andreessen has long suggested that print media abandon its roots, killing their print offerings and fully embracing the web.

The comments have spurred a spirited debate on Twitter, and ignoring the chatter about whether or not Cortes actually issued such a command, the debate is a good one. 

John Robinson, editor of the (Greensboro, NC) News & Record says "My advice to Andreessen: Buy a newspaper & show us how to do it, big talker"

While of course, Marc can raise these issues without personally worrying about how to deal with laying off thousands of employees or explaining massive short-term losses to shareholders, he brings out some very interesting points in the discussion.

I found most interesting his comments about the iPad:

”All the new companies are not spending a nanosecond on the iPad or thinking of ways to charge for content. The older companies, that is all they are thinking about.”

But people pay for apps. Wouldn’t he pay for a beautiful touchscreen version of a magazine? Maybe, if it were something genuinely new that blew him away. It would have to be more than an article with video and graphics though. (I agree, otherwise it’s no better than a CD-ROM).

Oh, and he points out, that the iPad will have a “fantastic browser.” No matter how many iPads the Apple sells, the Web will always be the bigger market. “There are 2 billion people on the Web,” he says. “The iPad will be a huge success if it sells 5 million units.”

I think that's a huge point. The iPad, Kindle and new eBooks to come cannot save traditional media. Sure, they can provide a short-term revenue bump, but they are not going to replace the classified ad business and it's not going to restore paid subscription rates to where they once were.

As for Cortes, I can't answer whether he made the famous "burn the ships' command as they entered Mexico or only later, when he feared his captains would leave for Cuba. But I'll use a different analogy, one familiar to any New Yorker.

In 2000, after trading Patrick Ewing, the NY Knicks went into a downward spiral. They threw good money after bad, putting themselves deeper and deeper into a hole. Rather than cleaning up their balance sheet when they could, they brought in Isiah Thomas, who took on horrible contracts for players like Stephon Marbury, Tim Thomas and Vin Baker. At each step along the way, Isiah seemed convince that adding one more high-priced former star would turn the team around. Predictably, the team's record got worse while their salary cap situation worsened.

As with newspaper companies, who say their shareholders would not tolerate years of painful losses in order to transition the business, we always heard that New Yorkers would never accept a few years of rebuilding by the Knicks.

Fast-forward a few years and the Knicks finally fired Isiah, replacing him with Donnie Walsh. Walsh set as his top goal to get the team below the salary cap in time for the free agent class of summer, 2010. And while it's still months before we'll learn whether the Knicks will be able to sign Dwayne Wade, Chris Bosh or the ultimate prize, Lebron James, Knick fans have been incredibly patient and supportive of the turnaround. Will it all end well for the Knicks? No one knows, just as we can't yet know whether a clean break from print for media companies will ultimately pay off. But, as with the Knicks, following the same failed course does not seem to be an option.

Alacra Pulse and the new Content Aggregation

Here's my presentation as part of the Fresh Look at Content panel at today's NFAIS conference.

The panel, to be moderated by Jabin White, features Dr. Emilie Marcus of Cell Press and Dow Jones' Brigitte Ricou-Bellan.

Here's my presentation. I look forward to a fascinating discussion.

NFAIS: A Fresh Look at Content

Monday, I will be presenting at the NFAIS annual conference in Philadelphia.

NFAIS (National Federation of Advanced Information Services) is an association of content industry companies; the event tends to attract a mix of technical and business leaders from a wide range of content publishers and aggregators.

I will be on the "Fresh Look at Content" panel, moderated by Jabin White of Wolters Kluwer. The other panelists will be:

Dr. Emilie Marcus, Executive Editor of Elsevier's Cell Press; and

Brigitte Ricou-Bellan, Managing Director at Dow Jones.

I will be presenting information on Alacra Pulse, sharing some of our experiences to-date with the freemium business model and talking about some of our plans for the near future (including a big announcement coming March 15).

I'm really looking forward to the panel. Cell Press has been doing a lot of innovative work in transforming the way that users work with scientific journals. Meanwhile, Dow Jones has gone through quite a bit of change in recent weeks and months and I look forward to hearing from Brigitte about the new direction, particularly with the former Enterprise Group (Factiva) being absorbed into the WSJ business.

Morningstar Acquires Footnoted.org blog

Morningstar (NASD:MORN) has acquired Footnoted.org, the blog-based financial research service that reads through footnotes of SEC filings, spotlighting the items that companies prefer investors not see.

Footnoted also posts its "worst footnote of the year" each year - for 2009, the "winner" was Chesapeake Energy (NYSE:CHK) which spent more than $12 million to purchase its CEO's antique map collection.

Last year, Footnoted introduced Footnoted Pro, a service geared towards hedge funds and institutional investors.

Congratulations to Footnoted.org founder Michelle Leder, who has tirelessly read through more filings in the past seven years than most analysts do in a lifetime. Following the acquisition, Michelle will continue to run Footnoted under its new parent.

Update: Some insights from Michelle on the acquisition, posted at Footnoted.org.

Truthiness and Punditry

Attend any conference and you’re bound to hear some truthiness – those concepts that the pundits believe to be true and repeat often, yet have little or no basis in fact.

 

This week’s SIIA Information Industry Summit was an excellent event, but there was a certain level of truthiness that I wanted to point out. Here are the examples that jumped out at me – I welcome in the comments examples you’ve heard there or elsewhere.

 

Truthiness #1

Those “25 and under” employees turn to Google, while those over 25 in the workforce use Factiva, LexisNexis or other "professional information" sources.

This was probably an accurate statement in 2000, but ten years later, it’s a crock. Do you know which of your customers turn to Google first? ALL OF THEM (with the possible exception of the corporate librarians). When users think of finding information, they think of Google. They’re not thinking of Factiva nor LexisNexis (nor Bing for that matter). And that applies to your 30-year old customers, 40-year old customers and 50-year old customers.  If you want to argue that those in the 55-65 age group are not active Google users, you might have an argument, but you probably can’t build your business around them.

Sure, there are differences between “digital natives” and those who grew up offline. But it’s not in the area of search. The differences are more around things like email. I know 19-year-olds who have Blackberries but never use email. To them, the Blackberry is simply a good keyboard to use for messaging.

 

Truthiness #2

All newspapers are basically the same; a model that works for one should work for another.

This one has been tossed around heavily in recent months, as newspapers explore the possibility of moving their content behind the pay wall. Pundits typically take one of two positions: those in favor of paywalls say “it’s working for the FT and the WSJ, so it can work for others”; while those opposed to paywalls say “it failed for NY Times Select, so it can’t work for anyone”.

 

But, not all newspapers are created equally.

First, the obvious example (and thank you, Gaby Darbyshire of Gawker for being one of the few to “get” this) – the Wall Street Journal and Financial Times are business newspapers. A large proportion of their subscriptions are paid for by corporations or are expensed by employees. Unlike most newspapers, these are a b2b purchase.

 

On the opposite side is the TimesSelect example. Yes, TimesSelect failed. But that doesn’t mean that every subsequent effort by the NY Times or others will also fail. Looking at the ideas floated by the New York Times, you can see they’ve learned a lot since then. They welcome the search engine traffic and plan to use a metered system so that only heavy users will pay. Will this work? I remain skeptical, but the concepts do have merit. Of course, it’s also important to keep in mind what the goals are. I don’t think the Times sees paywalls as a means to gain huge new subscription revenue. Instead, it seems like it will be an effort to slow down the attrition rate of their current print subscribers. If they are smart in the way they implement this, they could achieve that goal without losing much of the other traffic they desire.

The key takeaway here is that each newspaper is different. You need to look at the specifics of each property to understand what their drivers are. A good example of this was the news this week that Newsday, since launching its paywall 3 months ago, has only attracted 35 paid subscribers to the online-only version. That is a laughable sum, especially since the systems to support the paywall cost an estimated $1M plus, but it helps to first look at Newsday’s goals. Newsday is owned by Cablevision, which is facing fierce competition in its core Long Island market from Verizon Fios. Newsday granted free online access to Cablevision subscribers. So, as much as this is a defensive move for Newsday, I think it may be moreso a defensive position to help Cablevision retain its customers, as it increases the switching costs.

 

Truthiness #3

We’re impressed by your access to corporate leaders.

Ok, this one’s not really a truthiness issue, but it’s an annoyance that comes up at every event.

At an early age, we’re all taught that no one likes name droppers. Yet some pundits still feel obligated to give example after example that demonstrate little other than the fact that they had access to some corporate leader.

Now, if you tell me you dated Scarlett Johansen, played ball against LeBron James or jammed with Bono, I might be impressed. But corporate executives are not rock stars (no, not even Steve Jobs) and we don’t need to hear about the 10^th time you interviewed Alex or gave a (virtual) footrub to Mark. We just don’t care.

The fact that you have access to industry leaders is only of interest to me to the extent that you can share insights about their strategy or their success. If you provide no insights beyond what us “outsider” already know, you’re just a name-dropper. And I think your mama taught you not to act that way.

 

What bugs you about the pundits? Drop me a note in the comments.

 

 

 

 

SIIA 2010 CODiE Award Winners

Last night, the Content division of the Software & Information Industry Association held its annual CODiE Awards presentation. While the CODiEs had previously been awarded in the spring (in conjunction with the SIIA Software and Education divisions), this year the event was moved forward to align with the annual Information Industry Summit.

The CODiEs are awarded in fifteen categories. There were more than 100 products nominated, by more than 65 companies.  Nominees are screened by a team of judges, who rate each product based on category-specific criteria. Finalists are named and the SIIA membership votes to select the final winners of each category.

The full list of winners is posted on the SIIA CODiE site; I'd like to note a few innovators here.

• Dow Jones Investment Banker won a CODiE in the Best Online Professional Financial Information Service category.
• The Best Video Content Aggregation Service was awarded to Reuters Insider
• HR.BLR.com was selected Best Online Government Information Service
• Collexis Reviewer Finder won for Best Solution Integrating Content into Workflow

And, without appearing too self-serving, I'd note that Alacra Pulse was awarded two CODiEs, one for Best Online Business Information Service and another for Best Online News Service. Alacra was one of only two companies to take home "matching bookends" (Dow Jones being the other).

Congratulations to all the winners.

Here are a few photos from the awards dinner.

       

Newsonomics and the Jesus Tablet

Newsonomics author and Outsell analyst Ken Doctor provided the Wednesday morning keynote at the SIIA Information Industry Summit.

Ken looked forward five years to 2015 to discuss what we might see. He's created his Laws of Newsonomics, including:

• Make it Social (Social, Mobile & Video are coming together - the new Trifecta. How publishers bring these three together will dictate their success.)
• The "digital dozen" will dominate: a dozen or so multinational, multi-platform media companies will dominate global news and information. The focus for these companies will be scale - in order to reach their share of the 900 million English language speaking people in this world.
  
• Aggregation: the aggregators will get disaggregated, then re-aggregated. For example, AOL (NASD: AOL) is launching its new TV product (4th effort), where it will license content from Disney, CBS, etc, then compete with the cable companies. Similarly, Google has launched the Nexus One in an effort to compete with duopoly of Verizon (NYSE: VZ) and AT&T (NYSE: T)
  
• Analytics-driven content is thriving. AOL, working with Seed.com now has 5,000+ writers who monitor search activity, then quickly create content based upon trending searches. The wall between editorial and publisher has come down. Example of Examiner.com, who have "hired" 25,000 writers who are paid $2-5 per post, and are now a top-30 website, in terms of traffic. They use a "pyramid' system, under which "examiners" are paid a referral fee to bring on other examiners and to bring on advertising sponsors.
  

Newsonomics will be available February 2. I will post a review shortly.

The digital dozen, as they stand

What's Old is New Again; the NY Times Explores the Pay Wall

Less than five years after launching (and 3 years after shuttering) TimesSelect, it appears the New York Times (NYSE: NYT) is about to return with another paid offering.

At its peak, TimesSelect attracted roughly 750,000 subscribers, with nearly 2/3 of those being print subscribers and fewer than 250,000 online-only subs.

When it shut down TimesSelect, the Times expected to easily replace the lost revenue with the advertising revenue to be gained by allowing Google and others to index its archives. Of course, that was based upon the world of online advertising in 2007, not that of 2010.

 So, what can we expect this time around?

Rather than a solid pay wall, the rumours are that it will be an FT-like metered approach, where users can access a page without charge, but as their page views increase, they will need to subscribe.  That approach makes more sense, as it allows all of the content to be spidered and indexed by the search engines, continuing to drive traffic.

It will be interesting to see where the Times sets the bar for free/paid access. The FT has lowered the bar a few times. It initially allowed 30 page views per month to registered users and 3 to unregistered guests. Now, that’s down to around 10 pages for registered users and 1 page for guests. But I don’t think that the Times is prepared to dramatically shrink its audience to a fraction of where it is today. I could see them allowing 50-80 page views per month before requiring users to pay. The goal will be to convert those who read the paper online each day, not those who read an occasional article.

Another big difference I expect we’ll see from the TimesSelect days is with the editorial pages. With TimesSelect, editorials were only available to paid readers. That was the exact opposite approach to that of the WSJ, where editorial opinion was one of the few open sections of the site. The NY Times wants its political opinion to be heard and shared, while its editorial page writers want to reach the widest audience possible I would expect editorial pages to remain open and not subject to page view counts.

Breaking news is another area likely to remain open. It’s hard to be the primary news authority if no one can read your news. So, I think that breaking news will remain open in the same way that the WSJ does it today. I can’t imagine the Times ceding their position on breaking news to CNN. Breaking news will remain free.

So, what will drive usage of paid content? I think they will focus on some of the pieces that makes the Times unique – the Book Review, Times Magazine, political coverage (non-breaking) and other content to convince users to pay. This announcement is being done in conjunction with the Apple Tablet release, so I’d expect access on the Tablet to be fee-based, just as it is on the Kindle. I think we’ll see the iPhone app require a subscription as well.

I think the Times will bundle its electronic offering, so one subscription will allow for access on all devices. I assume that print subscribers will gain access to this package as part of their subscription as well.

In terms of price point, I would expect them to charge somewhere around $79-99 per year (current Kindle-only subscription is roughly $150, which I think is a bit steep).

Will it work?

I remain a skeptic until someone proves they can get consumers to pay for news (and the FT and WSJ subscribers are largely b2b, not consumers)

I see them getting back to the level of 250,000 or maybe even 500,000 online-only subscribers at a $99 price point. And there’s no doubt that page views will drop. Would $25-50M in revenue make that worthwhile? Maybe, though as the advertising market strengthens, they will miss having the larger audience.

But the newspaper industry today is in free-fall and we can’t blame the Times for experimenting. Let’s hope they’ve learned from their TimesSelect experience and come up with a model that works.

 

 

 

 

Taxing the Banks

There’s no “Dummies Guide” for bailout recipients, but at some point there will be a few interesting HBS case studies in how poorly banks handled the public relations aspects of the bailout. I find it amazing at how tone-deaf the leaders at these major financial institutions can be.

The latest response is their shock that the Administration might look to assess financial institutions with a risk-based tax in an effort to recover more of the TARP payments. The banks argue that they’ve repaid their TARP bailout with interest, so why should the government come back for more?

What the banks do not seem to understand is that the bailout was not simply another financial transaction. Without those bailouts, many of these financial institutions would simply not exist.  It’s not enough to simply repay the bailout loans then return to your old ways.

Whether or not they truly feel grateful for the lifeline, leaders at these financial institutions should express gratitude. I also think they should put their arrogance in check. I can only speak for myself in saying that destroying tens of billions of dollars in shareholder value would be a humbling experience.

How might the banks have handled the situation better? Here’s a start:

1. Show up in Washington when you are beckoned by the President. It’s pretty pathetic when you make auto CEOs on private jets look like the “good guys”.
2. Take a serious look at your core business. Have some of the “best and brightest” at your firm focus on how you can return to making small business loans and helping homeowners restructure their mortgage. I’m not suggesting a permanent change in your business, but perhaps diverting a bit of your focus in the short-term away from proprietary trading.
3. Take an honest look at your compensation policies to ensure you are rewarding behavior that is in line with long-term shareholder value. Yes, it’s possible you might lose a handful of superstars, but you’ll survive. Remember that the bonuses paid by Lehman and Bear this month will be zero. That could have been you, had the taxpayer not stepped in.
4. Stop thinking that you’re a master of the universe. Take a look in the mirror. Remember that you and your peers destroyed more shareholder value than anyone in our history. You built a business driven by factors you barely understood and could not control. Look in the mirror again. Still impressed?

 

 

Media Quote of the Day

Great post from Cory Doctorow on the sustainability of social media. Overall post is great, but this quote is priceless:

Only ancient, clueless dinosaurs like Rupert Murdoch are dumb enough to pay hundreds of millions for social media companies with the belief that they will grow to be immortal giants. Only lazy, fat media execs from firms that endured for decades without having to remake themselves from top to bottom think that a complete turnover in the corporate landscape is a failure.

(would have just tweeted this but it deserved to be displayed in its entirety)