Content Matters

Who Should Buy Barnes & Noble?

Barnes & Noble (BKS) is being put on the block due to its depressed stock price. Current market value is barely $750 million, making it a reasonably inexpensive purchase.

The two most obvious suitors are founder Len Riggio and investor Ron Burkle, who currently owns about 19% of the company. But beyond those two, who might bid for the company?

Some have suggested Amazon (AMZN), but I don’t see that happening. First, that deal would be unlikely to pass antitrust scrutiny. More importantly, the deal wouldn’t make a lot of sense for Amazon. In Barnes & Noble, they have a weakened competitor on both the traditional book and eBook market. The Amazon model is working and there’s no reason to burden it with the negatives of running a brick & mortar business.

I’m sure that private equity firms will be in the mix (they always are) but won’t speculate on which ones might bid. Suffice to say that there will be other financial bidders here.

Barnes & Noble might also gain attention from other traditional brick & mortar retailers. It could be an interesting purchase for Target (TGT) or Wal-Mart (WMT), but neither is very acquisitive and I’m not sure that it would fit either company’s business model nor culture.

I think Barnes & Noble might have the most appeal to companies in the education market, perhaps someone like Blackboard, Inc. (BBBB). B&N already operates numerous college bookstores and its textbook division remains a strength. More importantly, the Nook seems well positioned to become the delivery platform of choice for education. B&N and Blackboard recently signed a partnership for eTextbooks. Financially, a deal wouldn’t be that easy. Blackboard’s market cap is just $1.3 billion, so they would need help in financing a deal. But a combination of the two companies could establish the dominant player in the educational e-reader space. The Nook would have incredible branding (every time a student logs on to their Blackboard service) and would have both online and offline distribution.

What Sidney Harman should do with Newsweek

It’s possible that 91-year old Sidney Harman acquired Newsweek simply as a means of minimizing estate taxes for his family. But assuming he truly wants to turn Newsweek into a viable product in the coming years, what might he do?

Here are three steps he might take to make Newsweek viable.

Leverage the brand

This won’t be easy. Newsweek has very strong brand recognition, but that brand name is an anachronism in the age of real-time news.Perhaps the best thing he can do here is come up with a clever tagline. Maybe something like:

There are 604,800 seconds in every week. Newsweek covers each and every one of them.

Kill the print edition

This one is the most obvious, but will also be very difficult for many inside Newsweek to embrace.
But there is no better way to change the mindset of a newsweekly than to eliminate the weekly editorial and print schedule.

It may seem harsh to kill the print version and the many jobs that will go with it, but if he wants to save the brand, he will need to move swiftly in that direction.

Reconstitute themselves as the curator of choice for politics & policy

Rather than trying to author content on a vast number of topics, what if they instead set out to become the curator of choice for political and policy content? Don't try to comment on the news - instead, provide insights on key policy issues, both domestic and international.

Retain a few key editors, each of whom will be expected to write 1-2 blog posts each day. Then, using a combination of technology and lower-cost curators, sift through content from other media and blog sites, identifying relevant content and classifying it by topic. The end result will be a series of high quality pages on compelling topics, led by a modest amount of proprietary blog content surrounded by carefully curated web content. Some topics may be evergreen, while others may be cyclical (elections) or event-driven (e.g. WikiLeaks). The content should be multimedia in nature and should aim to provoke and promote discussion.

I would trash the existing Newsweek.com site and come up with a dual strategy for website and mobile.  They should take a look at what Flipboard and Pulse have done on the iPad for inspiration. Everything should be based on easily browsing and sharing content.

That’s what I would do with Newsweek. What would you do?

 

Call for Mobile Content Innovators

WSA-Mobile (the World Summit Award - Mobile Content) is seeking entries for their 2010 contest.

Nominations are submitted via each country's national expert. The national expert for the USA this year is Michele Manafy, editor-in-chief of eContent Magazine.

Below is a brief overview of WSA-Mobile

WSA-mobile emphasizes cultural diversity and identity, the creation of varied information content and the digitalization of educational, scientific and cultural heritage. It aims to make the benefits of the new Information Society accessible and meaningful for all humanity, and in particular, to raise public awareness and give deserved public recognition to the highest quality e-Content, produced all over the world. As of today, around 160 countries actively participate in the initiative.

If you're interested in applying, take a look at the WSA-Mobile content categories and evaluation criteria, then head over to the nomination wiki to enter your submission.

WSA-Mobile awards offer great prestige. If you've had strong accomplishments in the mobile content space, this is a great way to show your stuff.

Amazon e-Books Outselling Hardcovers: What is the Impact?

Twitter was abuzz yesterday with links to this New York Times article quoting Amazon as saying that eBooks in the Kindle format are now outselling hardcovers.

So, what does that really mean and what does it tell us?

First, the details behind the headline (since Nick Carr suggests we rarely bother to click through). According to Amazon, for the past three months, eBooks have outsold hardcover books by a ratio of more than 1.4-to-1.  In other words, for every 100 hardcovers sold, they sold 143 eBooks. And that ratio has increased to 1.8 to 1 over the past four weeks.

That’s pretty impressive, considering the Kindle store has been open less than three years. There are fewer than 5 million Kindle-compatible readers (excluding phones) out there today, a small fraction of the book-reading audience.

Amazon has been extremely successful at managing a multi-channel device strategy. While pushing its own reader, the uptick since the iPad launch makes it clear that a lot of those eBooks are being read on the iPad. In the Times story, Amazon suggests that the iPad is a different device and is not competitive to the Kindle. While that may be true to some extent, it's naive to suggest that it won't have any impact. As an iPad user, I can't see myself buying a Kindle device. That said, I still use both Apple and Amazon libraries. While I prefer the iBooks app to the Kindle on the iPad, the Kindle has a much larger library of titles, so what I can’t get in iBooks format, I will buy in Kindle form.

It also shows that price wars have helped shift e-readers from novelty gadgets to mainstream products, suitable for young and old. Just 12 months ago, I’d perhaps see 1 Kindle user during my daily commute; today, there are likely to be 5-6 commuters using Kindles, iPads or Nooks in a single car on my train.  The Kindle price has dropped to $189 while the Barnes & Noble Nook is priced at $149. As they approach the magical $99 price point, they’ll become an impulse purchase and adoption will continue to grow.

The audience for eReaders is surprisingly diverse. While the typical technology early adopter is a 30-45 year-old male, eReader users seem equally distributed by gender and run all ages. 40+ readers have found the adjustable font size makes life easier, while teens and tweens are adopting them as well. The student market is likely to explode in the next 12-24 months. Barnes & Noble recently inked a deal with Blackboard to pursue the high school textbook market. I’ll be shocked if by the time my 11-year-old enters college she uses any printed textbooks.

What’s the likely impact?

The rapid adoption of eReaders will no doubt have a huge impact on the publishing industry.

First, the good news. Users of eReaders tend to read a lot more than others.  It’s no surprise that when you can carry as many books as you’d like in one device, you’ll buy more than if you had to carry each individually. So, despite lower prices, revenue and profits should see a noticeable bump.

It will be interesting to see, over time, how the reading patterns of users on dedicated readers, such as the Kindle or Nook, compare to those on multi-function devices like the iPad. While I have a couple of books in progress on my iPad, I’m more likely to read RSS feeds, use a news app or read Twitter much of the time.

At the same time, eReaders should quickly bring some level of disintermediation to an industry where publishers and distributors have incredible power. For bestselling titles, those blockbusters with 7-figure advances for name-brand authors, publishers will still hold court. But for long-tail titles, which never received much marketing support from their publishers, there is likely to be great change. I’d expect a new market to emerge, where PR and marketing professionals help self-published authors drive awareness of their titles.

On the channel side, it seems likely that the Big 3 will dominate. Amazon, Apple and Google (with their soon to be launched Google Editions, a store which will drive users to multiple channels for purchase) are likely to vie for dominance in the eReader market.

Barnes & Noble looks like it can be at least a niche player and can leverage its existing relationships to potentially dominate the educational market. 

That leaves question marks for companies like Borders and Wal-Mart. Borders has been on shaky ground for quite a while and despite launching its own eReader software, seems more likely to follow the Blockbuster video path than to find success. Wal-Mart has established itself as a dominant bookseller and has reach into many households which Amazon and Apple don’t reach today. Yet it’s hard to see what their value proposition will be in a segment where pricing is generally set by the publisher.

Similar challenges will be felt by independent booksellers, already an endangered group. Traditionally, these businesses thrived by their personal, hands-on touch. A market where awareness will be a huge challenge suggests a potential role for the independents, perhaps as affiliates to Amazon or Google, yet even that model suggests that a physical presence no longer serves a purpose.

Many have argued that the endearing qualities of physical books would make many hesitate to give them up. I have fond memories of wandering the “miles of aisles” at the Strand Bookstore. Yet, just as with digital music, it’s apparent that convenience and improved functionality can easily trump sentiment. Of course I still haven’t figured out how to get an author to personalize and sign a copy of an eBook.

What a Long, Strange Marketing Trip It’s Been

It’s no surprise that a key to innovation is rejecting conventional wisdom. And innovation thrives in many businesses, particularly those in the technology space. But whether in silicon valley or silicon alley, marketing is still largely done in the same way it has for decades. Companies hire PR firms who push out press releases, while marketers post product info to web sites and create factsheets for their sales staff.

Marketers may dabble with new approaches, sticking a toe into the social media space by creating a Facebook fan page or setting up an official Twitter account, but even then most apply old approaches to new platforms. Knowledge is shared through boring white papers which sit behind a registration wall while Twitter accounts push out links to bland press releases or staid marketing messages.

 When it comes to breaking the rules of marketing and rejecting conventional wisdom, David Meerman Scott (literally) has written the book. And now, he’s joined together with HubSpot CEO Brian Halligan to author a new book, Marketing Lessons from the Grateful Dead.

It’s not the first time that David has written about the Grateful Dead. Readers of his book World Wide Rave may recall a discussion framed by asking whether you wanted to be like Led Zeppelin, whose historic reunion show at the O2 arena was not made available in video format (and where YouTube was forced to remove clips posted by fans), or like the Grateful Dead who, long before the days of Facebook and social media, encouraged concert attendees to record their shows, even setting up special sections where they could plug in to the soundboard to get better quality recordings.

As the book pointed out:

If you want to remain relevant in an always-on, fan-centric, YouTube world, you need to embrace—not restrict—your most important supporters. You need to believe in the power of a World Wide Rave to sell your products and services.

In this new book, David and Brian take a look back at how the Dead worked to develop and nurture an active community of fans, then show how to apply many of those same techniques to today’s marketing platforms. For example:

Rethink traditional industry assumptions – Rather than focus on record albums as a primary revenue source (with touring to support album sales), the Dead created a business model focused on touring.

 (blogger note: if you’ve read what Fred Wilson and others have written suggesting media companies look to monetize the audience, not the content, this is a great example)

Bypass accepted channels and go direct – The Grateful Dead created a mailing list in the early 1970s where they announced tours to fans first. Later,they established their own ticketing office, providing the most loyal fans with the best seats in the house.

The foreword to the book is written by one of the biggest (literally and figuratively) Deadheads, former UCLA and NBA great Bill Walton. As he so eloquently describes it:

Their passion, creative spirit, imaginative soul, and industrious commitment to promote truth, fairness, justice, and the Grateful Dead way led them through the evolutionary transition where they went from playing for silver to playing for life. This book tells you how to make that transition for your own career.

David Scott’s books are always practical, insightful and a fun read. Fans of his prior books won’t be disappointed here. Marketing Lessons from the Grateful Dead may be his finest book to-date.

 

Why Most Pay Walls Will Fail (and a potential solution)

Walls. They're going up everywhere, or so it seems.
Times Online put up its pay wall last week, and now Time has put up a wall (just a wall, not a pay wall since you can't buy the content through the site), with many other publishers poised to follow. At the same time, numerous publishers see the iPad as their savior, giving them the opportunity for a mulligan, somehow erasing all of the web experiences of the past ten years.

I'm all for publishers experimenting with business models, in fact we've had too little experimentation in recent years. But I'm also pretty convinced that most of these pay walls will fail.

Let's start with Time.
The Time business model has some deep flaws. First of all, it's a newsweekly in a world where news breaks in real-time. And while it does employ some quality journalists, it is not easily differentiated from other news media, either online or in print. Other than perhaps the Person of the Year issue, when was the last time you sought out Time either online or off?

In its latest effort to boost subscription revenue, Time removed the full text of all its articles, providing only short snippets with no way to purchase the full article. Users have three choices:
1. Buy it in print
2. Buy it for iPad
3. Ignore it and find another source.

Most of us will likely choose option 3. There are far too many substitutes out there to pay a premium for the iPad edition or to buy the printed copy. If course there may be special editions which drive interest, spiking newsstand sales or iPad downloads.

Time's sibling, Sports Illustrated is taking a similar approach and I have little doubt that the swimsuit issue will set records for iPad magazine downloads. But SI has already given up on selling advertising directly and today announced a deal to have sister company Turner take over responsibility for SI.com. And Time may find it's overplayed its hand. Will many purchase the Person of the Year issue? Some will, but for most, simply finding out who is named Person if the Year is enough. Once that curiosity is satisfied, users may be unwilling to pay for the detail available through a subscription.

And that's the biggest challenge with these paywalls. Unless your content is unique and compelling, it will be impossible to build a substantial paid audience. Large brands, once they lose their audience, run the risk of becoming irrelevant.

Many have suggested that as most news sites move their content behind the paywall, users will have no choice but to subscribe. I question that logic. Even if you could move all the newspapers behind the paywall today (and do so without raising antitrust/collusion issues), new competitors will spring up. And, let’s face it, there’s no way you’ll get all the news products in a market to act in the same way. While Times Online has put up its pay wall, the Guardian has continued to push content to the open web. A key problem for the news industry is the glut of sources; as some of those sources remove their content from the open web, others will see that as a huge opportunity to gain traffic.

The web has clearly devalued the general interest, broadly read publications. This is most pronounced with the news weeklies, but even entertainment-oriented magazines will struggle. In order to remain relevant, magazines like People will have to provide more exclusive content, which will likely drive up their cost structure. For the general gossip info, such as the travails of Lindsay Lohan, users will go to TMZ or another free site. Ironically, it’s the niche products that will likely do well with paywalls, as there are few free substitutes. Enthusiast magazines, which often got the bulk of their revenue from newsstand sales, will have more flexibility in using paywalls or removing their content from the free web, while mainstream products will suffer.

What’s the solution?
As Forrester’s Nick Thomas recently wrote in his Publishers Need Popcorn Not Paywalls post (using a line originated by Union Square Ventures’ Fred Wilson) publishers must look to monetize the audience not the content. It’s something that publishers have not been very good at but that eCommerce and other digital businesses have mastered. Content providers will have to come up with the right mix of brand advertising, eCommerce, lead generation and other tools in order to become profitable.

I also think we may start to see some interesting acquisitions as eCommerce and other businesses may begin to acquire traditional publishers. An example came earlier today when FriendFinder Networks, an adult social media site, announced its intent to bid for Playboy Enterprises. FriendFinder, which previously acquired Penthouse magazine, clearly sees an opportunity to monetize these brands beyond simple content subscriptions. And while adult content may have its own unique characteristics, I could see other, more mainstream companies acquiring magazines with strong brands. How about a few of these potential deals:

• Guitar Center could acquire Guitar Player Magazine
• Dick’s Sporting Goods could acquire Ski Magazine
• Travelocity could acquire Travel + Leisure

If publishers can’t find alternative means to monetize their audience, then I expect to see more and more creative deals where companies with a proven ability to monetize their traffic acquire the content that drives it.

iPad Content Sales: Impressive Start but Likely Unsustainable

The numbers are starting to come in and the early results for sales and downloads of content on the iPad are in many cases, impressive.

• The highly touted Wired issue ($4.99) was downloaded 24,000 times in its first day and 62,000 to-date, grossing over $300k (netting $216k to Conde Nast).
• Rupert Murdoch announced that the Times of London had sold 5,000 subscriptions at £9.99 per month.
• The WSJ has reported 10,000 iPad customers, but hasn’t broken those out as to new subs vs. iPad access to those with existing wsjonline subscriptions.
• The FT app has been downloaded by a reported 130,000 users.

Those who’ve suggested that the iPad will usher in a new model for content – a do-over for news services, see this as proof of their theory. Unfortunately, I think it’s more driven by the “I’ve got a shiny new toy; what else can I do with it” model.

It’s great that 62,000 users downloaded the Wired app. A lot of that can be attributed to all the hype that came with its release. Yet how compelling was the Wired app experience? I played with it a bit and came away underwhelmed. The reading experience was OK, but nothing really different from what I could get on the web. Most of the innovation, it seems, was aimed at the advertisers, providing interactive ways to play with an ad. OK, that’s pretty cool for a demo, but do I really want to pay $4.99 to play with a bunch of ads? Perhaps the greatest condemnation comes from the InterfaceLab blog:

What strikes me most about the Wired app is how amazingly similar it is to a multimedia CD-ROM from the 1990’s

I think Wired will be lucky to see 10% of those users (6,000) come back to buy the second monthly edition. A more realistic guess will be about 3,000 users, hardly enough to drive circulation revenue OR get their advertisers excited.

The Times of London subscribers may have a bit more depth to them, but I think they too will soon dissipate, especially since News Corp has decided to make this a separate subscription than either print or online. They will likely retain some users who drop print, but with so many news alternatives it will be a tough road for them. I expect we’ll see the numbers continue to grow in the next few months (especially since the iPad has only been on sale in the UK for a short time), and reaching 20-25k iPad users by year-end might be a realistic goal. Yet while cannibalizing their print subscribers may be a good tactic in some ways, it may also foster a set of users who learn that they can do without the product altogether.

Some of the other results are harder to interpret. WSJ figures don’t isolate new paid subscribers, so judging quality is impossible.

Similarly hard-to-judge is the FT, which is providing two months’ free service. My guess is that the conversion rate will be modest. Many of those users, of course, already have FT.com licences, so they will continue to use the iPad at no extra charge. For others, I’d expect a conversion rate in the 5% range.

That’s not to say that there are no success stories. The Times of London and FT may turn out to be a strong success, and I expect that the WSJ will do well on the iPad over time. I think that magazines will fare far worse. While newspaper usage will grow over time, I’ll be shocked if any future issues of Wired exceed the water mark set by the premier copy. An impulse purchase of a magazine for $5 at an airport newsstand or when heading to the beach makes sense. An impulse magazine purchase on the iPad, where you have the entire web at your fingertips, seems unlikely.

When I first got my iPhone, I downloaded many new apps, many free, some paid. Over time, I got developed a routine and today have around 90 apps on the phone, but only a dozen or so are in steady use (TweetDeck, NewsRack, NYT, Bloomberg, Facebook, FourSquare, Pandora, Sportacular, TripIt, a few guitar apps and some games that my daughter plays regularly). The majority of the initial 10-20 apps I downloaded have been relegated to the trash bin. 

The same will occur for new iPad users. And with a good screen and browser, many iPad users will find that visiting the content provider’s website using Safari provides as good or better experience, which is not the case on the iPhone.

In the months to come we will see new and creative approaches to the iPad and other tablet devices. Publishers would be well-served in trying to find ways to create a compelling user experience that provides ongoing value, not simply a one-time gimmick.

There’s No Room for News Weeklies in a World of Real-Time Niches

Yesterday’s announcement by the Washington Post of their intention to sell Newsweek should come as no surprise. In fact, it wouldn’t have shocked me to see them announce they would simply shut it down. Yet many traditional media analysts still seem surprised by the news.

Time and Newsweek have held prominent positions in media history. For decades, it truly mattered what topic they chose to adorn their covers each Monday. In a world where news was dominated by the evening newscast, these two publications truly influenced the national agenda. But it’s been at least 15-20 years since either publication was truly relevant. As David Carr asked in a tweet yesterday, when was the last time you picked up a copy of Newsweek other than in a dentist office?

 

The impact of real-time news cannot be dismissed. Looking at the Newsday announcement itself, the first tweets appeared yesterday around 10:45am in a tweet by Anthony Edgecliffe-Johnson.  Within 15-20 minutes, I’d seen 40-50 comments on the announcement in my tweetstream. In fact, when I saw a tweet “announcing” the sale yesterday afternoon around 2:30pm by Steve Rubel, I recall thinking “why is he tweeting old news as though it were just breaking?”. 

I realize, of course, that only a small number of consumers are Twitter users, but cable news has the same impact. How many people have seen the photo of the Times Square bomber already?  Would you buy an issue of Newsweek or Time next Monday if his picture were on the cover?

I can only think of three weekly news-oriented magazines which remain relevant to a wide audience. The Economist is successful largely on the quality of their writing, their willingness to do long-form stories which lend themselves to deeper analysis, and the fact that they bring a global (or at least European) perspective to world events. New York Magazine remains relevant because it covers stories that others don’t. They don’t have a new focus, though certainly have elements of news in their pages. For New Yorkers, they provide a mix of who, what & where that remains important, though I can see them threatened in the long run by various blogs from Gothamist to Gawker. The New Yorker remains relevant for some of the same reasons as the Economist. Long-form stories, often on topics barely touched on elsewhere, combined with fiction from top writers make the New Yorker a good read.

Newsweek certainly has some quality writers, Jonathan Alter and Fareed Zakaria among them. Yet their format doesn’t provide a forum for these writers to do quality investigative journalism. How much of a difference in quality shows through in a 500 word story? Let’s face it- Rolling Stone has probably produced more relevant and impactful articles on politics and finance in the past year than Time and Newsweek together.

Of course the key parlor game question is “who will buy Newsweek?” I’ll play along with a few suggestions (apologies to those who saw me tweet these yesterday morning – I guess blog posts can seem old compared to real-time tweets).

First, I’ll dismiss the one that many others have suggested. I don’t see any likelihood that Bloomberg will buy Newsweek.  Yes, they have a lot of money and just bought Business Week, but their efforts to reach a wider audience don’t go as wide as Newsweek. Bloomberg wants to reach the corporate C-Suite, not Main Street. The new Bloomberg BusinessWeek gives them a great vehicle, in print and online, to do that, while providing more commentary to deliver through their terminals. Newsweek provides neither. So, those hoping to see a BloombergBusinessNewsWeek masthead will be disappointed.

News Corporation (NWS) could buy Newsweek. During its heyday, Newsweek was always a center-left publication, as compared to the more right-leaning Time under Henry Luce. From an ego standpoint, I can imaging Rupert Murdoch’s delight in moving Newsweek aggressively to the right. I can imagine his enjoyment in letting Glenn Beck or Sean Hannity sit behind the desk formerly inhabited by Ben Bradlee. Yet I see this as unlikely. Fox has print vehicles already (most prominently the WSJ) and I don’t see Newsweek as ultimately that attractive.

The Huffington Post or Politico should buy Newsweek. These alternative media have grown tremendously. HuffPo traffic is now ranked 10th among news with more than 13 million uniques in March. They have aggressively moved beyond politics, covering world events and local news. Yet the brand perception remains as a left-leaning political site. The Newsweek brand could bring instant credibility with a wider audience. While the print side of the business may not be that attractive, I could see where keeping print alive might bring them some advertisers they would otherwise not reach. If not, they could easily shut down the print operations a year or two from now, keeping the brand as an online-only news product.

For magazine publishers, the long-term question may be the one posed by Mathew Ingram:

Hopefully trade rags like Adweek and Mediaweek have already given some thought to their business model, but they might want to change their names while they're at it. And, in the world of real-time news, will we soon be saying that Women's Wear Daily and Investors Business Daily sound too static?

Salesforce Acquires Jigsaw, Shifting Prospect Data Landscape

Salesforce.com (NASD: CRM) acquired Jigsaw in a deal worth $142m this week. Once described by TechCrunch’s Mike Arrington as “one of the most evil companies on the planet”, Jigsaw has leveraged crowdsourcing of editorial content to effectively transform the prospecting database segment of the content industry.

For those unfamiliar with Jigsaw, they’ve built a prospecting database using a simple premise: sales reps could enter “business card info” for their prospects and clients, accessing one free record for each they uploaded. While no sales reps will give away their “Glengarry leads”, Jigsaw understood that one sales reps trash was another’s treasure, and reps would gladly share info on non-active prospects in return for new leads.

Jigsaw has transformed the industry in a few ways.
First, and most obvious, is the use of a crowdsourcing model for data maintenance. The crowdsourcing model is compelling for several reasons:

• Cost structure is low, as you push the cost of maintenance to your users. In Jigsaw’s case, they developed a thriving community who would actively source and update contacts in the Jigsaw database in return for free access to the service. Over time, Jigsaw found that by providing a “leaderboard” of the most active in the community and a marketplace for selling the points acquired by cleaning data, a subset of these users were updating thousands of records.

• Scale and reach go beyond what any traditional data collection process could provide. Today, Jigsaw has more than 46,000 people at Deloitte LLP, for example. Traditional people databases might capture 50 or 100 or maybe 500 executives at a firm like Deloitte. But they’d never be able to navigate the structure of a firm that large to amass that number of contacts.

• Maintenance is the greatest challenge for people databases. It’s easy to aggregate a bunch of names and titles, but once you go beyond the C-Suite, it’s incredibly difficult to maintain that information. Jigsaw implemented a crowdsourcing model where its users could challenge and update any records that were incorrect. In other words, every time a sales rep dialed an outdated number or had an email bounce back, rather than getting annoyed, they had an immediate opportunity to gain “points”  by updating the record in Jigsaw.

 
The second, and less obvious change that Jigsaw has brought is a mass-market data cleansing & management solution. While Jigsaw is known as a prospecting database, a large part of its revenue comes from selling what it calls its “graveyard”. Customers with large CRM databases can compare their data to the Jigsaw graveyard, identifying and cleaning up any “dead” records. For those records that are active, Jigsaw can append missing or updated information such as direct dial phone number, new titles and more.

Acquiring Jigsaw is a very smart move by Salesforce.com. Since the birth of the CRM industry 20 years ago, one of the biggest challenges has been populating and maintain quality data. The way to get sales reps, generally averse to any kind of reporting, to actively use a CRM system is to provide compelling leads. Unfortunately, maintenance is often an afterthought, so even those systems that get off to a good start often become a neglected mess of useless information.

For traditional aggregators of people data, this will place added pressure on what was already a difficult market. Providers such as InfoGroup, D&B, Leadership Directories, Hoovers, ZoomInfo and others will need to step up their game. While each of those providers can point to core markets where they provide specialized services not offered by a generic database like Jigsaw, a significant portion of their revenues come from more general use of their data. As Salesforce more closely integrates the Jigsaw platform, it will make it significantly more difficult for these businesses to succeed.

Congratulations to Jim Fowler and the Jigsaw team. They’ve built a rapidly growing, highly disruptive business in an important segment of the content industry.

(Note: Jigsaw was named one of the "50 Content Companies that Matter" by the Content Matters blog in December, 2005).

Why the iPad Won't Save the News Industry

I’m excited for the launch of the new Apple (NASD:AAPL) iPad and over the next 12-18 months, I think it can really transform the way that users interact with content. But I don’t think it’s the savior of the newspaper and magazine industry that many are holding it up to be.

To start, let’s take a look at what’s caused the newspaper industry to crash in recent years.

First is the total collapse of the classified ad market, where newspapers ceded their most profitable revenue stream to Craigslist, Monster and others. Classified ad revenue has dropped by more than two-thirds in the past 10 years.

Second is the fact that during the economic downturn, retailers, long the mainstay of newspapers advertising, have cut back dramatically in their advertising. While the recession accelerated this trend, the recovery will not return us to that environment. Much of that advertising is gone for good. Big box retailers are now dominant and spend much less on print advertising than the smaller local advertisers they’ve replaced.

Third is the fact that newspapers (online and off) have lost significant readership share in the past 10 years, what Ken Doctor calls “the attention gap” in his excellent book, Newsonomics. One of the reasons for this is the generic nature of almost all newspapers today; as newspapers cut costs, they began to use more syndicated content, losing their uniqueness and their voice. As a result, news sources are basically interchangeable. So, Yahoo News is just as good as their local newspaper for most users. We are now in a market where “good enough” is clearly good enough.

As the New York Times recently noted, 2009 was the worst year for the newspaper industry in decades. Ad revenue dropped $10 billion - more than 27% - from 2008, previously described as the worst year for newspapers since the Depression.

So, what can the iPad and other tablet devices do to reverse these trends? From my perspective, not a lot.

From an advertising perspective, I expect there will be a burst of advertisers who line up initially, looking to get strong positioning on the iPad during the early hype curve. But how many of those stay will depend upon the response rates they get. And while click-through rates and engagement could be higher on the iPad than for traditional banner and space ads online, the number of eyeballs will be a small fraction of those reachable through the web or broadcast tv. So I think any iPad premium will quickly diminish, though a handful of publishers may see a small revenue bump for the first 9-12 months.

Looking at subscription revenue, I think there will be some gains, but those will be limited to a handful of publishers. The WSJ intends to charge $17.99 per month for access on the iPad.  That seems a curious price, as new users can subscribe to wsj.com for $8.62 per month, a print subscription is around $10/month and a combined print/online subscription is just $11.66 per month. Despite that pricing inequity, the WSJ may do reasonably well in the short-term. Initial buyers of the iPad will be hungry for content and many of those may be able to expense their WSJ subscriptions. This blog and others have long pointed out that the WSJ, often paid for by businesses, is not representative of the newspaper industry. Even so, while the Journal may attract 50k paid subs to an iPad app, that will only provide a modest boost to its revenues and much of that may come at the expense of existing print or wsj.com subscriptions.
The FT, which has a similar demographic of business users, is taking a similar approach, with a $190/year price tag (after 2 months’ free service) for iPad users.

The New York Times has yet to announce its iPad plans, but I expect it will come in slightly lower than the Journal and the FT. Rather than pricing it as a premium to print, I think the Times Digital folks will win the pricing wars and price it in the $10/month range, a discount to print but a premium to the free online site. Some suspect they will charge $14.95, the same price they currently charge for Times Reader, though I think they will want to maximize initial readership on the iPad, to take advantage of the early enthusiasm. It’s easy to raise prices down the road but hard to reclaim an audience once they’ve found that alternative sources meet their needs.

Yet, overall, I doubt that the iPad will be the savior most newspapers are hoping for.
The move to more syndicated content in recent years has helped newspapers slow the hemorrhaging on the expense side, but it’s also led to newspapers losing their identity. For almost any newspaper, there is an adequate substitute available for free. As Murdoch moves the Times of London behind the pay wall, the Guardian will see an increase in readership. There are dozens, if not hundreds of quality free sites for national and international news. And nearly every city in the world has quality free sites that focus on local news and activities.

The other challenge facing newspapers is one of demographics. The iPad will initially attract an audience of technology-savvy users, mostly under the age of 45. These are the users who have been consuming news via the web; it’s the iPhone and Blackberry user. Many of these users have already stopped reading newspapers in print and are not wedded to a specific newspaper.

While I’ve focused largely on newspapers, I see the same impact for magazines. While the iPad does create many possibilities for magazines, I’m not convinced that those enhancements will drive the additional revenue publishers expect, either from subscription or advertising revenue. Publishers tout how the iPad will enable them to include much more content than the printed page supports. The widely viewed Sports Illustrated tablet demo talked of thousands of photographs of a key sporting event, which never made it on the page. Yet there are no shortage of photos of the Super Bowl, Olympics or World Series already. How many will choose to subscribe just to access that content? Perhaps SI is really betting on people subscribing to get thousands more photos of their annual swimsuit issue.

As with newspapers, I do expect an initial burst of creative advertising idea; yet in the long run, this may not be sustainable. The iPad will open up new possibilities for advertisers – including interactive games -but they may find that in exploring those new ideas that it’s more cost-effective to launch those as apps rather than paying a premium to ride along with a magazine.

As Michael Wolff notes:

“The iPad has nothing to do with magazines… [Magazines are]  a promotional entry into this business. Why you should add another computer to your set of computers. But is it about the magazines? Is it about the traditional media business? Not on your life. This is one of those moments in which everyone says, 'Oh, maybe this is the way magazines will be saved.' They will not be saved this way.”

That’s not to say that the iPad will not generate revenues for content providers. I think it will prove to be a boon for many publishers. But I think that the biggest impact will come in the area of entertainment, rather than news. Video consumption on the iPad should vastly exceed video on computers or mobile devices. The iPhone has become a premier platform for gaming; the iPad should accelerate that trend and become a viable alternative to the Nintendo DS and Sony PSP. There will be some successful startups, just as Zynga and others have found success on Facebook. And we’ll soon see major game makers begin to develop for the iPad platform (how long before we see Super Mario on the iPad?). Yet, the largest revenues from that growth will largely accrue to Apple.

The iPad is poised to change the way that users consume content. Unfortunately, it seems unlikely to have an equal impact on media business models.