Welcome to Disintermediation 2.0, where the content is video. It’s
entertainment not news. And the stakes (at least the monetary ones) are
much higher.

While everyone in online video is challenged by the reality that digital
presents to any media — measurement, targeting, accountability —
traditional “editors” are also being squeezed by the very same process
that beset news in the late 90′s.

The article goes on to (correctly) identify the growth of highspeed broadband as the catalyst for the coming collapse of the traditional broadcast video model. I’d add to that the increasing popularity of DVRs, which are teaching the audience that we don’t necessarily all have to gather at 9 o’clock Eastern, 8 o’clock central, to begin our nightly turn-off-the-Alpha-waves sessions. Instead, the time-shifting that in the 80s had David Letterman jokingly producing a “morning Late Night show” because so many of his fans were using VCRs to watch him while scarfing their ham&eggs — that has become commonplace.

From econtent:

This has led to a new
rating system, called either “C3” or “live-plus-three”; instead of only
counting viewers who watch shows live, Nielsen counts anyone who records
and plays back the program up to 3 days later. This captures more of
the time-shifted viewing audience. By the end of 2010, McDonough says,
Nielsen’s ratings will combine both DVR’d and online streaming content.

Kate
Sirkin, executive vice president and global research director for
Starcom MediaVest Group, sees the DVR, particularly the TiVo, as
fundamentally changing the way Americans view television. “We have three
in our house,” Sirkin says. “My 5-year-old doesn’t understand live TV;
she’s always had a DVR.”

The other effect of DVRs, of course, is the commercial-skipping. Used to be that you had to hack your TiVo to be able to skip 30 seconds at a time. Now that comes programmed directly into the remote on the DirecTV HD controller (but I still prefer the TiVo, since it skipped you automatically 30 seconds forward in time, rather than making you watch blurred fast-forwarded action).

But the biggest eye-opener for me is that articles predicting that broadcast TV, the cash cow for so long for the advertising industry, is about to head into the abyss … well, that’s news. Because what took down newspapers was not that nobody was reading them anymore – in fact, the stats show that more people are reading newspaper content than ever before.

What has laid print newspapers low is that the revenue streams from traditional print advertising have dried up & blown away.

Most, if not all, of the major media buyers that I’ve run into over the last three years at various ad industry events, have all admitted that they know that advertising on TV really doesn’t work the way that it used to. The profusion of channels on cable and satellite, the DVRs, the growth of internet, all mean that they are getting less reach than they used to. Meanwhile, they’re getting charged through the nose for that same 30-second spot.

This relationship is inherently abusive, much like the relationship was between newspapers and their advertisers. When a viable alternative comes along, and you’ve managed to piss off your customers, guess what they do?

Page design at Rue89.com looks a little like what splatters on the side of the carny Tilt-a-Whirl after you load it up with a buncha 10-years olds who've spent the day eating cotton candy and mystery meat hotdogs. I think the boxes up & down the sides are supposed to be clickable ads, but they were inert when I tried them... (click for larger)

The illustration here is of a new French news site that is apparently taking off at Rue89; I can’t decide whether the chaotic design is totally off-putting, or intriguing because it basically violates every rule of page design.  Also, I can’t hear the word “Rue” in a title without flashing to “Murders in the Rue Morgue.” Or some B-movie villain twirling a moustache and chortling, “You’ll rue the day, Rex Manly!”

As a bonus, this week I’ve broadened the focus a bit to include some big-picture thinking from some of the unusual suspects; Doc Searls has a post wherein it is posited that what we think of right now as the internet is just a finger pointing in the direction of what this thing is actually going to grow into.  Which should fuel a couple of late-night dorm-room debates, if nothing else…

Jeff Jarvis comes out in favor of doing the exact opposite of erecting paywalls, and dubs it “Hyperdistribution”  http://www.buzzmachine.com/2009/08/25/hyperdistribution/ In a nutshell, it’s the idea that news organizations have to splash their content all over the web to try to make up for the lower ad rates by compensating with larger audiences. Nut graf: “I have stood in and before no end of conferences when I or someone else recalls what that student said in The New York Times said a year ago: “If the news is that important, it will find me.” Waiting for her to come to our site won’t work – and it especially won’t work if, once a peer links her to our site, she finds a wall. No, we have to take news to her.”

PaidContent.org says that “The Future of News is Scarcity” http://paidcontent.org/article/419-the-future-of-news-is-scarcity/ and that the mistake newspapers are making is that they are focusing on

A new take on the "trust/verification" function of news organizations.

the wrong problem. Instead of trying to come up with ways to preserve the content model that has worn out, he says that “every abundance creates new scarcities and this is where the news industry must go to make money in the 21st century. The scarcities created (and enabled) by abundant news are interesting stories, thought provoking analysis, conversation and community, and trust/verification. (snip) The successful news company of the future will have to take all this on board and deliver it with a radically lower cost base than this industry is used to.”

From the BBC, an article about what the music industry can teach television (and perhaps newspapers) about fighting with the internet: http://www.bbc.co.uk/blogs/technology/2009/08/what_can_music_teach_telly.html Sample thoughts of what lessons to draw from the fight the RIAA has waged against its users: “Music biz teach TV? Greed, backwards thinking and lack of respect for the end consumer.” And “How to alienate its customers by treating them all as likely criminals.” One of the links will take you to this page, laying out the numbers of piracy of popular TV and movies: http://news.bbc.co.uk/2/hi/technology/8224869.stm

Over at Media Bullseye, they reference Star Trek villains, in a piece entitled “The News Aggregator-Borg: Resistance is Futile”

Does this mean Arianna Huffington is going to start sporting external cyborg prosthetics? 'Cause that'd be cool...

http://mediabullseye.com/mb/2009/08/the-news-aggregator-borg-resis.html The author, Robert Quigley, is the social media editor for the Austin American-Statesman, and is considered one of the smarter New Media thinkers around.  He says that journalists should take the “if you can’t beat ‘em, join ‘em” approach to aggregating content in & around the web, pointing to the success CNN had in covering the attacks in Mumbai and unrest in Iran as examples of using the power of aggregation to shape & expand coverage.

Y Combinator, the startup incubator that has a heavy-duty track record, is calling out for business models to pave the way to “the Future of Journalism”: http://ycombinator.com/rfs1.html Y Combinator has a strong history of funding companies like Reddit, Omnisio and Zenter, and they are looking to dump money on anyone who thinks they have a realistic business model to support news production.  The RFS (“Request for Startups”) is being issued because, according to them, ” Newspapers and magazines are in trouble. We think they will mostly die, because we think we know what will replace them, and it is too far from their current model for them to reach it in time. ”

Many people have pointed to the success of Amazon’s Kindle as proof that the future of news & newspapers lies in e-reader and portable devices like that. However, just as many people point out that Amazon demands 70% of the subscription revenues, which is spurring a lot of competitors.  Slate magazine has an article about how to compete with the Kindle http://slate.com/id/2226503 Basically, just look at what all the would-be competitors to the iPod did – and do the exact opposite. Key point: “The service matters more than the device itself. Every time I dismiss the Zune, Creative Zen, or some other MP3 player as an also-ran, I get letters from loyalists who insist that their gizmo far outshines the iPod. Sometimes they’re right-but what they miss is that the iPod isn’t a standalone device. It’s part of a music-delivery ecosystem, the most important feature of which is iTunes.”  Basically, the article lays out what publishers will have to do if they really want to deliver content to e-readers and make a profit.

In that vein, Editor & Publisher asks “Will E-readers Help Save Newspapers?” http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004007001 It appears that the

I tried to look at this on the Kindle. Not so good.

USA Today is hanging a great deal of hope on e-readers, along with a lot of other leading publishers. Nut grafs: “What’s interesting about e-readers is that they will most likely resemble the best aspects of print. The missing link, however, is the advertising model. (snip) Without advertising, newspapers stand very little chance of making any meaningful revenue from the e-reader platform.”  The article goes on at length to address many of the technological, social and business obstacles standing in the way of just eliminating the costs of paper distribution in favor of sending Quark page layouts to a Kindle-like device.  Oh yeah – and here’s a link to the announcement of the Sony device http://www.publishersweekly.com/article/CA6685746.html

At the Knight Digital Media Center, the possibility of establishing “membership options” to charge for news is dissected: http://www.knightdigitalmediacenter.org/leadership_blog/comments/rather_than_a_pay_wall_consider_membership_options/ This borrowed somewhat from Mark Cuban’s suggestions (covered last week) to build a “News Junkie” membership which offers multiple services.  The ASNE chat that this comes out of is located here http://208.88.72.149/tabid/122/Default.aspx (you do need to be a member or paid subscriber to see this – and yes, I recognize the irony inherent in all that).

Speaking of Cuban, he’s off on another unlikely crusade – this week, he’s decided that the internet has been “dead and boring for a while now,” and that two new technologies WebHooks or PubSubHubBub are going to CHANGE EVERYTHING!!!! (emphasis his) http://blogmaverick.com/2009/08/25/the-internet-is-about-to-change/ If you can get past the jargon (i.e. “Cloud-based distribution hub”), there might be something there. I’d be interested to see if he’s got any money invested in these, he’s banging the drum so hard. To me, it sounds like just another variation on “push”

Why do these wireframes look like the Tinkertoy stuff I made when I was 6?

technology, where a publisher crams information down the pipe to subscribers before it makes it available on the website. Me? I prefer the AP news alerts I’ve set up on my iPhone. For free. If you’re interested, Impact Media has a slightly more measured description of PubSubHubbub http://www.impactmedialtd.co.uk/blog/internet-news/what-is-pubsubhubbub/

If you’ve got the time for a “think piece” about what the long-term solutions to the revenue problems faced by companies trying to migrate their analog businesses to a digital platform, check out Doc Searls (one of the authors of “The Cluetrain Manifesto”) in “Thinking outside the Internet box” http://blogs.law.harvard.edu/doc/2009/08/28/thinking-outside-the-internet-box/ Here’s the Keanu Reeves “Whoah!” moment: “I’ve written often about how hard it is to frame our understanding of the Net. Now I’m beginning to think we should admit that the Internet itself, as concept, is too limiting, and not much less antique than telecom or “power grid “The Internet” is not a thing. It’s a finger pointing in the direction of a thing that isn’t. It is the name we give to the sense of place we get when we go “on” a mesh of unseen connections to interact with other entitites.”

Another “deep thought” piece comes from Fast Company, setting out “Three Possible Economic Models” for the digital future: http://www.fastcompany.com/blog/jamais-cascio/open-future/three-possible-economic-models-part-ii This is not directly related to the paid content debate, but it’s some interesting thinking on what kinds of companies are going to be viable in 10 years or so.

A piece on MinnPost talks about how the Journalism Online project launched by Steve Brill to such fanfare, perhaps … overstated … the number of newspapers that have signed on. http://www.minnpost.com/braublog/2009/08/19/10972/star_tribune_not_part_of_online_fee_venture Apparently, the Star-Tribune and Pioneer-Press have not, in fact, signed up.

This is a post from last week that I’ve just gotten around to including – Alan Mutter writes “Why aren’t we paying for news?” http://newsosaur.blogspot.com/2009/08/why-arent-we-paying-for-news.html Be sure the check out the comments section – there are notes there from some papers that recently either went behind, or emerged from paywalls. In the article, Mutter blames fear of change as the reason that everyone is talking about paid content, but very few people are actually doing it – yet. “Publishers can’t figure out how to charge for content without throttling their web traffic and the online advertising that comes along with it. (snip) Individual publishers are afraid to move unilaterally to begin charging for content but also unable to coalesce as a group around a common philosophy and platform for doing so.” Part 2 of Mutter’s epic trilogy is here: http://newsosaur.blogspot.com/2009/08/what-stops-publishers-from-charging-for.html And he winds it all up with: http://newsosaur.blogspot.com/2009/08/how-publishers-can-make-web-content-pay.html

Journalism.co.uk takes on the issue of free vs. paid content by stating that “Free is just another cover price” http://blogs.journalism.co.uk/editors/2009/08/

In the little time I've spent here, I actually quite like this scrappy little paper. Damn shame Rupert kicked it to the curb...

27/comment-free-is-just-another-cover-price/ They dissect the real reasons behind the demise of Murdoch’s thelondonpaper freesheet, and conclude that “thelondonpaper isn’t closing because the model

was flawed, but because News International either couldn’t make it work in the current economic climate or was unwilling to give a paper, still in its infancy, the time it needed to become commercially viable.”

The Newspaper Innovation blog writes at greater length about thelondonpaper, and whether this is really the death knell for the freesheet model http://www.newspaperinnovation.com/index.php/2009/08/24/freesheet-no-longer-viable-model-and-other-myths/

For readers interested in what’s happening with the whole “let’s regulate that crazy, dangerous internet” debate in Europe, the European Journalism Centre has a long post up about all the laws being debated around The Continent that might affect journalists http://www.ejc.net/about/blog/media_laws_spur_summer_debate_autumn_actions_likely/ The proliferation of laws designed to criminalize filesharing shows that RIAA and MPAA lobbyists are still very much on the job.

King Kaufman gets a little lathered up by the column in the LA Times that I linked to last week, writing that “We must kill press freedom to save it” http://open.salon.com/blog/future_of_journalism/2009/08/25/we_must_kill_press_freedom_to_save_it Somehow, I don’t think that managing editors are going to be going around holding up a Zippo to the printing presses anytime soon, but OK, he’s upset. In fact, about halfway through he gets into an imaginary conversation, which quickly turns into what the Brits call a slanging match. Viz: “Have you met the people, Tim? I hear they’re lovely once you get to know them. They’re the ones who have been saying for years, with their actions, “If you charge us for online news, we will abandon you. We do not support newspapers or anyone else charging for online news except for news that’s highly specialized.”  King’s basic point is that by trying to form a consortium to crush internet competition, the news industry is in fact acting against the public interest, rather than for it.

Trying to get users off their asses, to participate? Well, hot-button issues like the "Skank" blogger case are a good way to start...

In a slightly more constructive piece, Dan Gillmor, one of the authors of We the Media, announced that he is launching Mediactive, a site dedicated to getting the audience more involved in the news, but transforming them into “active users” rather than “passive consumers.”  The announcement piece is here http://mediactive.com/2009/08/24/moving-along-mediactive/

The Nieman site has a piece up on how the New York Times is monetizing its journalists by offering online courses in the Knowledge Network, to be taught by Times columnists http://www.niemanlab.org/2009/08/newspapers-find-a-new-way-to-monetize-their-journalists/

Two journalists are attempting to sell “kits” that would allow recently laid-off journalists to establish hyper-local news sites http://www.jiltedjournalists.com/News.html The effort is being called Dailytown.com, but the kits don’t seem to offer much beyond what a savvy online journalists could do with a custom WordPress install.

Interesting experiment – reminds me of WindyCitizen.com.

A couple of French startup web-only news sites called Rue89 and Demotix, are experimenting with multiple unconventional revenue streams,

but agree that “paid content is a dead end” http://onlinejournalismblog.com/2009/03/04/the-future-of-online-journalism-according-to-rue89-and-demotix/

And finally, just for reference, the Columbia Journalism Review sets out the difference in value between a print and an online reader – a print reader generates about $709 a year, while an online reader only generates $46 http://www.cjr.org/the_audit/post_11.php

Just a quick late-night hit while I prepare to shoot an interview tomorrow at KCET.

I’ve spent much of the last couple years of my life trying to come up with case studies, strategies, training programs, tools and mash-ups of all the aforementioned, all aimed at illuminating a clear pathway for the newspaper industry to follow to save itself from “The Crisis.”  My last big project was the Audience Planbook for the NAA, which was supposed to lay out a step-by-step process to building new businesses that take advantage of the technological innovations that have changed the way we get news.

I’m not so delusional and narcissistic as to think that I have some revealed, holy wisdom that can turn around the momentum of a massive, multi-billion dollar industry by myself.  But I had hoped that maybe my voice, along with the voices of those who I recruited (shanghaied? hoodwinked?) into writing chapters in the Planbook for me, would spur some kind of change.  This hope has grown harder to sustain in the last couple of months.

And then there’s a straight brass-knuckles shot to the chops like this, on the Xark! blog:

What will these media executives do when that reality hits them?
When these debt-burdened chains, stripped of journalistic talent by a
decade of profiteering, their web traffic reduced by 60 percent by
their paid-content follies, their pockets emptied by the cost of the
proprietary paywall systems offered by Journalism Online LLC and other
opportunistic vendors, what will they do?

Will they buck up and
go back out into the fray with fresh ideas and leadership? Or will they
fold, casting bitter eulogies to their own imagined glories as they
exit the stage?

The chances of them adapting well to another
failure are dubious. Remember, these are the same people who have acted
as if there were no other options, even when those options were
practically gift-wrapped for them. As if Newspaper Next never happened. As if commerce hubs and C3 and all the interesting, exciting ideas that are practically everywhere today do not exist.

They don’t get it. They don’t want to get it. And in many cases, they’re literally paid not to get it.

America’s
journalism infrastructure – from corporate giants to non-profit
foundations like the American Press Institute and the Newspaper
Association of America – is funded by dying companies. So when you hear
about efforts to save newspapers (and, by extension, journalism),
understand that answers that don’t return the possibility of double-digit profits and perpetual top-down control aren’t even considered answers. They’re not even considered.

They’ll do anything to survive… so long as it doesn’t involve change.

Click on over and read the rest of the piece. And then go to the comments section – because the action is always in the comments – and check out the long, impassioned note from someone trapped in a sinking newsroom.

Do not count me – yet – amongst those who hope that, well, now that it’s (allegedly) become clear that newspapers are fated to die, then let’s just get this over with.  I still think that they can turn things around – the recent LA Times excellent Mapping LA project is a great step towards building the kind of hyperlocal database and information exchange network that could take off and fulfill all those dreams about the possibilities of digital local coverage.

While I am all for the development of the new content & biz models touted in Xark!, I don’t think they are ready – yet – to step into the line of fire and take over in collecting and distributing the information that we need to be able to function effectively as a society. Hell, as a civilization.

The anger in the screen on Xark! is palpable, and I will cop to feeling it on more than one occasion.  But I am not yet ready to give in to it. to throw in the towel and just lean back and toast marshmallows over the flames.

Curmudgeons skip directly to 7:50 or so, for the juicy bits. If you are in a crowded place, please allow at least 10 feet of safety space in all directions for when your head explodes.

This is the first part of the rather incendiary keynote speech by Jason Calacanis, founder of Mahalo.com, at the OMMA Hollywood 2009 conference. The keynote’s title is “Advertising, Riots, Twitter, Facebook and the Depression,” and in it, Calacanis cheers the death of newspapers and “Old Media,” and lauds paid search as the “most powerful advertising medium ever created.”

Not coincidentally, Mahalo is a paid search company.

Along the way, Calacanis also trashes social media advertising, showing screenshots of drunken parties to “prove” that all advertising on this platform is unwelcome, intrusive and doomed to die.

Highlights:

“Gosh, newspapers didn’t see this coming, did they? I mean, the newspapers were reporting on their own demise for a decade. And they still couldn’t change it.

It’d be as if you’re the Titanic and you haven’t even left port yet.  And they’re like, “By the way, there’s a lot of icebergs to the north.” And you’re like “OK, thanks.” A day later, it’s “Icebergs are still there.”

They’re like, “Full speed ahead! To the icebergs, as quick as possible!”

They did nothing. They deserve to die. Don’t cry for newspapers, it’s great that they go out of business, because new things can take their place that are better. Much better.

(snip)

Don’t cry for journalism.  Rejoice, because a new journalism is being built, today, as we speak. And it’s going to be better than the last one.

(snip)

“They deserve to go away. Goodby, good riddance.”

The keynote was obviously designed to provoke a reaction (more than one conference attendee muttered “linkbait” after listening), and it certainly did that, as every other session after this opened with the panel trying to refute Calacanis’ claims. I’ll post John Battelle‘s rather more measured keynote tomorrow.

I have a few reactions to this, and I’ll post some more with the other three videos in this series.  But to start with, the notion that newspapers did nothing at all about the internet is absolutely false.  The industry has tried to engage with online since before there was an internet (you’ve probably all seen those videos from San Francisco, showing the early paper over video screen tech of the 80s). The problem is, that the battlefield on which newspaper have been trying to engage has shifted radically.  First, it was the fight between portals – Prodigy vs. CompuServe vs. AOL.  Then it was Netscape vs. Internet Explorer. Yahoo vs. Google. Facebook vs. MySpace.

Newspapers are a $50 billion a year industry, with tremendously expensive production and distribution infrastructure, grown up over centuries.  If the Tribune chain had just splashed kerosene over the presses back in ’92, and declared in the flickering light that they were shifting every penny over into becoming a competitor to AOL … well, they probably still woulda wound up about where they are.  But along the way, there would have been tremendous dislocation – millions of readers not getting information.  Millions of readers turning to competitive print products that would have made billions.

So the newspaper industry has tried incremental solutions. Right up to this point, where, as we see in Seattle & Denver (despite what Jason sneers at, there are plenty of people who want to read what he dismisses as “boring” stories about local government, taxation, schools and crime) the papers are being forced to migrate to the web under conditions that are nothing short of brutal.

It’s all very well and good to talk about the exciting news products that are “being built today, as we speak.”  But I know many of the people that work at these small, struggling web news outfits. They are up against the wall, just trying to keep the broadband bill paid.  They are not going to be able to devote thousands of man-hours to digging through documents and making connections, and going out and doing original research (i.e. interviewing people to get things that are not archived on the magical, all-seeing web). Maybe this will be solved someday – but it ain’t the case today, and that’s when we need it.  We need this kind of enterprise reporting, or this country is going to implode, because society is angry at the economic collapse, and nobody’s really been able to dig deep enough to explain it. At least, not in a way that holds up & makes sense for more than a month or so…

If I sound like a bit of a curmudgeon here, well, it’s hard to watch this and not get a bit grouchy. I agree with Jason on the broad points – that Big Media has sinned, and is paying the price; that ad dollars are shifting to where the consumer eyeballs are, and that this trend is only accelerating.

But dude? Less of a gleeful grin.

But – two items this week converged (yeah, there’s that word) to illustrate one of the powerful, emerging lessons about New Media.  It’s one that I learned years ago, when I first rode a couple of dot-bombs all the way down into the crater.

Big site traffic numbers do not necessarily mean big money.

First, let’s hear from apostate blogger Dennis the Peasant, who was one of the founders of Pajamas Media until his partners chucked him overboard a couple of years ago.  The news this last week that PJM was no longer going to write fat checks to its bloggers was met with screams of rage from said suddenly unfunded right-wing bloggers (and joygasms from left-wing bloggers who had long derided the PJM checks as “wingnut welfare” – a POV now seemingly shared by said wingnuts’ former employers).

So Dennis had schadenfreude & Cassandra-vindicated moment, in which he flipped off the camera & did a Snoopy dance.  And then, he got around to some actually interesting stuff about the economics behind blogging:

The thought in everyone’s mind is If only I can get enough traffic I can make money. If I have the traffic the advertisers will pay for access to it.

Everyone assumes site traffic is the key to blogger riches.

And, everyone is wrong. It is that simple.

(snip)

… what we discovered seemed to suggest we were sitting on a goldmine: Large household incomes, very well educated, disposable
income out the blowhole… what we assumed advertisers wanted.

Well, by January of 2005 Roger and Charles had disappeared in a cloud of pure bullshit, and there I was, left waiting to hear about the
“new model”, the “new partners” and “the new” what not… Being the curious sort, I arranged for a friend of mine to introduce me to the
managing partner of a small, but prestigious, advertising firm in Columbus. I packed up our survey statistics and headed to a luncheon
engagement that I assumed was going to convince this guy I was on to something.

Well, I spent 20 minutes explaining our idea and the business model as I envisioned it, and then, as the capper, whipped out the survey
statistics and showed them to him. He looked at them for a moment, laughed, and then threw them down on the table in front of me.

“Worthless,” he said, smiling.

DtP goes on to talk about something that New Media folks take for granted, but that Traditional Media people still have problems wrapping their heads around. See, newspapers, radio, TV, billboards, direct mail, etc. etc. — they all base their ad rates on the pure numbers of eyeballs on their content.

While have a big audience is nice, in web terms it can actually be more of a hindrance than a help.

Which is where Facebook comes in. Today it celebrates its 5th birthday. And it is hemorrhaging money from every orifice, with no clear business model in site. (Here’s an interview the BBC did with founder Zuckerberg last fall)

The perennial question for Facebook has been how to monetise the site and cash in on its 150 million users who critically spend more than two hours each day on-site. Analysts Neilsen compared that figure to the 90 minutes users spend hanging out on MySpace.

As the pressure mounts on the Facebook team to make money, the job becomes harder amid the present economic downturn.

(snip)

the clock is ticking fast.

“At some time the economic model has to grow with the rest of the firm.

“Investors will want a return on their money and in this market, investing in vapour can be very difficult. Their time is up for doing this without making money.

“They need to develop a business model soon before they find their funding sources start drying up,” warned Mr Enderle.

The Facebook Advertising page, like its obvious model Google AdSense, tries to make it easy for an individual or small-biz owner to buy an ad. Contrast that with all the hoops you have to jump through to buy an ad in traditional media.

The numbers that came our recently show that Facebook has among the lowest click-through scores on the web – 400 clicks for every 1 million page impressions. This has not gone unnoticed. The pro-Facebook & social media mavens claim that the demographic information that has been amassed by Facebook, MySpace, Bebo, etc., is going to pay off with highly targeted ads that garner higher CPMs. And they have an easy-to-use frontend that is quite obviously modeled after the AdSense DIY concept.

Facebook’s experiment with tying ads to your personal information was, however, a disaster. And critics have started pointing out that maybe Facebook doesn’t know all that much about you…

And the stories are starting to come out about how desperate they’re getting – despite the impressive raw traffic numbers, time spent on site, and user engagement indices — all numbers that media companies try to pay attention to.

I can tell you from my experience with a succession of dot-bombs, big page traffic without the proper monetization scheme is actually a detriment to your survival. Especially in the video space.

While bandwidth charges are a small fraction of what they were even six years ago, they still rack up quickly.  And if you have a million people watching a 10 meg video on your site (as can happen if you get a viral hit), and your monthly service contract with your hosting service starts charging you after, say, 250 gigs … well, work the numbers.

1,000,000 users x 10,000,000 megs downloaded = 10,000,000,000,000 (10 terabytes aka 10,000 gigs) of page traffic, just for that video.

Depending on your contract, your site will either crash and you’ll have to wait a month or whatever before you can bring it back up … or they just act like a cabdriver and flip down the little flag and start the meter running.  At the end of the month, just like with a cellphone company when you go over the minutes, you get charged up the wazoo.  Say it’s a $.10 a gig, the way DreamHost does it.

10,000 – 250 = 9,750 gigs

9,750 x .10 = $975 overage charge for the month.

Now, there’s no way that Facebook is paying that much for its bandwidth – economies of scale and all that.  BUT.  The bandwidth still does cost.

DtP makes the point that 400 dedicated readers in a well-defined niche space, such as photography, beat the hell outta 40,000 drive-by users in an amorphous mob. Advertisers will want to reach those 400 people, because they know them, know what their interests are, and know that the ads served to them are going to the right people.

General interest sites, however … well, let me put it this way.  Check out the sode aisle in the supermarket next time you’re there.  Diet Coke, Diet Coke with Lime, Diet Coke with Splenda, Diet Vanilla Coke, Diet Black Cherry Coke, Coke Blak, Regular Coke, No-Caffeine Coke, Coke Zero, Diet Caffeine Free Coke, Vanilla Coke, Cherry Coke, Diet Coke with Vitamins.

Each of those products exists because there is a niche out there that wants to drink them. Why would Coke want to waste its ad dollars for health nuts that want a soda that has vitamins and that they can delude themselves into thinking that is “good for them” … on a site that has an audience of cigar-smoking red-meat-eaters?

The advertisers have had to fragment their products. Those fragmented products have to be marketed just to the people who are going to buy them, or they are not viable.  That means that the platforms that those products advertise on have to be similarly well-defined.

The root of the problems with mass media isn’t that there isn’t interest in the information – it’s that the advertising money is shifting away to places where the audience is better defined & targetable.

Technorati Tags: Facebook advertising, Pajamas Media implosion, blog, advertising, monetization, web economies, click-through rates, audience, segmentation, marketing, demand

First, Ron Rosenbaum unloads on Jeff Jarvis for being “increasingly heartless” about newsroom cutbacks, layoffs & the general death spiral.

A sampling:

Not all reporters had the prescience to become new-media consultants. A lot of good, dedicated people who have done actual writing and reporting, as opposed to writing about writing and reporting, have been caught up in this great upheaval, and many of them may have been too deeply involved in, you know, content—”subjects,” writing about real peoples’ lives—to figure out that reporting just isn’t where it’s at, that the smart thing to do is get a consulting gig.

But Jarvis believes the failure of the old-media business models is the result of having too many of those pesky reporters. In his report on his recent new-media summit at CUNY, he noted with approval one workshop’s conclusion that you’d need only 35 reporters to cover the entire city of Philadelphia. Less is more. Meta triumphs over matter.

It makes you wonder whether Jarvis has actually done any, you know, reporting.

Oh, that’s nasty. Shorter Rosenbaum: “Jarvis is an substanceless, fluffy airhead, taking advantage of gullible publishers, peddling his New Media snakeoil & banking fat stacks while real reporters who actually work for a living are being thrown to the wolves.”

The dodo, too, frowned and squawked over its fate.

Next, Jarvis fires back at Rosenbaum, mocking him as a petulant, immature child who can’t deal with the New Reality of Media. Sample:

Sadly, Rosenbaum doesn’t debate the idea and history and fate of journalism, which might be productive or at least provocative. Instead, like a pissy third grader, he attacks me. Because of my opinion, he says he doesn’t “like” me anymore. Take that, Jarvis! You can’t sit at my lunch table ever again! He reminds me of that same third grader who, when he doesn’t study for a test and sees the results of his inattention, whines, cries, and stomps his little feet, declaring, “It’s not fair.” No, kid, life ain’t.

Shorter Jarvis: “You can’t handle the truth, you sissy. Your whole industry is doomed.  Doomed, I say!”

These powerful beasts once dominated the landscape.

And then the catfight continues down in the comment section, where web luminaries like Seth Godin chime in with support, reactionary trolls addicted to the right-wing media victimhood meme blame press declines on the liberal bias that tricked America into electing Obama, and most of the self-identified print reporters want to know where their next paycheck is coming from.

This whole slapfight is actually quite timely for me.

The dinosaurs eventually became useful again.

Just yesterday, I cautioned my writers that we have to tread very carefully while making our recommendations to the newspaper industry. Anyone still working at a newspaper has to feel somewhat like the grognards at Verdun: starved, exhausted, trembling from incessant shellfire, and depressed at seeing way too many of their comrades-in-arms fall.

I’ve fallen prey to the digital triumphalism. I’ll admit it. It’s really easy to hang on the rim and hoot, when you’re on the outside looking in.  This provokes a reaction much like the one we’re seeing here.

The digital enthusiasts feel like the crews on lifeboats, trying to pick up survivors after the Titanic has gone down, only the survivors are shooting at them with pistols, yelling “You smug bastards in the lifeboats! You don’t know what it’s like here in the freezing water! Sure, it’s easy to be warm & dry when you’re in a lifeboat! Aaaaaggghhhh! Bang!” (blows own head off)

Meanwhile, to the guys in the water, what they see is the lifeboat crew saying “Sure, we’ll give you a hand up. But first you have to sing a tune apologizing for how stupid you were while we pee all over your head. And maybe we’ll smack you around with the boathook. But you have it coming.”

And what both sides are missing is that while the lifeboat is a good stop-gap solution, the oars seem to be missing, and the crew in the lifeboat is arguing amongst themselves as to which direction they would row in, should the oars ever be found, while others say that rowing is so old-school, and that what we should concentrate on is inventing a nuclear reactor that would provide endless propulsive energy, while still others think that the whole lifeboat thing is wrong, and we should jump back in the water in the hopes of evolving  gills.

OK, I’ve abused that metaphor enough for now.

I think this guy is flipping off the oncoming dinosaur-killing comet. Or perhaps posting on Slate.

The larger issue here is one that only tangentially gets addressed: how do we support expensive “good journalism” in the New Media, when the biz model there is so stripped-down and bare bones?

A clue comes from a poster who says that assuming that big, heavy NY Times-like investigative reporting is necessary to cure social ills is proceeding from a false premise.

A commenter known only as “Mike” quotes Lippman, who 80 years ago wrote about the dangers inherent in conditioning gov’t and society to depend on newspapers/media ginning up “public outrage” to effect needed societal course corrections.

Nut graf:

My guess is you want a more responsive, well run gov’t. And apparently to get there you want newspapers to report on things, and then for those things to magically to get better. You and people like Ron’s wet dream is for Obama to read their article and be so moved that they will be driven to action. And that’0s the best case scenerio. That’s the expert, closed approach of the past.

What I am saying is maybe instead of spending a month reporting on something and then running one article that I may or may not read, why don’t you build something that interested people can engage with and actually solve problems with?

The Long Island rr and everything else needs to run itself, and when a problem there arises we need citizens who are informed and can solve the problem themselves. We can’t depend on the New York times to report on everything-they can’t do it and we can’t expect them to.

OK, now we’re getting somewhere.

The whole justification for why we need great big newsrooms full of specialists keeps coming back to the argument that if we don’t have them, then Big Stories are going to go unreported, corruption & malfeasance will flourish, and our whole way of life as we know it will collapse.

Reality check: Look outside the window. Collapse currently in progress.

We have had the Big, Well-Staffed Newsrooms. Hasn’t stopped the U.S. from disastrous invasions. Hasn’t stopped corporate corruption and greed.

Hmmm.

Let’s look at this from the Newspaper Next POV – if the “job” we want to accomplish for the public is getting better gov’t, then how do we go about doing that? Is it through producing 110-inch, multipart stories that cost tens of thousands of dollars, man-hours, and that are read only by those most interested in the industry/agency being spotlighted.

As Skip Taft, editor of the Shelby Star said to me, ““People won’t read those 60-inch takeouts anymore.
Maybe on Sunday, but you know people go to work on Monday.  “I mean, what the hell? They’re going to sit there and be late to work just to read some story?  I don’t think that’s realistic.”

I’m working with the NAA on a project aimed at helping newspapers to come up with a way to preserve journalism; new businesses that people will actually read & use & interact with — and that MAKE MONEY.

I’m open to ideas.