Sips from the Firehose
A blog that seeks to filter the internet into a refreshing, easily-gulped beverage


May 29

Economic Crisis Forces Spain’s Newspapers into Digital Migration

Posted: under Digital Migration, new media, New Media Strategery, newspaper crisis, Newspaper Deathwatch, Newspapers, Platform obsession.
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Unemployment over 50% – banking system collapse – political instability – newspapers run out of options

When asked what are the enduring lessons of the last five years for newspapers, various pundits have opined “Don’t enter an economic recession massively over-leveraged and dependent on fragile business models.”

One by one, newspapers are falling behind.

In Spain, the problems that we are experiencing in the U.S. are even more severe. The advertising base was even more reliant on crazy real-estate bubble advertising than it was here. Anyone who has flown into, say, Barcelona, and seen 20 MILES of empty housing developments, half-built apartment blocks, and gradually eroding graded hillsides, can quite easily judge what kind of devastation was left behind when that bubble burst.

But now comes the news that digital media has overtaken print in Spain. 

There is some disagreement over just how many digital news outlets have sprung up in the past couple years:

Ahora desde la AEEPP (Asociación Española de Editoriales de Publicaciones Periódicas) reconocen que tienen 763 publicaciones digitales asociadas aunque, Carlos Astiz, secretario general de la Asociación, estima que puede haber 3.000 medios digitales.

…and exactly what constitutes a regular news publication (such as when its edition are funded via crowdfunding:

En medio de la crisis que afecta a los medios tradicionales, han surgido en los últimos meses un gran número de medios digitales con fórmulas diferentes para conseguir la rentabilidad. Desde la existencia de socios que por un módico precio acceden antes a los contenidos como en diario.es o infolibre.es a proyectos financiados por crowdfunding como la revista FronteraD.

But the trend seems to be that digital-only publications have been designed from the ground-up to be profitable on this new platform. The publishers, operating on a shoestring, find an audience, find ways to monetize that audience, and then start to methodically try to scale up.

The opposite is in action with the traditional media. They have their audience – but it is shrinking.

They have their revenue streams – but they are evaporating.

So they are engaged in a massive scale-down. Cutting coverage, cutting staff, and according to the Difusion story, only weeks/months away from re-erecting the infamous paywall around El Pais that was widely credited with destroying the paper’s digital operations before they had even gotten a chance to find their footing. I wrote an entire case study about it (and El Tiempo’s desperate attempts to re-connect with the young audience that they had alienated & lost) for the NAA. 

El Pais Spain front page

Soon to run back behind the paywall. Maybe it will work this time. Then again, with so much new competition in the digital marketplace, and with the brand discredited & distrusted by younger readers … maybe it won’t.

Meanwhile, over in the digital-only world, site owners are waking up to the trend of “native advertising” – i.e. putting posts into the middle of the flow that look a lot LIKE the news stories that readers are there to check out … but that contain sponsored content, written in a way that doesn’t conflict with the rest of the content on the site.

Check out what John Battelle has to say about this evolution of monetization: 

The reason native works is because the advertising is treated as a unit of content on the platform where it lives. That may seem obvious, but it’s an important observation. When a brands’s content competes on equal footing alongside a publisher’s content, everyone wins. Those search ads – they win if they are contextually relevant and add value to the consumer’s search results. Those promoted tweets only get promoted if people respond to them – a signal of relevance and value.  The same is true for all truly “native” ad products. If the native ad content is good, it will get engagement. The industry is evolving toward rewarding advertising that doesn’t interrupt and is relevant and value additive. That’s a good thing.

 

 

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Aug 16

Paid Content, Paywalls, the Link Economy and Mark Cuban’s Waistline

Posted: under Digital Migration, New Marketing, new media, Newspaper Deathwatch, Newspapers, Webconomics, Wrongheaded solutions.
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In which I get very “Meta” and write a blog post that aggregates other blog posts that were written about aggregation.

I am also posting this over on the AIM Group blog, as part of what I think might become a regular feature, “This week in the paid content debate.” The best of the bunch is the back-and-forth between billionaire Mark Cuban, and the bete noire of many print publishers, Michael Wolff, who runs the Newser.com content-aggregation site.  Cuban actually suggests something that shows that he’s put more thinking into the issue than the kneejerk “Up with the paywalls!” bunch.  I note below the flaw in his plans – my ex-roommate used to describe for me in detail how impossible it was at Time-Warner-AOL to get the jealous VPs of Home Video, say, to play nice with the guys from HBO and pay-per-view. Why make someone else’s P&L sheets look good? That just means they are going to get the Exec VP slot faster than you…

This is an example of a newspaper that has developed multiple, reliable, alternative revenue streams. UOL in Brazil is doing quite well, thank you. They planned ahead, unlike so many complacent U.S. papers.

This is an example of a newspaper that has developed multiple, reliable, alternative revenue streams. UOL in Brazil is doing quite well, thank you. They planned ahead, unlike so many complacent U.S. papers.(Click for larger)

Anyway, the discussion in all cases gets heated very quickly. Insults are thrown around, fisking takes place in the comment threads, but a few actual new ideas & fact-based analyses sneak in here and there. The fact that some very smart entrepreneurs are actually interested enough to toss in some innovative thinking is rather heartening, actually.

  • Mark Cuban gives some free advice to fellow billionaire media mogul Rupert Murdoch: http://blogmaverick.com/2009/08/08/my-advice-to-fox-myspace-on-selling-content-yes-you-can/ Basically, he advances the idea that to get consumers to pay for news, you have to bundle it up with other goods, services and content that exist within giant organizations such as Fox or Time-Warner. A “Newsjunkie” subscription would come with access to special sections of Fox News, a couple of books from HarperCollins, magazine subscriptions and DVDs of 20th Century Fox movies.  Commenters point out that such “synergies” remain elusive in these big media conglomerates, as each of the divisions is still in its own silo, with its own P&L, jealously guarding its own turf. Cuban paid special attention to aggregators, suggesting that newspapers ban links from aggregators such as Michael Wolff’s Newser.com.
  • Michael Wolff responds with a post entitled “Mark Cuban is a Big Fat Idiot” http://www.newser.com/off-the-grid/post/237/mark-cuban-is-a-big-fat-idiotmdash3bnews-will-stay-free.html Highlights include “some people” finding Cuban bumptious, arrogant and rich only through a dot-com fluke. Wolff maintains that news will always be free and ad-supported, and suggests that Cuban must be “smoking something” …
  • …leading to Mark Cuban responding with a schoolyard-taunt opus: I’m Rubber, You’re Glue http://blogmaverick.com/2009/08/12/to-michael-wolf-im-rubber-youre-glue/ Not sure what it means when the discussion over paywalls degenerates so quickly, even amongst intelligent and successful publishers.  Apparently, Cuban takes umbrage to Wolff calling him a “big fat idiot,” and in turn, taunts Wolff by criticizing his “outdated model” of a site.
  • The fallacy of the Link economy: http://paidcontent.org/article/419-the-fallacy-of-the-link-economy/ This is another assault on the value of inbound links from Google and other news aggregation sites.  Arnon Mishkin says that even sites that publish a headline and short description of a news story appearing on another site are destructive, because readers mostly skim stories, and therefore get the news content they need without having to click through. No word from him on what he thinks newspapers should do on newsstands – perhaps they should be like old-school porn magazines, in plain brown wrappers.
  • Ken Ellis responds on NP-Harder: http://npharder.wordpress.com/2009/08/14/the-fallacies-of-arnon-mishkin/He picks apart some of the assumptions as to what constitutes value from links, and concludes, “All that being said, I still agree in principle with his final three points.  However reclaiming value from aggregators isn’t going to help publishers much.  They need subscribers and a pay wall.  Not an iron curtain, but a permeable pay wall along the lines of the Wall Street Journal.  There’s no save-my-business-model pot of gold out there in the hands of aggregators to help you pay for all that good journalism.”
  • TechCrunch proclaims “The Media Bundle is Dead,” http://www.techcrunch.com/2009/08/16/the-media-bundle-is-dead-long-live-the-news-aggregators/ Erick Schonfeld addresses paid content by claiming that back when newspapers still enjoyed local monopolies on news, “80 percent of the stories in the paper sucked,” but that the audience was still forced to buy the paper because there was no alternative.  Kind of like the argument that the music industry has failed because people are no longer willing to pay $15 for a CD that contains one song they like, and 9 others that are crummy.
  • Five Key Reasons Newspapers Are Failing: http://www.splicetoday.com/politics-and-media/five-key-reasons-why-newspapers-are-failingOnly the first point really addresses paid content, but the suggestions at the end of the piece on how to transform a newspaper into a web-based news operation that will produce the type of content that readers will actually reach into their wallets and pay for – is very instructive.
  • A post drawing an interesting parallel between Microsoft’s dilemma on how to compete with Google’s free Open Office product, while still maintaining its huge profits from its own MS Office suite http://www.pbs.org/idealab/2009/08/future-of-local-news-about-more-than-paid-content225.html
  • A rather scathing piece on how Reuters should take advantage of the AP’s “suicide” http://techdirt.com/articles/20090724/1533155652.shtml
  • From “Scooping the News” a post entitled: Newspaper Access Fees Destined for Failure: http://www.scoopingthenews.com/2009/08/newspaper-access-fees-destined-for.html He compares the paywall solutions to pop-up ads.  He lists five points that he claims explain why access fees will not generate that much revenue. Basically, the argument against boils down to the “internet readers are used to getting information for free, and they have lots of alternatives, so they’ll never pony up when newspapers start slamming down the paywalls.”
  • Steve Outing gets psychological in explaining what changes to user behavior will have to take place before consumers start paying for news: http://www.editorandpublisher.com/eandp/columns/stopthepresses_display.jsp?vnu_content_id=1003997955
  • And finally, another piece about how raising the paywall will “kill the buzz” around quality content, pointing out that even print newspapers get shared, picked up, discussed in the pub and curated. http://23musings.com/2009/08/15/raise-the-paywall-stop-linking-kill-the-buzz/

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