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

Sep 25

Yes, Investigative Journalism CAN Pay. And Pay Well.

Posted: under Digital Migration, new media, newspaper crisis, Newspaper Deathwatch, Newspapers.
Tags: , , , , , , , , , , , , ,

Mediapart in France is profitable because it gives readers what they are willing to pay for.

Imagine that. front page

The Mediapart organization makes its living by doing hard-hitting investigative journalism that its audience is willing to support. They also make a point of including lots of video on their pages.

Quick hit here for my students, who are increasingly upset about their job prospects after graduation.

I shared an article from Neiman about the upheaval in the newspaper business in France. Apparently, the same problems that plague the French economy at large are at work, writ small & exceedingly acerbic, at the major newspapers. They are tech-phobic, rely on business models that no longer fully function, and react angrily to anyone threatening the promise of a cushy work situation with guaranteed employment and 1/4 of the year spent on vacation.

Can’t imagine why that can’t cut it in a world increasingly dominated by the internet work ethic of, “If you eat lunch … you ARE lunch.” Somehow, I don’t think this will fit in with a languid afternoon at a sidewalk cafe with a nice burgundy and a baguette slathered with brie. With accordion music wafting in the background.

But about 2/3 of the way down the article, there appeared these grafs, which I am going to excerpt here, although I do urge you to go to the Neiman site & give them some traffic-love, ’cause @petergumbel did a damn good job with this write-up:

Edwy Plenel, for one, is incensed by the conflicts of interest inherent in the French press. But then that’s not entirely surprising, since outrage is Plenel’s mojo.

He has come a long way since his revolutionary youth, which he wrote about in a 2001 memoir. He made his mark as an investigative journalist at Le Monde; one of his most celebrated scoops was uncovering the role of French intelligence in the 1985 sinking in New Zealand of the Greenpeace boat Rainbow Warrior. He made the Elysée so nervous that it illegally bugged his phone during the presidency of François Mitterrand. He spent a total of 25 years at Le Monde, including a stint as editor in chief, but he left in 2005 during one of its sporadic crises, after attacks on his management style.

He launched Mediapart as a subscription site in December 2007. Three years later it was at break-even. Today, it’s racing toward 100,000 subscribers, each paying the equivalent of about $12 per month. This year he expects the site to make about $2 million net profit on just over $10 million in revenue. It has a staff of 50, 33 of whom are journalists. It now outsells Libération, which has almost six times as many staff members. [Emphasis mine – dlf]

The secret: a laser focus on exclusive news, especially revelations of high-level political and financial skullduggery. Mediapart’s subscriptions soared in 2010, the year it broke the story about a convoluted political and financial scandal involving France’s richest woman, Liliane Bettencourt. They leaped again in 2013, after it revealed that the then-budget minister Jérôme Cahuzac, whose job included fighting tax evasion, himself had an undeclared Swiss bank account and had transferred funds to Singapore. After denying the allegations for months, Cahuzac eventually resigned, acknowledging that he had lied to parliament and to President François Hollande.

Work the numbers, folks. $10 mill in revenue-$2M profil = $8M in expenses. $8M/50 employees = $160K/yr per employee. Figure about 40% of that per-employee allocation is insurance, pension, and building/maintaining the site & gathering news costs, and you still get a salary of $64K/yr on average. For a journalist, that ain’t bad. Plus you’ve got a warchest of $2M that you can throw at a big story, should one come up, and to use to build out the site & extend its reach.

So. There’s a lot going on here. I’ve written in the past about how I disagree with the authors of The Death and Life of American Journalism, who called for exactly the kinds of government subsidies for newspapers that are allowing them to continue to try to deny reality, and live in a fantasy-bubble. At the time, I was reacting to what I’ve seen in Latin America, Georgia, Kazakhstan and other places where allowing the government to get its hands on the revenue stream is akin to letting criminals loop a choke-chain around your throat. They can lead you around by it, and if you start getting out of line, all they need to do is give it a quick, sharp yank, and you fall back in line, suitably docile.

I’ve seen that happen. First-hand. In Venezuela, when I was a very young editor.

Government subsidies are kinda like this. Nothing really sticks until you try to do something that the person holding the leash doesn’t like.

The solution that Mediapart has come up with here may not last. It may not work everywhere. But it’s something that makes a lot more sense to me than journalism that exists as a kind of state-supported performance art piece. Because I’ve seen that as well: journalists who are completely disconnected from the concerns of their audience, sporting paternalistic, condescending attitudes, producing self-indulgent “investigations” that nobody really reads, and that don’t really threaten the people who give them checks each month.

So when I see that Mediapart is actually making a pretty nice profit, running with a lean staff, and dedicating itself to serving the interests of its audience, it pretty much makes my day, particularly in light of the grim news out of the LA Register, NBC news, and pretty much every other traditional media outlet recently.

Look, I am not hooting and hanging on the rim here, delighting in the travails of people still stuck in jobs at tottering media empires, hanging on for dear life through ownership changes, strategy changes, and promises that melt away like morning dew.

Long-term, market forces are going to prevail. If journalists produce a product that people want, and give them a means by which to support/purchase/share it, then that audience will fight to ensure that this important part of their lives is still there. The very first case study I ever did was centered around that fact. It makes me sad to see so many journalists, who base their entire journalistic ethos on pushing people and institutions to change, to adapt to the times, to leave behind (even if painful) the habits & traditions of the past … ignoring their own best advice.

Liberation may not be a cafe. But it may also not be an outlet for journalism much longer either.




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Dec 26

The Ongoing Digital Migration: Spin Magazine

Posted: under advertising, Digital Migration.
Tags: , , , , , , ,

Spin magazine is killing its print edition-tell me how paywalls would help this situation?

I keep hearing over and over again that the demise of Murdoch’s The Daily means that digital magazines don’t work, the real solution to the revenue problems is to “fix the original sin” and put all content behind a paywall.

The thinking seems to be that since the New York Times has said that circulation revenues are equal to ad revenues, that must mean that paywalls are the long-awaited saviour for the news business.

Comes now the case of Spin magazine, the venerable Rolling Stone also-ran. Can’t spin these numbers as anything other than a full blown collapse of the underlying ad market:

Over the course of the last decade, ad pages gradually declined from 661 in 2003 to 378 in 2011, a 43% drop, according to the Publishers Information Bureau. More recently, ad pages plunged another 40% from 287 in the first nine months of 2011 to 171 in the first nine months of 2012.

On the circulation front, in the six months ending December 2011 (the most recent period for which data is available) Spin had a total circulation of nearly 460,000 down 15% from 540,901 in the same period of 2005, according to the Alliance of Audited Media, formerly the Audit Bureau of Circulations.

(H/t Mediapost)

OK, so take a second and mull over those numbers. When your ad revenues diminish by 75% while your circulation is only down 15%, what does that really mean? Does it mean that the audience has abandoned your product?

Or does it mean that advertisers have abandoned your product?

Of course, it means the latter. The young, hip audience that buys music (and all the related lifestyle accoutrements you see in music mags, such as t-shirts, DeVry University classes on how to be a music producer, black light posters & urine-cleansing supplements), is now getting their music online, not from the no-longer-existent music stores.

Why buy an ad in a print product that doesn’t offer a quick and easy way for the now-engaged audience to seamlessly buy what you’re selling? It’s more effective than print, and (due to continuing wrongheaded ad sales policies) cheaper too.

The challenge here, once you make the shift to all-digital, is going to be offering some kind of as product or experience that differentiates your music mag from all the music blogs out there that have much lower cost overheads.

I’ve always said that the places to watch for innovation are music and video games. Keep an eye on this space. If there are going to be innovations, they are likely to show up here first.

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Nov 30

This Week in Paid Content: Thanksgiving Week

Posted: under Uncategorized.
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In the spirit of the season, I hereby give thanks that there is such an open and vivid discussion about the core issue of monetizing online content.  If we’d had this kind of focus on actually taking the utopian dreams of “all content, everywhere, all the time” and making it work back when I was in my Web 1.0/dot-bomb startup days, we might not have cratered so spectacularly.

So this week, we’ve got a rising level of chatter about Murdoch’s media properties banning Google links in favor of getting paid by Microsoft’s Bing search engine, the BBC throws a wrench into paid content in England (and perhaps everywhere else), the idea of sprinkling porn onto newspaper websites to see what happens is floated, and what orcs and dwarves can teach newspapers.

Murdoch’s bluffing about Google to try to extract money from Microsoft’s deep pockets

This somewhat NSFW (lots of cussing) take on Murdoch is by someone familiar with the way that Murdoch papers like The Sun always seem to pick the winner of an electoral campaign.  Not because they’re so influential that the person they anoint goes on to win – but because Murdoch is canny at figuring out who the top dog in any fight is, and busies himself sucking up to them as soon as possible to maximize his profits.

By convincing Bing that there’s a chance he might drop Google – for the right price – Murdoch suddenly has a new partner falling over itself to give him prominence in their search results, on his terms. Sure enough, Microsoft has just agreed to help fund the next-generation search crawling protocol, ACAP, which gives content owners like News Corp more control over how their news is indexed.

(snip) And that’s where we see Murdoch’s real genius: he has managed to use his illusion of influence to get all of these benefits without having to commit himself to anything, or expose himself in any way. There is no way in hell that News Corp content will vanish from Google and yet with every headline asking whether Google should be worried or suggesting that other companies might follow Murdoch’s lead, his image as a kingmaker is strengthened.

McClatchy starts sending out notices, but still claims paywalls are not imminent

Talk about mixed signals. The terms of services for its websites are all being changed, but that change doesn’t actually mean anything is changing. Except, of course, if it does. If they eventually decided to charge for content, they will clearly notify the readers, but in the meantime, please make coming to the site a habit and would it kill ya to click on the ads now & again?

A Perpetual Recession for Newspapers

Rick Edmonds, who writes The Biz Blog for Poynter, says that news organizations have lost $1.6 billion that was used to cover news, and that even when the economy recovers, newspapers won’t: So maybe we should all just learn from the porn industry – or maybe even start putting porn on our sites, to see if maybe that will get people to pay for our content.

The building of micropayment systems, like the one being developed by Steve Brill, is a hotly debated issue. Wouldn’t it be helpful for this kind of system to be established first with Web content that really drives users–say, pornography?

Sure, but that’s not an option for newspapers. There have been experiments with these kinds of systems in Denmark, where several companies tried it at the same time. The problem was that they couldn’t answer peoples’ security concerns. The experiments turned out to be a dud.

“Knock yourselves out,” Google yawns.

The head of newspaper industry bête noir Google News says in an interview that publishers are free to do whatever they want with their content.  Google is apparently willing to work with publishers to do whatever the publishers demand with their content – list it, ignore it, work with it to implement a paywall, whatever. The easy confidence that is displayed here is the result of Google’s near-monopoly position in the market

Removing News Would Have Negligible Effect on Google

This study by German research company TRG shows that even if all news was taken off Google, that would still leave about 95% of Google traffic intact for them to monetize.

Financially, then, Google doesn’t depend on the publishers’ content. “In comparison, if you detracted Wikipedia from the results, 13 percent of the number-one results would be gone,” said Christoph Burseg, the CEO of TRG, the research company that ran the survey.

BBC: We won’t charge for online news

Now this has got to be raising Mr. Murdoch’s blood pressure a bit. Online news paywalls only work when the competition plays along too (see the case study I did on the disastrous experiment of El Tiempo in Spain, & how they lost their market share to a formerly laughable upstart). A more interesting discussion is brewing, about what to do about content that is not just re-purposed BBC news, but that is specifically produced for the online editions. Viz:

However, Lyons also questioned the future of content created for online that is not directly related to specific BBC programmes, asking, “where should the boundary be drawn” between this and “the online expression or extension of BBC programming”?

Wall St. Journal’s price to go Bing-only: $15 million

There’s been an increasing amout of space devoted to what Murdoch is going to do to start moving all his content behind paywalls, and away from the hated Google “parasites.” Business Insider backwards-engineers the numbers that de-listing from Google would cost the WSJ, and comes up with $10-15 mill.

If Microsoft really wanted to induce Murdoch to ditch Google, it would therefore only cost $10 – $15 million. Maybe more if Murdoch wanted a premium. Considering Steve Ballmer said he’d spend $5.5 billion to $11 billion over the next five years on Bing, this is nothing.

More on the Murdoch-Google fight – seems the Denver Post and Dallas Morning News may follow in his footsteps

Interesting that Dean Singleton has come out and said that readers in Pennsylvania and California will get hit with paywalls starting next year, and the DMN is upgrading itself to a “definitely maybe” status. A further article from the Independent about what publishers in the UK are thinking on this issue and

And finally, a meditation on whether Murdoch’s plan for paywalls will run afoul of anti-trust laws

“Not a cat’s chance in hell” of successfully charging for online content

The CEO of the Future Publishing Group said that there is no hope for paywalls for general news because of the ubiquity of free models, particularly in the UK market. However, Future are experimenting with specialized and niche content to see what the market will bear.

The group has taken a bullish approach to pricing its print magazine titles, with an average cover price of £5, up from £4.70 this time last year.

She cited a promotion of the new album from former Guns N’ Roses guitarist Slash, which is being exclusively attached to a special edition of Classic Rock magazine for £14.99.

Americans less willing to pay for online news

The New York Times finds that less than half the people in the U.S. are willing to pay for online news, and even at that, they will only shell out $3. Apparently, there’s some kind of fundamental disconnect going on at the NY Times, between top management hell-bent on charging for content, and the weary soldiers in the trenches, protesting that this will not work, has not worked, will never work, and producing article after article that seemingly is not read by their own bosses.

“Consumer willingness and intent to pay is related to the availability of a rich amount of free content,” said John Rose, a senior partner and head of the group’s global media practice. “There is more, better, richer free in the United States than anywhere else.”

If readers are willing to pay – they prefer micropayments and only pennies

The analysts at Continental Research found that 63% will not pay for news, leaving only 37% who will – and at that, only willing to pay about 10 cents per article. More about this at

James Myring, Head of Media at Continental Research says “The amounts may sound small, but it is better to get a lot of people making small one off payments, than virtually no-one paying a higher subscription. For a comparison, think of the mobile industry, profiting from lots of small payments for text messages.

London Times Editor says online paywalls are “fight of our lives”

There’s the by-now predictable bashing of Google and the other supposed “parasites,” but the one actual realization is buried at the end of the article.

Harding said the Times wanted to improve its relationship with its loyal customers through home delivery and through its recently launched Times+ membership programme.

He said: “Historically, newspapers have treated their best customers worst and their worst customers best.

“We give the paper away to people who could not care less and we pay little or no attention to people who love it and read it every day.”

What newspapers can learn from orcs and dwarves

This is actually something that I’ve felt for the last year or so – if we’re going to try to get young people to try & buy, then we’re going to have to emulate the things that they are already comfortable doing so with. Basically, the World of Warcraft guys are minting about a billion a year from online content – and there are a bunch of key points to their service that newspapers should study, if they actually want to make money, as opposed to just slamming down paywalls and pretending that the rest of the world will care (or even notice).

News as gaming: Could newspapers similarly harness the human need for interaction and stimulation and sell not just boring text news but access to a shared experience? Sure, there’s MySun, MyTelegraph and “tell us what you think in the comments below”, but that’s a marketing ploy to drive page impressions and encourage more content consumption. The lesson from gaming is that people won’t pay for content they can’t help shape themselves—or project their own personal narrative onto.

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Nov 19

Wallflowers at the New Media Dance: Newspapers Can’t Decide On Paid Content

Posted: under Uncategorized.
Tags: , , , , , , , , , , , , , ,

Due to some intense consulting projects, multimedia presentations at national conferences, and BizDev meetings with like-minded New Media entrepreneurs, there has been quite a gap in my updates on the whole “Will they or won’t they” kerfuffle over paid content. This should get us up to about last Friday; tomorrow, I will post this week’s follies – and there have been a lot of them.

The overriding theme these days seems to be borrowed from the debate over the war in Afghanistan: dithering. Waffling. Hemming and hawing.

The newspaper industry is shifting from foot to foot, licking its lips, and generally acting like a 14-year-old boy at his first school dance, afraid to take the Big Leap.

This is the screen that pops up on, bugging you to subscribe.

This is the screen that pops up on, bugging you to subscribe.

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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.
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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 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: 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
  • Michael Wolff responds with a post entitled “Mark Cuban is a Big Fat Idiot” 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 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: 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: 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,” 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: 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
  • A rather scathing piece on how Reuters should take advantage of the AP’s “suicide”
  • From “Scooping the News” a post entitled: Newspaper Access Fees Destined for Failure: 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:
  • 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.

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