Category — Media Future

Fast Flip, a way of experiencing the online media, in quicker way, without actually accessing the paper, gives a cleaner experience of reaching newspaper contents and, of course, removing advertising (a cleaner site involves less advertising).

Audience time is so valuable that whatever makes their experience more time productive can be positive. It is interesting to see how innovation is so simple: cleaning. Media webs are more and more complex full of links and contents and innovate is just cleaning up. Google made it here and Facebook did the same with Facebook Lite that moves in the direction of Twitter, another “cleaner and faster” web experience.

The News Corporation, the media conglomerate controlled by Rupert Murdoch, plans to hire new journalists worldwide — not to do original reporting but to rejigger copy from the company’s far-flung news outlets so it is suitable for local audiences.

News Corp. Setting Up an Internal Wire Service (nyt)

 In “Moving into multiple business models” there is a very clear concept about the multiplatform reality that basically summarizes in the need for concentrating in the content and then using it in every channel insted of producing contents for a concrete channel. Now, this movement by News Corporation shows us a way to making it a reality.

“Get me as close to the fighting action at the point-of-sale and moments of truth—on that ground will I deploy most of my resources.” Robert Brazell

By having a look to new ventures, to vouchacha, while there are already some other initiatives out there, it reminded me to the vision of Rob Brazell on how to get media out of the fire.

ccimages by bashed, and Rsms

I had no hope in sustaining contents thanks to donations, and I wish I was totally wrong. Having a look to two references in donation supported models, I see that MIT OCW says to be operating at a cost of 3.6MM $ while wikimedia has an annual expenditure of nearly 6 MM $. When wikimedia reached their target, all funds collected were put into a reserve fund (if media had done this we won’t probably be where we are).  What calls my attention the most is their conservative approach to expenditures following a logic: if you do not have it, do not spend it. A second interesting point is in their budget. No content production costs (of course) and no traffic acquisition costs while technology is, by far, their main cost.

Sustaining a part, a section, a portion of contents of a traditional media by donations would need to be transparent and to give recognizement to donors. It may be possible but it would need a change in many decision makers. Converting a part of our business in a foundation could be possible and these two examples are showing how it could be done.

cc image

Once upon a time, Internet was the place in which everyone could do everything. States did hardly understand what was this about. But, with the time passing by Governments understood it and, of course, made everyone to bring a passport in order to navigate. It is the bad side of the Net getting so important in our lifes, states will start caring about it and will definitely look at it. On the other hand, it will be true that Internet will be critical even for the national security of a country.

We are definitely going to an Internet with compulsory identification. I have no doubt about it: China Web Sites Seeking Users’ Names

I very much like the idea developed now by outside.in. In fact, I made a very similar business plan three years ago that I unfortunatelly could not develop (so, if need partners in Spanish get in touch with me ). That is the reason I looked so much at what Peter Kafka exposed yesterday. There is an spreadsheet that shows figures for a sustainable local online media business.

Figures are too optimistic revenue side, although it is compensated because they are also generous in the cost side. What I like the most on this is discussing on a model that could work healthy no matter the size. I would change this:

1. With so many software as a service, I do not really think future media will run on many fixed technological costs (as stated in this model). I see it more like getting capabilities as you grow. Therefore, being all variable (or nearly), we are in a totally different way of thinking about it.

2. Same applies to content production costs. Salaries are not 70K$ multiplied by the number of employees. Salaries are a low base, plus a variable based on KPI from our scorecard that always give positive margins to the organization. Our organization could be more a marketplace let’s say, journalist to consumer, than a b2c (news organization to consumer). So our news organization is a kind of content marketplace like eBay.

3. Finally, IT costs are, from my view, too expensive at 0,95$. And CPMs overestimated.

Of course, all these are questions in which we may have different opinions.

A netbook? A tablet PC? Does it matter? asks Sarah Rotman Epps from Forrester. For those doing business right here (media) right now (april 2009) it matters.

Sizing the ereader opportunity, Forrester expects its penetration to begin doubling YoY from 2010 reaching a 4,5% penetration by 2012.  In this presentation there is not much information on how piracy could affect content providers with the spread of these devices. MP3 players are now very popular but music providers are not in a very good situation.

It is a good document to recap the ereader situation and what we can expect to happen in this area.

Where I disagree with this presentation is when inisists in the widely discussed idea of ereaders not being ereaders but PDAs.  For many, in order to be competitive, ereaders need to include a touching screen,  audio and video capabilities, wireless connectivity, etc.

This is not the competitive advantaje of an ereader. An ereader has an approach that we may call: technological austerity. What is important in an ereader is that you don’t need to worry about charging its battery and you can store lots of plain text. No pluggins, no software, no colour, no touching screen, etc. It’s just a way to approach texts in a more static and profound way. And, therefore, that is why personally I cannot see the future of newspapers flooding into ereaders (not totaly, but partially for sure yes), because news are dinamic and constantly changing and updated. Ereaders are, in fact, a response moving backwards to what is important for so many: contents built on words. For contents built on audio or video, no worries, we got other much better devices already.

Most of times, this criticism to ereaders comes from people who are in fact not yet heavy users. I combine my ereader with my pda, then I still have some books, and for some other things I still use my laptop. If my ereader battery couldn’t last weeks (or months), if it got hot, and it was aggresive to my eyes, I would just leave it and use more my PDA. If e-ink can progress into a kind of pda with a different (more efficient) process, then we are just talking on a new PDA generation, but, most experts in e-ink admit that this is, by far, science fiction at the moment. And, if that is the case, why should I have 2 PDAs? In that case, there is no point to develop theory, because ereaders would just be the future of PDAs and so, business side, what we do in PDAs we would do in ereaders; i.e. there would not be a different business case nor such a different product.

There is a clear trend towards convergence also in devices but this is not something we will see in a very short term in terms of e-ink/PDA merge. Making business plans or predictions taking that device convergence for granted is for sure interesting for academic and longer term strategic purposes but is of little value for business managers that need to build up solutions (revenue streams) today. Even more, if such a convergence came after 5 years, we got 5 precious years ahead we couldn’t lose to gain competitive advantage over our competitors. Business leaders in media right now cannot wait to potential convergences in order to make decisions around devices, and so, decisions must be taken with market conditions today: PDAs and ereaders are (today) different products.

As we develop into an increasingly virtual world, our lives are definitely moving into a “virtual reality” that is complementary to our physical life. (In philosophy, in fact, would be not so clear which of our existences is the complement, but this is not our topic now).

Virtual goods made 2.1 billion US $ compared to 16.9 billion revenues in advertising in 2007. In other words, virtual goods are worth watching closely since any digital player may get a share of this market in a coming future incorporating new revenue streams.  If online games managed to create virtual objects that are worth real money for their audience, it may be the case that we, online media, may find a similar response. In fact, if I am typing this letters right now is because I am sure that media can create virtual goods within their communities of influence.

Virtual goods (summarized from Lehdonvirta’s excellent work: Virtual item sales as a revenue model: identifying attributes that drive purchase decisions.) are not information goods (a mp3 file) but “simulations” of material objects that sometimes do not have a material counterpart with 3 key characteristics: mutually excluding (their usage by one person excludes the use of a different person), persistency (it has to exist for some length of time) and interconnection (must not exist in isolation).

Virtual purchase drivers are:
1. Functionality: goods that improve performance, new functions or gameplay options.
2. Hedonism: aesthetic attributes
3. Social drivers: like facebook gifts that sometimes got artificial scarcity

“Virtual goods are more suited to creating and maintaining social distinctions and bonds because of their built-in rivalry and scarcity.”

Therefore, virtual goods are, at the end of the day, not that different to “real” goods. As we buy a Gucci bag, or a BMW, we are not just buying the physical object (its functionality) but the social, hedonistic part… how this object differentiate us from the others by its brand, design, etc. We are defining ourselves in society by acquiring some goods are not others.  Physical goods have a great “virtual” load in their attributes.

World of Warcraft, Habbo Hotel or Second Life may appear that have nothing to see with online media, but, there may be rules of their business model we should be watching because they are making money.  Online media will probably be soon a major supplier of “virtual goods”.

Encouraging registrations has not been crucial for online newspapers. Still today, our reasons to register most online newspapers are not so attractive. As a result, registration volume is low and newspapers’ permission levels –i.e. permission levels on their audience- are low. Ft.com may be an example of a good attempt trying to gain permission from its readers and they claimed in march 08 having 7,1MM registered users what is peanuts compared with some social networking websites, and, the comparison could be even harder in terms of user activation even it is high compared with most newspapers.

Online media and, particularly, online newspapers, would like to increase the relationship with their audience and that is one reason for a moving towards social application usages of their platform, and, sometimes, even to trying building up social networks themselves. There are, of course, other reasons, like locking in users, engagement increase, or the feasibility of a more powerful targeting. So, knowing who is behind the screen is interesting for the advertiser, and so it is for the content supplier, but online media did not find the path for doing it.

How can online media increase permission levels without damaging audience growth? Maybe some people believe that increasing permission levels is not that relevant, but from my view it is a key challenge and we have to respond on how we are going to engage audience so they are happy not just to enjoy our contents, but to belong and contribute.

After having a look to pluck, I get back to the idea that technological commoditization is (to some extent) a matter of fact that will come with time and that will help media getting back to core. Of course, still after decades automotive industry compete in adding new developments to their products as do mineral water suppliers.  Differentiation will always play a role, but there is certain degree of commoditization in what is physically a product, in what we actually sell.
The physical side of our product (the “water” we sell) has been dominant during the revolutionary beginning of digital development. By adopting and developing new technologies some companies have got faster than others in their growth.  In response to this reality, some media companies lost their focus and after a kind of existentialist debate believed that trying to be in the fast adoption and development of new technologies was going to be key to succeeding with the new technologies.
Those who invented and developed presses for printing were not those who later built publishing houses or media businesses, or those who invented and developed TVs were not who later exploited broadcasting enterprises. And, I would add that first mover advantage has probably been overvalued when talking on digital businesses, mainly, when we still do not know whether and how some initatives will make money (i.e. be sustainable).
We are moving to an stage in which technology will get cheaper, easier to get and more widely and commonly known, and in which media businesses will start realizing that their competition is not there (or at least, not completely there).
In this context, companies like pluck, Autonomy and others, may progressively become much more relevant than media internal product and technological development departments. Then, media would again focus in values, brand, contents, and what is not physical in their product while saving those efforts.
Media convergence may not necessarily come from mergers and acquisitions, but from a new relative standardization and commoditization of technologies under their contents, and this is, in my opinion, our route ahead.