news content economics
DESCRIPTION
Overview of current situation for news publishers primarily print, but will apply to all providers. Suggests models and strategy will follow up.TRANSCRIPT
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Challenge&Possibilities
PreparedbyTerryGarrett(seelastslideforcontactinfo)
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Thispresentationisdirectedtotraditionalmediaplayers,primarilyprintpublishers.
Theideasandconceptsrepresentasynthesisofthethoughts,opinionsandresearch,whichmanyhavecontributed.
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Ihopethisprovidesanoverviewofthecurrentsituationthatleadstoquickandfuriousinventionandinnovation.
TherehavebeenmanygoodideasfloatedbyearnesteffortsofNewspaperNext,PewCenterandAJR.
There’stoomuchtoeinthewaterandnotenoughbaptismforimplementationofthoseideas.
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Fairlysimpleandstable
• Youknewhowthegamewasplayed.
• Youactedaccordingly.• Supplyanddemandwerefairlystable.
• Milddisruptionsproducednewideasandyoucouldadaptwithoutmucheffortorpain.
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iterateintuitiverelationships…aggregateseamlesse‐services…reinventstickyusers…HA!
Toomanylevelshappeningsimultaneously:Dryingupoffinancing,deepbudgetcutbacks,disappearingsalesandaudience…
Youdon’tknowwhattodo.
• Youreactconstantlyandlosesenseofbeingproactive.
• Youwanttimetosortitout.
• Youhavetotrynewthings,butwhat?
• WTF?
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Marketdriveneconomy overpastfiftyyears
Consumerspending73%ofUSeconomy
Drivesadvertisingspendingandproliferationofmediachannelsandplayers
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ConsumerspendingroserapidlyAND
Advertisingspendingfollowedandincreased10Xpre‐1980levels…
Mediachannelsbecameover‐saturatedwithplayers
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Matureplayersprofitharvest,butmakelessinvestmentincontentquality,slowergrowth,losemarketsharegradually.
Start‐upsshowheadygrowth,investinmarketing,makelessprofitsthanincumbentplayers…
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•Movefromgorgingonthe“mediabuffet”topost‐consumptionfatigue,over‐whelmed,overstimulated,toomuchofagoodthing
•Diminishedengagement,indifferencesetin…
Thenconsumersbegin
•Mentalsortingofmostmediachannelsandplayersinto‘allaboutthesame’,lumpymass
Orintoaslimmer‘musthave’niches
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1908averagenewspapercosts5¢(fornewscontent,pre‐massadvertisingera)
2008averagenewspapercosts50¢
Adjust1908coststo2008
forequivalentprice:
$2.67percopy
In100years,Newscontentwasdevaluedinprice400%
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Content Device Devicecosts Perceptionofcontent
TV TVsets *Relative FREE(exceptcable)
Radio Multi‐sets Relative FREE
Dailynewspaper Paper Nominalrecurring Paid,butnecessary
Magazines Paper Nominal‘+’recurring Paid,necessaryluxury
Otherprint Paper Nonerecurring FREE
* Expense of acquiring device was relative to consumer’s income
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Twodevicescandeliverallformsofmediaanywhere,anytime
DeviceandserviceCost:relativetoconsumer’sincome
Perception:FREEcontent
VE
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▼ Traditionalmediaplayersbundledcontent(manyarticlesbecamedailypackagedproduct)
▼ Webunbundlescontentpackages[atomizesit]
▼ Webplayers[search,aggregators,reconstructors]re‐bundlecontentintonewpackagesundertheirbrand,whichdilutesoriginator’sbrandbasedonsinglepackageidea
▼ Google,Yahooatomizesadvertisingandchangeprice/valuemetricandbuy/sellmethodology.
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• Newplayerscapturenewwebadincome,deviceanddistributionincomeandreducetheincomepotentialfortraditionalmediaplayers…wholackabilitytoscale.
• Consumersgetafreerfreeride TellmesomethingIdon’tknow!
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Newmodelsforcontentandadvertisingareurgentlynecessary.
Thereisnogoingback.
Majoroverhaulisrequired.
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1 WillconsumerspayapriceaboveFREEfornewscontent?
2 Willadsalesaloneyieldenoughincometosupportanewsoperation?
3 Does‘qualityofcontent’mattertoconsumers?
4 Howdoconsumersparticipateincreatingthecontextofnews?
5 Doesbrandofnewscontentprovidermattertoconsumers?
6 Howimportantisdistributionofcontenttoconsumers?
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Nameatleastthreeconsumeritemsthatwereoncepaid,butarenowFREE.
Nofairsayingnewscontent,oranythingrelatedtotheweb.
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Freecheckingaccounts
Thepointistherearefewinstancesofconvertingconsumerproductsorservicestofree.
Thereasonisobvious,it’sadamntougheconomicmodeltomakework.
FREEcheckingasalossleadertowritingbadmortgages?
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Theproblemisthatit’sbeenpricedatFREEbytraditionalplayersforsolongnowtheybelieveit’sworthlessandconsumersexpectit.
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① Traditionalplayersaremotivatedtothinknewscontenthasvaluenow,becausetheadvertisingsalesrughasbeenpulledoutfromunderthemandonlinepricessuck.
② Theyhaven’tfiguredoutthenewvaluecreatedforcontentwhenconsumers,bloggersandothersrateit,shareit,commentonit,re‐bundleit.Asamatteroffact,theyhaveresistedthispracticewhentheyshouldworkitandseethevalue.Itcreatescontextfornewsconsumption.
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Newscontent
Commodity
“Undifferentiatedquality”“Allinfoisequal”“Info=News”
Isthistrue?
o Newscontentpublishershavebeentoldandsomebelievethatnewsisacommoditythatisvaluelessinandofitself.
o Itisvaluableonly asameanstoattractaudienceandselladvertising.
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EvencommoditieshavevalueatapriceaboveFREE.
gold silver soybeanscorn
copper porkbellies(yum,yum)
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Howso?Commoditiesarethingsfairlysimpletoidentifyandvaluebasedonsimplersupplyanddemandvariables.
Newscontentisrapidlybecomingmorecomplex.Itisbasedonthoughtsandideasabouteventsandthings,andsubjectivelyvalued.
Commodityisthewrongnountoassociatewithnews.Itoversimplifiesitstruemeaningandvalue.
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Valuedependsuponhowwellnewsis:
▼ Conceptualized
▼ Contextualized
▼ Whereandhowit’sdelivered
▼ Whenit’sdelivered
▼ Crediblesource
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“Idon’tthinkIcaneatallthisonmelunchbreak”
FREErattlers,allyoucaneat!
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Whatgivesthemmoreenjoymentforlesstimeinvested?
▼ Publishersmustknowtheutilityofnewsforconsumers[thinkNewspaperNext‘Jobstobedone’list]
▼ Helpthemfindit—makeitreadilyavailableviacomputerandmobile
▼ Helpthemshareit,rateit,evaluateitinanewcontext—connectedconsumptionfactor
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Consumerssharecontenttheyvaluewithselectedothersortothecommons.
Connectedconsumptionhelpsthemfilteranddiscovercontent.
Didyouhear…?
X
Newscontentprovidersmustexploitandleveragethistogreatadvantageforall.
Think‐like
strategyDevicesand
Sharingapps
BloggersConsumersNewsAggregators‘Linkeconomy’
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▼ Addstocontentvaluebyprovidinganewmeasureofcommunity‐propagatedcontext…communitytellsoneanotherwhatthenewsisworthandwhy.
▼ Notfixed,butconstantlymutableandelastic.
▼ Contextandcontentarenolongerone‐way,
Editor/writerconsumer.
▼ Whichmeans,italtersthenatureandvalueofcontentinameaningfulandpositivewayforconsumersandcontentproviders
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FromthePewCenter’sStateoftheNewsMedia2008report
“Asurveyofjournalistsfromdifferentmedia...Majoritiesthinksuchthingsasjournalistswritingblogs,therankingofstoriesontheirWebsites,citizenspostingcommentsorrankingstories,evencitizennewssites,aremakingjournalismbetter—aperspectivehardtoimagineevenafewyearsago.Thesenewtechnologiesareseenaslessathreattovaluesorademandontimethanawaytoreconnectwithaudiences.Newspeoplealsoarelessanxiousaboutcredibility,thefocusofconcernafewyearsago.”
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Freecontent
Donorsupported
Freecontent
Adsupported
Paidcontent
Paidcontent
Adstoo
Noads
Free&Paid
Free&Paid
Adstoo
Noads
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AWordfromOurSponsor
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Massadvertisingmodel
JosephPulitzer'sNewYorkWorld1890Adjustedto2007dollarsNet Income $916million
Google’sWorld2007NetIncome$5billion
Innovation
Createdadvertisingtoamassaudience
Createdbidpricingandself‐adminadvertisingtoaverytargetedaudience.
Targetedadvertisingmodel
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Google’sinnovationreshapesalladvertising‐basedmedia,notjustonline.
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Itisdisruptinganestablishedmarketplaceandconvertingvastsumsofmarketsharetoitself.
Themagnitudeofoperatingincomeat5timesthelevelofthepreviouslydominatingmodelshowsit’spower—amassivereshapingstrategy.
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Thenatureofthedisruptionissosevereandshareconversionsoquickthatitwillwipeoutasignificantnumberoftraditionalmediaplayers,includingmajoradagencies.
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PlayersneedanEntirelynewapproachtoselling,distributionand
businessadministration.
THINKMANY$mall$$$$$$$$$$$$$$$treams$$$$$$$$$$$$$$$$$$$$$$$$$
vs.
$$$
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• Bannerads:someincomebutnotenoughtosupportanorganization
• Classifieds:ditto• Affiliate:lotsofroomforgrowth
• Mobile:nascentstagewithlotsofupside
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Unbelievablethishasbeenignoredbytraditionalplayers.
Canbe:1. Locally‐dominatedorniche‐dominated
2. Networkedglobally
3. High‐utilityforconsumersandadvertisers
4. Integratedwellonlineandwithmobile
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Butbrandvalueisgenerateddifferentlythanbefore.
Connectedconsumptionplusatomizeddistributionplayabigroleinbrandvalue.
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Alotaboutbrandworthbasedonthevaluetheyreceive.• Makeiteasyforthemtoconveythatinformationandhelpthemspreadtheword.• Consumerscanpromoteorkillabrandinquickfashion.• Themoretransparencyandthemoreplayersfacilitateconsumercommunicationabouttheirproductsandservices,thehigherthebrandvalueprobability.
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① Newvaluechainbasedononeofthesixmodelsselected
② Qualityofcontentmattersmoreorlessdependingonthemodelselected
③ Adincomefrommanysmallstreams④ Webisthehubforcontentmanagement
anddistribution⑤ Connectedconsumptionisthenew
branddriver
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Traditionalplayershaveadaptedandadoptedpractices—poorlyinmostcases.
It’surgenttobeinnovativeinstead.
Thatdemandsnewmodelsbaseduponbeingashaper,notafollower.
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Withanorganizationalculturethatfosters:① self‐responsibility② creativity③ enthusiasm④ experimentation⑤ innovation⑥ integrity⑦ cooperationanddirectcommunication
traditionalplayershaveachance.
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TraditionalPlayers
Gottamakethedonuts
IfIwantyouropinionbyGodI’llgiveittoyou!
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Wannagoforarunafterwefinishcodingthatnewfeature?
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I’mcreatingacompleteanalysisofeachmodel(6)includingrequirementsforeachvaluechainnodeandtherelationshipbetweenthem.Additionally,I’llcreateproformabudgetsforafewofthemorepromisingmodelsthatapplytotransitioningplayers.
I’mconvincedthattraditionalplayersmuststartthistransitionalprocesswiththeattitudethatsays,“Ifwestartedanewmediacompanytoday,whatwoulditlooklike?” It’stheonlyapproachthatremovesthebiasofwhichresourcesarevaluableandwhicharen’t.
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Ifyou’reinterestedinlearningmoreaboutwhatyoucandobyreviewingtheanalysisofthemodelsmentioned,pleasecontactme:
TerryGarrettGarrett.tm@gmail.com415.302.9583ManagementandWebConsulting:BusinessAsIfContentManagementSystems:OasisWebLogisticshttp://bizasif.comandhttp://oasiscms.com