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Archive for March, 2011

The Wall Street Journal is Selling on the iPad, is Anyone Else?

March 14, 2011 1 comment

The iPad version of the Wall Street Journal now has over 200,000 subscribers according to this article at Smart Money. But should we be at all surprised?

Throughout the entire internet revolution, papers like The Journal and The Financial Times have been able to lure subscribers to pay for online content while many of the competitors have been unable to do so. This is due in large part to the audience reading them. The financial papers offer information that can help people to make money. People who need that information are willing to pay for it. It’s a simple formula that has stood the test of time.

The reason these papers work isn’t because they can help people make money. It’s because they’re focused in on a specific target niche, and always have been. The difficulty with other papers, such as The New York Times, adapting to any new distribution model is that their audience is too vast.

There is such a wide array of information in The Times. Unfortunately, very little of it is vital to our daily lives. I’ve gone many days where my print edition of The Times is never opened and gets recycled inside the blue plastic bag it was delivered in. Go ask a stock-broker how long he’d last in his business if he didn’t read The WSJ.

Newspaper makers are making another miscalculation in thinking that the iPad is going to save their industry.The vast majority of people are not going to subscribe to iPad editions of newspapers when the same non-vital information is available from a number of other sources. The iPad is just an extension of the internet, and iPad subscriptions are just an extension of the newspaper industry’s inability to escape its legacy business model.

Any newspaper executive who believes the iPad is the messiah they have been waiting for is delusional. Soon enough, we won’t be using tablets or laptops at all.  Those who survive in the digital age will do so because they recognize the core change to their business model. Those who are waiting for the “next big thing” to help monetize their industry, will still be waiting when they file for bankruptcy.

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Playing by Different Rules

This week saw NPR’s CEO Vivian Schiller step down after her chief fund-raiser was caught in a sting operation by right-wing activist James O’Keefe. The entire process from the O’Keefe video going public to Schiller stepping down took a total of 12 hours. The knee jerk reaction involved seemed awfully familiar to those following NPR’s dismissal of Juan Williams this past fall.

The O’Keefe sting operation involved setting up a meeting between NPR chief fundraiser Ronald Schiller (no relation) and to actors posing as Muslim philanthropists with ties to the Muslim Brotherhood. In the video, Mr. Schiller remarks that the Tea Party is made up of racists, and that liberals tend to be more educated than conservatives.

The shame in all of this is that Schiller felt the need to resign over comments that were inappropriate at best. Her counterpart at Fox News, Roger Ailes, was recently caught on tape urging publisher Judith Regan to lie to federal investigators vetting Bernard Kerik for the job of Director of Homeland Security. Ailes is caught on tape urging someone to commit perjury in an act that could harm the nation’s security, and the idea of resigning is never even suggested. A staffer makes a few off-color remarks at NPR, and suddenly the company’s executive has to step down.

I would be willing to bet that the presidents of MTV or Comedy Central would step down from their posts if a federal investigation had caught them urging someone to commit perjury. The idea that the head of a news organization is unwilling to do so under these circumstances is outrageous and truly speaks to Fox’s lack of credibility. 

Fox and NPR clearly have a different view of what is appropriate behavior for news executives. It’s a shame that NPR is willing to allow itself to be bullied by conservative activists like O’Keefe at a time where integrity within the industry is so scarce.

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Why Are Old-Media Companies Still Spinning Their Wheels?

Tech Crunch reports in this article that AOL’s Patch has bought Outside.In, a news aggregator aimed at delivering hyper-localized content. The deal was valued at under $10 million.

It’s stories like this that disappoint me the most in today’s modern media world. I believe that hyperlocal news has a strong future ahead of it, but I don’t think Patch, Outside.In or any of the other companies experimenting in this field will be the major players when all is said and done.

Moves like the ones that AOL has made lately in acquiring Huffington Post and Outside.In, are like the equivalent of buying out the Mozilla company so you can view a webpage. Outside.In and all these crazy little content aggregators are nice, but they don’t get at the heart of what Web 2.0 is and what Web 3.0 can be. Patch, and every other journalistic outlet need to understand that they are no longer in the business of news distribution. They are in the business of news gathering and production.

There are plenty of sites already available that have the user base and the demographic information to properly spread information; namely Google and Facebook. There is certainly room for a few more giants though, and if someone can create a network experience that people want to join, they can become a player.

Imagine a world where you log into your Facebook account. You click on your news app, which presents you news from your country, your state, your region and your local community. An article from the NY Times is right next to a video produced for Patch on a string of burglaries in your area. You can have access to the information that affects you the most, on various different levels. The data Facebook has on you can be fed back to advertisers, which in turn will fund the quality journalism you experience daily.

The real trick in all this, is to control what the data they mine on you can and can’t be used for. It’s one thing if you know my car is falling apart and show me a Toyota ad. It’s another entirely if you take a picture of me enjoying a beer and send it to my employer.

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Who Should Pay Whom in Broadcast Retransmission?

A recent Los Angeles Times blog discussed the FCC looking into taking some control over disputes between Broadcasters and Cable Networks when it comes to retransmission rights. The move was cheered by the cable industry, which has been asked by broadcasters to pay severely higher retransmission fees than in the past.

Last year, ABC pulled its network from Cablevision during a high-profile  dispute that left many viewers hanging in the balance until service was restored just before the 2010 Academy Awards. This fall, a similar dispute between Fox and Cablevision arose leaving Philadelphia fans unable to watch the Phillies in the National League Championship Series. In both of these cases, the broadcast networks were asking for exorbitantly high fees from the Cable providers, which resulted in a stalemate. Eventually, compromises were reach which will inevitably trickle down to the consumer in the form of higher subscription fees for cable television.

But in the world of broadcast retransmission, why should cable providers be paying anything for retransmission rights?

The broadcast networks generate most of their revenue from advertising, both local and national. The commercials and in-show product placement that are the result of those ad streams, are exactly the same whether they are viewed through set-top reception (rabbit ears, or an antennae), or through a cable provider. The cable providers receive no revenue from those ad streams. The broadcast content is also available to anyone for free by using set-top reception.

Why does this model make no sense? Let’s apply this concept to another similar business: newspapers.

A newspaper, like a broadcast network, generates its revenue through advertising. Now let’s say that a small newspaper suddenly had the opportunity to expand its readership through a new delivery service. Let’s say a new railroad that can move through the state at high-speed can now carry this paper further, bringing it into more homes than it has ever been in before. It expands its viewership, and it does a better job of delivering the paper than the newspaper company’s own distribution service could. Ad revenues go up, and the newspaper is making more money than ever before.

Well, under the broadcast retransmission system that currently exists, the newspaper would then turn around and charge the railroad for helping to deliver its core product to a wider audience. It makes no sense. If anything, the railroad should charge the newspaper a handling fee for delivering its content, not the other way around. Similarly, cable providers should be charging the networks a bandwidth fee for delivering their signals through their digital networks.

The entire idea of increased broadcast retransmission fees is an outdated concept from an old school of thought. The media today cannot be contained. You cannot control who transmits what to whom, and you shouldn’t try. Revenue needs to be created at the source of transmission, and afterwards be let into the wild.

If I were running a cable network, I would have taken a much simpler route to fix this problem. The hundreds of millions they pay every year in retransmission fees could be eliminated, and they would never face this issue again. Now that every cable subscriber is required to have a digital box to connect their cable to their television, simply build in a broadcast receiver to these units. This way you’re not retransmitting their signal anymore, and your subscribers can receive the broadcast networks effortlessly, and seamlessly in their own homes.

And most importantly, it wouldn’t cost your customers a dime.

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