Hyperdistribution
Posted on 04. Sep, 2009 by Jeff Jarvis.
The newspaper industry should be sobered by Martin Langeveld’s calculations, based on the Newspaper Association of America’s misplaced bragging about Nielsen internet data, that only about a half one one percent of time spent online is spent on newspaper sites.
It is clear that if journalists want to be supported – let alone have impact and influence and find their days worthwhile – they need more people to spend more time with news. I believe they should be doing the opposite of what is being suggested in many quarters: clamping down controls to try to fight aggregators and search engines, threatening to build pay walls, consolidating content into destinations they’d have to work harder to get people to visit.
Right now, news organizations should be trying to reach more people and engage with them more deeply. They should seek hyperdistribution.
Since when did it become OK for media people to shrink their audiences? Since they gave up on the ad model, that’s when. But I am not ready to surrender to the idea that advertising, which has supported mass media since its creation, is over. Yes, ad rates are lower; welcome to competition. That’s all the more reason why publishers must attract larger audiences publics – make it up on volume – as well as more targeted and valuable communities.
In our presentation at the Aspen Institute on CUNY’s New Business Models for News Project(funded by the Knight Foundation), we listed some of these opportunities, even though we didn’t build them into our first models because we wanted a conservative base case. Next we are building blow-out models incorporating these means, many built on the principles of the link economy:
* Reverse-syndication. We suggest that the new news organization (NNO) we envision in our ecosystem can create highly targeted content that can be distributed on the sites of other members of the network. So, for example, a new news org could create voting guides for every state assembly member and all the hyperlocal bloggers in the state could offer them to their readers. This content could carry both metro and hyperlocal advertising sold by and benefiting both sites. It is in the NNO’s interest to help these bloggers succeed. Thus they should collaborate on creating and distributing everything from news to calendars to functionality.
In the link economy, value is created by he who creates content and she who delivers audience. So in this networked ecosystem, large players and small will find ways to mutually create and share in more value.
* The embeddable paper. Once you embrace hyperdistribution, then you’ll find new and simple ways to get readers to become distributors. In this post I suggested that we should enable any content to be placed in YouTube-like players that carry brand, advertising, states, and links.
Lo and behold, Silicon Alley Insider just made it possible to embed its stories on this blog or anywhere. In fact, you don’t need to follow that link above; you can read the story below (and I imagine it won’t be long before there’s an ad there, along with the Insider’s branding, links, and data collection).
* API The New York Times has an API (application programming interface) enabling developers to incorporate its headlines, driving traffic to NYTimes.com. NPR and the BBC have APIs that enable others to use more content; as public broadcasters, their goal is simply broader distribution. The Guardian’s API offers full content but requires developers to join its ad network. Thus the Guardian wants to get its journalism into the fabric of the web, as they put it, and support it at the same time. Fingers crossed that it works.
* Specialization. One-size-fits-all news was a product of our means of production and distribution and a very small number of topics aside, that just won’t cut it anymore. Whether by geography, interest, or community, news must become far more specialized. In the link economy, this is how content rises in search to be discovered and it is how value is added with advertising.
Specialization sounds like a way to decrease, not increase audience but with the efficiencies specialization enables, many more publics can be served more deeply and each is bound to be more engaged. In our New Business Models for News projections, we ended up – to our surprise – with an equivalent number of journalists working in our hypothetical ecosystem when compared with the legacy newsroom, but these journalists were all covering much more specialized topics in much greater depth, creating more journalism for more communities than before. Specialization becomes a way to grow.
* Social engagement. In our NewBizNews models, we projected 12 page views per user per month because this is in line with existing news sites and thus, a conservative assumption. But it’s also a shameful assumption.
Local news networks that are truly a part of communities – owned and operated by their communities – will surely have much higher engagement. The fact that Facebook – which brings communities elegant organization, just as newspapers endeavor to do – gets hundreds of pageviews per month per user should be a lesson and model for news networks.
If news organizations – pardon me – asked what Google, Facebook, Twitter, and craigslist would do, they would define themselves as platforms more than content creators and controllers. They would act as networks rather than destinations. Once again, this gives them not only distribution and engagement but efficiency.
I have stood in and before no end of conferences when I or someone else recalls what that student said in The New York Times said a year ago: “If the news is that important, it will find me.” Waiting for her to come to our site won’t work – and it especially won’t work if, once a peer links her to our site, she finds a wall. No, we have to take news to her.
At Aspen, Google’s Marissa Mayer told the assembled news machers that they have to find ways to insinuate their content and value into our own hyperpersonal news streams. In other words: This ain’t about getting people to come to your home pages anymore.
You can bet if Mayer is thinking this way, so is Google and so it will find ways to consolidate information about sources across these new means of distribution. It’s still in Google’s interest to tap the tree for Googlejuice. So I say we cannot waste a moment finding more ways to get more people to distribute and engage with news.
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NewBizNews on On the Media
Posted on 22. Aug, 2009 by Jeff Jarvis.
On the Media’s Bob Garfield interviewed Jeff Jarvis about the CUNY New Business Models for News Project, funded by the Knight Foundation. Listen here:
Jarvis made one error: the new news organization’s editorial staff after three years is 46; total is 90.
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The Aspen Presentation Archive
Posted on 20. Aug, 2009 by Jeff Jarvis.
Here, thanks to GroundReport’s Rachel Sterne, is the archive of the presentation we made at the Aspen Institute on Monday; it starts a few minutes in. The New Business Models for News Project has been funded by the Knight Foundation. (View all the new business models.)
And here, again, is the presentation, which uses new software from Prezi. Just click within the screen once the presentation starts and you will advance to the next screen.
Click here to see the presentation full-screen.
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New Organizations, New Relationships
Posted on 19. Aug, 2009 by Matthew Sollars.
We’ve heard a lot about our forecasts for advertising revenues in the New News Organization this week (mostly asserting that our cpm and penetration assumptions are too optimistic). But, it seems our other goal–to envision a sustainable business built on a diversity of revenues–has been largely overlooked.
In fact, in year three of our NNO model, advertising accounts for 57%, or $11 million, of the $20 million in total revenue. The rest, or $8.6 million, comes from new business opportunities that have been so often neglected by existing media companies (or discounted because they were too expensive to develop in an era when margins on advertising were fat). In most cases, these new opportunities will require news organizations to forge new relationships with their readers and with the advertisers and businesses they serve, and to rethink some of the news content they provide.
We’ve written about a number of e-commerce opportunities already. We spoke with the Telegraph about their efforts to sell products in a contextualized format, taking fees for selling tickets and sports betting (there has even been chatter recently that legalized betting might help save the news industry). We’ve estimated just over $35,000 in annual revenue from ticket sales in our model. As Steve Buttry points out, we can go much further: obituaries are an opportunity to sell flowers and college football games are an opportunity to provide access to restaurant reservations before or after.
We also think that the advertising arm of the business should invest in training and/or consulting local businesses in online advertising and marketing. That service could bring in $480,000. Building a business-to-business marketplace where local entrepreneurs can list sales and post and reply to RFPs, could earn nearly $1.5 million in annual revenues by year three.
Hosting events is another item. Folks like the Voice of San Diego and Brooklyn Based say they view offline events as a new way to present their journalism. But, they can also serve as an important source of revenues, indeed events account for most of Brooklyn Based revenues. Events for readers could generate $330,000 by our estimates, and business-to-business conferences another $1.2 million annually.
Behind all of these ideas is the need for the new news organization to provide services to businesses and readers where they need them. As Steve Buttry pointed out to me today, in most cases, news organizations already collect highly valuable data, so all they need to do is figure out how to maximize that value for customers or businesses. In some areas the content itself might need to be reworked. He explained:
Perhaps the best example of thinking differently is in driving. Our automotive vertical is based on a job (buying a car) that most people do once every few years, so it’s not a routine and we don’t have a regular way that we do it. So it was easy for specialized car sites to steal the business away. But driving is a local job that most of us do every day. So if we develop a service based around driving, people will come to us every day. And that gives us an opportunity to become essential with some businesses that are not as big advertisers for newspapers (tire shops, auto-repair shops, auto insurance, etc.). And if we think beyond selling eyeballs, and think beyond print and start using the tool that most of us always carry in our cars, the model becomes entirely different. We think about being the conduit for text messages from motorists needing repairs today to garages with openings today. Filling that bandwidth has tremendous value to the business and identifying someone who can repair the car has tremendous value to the consumer. Win-win. (And, by the way, if you’re a car dealer and someone in your community develops a service like this, where do you think they will look first when they’re ready to trade up? So you’d better advertise there, too.)
Lastly, it’s important to make a point about the changes we think are coming in advertising. We’ve outlined new advertising units and ways to deliver them, including coupons and deals delivery, and we put them as separate line items in our model. But, it seems clear that advertising on the web will increasingly move towards the deals/coupon model eventually replacing display ads at nearly all levels. Online ads want to be transactional. We’ve already seen this with the launch of AnnArbor.com, which only publishes deals. The role for the news org going forward is to build a platform that serves the right ads to readers (much like it will need to serve the right news content). Also, the org will need to serve its advertisers better by working with them to develop messages and campaigns that work. It’s simple really, if they don’t do this in a pay-for-performance model, the advertisers will go elsewhere.
Not all of these ideas will pan out in all markets, or for all organizations. But it seems high time to give any idea with even a bare chance of succeeding a try. (The New Business Models for News Project has been funded by the Knight Foundation.)
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The New Ad Network
Posted on 19. Aug, 2009 by Damian Ghigliotty.
Ad networks have come a long way from those annoying punch-the-monkey banners used to fill remnant ad space.
But while innovative networks like Glam Media are continually building new tools and services to connect online publishers with highly targeted ads for their audiences, the majority of them still focus on national advertising paired with the content rather than the reader.
Within the new ecosystem and framework we’ve been outlining, the role of ad networks would expand to connect publishers with new advertisers, audiences, and other publishers on a local and metro-wide level.
The best way to do that is “to work with the content providers who know their local barber and their local pizza place and help them sell their ads in a larger network,” says Mark Potts, who recently launched GrowthSpur (disclosure: Potts’ played an important role in brainstorming the framework concept for this project.) Not only does his team provide a range of tools for content providers like invoicing, analytics and search engine optimization, they also provide professional training in how to sell advertising.
In line with Potts’ aim to rethink advertising, we also see several untapped opportunities for ad networks to bring in new revenue through increased interconnectivity. One way to do that would be for independent publishers to help larger media brands and news organizations reach audiences normally overlooked.
Imagine for example if a local sports blogger covering the Illinois State Redbirds was to run targeted ads from ESPN Chicago and maximize the dollars gained from those ads. Potentially, both content providers would benefit, as well as the advertisers. And that would also allow the content providers to focus on what they do best: providing content.
“It’s often harder for larger media sites to reach local advertisers,” says Potts. “But if someone is already out in a community selling those advertisers on their site, they can also sell ads for the larger sites as well.”
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Community Training in the Ecosystem
Posted on 18. Aug, 2009 by Damian Ghigliotty.
One function that runs throughout the entire ecosystem is the role of community training — both in editorial coverage and ad sales.
The New News Organization plays an important role here as an outlet for experienced, professional journalists to train local bloggers and citizen journalists how to cover their communities with more depth, detail and accuracy. That training would then help the NNO expand its daily coverage of education, local politics, crime, business, sports, entertainment and nightlife. (See our post from yesterday on the staffing breakdown for the NNO.)
Mike Reicher, a CUNY J-School grad student, wrote about his experience at The Local this summer recruiting experienced journalists to train budding community reporters and photographers.
Also, in our interviews with several not-for-profit news sites, we found experienced investigative journalists like Trent Seibert of Texas Watchdog training everyday people around the country how to properly cover their communities. Doing so has allowed Trent and his colleagues to raise more money for their investigative news site, which will play a vital role in the future of journalism.
And as local coverage grows, there will also be opportunities for professional training in citizen sales. In the larger framework, business-to-business services like a white label email and online marketing training service — or even in-person training sessions — could provide viable revenue opportunities for a new news organization. Those services also represents the kind of broader community outreach people like Steve Buttry have been calling for in various places and in response to some of our models. As a result, citizen sales training could help independent local bloggers grow their ad revenues without the need to hire a full-time sales person.
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Advertising in a Sustainable Not-for-Profit Model
Posted on 18. Aug, 2009 by Matthew Sollars.
We’ve been getting a lot of great feedback to our models, both online and out in Aspen, since we made them public yesterday. Some of the best comments have come from Jim Barnett, who questioned some of the results in our not-for-profit model both in the comments and later in a piece on theNieman Lab site.
He asks whether our model for the growth of advertising revenues–to 49% of all revenues by year three from 18% in year one–is possible or desirable at a lean not-for-profit new organization. First, to determine whether such growth is possible we looked to Joel Kramer, CEO at MinnPost.com. Kramer told David Westphal in a piece at OJR in October that he hopes 70% of MinnPost’s revenues will come from advertising by 2011.
Here’s the paragraph from the OJR piece:
Q. What was your hope, what is your hope on the mix of advertising and contributed revenue?
A. When we started we said our hope was, by 2011, 70 percent advertising, 30 percent membership. Right now it’s running about 50-50, maybe a little higher on the membership side. It’s pure guesswork because it’s a new model. The key is to get to a sustainable model by 2011. There are a lot of reasons to become optimistic, but the advertising side really needs to get better.
Kramer has since been hard at work developing display ad business (MinnPost was charging a $15 cpm earlier this summer) and new advertising units, including a Twitter-like service that he thinks could be a new form of classifieds for local news.
Our model only has 49% of revenues coming from advertising in the third year. Still, it’s a fair point to wonder whether not-for-profits should join the scramble for advertising and sponsorships when for-profits are having such a hard time of it themselves. Kramer himself comments on Barnett’s post to say our model appears to overestimate potential advertising and underestimate membership revenues. He also does a good job of answering Barnett on the pressures such a lean organization faces in separating business from editorial.
Again, we’d love to play that scenario out in our Google doc to see if those differences amount to a wash. (The New Business Models for News Project has been funded by the Knight Foundation.)
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Thank You and Keep 'em Coming
Posted on 18. Aug, 2009 by Damian Ghigliotty.
So far we received a lot of interesting responses since the FOCAS conference kicked off yesterday and we look forward to reading more as we continue to break down our individual models.
This project is all about interactivity and we wouldn’t have moved past the theoretical phase without your input. That goes for our 113 survey participants and the 13 sites we profiled as well.
Keep the comments coming and give your own figures a shot using one of our spreadsheets. (The New Business Models for News Project has been funded by the Knight Foundation.)
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Hyperlocal Revenues, Yes, They're High
Posted on 18. Aug, 2009 by Damian Ghigliotty.
The figures we used for our Hyperlocal model were based on three market sizes — small (20K), medium (35K), and large (60K) — supported by a broader Framework of local businesses and ad networks.
Yes, our work assumes that “in a metro market of 5 million people, the hyperlocal network will be able to get 1.75 million readers (35 percent penetration) in Year 1, growing to 3 million readers (60 percent penetration) in Year 3,” as TechCrunch points out.
That would allow a large blog to increase its gross revenue from $126,976 in the first year to $331,640 in the third, while growing its net income from $42,277 to $148,269 in the same period — assuming that staffing costs will also increase. Some sites are already coming close to those figures without optimization and efficiencies we believe ad networks and the framework would provide. Click here to view the Hyperlocal & Framework models as a Google Document. Be sure to click on the Revenues for Blogs and the Income Statement for Blogs tabs at the bottom of the spreadsheet to view all figures related to this post.)
We’ve compiled our numbers for each market size based on several revenue opportunities, including advertising, business-to-business services and e-commerce. While not all of these opportunities would work for all sites, our team found enough revenue models to support our assumptions.
And from what we’ve been reading, there is certainly strong interest in hyperlocal news these days. See the PBS Engage/Knight Commission online survey about community information needs published in April, as well as our post on ESPN going local. As a final note: to cover the largest targeted readerships we extended the taxonomy of hyperlocal to include vertical sites such as music, food, sports and mom blogs.
Again, we welcome readers to play with these numbers and see what they can come up with. (The New Business Models for News Project has been funded by the Knight Foundation.)
Download the Hyperlocal/Framework Excel file here.
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The Assumptions Behind Our Models
Posted on 17. Aug, 2009 by Matthew Sollars.
Some points about the assumptions baked into our models:
We settled on a $12 cpm as a conservative benchmark, based on feedback from a number of news organizations, large and small. Indeed, we commonly heard a range of $15 to $20 cpm. In terms of for-profit startups that replicate what we are calling the New News Organization, San Diego News Network is charging between $8-$10 cpm right now and they anticipate the rate will go higher once the economy recovers. For smaller startups and hyperlocals, we calculated a cpm from the time-based advertising rates. Here is a list of the folks who participated in our survey. Hopefully running through these two lists will answer some of your questions about where our numbers come from. Bottomline, we have data from a lot of sites that have been aggregated into the models.
Paul Bradshaw of the Online Journalism Blog asks why the development costs for our Not-for-Profit model is not higher in the first year? We have on-staff developers built into our New News Organization and Not-for-Profit models, in addition to the development line item in the budget. So, yes, we anticipate that future businesses will continuously spend to update themselves. Perhaps we haven’t factored in enough of a front-end development cost.
Bradshaw also questions one of our conclusions, that this new news organization can actually be as profitable as we postulate. He writes on Online Journalism blog:
Also, I’m somewhat baffled by the projected margins of 29% by year 3 – those are the sorts of margins news organizations enjoyed during the ‘print bubble’© and led to the sort of debts and shareholders that have been just as problematic as advertisers.
It’s important to separate profit margins from revenues. The news organization we envision is much smaller, with $20 million in annual revenues, compared to the hundreds of millions in revenues enjoyed by print newspapers today. Of course, the new organization’s costs are smaller, too, hence the profit margins. That means those margins don’t require the huge capital investments made by newspapers in the past. The new online news organization will necessarily be more agile and flexible.
A point for some of those folks who think our assumptions are overly optimistic. Our goal was to project what happens when the daily newspaper in a large city has gone away. That’s the context for our numbers: what will advertisers do when they need to go to an online-only publication? In all of these cases, we are testing hypothetical models. That’s why we’ve posted the spreadsheets online. We’re asking you to put in your own assumptions and share them with us, please put your versions in the comments. (The New Business Models for News Project has been funded by the Knight Foundation.)
