Archive for May, 2009

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Facebook’s last roll of the dice?

May 27, 2009

Facebook has sold a $200m stake to a private Russian investment group. This is its last chance to succeed by going down a road nobody else has tried.

Is that alarmist? I don’t think so. Zuckerburg and his team should be complimented for their attempts to do things differently – after all the biggest prize often goes to the innovation that leaves the competition behind. Just look at Apple and the success of iPod, which eight years after its launch, still easily leads the portable music device market.

But the problem with rolling the dice is that you need to show the audience at some point that you have a knack of winning, otherwise you look like you are gambling.

Look at Ev Williams – there’s a guy with a knack of winning. Having founded both Blogger and Twitter, he epitomises not only Silicon Valley entrepreneurial success, but business success.

But Zuckerburg is still dining out after his first success – the launch of Facebook. Since then, he has overseen the launch of the Facebook Platform, had to quell – and then acknowledge – rumours about a Facebook payment platform, and totally redesigned Facebook to resemble a twitter hybrid.

The problem is that none of these has had the effect of changing the game. In fact, the latest design changes to Facebook to some extent diminished the impact of third-party apps (i.e. I can’t find them any more), and repeated customer service failures (see here and here) mean some people are beginning to think Zuckerburg and his team don’t have a game plan – or winner’s luck.

Whatever Facebook does with this $200m had better rewrite the rules, or there will be a very unhappy group of Russian investors wondering where their money has gone.

Facebook *has* to become more than this (though it is very funny):

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Murdoch lays groundwork for paid-for online content

May 11, 2009

Rupert Murdoch has proven he is no fool in business, but he is a divisive character.  He received a great deal of criticism after the publication of News Corporation’s latest financial figures, much of it for his plans to charge for online content. But do these plans deserve criticism?

Vanity Fair columnist Michael Wolff provided an ascerbic analysis, suggesting that a man who does not use email cannot possibly make a success of an internet business (this is familiar territory for Wolff, who last year wrote a biography of Murdoch). Maybe a more important point is that Murdoch, unlike some younger peers running web businesses, knows how to make money.

When he bought MySpace, it was turning over $79m a year. It has failed so far to break the $1 billion mark – though it has come close – but you would have to be churlish to deny that $850m turnover is impressive, particularly in comparison with the commercial realities at other social media such as Facebook and Twitter.

You use it, you pay for it

The real bombshell delivered by Murdoch, however, was his view that charging for online content is imminent at some of his newspapers, following the success of the subscription model at the Wall Street Journal.

It is often claimed that people will not pay for internet content. For example, Michael Tomasky at The Guardian makes this point very clearly.  But that is only half the argument.  The issue is that people will refuse to pay for content when they are offered something the same or similar for free at the same time.  And this is usually the case because the media sector is so fragmented.

Thanks to the Internet, if your favourite newspaper starts charging for its use, there are thousands of alternative ways to get the same information for free.  So in terms of moving to a paid-for content business model, unless all media websites change as one, the first movers will be so severely penalised as to render the change to a pay-per-use model impossible.

But Murdoch’s announcement may make a difference because he is a game changer. By announcing his intention to begin charging for content a year in advance, he has primed the entire media sector for a change in this direction. This would be good for newspaper users. A move to a mixed model, where revenue could come from web subscriptions, mobile devices such as the Kindle or iPhone, as well as ad-funded, is overdue. Dependence on a single revenue model is dangerous. If you need proof of this, just look at the current plight of the venerable Boston Globe:

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Journalists and bloggers could both benefit from e-readers

May 4, 2009

I just finished reading this great TechCrunch op-ed written by MG Siegler. He believes newspapers, such as the New York Times, that pin their hopes on large-screen e-readers, prove that they have not grasped the challenges posed by the internet.

Part of his argument is based on the immediacy of online news, and he says:

It’s not the “paper” part of newspaper that’s the problem, it’s the “news.” As in, newspapers are way too slow at delivering it in the age of the Internet.

This is a good point and he goes on to suggest online news is the solution, but e-readers are not. I am not so sure it follows that e-readers cannot be part of the solution. After all, with the right connectivity they could  become a very attractive way of browsing the net, including newspaper websites and blogs.

But this all skirts round the real problem of commercial sustainability in news organisations. MG suggests that:

…there is something to be said for good journalism, but that is being done online as well — and can be viewed for free.

But how long can good journalism carry on being viewed for free? This point is brought into stark contrast by this line:

But books are fundamentally different from newspapers. There isn’t a free online equivalent to books, like the newspapers have to contend with in blogs.

This, I think, sums up the current problem with journalism. This statement assumes authors of books are unique and valuable in a way that journalists are not.

The task at hand for the traditional media is to remind people of the value of good journalism – as something that has to be paid for. Good journalists deliver value because of the access they gain, the training they receive to write clearly, capture information through interview and investigation, and know the laws surrounding defamation and libel.

In fact, many of the best blogs are attached to media websites and written by professional journalists. And many of the best independent bloggers have learned the skills of the journalist, and earn money from their blogs through the blunt tool of advertising. The smart solution for newspapers and blogs will ultimately be the same – getting paid for what you do by charging the people who benefit from your work.

E-readers such as the big-screen-Kindle will be part of the solution, by helping broaden the appeal of online journalism and blogging alike.

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Alan Rusbridger on journalism (and twitter)

May 4, 2009

In my view, the New York Times and The Guardian have taken social media more seriously than any other newspapers (I’m quite happy for anyone to point me to other examples). The recent release of their API (NYT, The Guardian) make them resemble social media more than traditional newspapers.

Here is a very interesting interview with Alan Rusbridger talking about the future of journalism, and twitter. It’s from German blog Carta.

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The end of newspapers

May 2, 2009

The debate rages on – how to save printed newspapers.  Try googling the terms “newspaper”, “death” and “internet”, and you receive 10 million results.

So why is this such big news?  Are we facing the death of news?  Hardly. We are swamped by more news today than ever, and are blessed with digital ways to track issues and filter for our interests.  For news junkies, things have never been better.

It seems that it is not the public good that news confers that is at stake, but rather the newspapers themselves. Why is there such a strong urge among newspapers to back the status quo and stick with print?  After all, surely the smart money is on the first news gathering organisations to make a break and start doing things radically differently.

The Guardian’s recent decision to release its API might come to be seen as a game-changer, but most of the messages we hear are about “saving” newspapers.  Here are five reasons printed newspapers are dead meat, and why they won’t tell you about it:

1) Once people stop reading printed papers, they won’t go back

It happened to me, it’s gradually happening to my colleagues who work in PR and deal with newspapers every day, and it’ll happen to us all eventually.  You can get the same information from the newspaper’s website, so why would you bother with the paper?  It’s more convenient, I hear you cry.  Well, that brings me to the second point:

2) The technology that will allow us to read electronic papers is still in its infancy

You can buy a subscription to the NY Times for the Kindle*.  It’s updated daily over Wifi and costs 50 cents a day.  This does not even begin to tell you how slick, cheap and flexible e-readers will be in a decade’s time.  Before long, you will be able to read something that feels lots like a newspaper, based on flexible, textured e-paper and programmable full colour e-ink.  Think the Daily Prophet in Harry Potter and you’re getting close.

3) People buy news, not newspapers

It so happens that since the invention of the printing press, the best/cheapest way to obtain news was via a newspaper.  But this is by the by, based on the technology that there was.  Technology has moved on, and so will consumers.  Thanks to simple platforms like Twitter and RSS, I read news from hundreds of different places each week, based on subjects that interest me, headlines that grab me, and recommendations from people I trust. Newspapers are limiting – imagine going into a restaurant and being offered only set meals instead of a flexible menu.  You would not be happy – so why are you happy with newspapers?

4) Demographics are against newspapers

Research shows again and again that young people get information from the internet, not newspapers.  That’s all you need to know to tell you that newspaper circulations are going to fall off a cliff.  The death of newspapers is not the problem – it’s the death of the newspaper readers that will come to haunt traditionalist newspaper men and women.

5) The picture we have is skewed by vested interests

However bad the situation for newspapers looks, the truth is far worse.  The “save the newspaper” lobby – i.e. the newspapers themselves – is desperate to keep the idea of the printed newspaper alive.  Why?  There are the people.  As in any walk of life, the establishment is old and has become stuck in its ways.  Newspapers are no different – in the UK, one of the most interesting papers to watch is the Daily Telegraph, as it embraces electronic media.  It is no surprise that the editor Will Lewis is only 40 this year.

Then there are the financial investments in the print works. Large print machinery is amortized by the hour.  That’s part of the reason it costs so much more to run a short print run than a long one – because the time it takes to set the printer up literally cost money. If the print machinery is amortized according to a 20-year schedule, they had better be used profitably for the full 20 years.  Welcome to newspaper world – The Guardian installed its berliner presses on a 25-year schedule in 2005.  So they have an interest worth millions of pounds in pushing for printed papers lasting until 2030.

But here’s a fact: as circulations drop, the profitability of printing newspapers drops too.  At some point, the cost of printing the paper will become larger than the cost of not using the print presses – and that’s the day the newspapers will die.

* UPDATE  (07/05/2009): Amazon have launched Kindle DX – makes my point even more valid ;)