Apr

27

Digital Newspapers and Advertising Don’t Work

Filed Under B2B, Blog, Industry Analysis, internet, mobile content, news media, online advertising, Publishing, Search, social media, Uncategorized | 1 Comment

Well, Ken Doctor says it, and Neil Blackley draws it to my attention, so it must be right. Ken, now the doyen of newspaper analysts, notes on his Newsonomics site (http://newsonomics.com – a site whose title banner is replete with a photo of the Flame-Haired Temptress herself) that not only are digital revenues failing to grow significantly for newspapers in the age of paywalls, but that the contribution of digital advertising, the supposed rising graph line which will cross over the falling print advertising line in years to come, is now itself down to a growth rate of 1.5% in the US. In a country where online advertising now surpasses both broadcast and cable television advertising in revenue terms with a revenue base of $42 billion, newspapers command an $18 billion advertising market (IAB 2013 full year report). Ken shows that newspapers report this differently – the NAA report for 2013, also published last week, shows ad revenue of $ 23.7 billion, but even on this basis, says the sage of Santa Cruz, “as digital advertising overall grew by $6.2 billion a year, newspapers digital ad take increased by only $50 million – less than 1% of that $6 billion dollar growth”. And it also means that the growth trend measured year on year is in steep decline. The digital advertising market for US newspapers grew in 2010 at 10.9 %: in 2013 it increased at only 1.5%.

Like a good industry commentator Ken lets his readers draw their own conclusions from all of this, while pointing out, inter alia, that 10 companies dominate 71% of the digital advertising market – and none of them are newspapers. He indicates also that digital classifieds growth has diminished to 2%, and high growth sectors like mobile, digital video, search and performance -based advertising are not places where newspapers have developed any strength. And, crushingly, he indicates that his own estimates of circulation revenue growth were around 5% for last year, based on the outcomes of paywall subscription models becoming so widespread in the US market. In fact revenue growth was only around 3.7%. Factor in inflation and growth becomes very hard to find, in my view. And it also seems to me probable that there is a parallel experience in Europe. Paywalls have not increased revenues significantly, and digital advertising growth is in decline . Ken is an ex-newspaper man and a very polite one as well – my question after reading his summary of these two reports is more direct: If we can now see that the business model is bust in all respects, are newspapers as we once knew them destined for the Dustbin of History?

The answer to this depends on whether you think that the only business model for newspaper publishing was the advertising/circulation model developed in the last days of print. What we have seen so far in the digital age has been a huge effort to keep that model going by other means. So we transfer the print to online, without fundamental format change, and we expect the advertising model to follow it. And then, when people use the digital network as it was meant to be used, and copy stuff to their friends, and comment upon it, we place it behind a paywall in order to control and charge them for doing that, and we intersperse the text with display advertising which is easy to avoid, gets low footfall and is unattractive to advertisers. Or, as with Schibsteds or Axel Springer in Europe, we buy up all the classifieds and put them into mega-sites to which users go as needed and which are – rightly – fully separated from the whole business of newspapers. Car.com, the last site in the US which stated a link to the interest of the newspaper world in needs-based advertising is now for sale.

But even if many newspaper managers find it hard to get their heads around the fact, there are other newspaper business models that will be worth a try once the present models have been proved, at the cost of the redundancy of many good journalists, not to work. If, as I anticipated in a recent blog, the Guardian is brave enough to go to a membership model, with privileged members getting to write and comment alongside their peers, then it may be possible, from their 80 million plus registered online users, to find 5 million prepared to pay £50 a year for citizen journalist privileges, for the peer review of fellow opinionated opinion-formers and to have access to the iconic brand as “members”. While Vice and Buzzfeed at all will thrive as ways of giving content to social media users for re-use, some brands will be able to go forward as communities, like the New York Times, within which sub-communities thrive under a trusted brand umbrella. As advertising becomes a social media fulfilment, with stated needs satisfied by machine-to-machine matching services (aka data analytics) and ad spend generally declining as a way of bringing products and services to people’s attention, people will seriously wonder how the late days of print were so dominated by advertising. One thing is certain. Newspapers will get smaller as revenue vehicles, their role will be commentary and explanation and background rather than breaking news, and none of this will happen at all unless they get a grip on what happened to format in mobile and social media contexts. And then, again, I find myself ending up with a line I have worn thin with overuse these many years: none of this gets to happen unless they can reconnect with the users they have ignored, understand again the behaviour and requirements of users online through observation and intuition and be prepared to change every facet of their performance and activity in order to work in a digitally networked world.

Apr

16

Trust, Privacy and the Good Web Life

Filed Under B2B, Big Data, Blog, data analytics, data protection, Industry Analysis, mobile content, news media, privacy, Publishing, social media, Uncategorized | 1 Comment

When J P Rangaswami, Chief Scientist at Salesforce, speaks, as he did last year at the Outsell Signature Event, he often alludes to his childhood in a small Bengal village. When he went to the shop for cigarettes for his father or groceries needed by his mother, these were handed over to a child on trust, and with the justified expectation that payment would be made by an adult in due course. I had similar experiences in a Gloucestershire farming village, which demonstrates to me that trust and privacy form part of the lattice-work which underpins a society in which it feels good to exist, and in which there is a balanced view between everyone knowing enough about everyone in order to live at peace with them and trust them, and not knowing those things which are unnecessary to such trust and regarded as private by the individuals concerned.

We lost that balance in civil, real society in most western democracies in the second half of the twentieth century, so it is a bit surprizing that one of the most widespread criticisms of the virtual world of the networks is that these features are not in place. Yet the frequency with which both Trust and Privacy occur on conference agendas and in newspaper and blogosphere commentary reminds me all the time that we talk a great deal about the loss of these things, but do very little about them, even to the point of not consistently monitoring what is going on. And I was fascinated to hear, at a recent conference of librarians and academic researchers, one distinguished critic of publishing businesses point out that aggregators and publishers are now creating new and valuable information about the patterns of usage, the contexts in which certain types of usage take place, and the preferences of users where content was available unwrapped from its original – all of this great information was private to publishers and was not available to authors. And that the paradox here was the levels of sometimes unjustified trust given to academic peer review (he cited the Tamiflu case, of course) where those being trusted were denied full sight of the evidential data, in a milieu where peer reviewers are not required to even try to replicate the results achieved by the experiment which they are concerned to referee.

And these comments were made about science and medicine, areas where public trust must be blind because it cannot be fully informed. The other area where this same consideration applies is in security, the flipside of Trust. When we are told that something is “secure” in the network, few of us have the ability to make a judgement. Thus, until last week, few of us had doubts about SSL – until Heartbleed broke. I have been reading about this in a new online newssheet called Cyber Security Intelligence (info@cybersecurity-intelligence.com), founded by my friends Alfred Rolington and Tim Heath. And I take it that the success of this venture – I have certainly become an avid reader – is about the fact that Trust is now front and centre of our concerns on the network, and so Security, whether it is the Snowden leaks or security being compromised at our bank, becomes critical to all of us.

In these difficult circumstances we will probably behave as we usually behave. We will ignore warnings (who changed passwords because of Heartbleed?) and only seek control of the Trust question by increasing security close to us when it is easy to do so, and enhances our Privacy at the same time. To an extent, everything we do in the network is competitive. I must have better Security and enhanced Privacy because I need it/deserve it/can pay for it. You do not need it, since I need to evaluate you as credit risk/market research you as a target/use you as part of my data analytics sweep. In order, then, to even think about the question of balance with which I began this piece, we need to be able to decide, each for himself, our own settings in terms of Trust (Security) and Privacy.

The systems to help us do this are now becoming available, just as more and more of our personal information becomes network available/vulnerable. Users of the new Galaxy S5 smartphone, just launched by Samsung, may or may not be keen on its built-in personal heart rate monitor being available to insurers or employers. So the market at last seems interesting for services like Paogo (info@paogo.com), long in the wings (2008), or new developments like the French/American Tego (http://www.tegobox.com), in beta now for launch later this year. Here is something of what Tego says it will deliver:

“Simple
Simply tag a file and it will be encrypted and kept safe. Control what others can see and for how long.
Clear
No central server collecting your data, no tracking. Data never leaves your devices. Surf completely anonymously.
Personal
Build different personal environments with trusted contacts. Then share without risk”

Tego (“I protect” in Latin) will secure you against market analysts and hackers and your own government – but what about that issue of balance? When everything is all locked up we still won’t have the levels of Trust of JP’s Bengali village. Maybe I am looking for something completely different. Is anyone out there building a Trust machine, which does data analytics on your avatar, on your writing, on your facial expressions on Skype, and compare them with Trust models, so I really know whether to trust anyone out there ? And whether I am rated Trustworthy? I doubt it, since it would undermine elective politics completely, but if the answer to the machine is in the machine, as my dear friend Charles Clark was wont to say, then we should start now to engineer the network to find us that vital point of balance between Trust and Privacy.

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