Schizo Business Model

What is really hurting newspapers and magazines is not discussed all that much: a schizophrenic business model.  

 

Let's use the example of a major magazine. It has investigative reporters working for months on a story, and their research uncovers a major scandal. The magazine at this point has two things: many thousands of dollars invested, and truly proprietary content. What is the natural instinct of the magazine at that point? To tell it to the world as quickly and loudly as possible. Maybe in the old days that was a way to sell more magazines, but in today's world it is just the opposite.

I remember not too long ago, an interesting, important story was published in the New Yorker, a magazine to which I subscribe in print. I first heard about the story when its author went on NPR and spent 20 minutes revealing every last bit of  it on the air. That was followed by dozens of news articles and blog posts, a good percentage of which linked to the full story, which was freely available on the New Yorker web site. Ultimately, I was so interested in the story, I clicked through and read the story online, ironically surrounded by ads beseeching me to purchase a print subscription to the New Yorker. Several days after reading the story online, my print copy of the New Yorker arrived, raising a critical question: who's the fool?

 

This takes us to what I think is the heart of the issue: newspapers and magazines are resisting paywalls only in part because they fear nobody will pay. An equally large but unstated concern is that they will lose their power and influence, something that has become integral to their business model but that is leaving them dangerously exposed in the current media environment. 

Being able to get attention on the national stage is the stuff of awards and prizes, and respect from your peers. And a loud public voice gets you political clout and the attention and respect of all sorts of powerful and important people. But this no longer fuels subscription sales, if indeed it ever did. In short, there are tremendous built-in pressures in these businesses to distribute their content fast, furiously and free. Chasing the public spotlight to push your way into the center of the action was economically viable when advertisers were footing all the bills, but those days are gone. There was a time when much of the news media could have it both ways:  prestige and profits. Now, it's looking increasingly as if they'll have to choose between the two.

Beyond the Pizza Paradigm

The idea of coupling video with directory listings is hardly new. In fact, I was involved in some yellow pages trials as far back at 1989 that were focused on exactly this idea. Of course, yellow pages publishers being yellow pages publishers, a lot of testing revolved around video ads for pizza parlors -- something I call the Pizza Paradigm. And perhaps because all this testing was centered on one category of businesses that really couldn't make very effective use of video, I formed an early opinion that video and B2B directories just didn't mix too well.

Times of course have changed. And I had a light bulb moment this week when I saw a press release from the publisher in India that operates IndiaMart.com. It's selling video to the Indian businesses that list in its directory in order to help buyers in distant countries build trust and confidence in them as potential suppliers. Brilliant! An absolutely spot-on, high value and best of all legitimate use for video in a directory.

Just days later, an announcement appeared from local yellow pages and rating site Yelp, indicating it too was adding offering video upgrades to business listings. This reminded me of another thing that's changed in recent years: the cost and complexity of video production has dropped dramatically, eliminating one of the other great barriers to use of video within directories.

The timing could be right to "go Hollywood" with your data product. Imagine how you can bring your listings to life with videos. This one from Yelp offers some inspiration.

Google Giveth; Google Taketh Away

The blogosphere is abuzz with reports that Google has once again tweaked its ranking algorithms. If I correctly understand what's going on, this could be an ugly one for many data publishers.

Apparently, in an attempt to raise the quality of search results, Google is now on the lookout for web pages that appear to be database-generated, contain few inbound links, are several levels below the home page, and offer limited amounts of information. Sounds like most of the online directories I run across. The bad news is that once identified, these pages will now be pushed way down in its search results.

The sense of those who watch SEO very closely is that Google is going after e-commerce sites with low-information product pages. Data publishers could just be collateral damage.

Time to panic? Not yet. Google is not offering up many specifics, and even the SEO alchemists aren't sure what's going on yet. The most important thing for right now is to know that something may be going on, and watch your traffic and test your search result ranking in Google to see if you are being impacted. There's lots being written on this, but here's a good place to start if you want more information.

Lights, Camera, Action

A couple of weeks ago, Thomson Reuters introduced a new service for its paid B2B subscribers called Reuters Insider. What's interesting about this is that it's entirely video-based.

In a nutshell, Thomson Reuters plans to create and post as many as 3,000 very short webcasts each week, that discuss breaking news. Once a webcast has aired the first time, it moves into a video-on-demand archive within 90 seconds. The archive is extensively indexed for searching by subscribers, who can view any webcast at any time, and tag specific webcasts as "favorites" to easy access. In addition, the webcasts will be viewable in iPhone and BlackBerry devices.

My initial reaction was that this was kind of gimmicky. But as I thought about it more, I warmed to the idea. This is an alternate means of information delivery. It's easy and efficient to consume. It's a break from screen after screen of text. It's a real competitive differentiator, and has high perceived value. But what really moved this from "gimmick" to "useful feature" in my mind was the fast archiving and serious approach to indexing.

 

That's a real shift from the traditional broadcast model, and starts to give video the same value as other information delivery formats. It's a pretty simple concept, but often overlooked: if you want something to have lasting value, at the very least you need a means to find it again.

Although I don't have the full details, Thomson Reuters also apparently envisions its subscribers making and uploading videos. Yes, that sure sounds like a B2B version of YouTube (frankly, can you imagine anything scarier?), but it is at the same time another type of user-generated content, which has shown good value in the B2B context.

I'm not sure where all this goes, but it may well signal that  it's showtime for vertical market content providers.

Context Matters

An interesting two-part article in Paid Content entitled "Traditional Ways Of Judging 'Quality' In Published Content Are Now Useless" really provides an important lesson in context.

In the article, the author blithely lists four characteristics of quality that he dismissively labels as "Publishing 1.0," the stuff of "old media traditionalists," because in his view, they simply don't matter anymore. Consider his list:

1. Credentials (that's right, your brand)

2. Correctness (yup, we're talking about plain old accuracy)

3. Objectivity (forget facts, it's all about feelings)

4. Craftsmanship (apparently doing a good job is old-fashioned too)

Basically, this article wants you to believe that readers don't care if the article comes from the New York Times  or Joe's Blog. Factual correctness? Well, the author's stance is that since you can quickly and easily correct your mistakes online, there's no harm in getting the initial story wrong. As far as objectivity goes, why bother? Readers look at lots of content, not just yours, so they'll figure out if you are biased or have an agenda. Craftsmanship? Well, the author believes quantity trumps quality.

I could spend pages rebutting this nonsense, but the real question is "who would write something like this?" I dug a little further, and determined that the author runs a website called Wetpaint, an aggregator of what appears to be largely entertainment-oriented blogs. And therein lies the answer. Our author isn't wrong; everything he says makes perfect sense in a world where you are concerned about content such as "Warrior Cat Clans 2" and "Zombie Survival and Defense." It's an issue of context.

Even at this late date, online remains largely uncharted territory. It continues to evolve and change. That's very destabilizing, and it naturally makes us eager to take ideas, insights and business models from those who have found online success. The caveat, of which this article is a perfect example, is that context matters. Things that work in the consumer sphere tend not to translate well in the B2B world. Things that work in one specialized arena usually aren't universally applicable. Ideas that work for newspapers aren't likely to help data publishers. Ad-based sites have different objectives than subscription-based sites.

I'm not asking you to tune out new ideas. Rather, the next time you hear on an online success story, consider the source. It's not just a question of whether the idea makes sense ... the question is also whether the idea is makes sense for you. 

*****

We are pleased to announce 

 

 

Iain Melville CEO, Reed Construction Data 

 

 

as our keynote speaker at DataContent 2010.