If Newspapers Were Stores, Would Visitors Be “Worthless” Then?

As the war of words ramps up between Google and some news publishers, the latest spin seems to be how “worthless” the traffic is that Google sends. In reality, the traffic probably does have value, but the newspapers are likely doing a terrible job of monetizing it.

I’ll give some examples in a minute, but how about an imaginary story to illustrate the problem?

Let’s say a newspaper executive opens a store. They put some story headlines up in their shop window.

Now one of those old fashioned newskids comes along. You know, the type that you’d see in movies selling papers on the street. Let’s call the kid Google.

Google reads the headlines and then scampers off down the street, shouting out to people things like “Senate’s debating health care!” or “1 out of 4 homeowners are in the red!”

Some of these people are interested. They ask this Google kid for more information, and Google sends them back to the news store.

At the store, the news exec owner greets visitors by asking them what the hell they want. Perplexed, they visitors say they heard about these stories and wanted to know more. The exec shouts at them. “Get the hell out of my store, you freeloader! This is for members-only. We don’t need riff-raff like you in here.”

That’s a hell of a way to run a business, don’t you think? But it’s pretty much how News Corporation execs seem to view the world. Consider what News Corp digital chief Jonathan Miller said earlier this month:

The traffic which comes in from Google brings a consumer who more often than not read one article and then leaves the site. That is the least valuable of traffic to us… the economic impact [of not having content indexed by Google] is not as great as you might think. You can survive without it.”

Today, we got similar remarks from James Moroney, executive vice president of A.H. Belo, which publishes the Dallas Morning News and other papers:

“This is traffic that’s not being monetized to any great degree,” Moroney said. “It’s akin to a person who drops into town, buys one copy of your newspaper and leaves town again and yet you spend a whole bunch of time building your business around that type of customer.”

Let’s be clear about one reason why these statements are coming out. This is round two against Google. In round one, some publishers said Google steals our content. Google’s response was that it sends them millions of visitors for free. So in round two, it’s time to make out like those visitors aren’t worth much. That’s especially important if you’re an executive who, after floating the idea of dropping Google, comes under attack as stupidly cutting your own throat.

Me, I see visitors as opportunities. This is the internet, where you can tell far more about a visitor to your web site than you can in print. You can tell:

  • They’re visiting for the first time or on a repeat basis
  • They came from Google
  • They came from a specific page, or using specific search terms
  • The geographic area they’re located in

And the “visitor” who buys your paper printed on a dead tree out of a newsstand? You can tell you sold a copy. And that’s it. That regular subscriber? You know they live in a particular area, maybe some demographic info, but you can’t custom your dead tree version in any way to target for that.

Can you imagine what would happen if the Wall Street Journal did a one time promotion where for a day, they gave away 1 million copies of their paper? Since there’s a real cost to doing so, don’t you think they’d figure out a way to make that promotion count? They’d sell special ads? They’d have a super attractive subscription offer?

But on the internet, where they’re not paying anything for all that traffic flowing from Google, there just doesn’t seem to be any effort. Millions of people are just written off as worthless. If they’re watching The Simpsons on Murdoch’s Fox TV network, they’re valuable (see “Free” Isn’t A Four-Letter Word Offline, So Why Does The Media Hate It Online?). Put the exact same people on the internet, and suddenly they’re “net neaderthals.”

The problem isn’t with the people. They didn’t suddenly change when sitting in front of a computer keyboard. They don’t suddenly have less money. They aren’t suddenly less attractive marketing prospects. The problem is with how you’re targeting them.

Remember what Miller said? That most of these visitors read a story once and then leave? Well, clearly the WSJ has some analytics running to understand that. Someone, somewhere has churned a report to arm Miller with that information. But that same data can be used to target those visitors better.

Time for a real life example. Today, at lunch, in the hard copy of the Wall Street Journal that I pay $100 per year for, I read a story bout how 1 in 4 US homeowners are “underwater” or owing more than their homes are worth.

I guess I have at least $100 per year in value to the Wall Street Journal, since I’m a subscriber. But that’s gross revenue. Someone’s being paid to deliver the hard copy to my door. There are print costs involved with producing it. I doubt the $100 I pay per year covers all that. But the WSJ also convinces advertisers that I’m somehow valuable to them, which is why they pay to place quality ads in the WSJ like this in front of me:

WSJ Ad

Now that same story is currently being featured on Google. The minute I click from Google to read it, I’m transformed. My $100 per year value is lost. Instead, I become one of those people who Miller says that he doesn’t make any money from.

Well, let’s see what I get:

WSJ & Monetization

That’s the beginning of the story. It is EXACTLY the same thing I see if I read this story by clicking through to it from a link on the WSJ’s home page (they’ve made it free to anyone from there). It’s also the same thing I see when I’m logged in using my paid account.

Why is the WSJ treating the one-time / first-time visitor the same way as a regular reader? See those two big arrows I’ve drawn pointing into the story? I’m pointing out that one of the top goals the WSJ would have for  first time visitors is to get them to take that 2 week free offer to subscribe or to take one of the free “stay connected” via email or RSS options. And yet, these things are shoved off to the top and side of the page.

Place them in front of the reader! At worst, you lose nothing. But more likely, you’ve slightly interrupted one of those “freeloaders” in the same way you interrupt them when they watch News Corp TV shows and get commercials. And more of them will convert. They may buy more subscriptions, or they may register so you can do outreach marketing to them.

Meanwhile, money IS being made, even off the supposed freeloaders. There’s a big ad sitting there off to the site, plus another one right above. Oh, there’s too much ad inventory? Then find a way to convince your advertisers to buy more ads or pay more for them, which probably means showing that your ads perform well. And if they’re not performing well, fix your problem. Why aren’t they?

This is an article about mortgage owners being underwater. Can we assume some of the readers are attracted to it because they may want help with their mortgages? Are there no companies that offer this to type of service? Are there no ad execs who could figure out how to reach them?

Instead, I get served with an ad from Zurich about how to buy the right insurance for my business. Seriously? That’s the ad you show me? This is targeting? Roll out one of those “Get a mortgage for below 5%” ads that I see offline everywhere.

Even better, here’s another ad that also shows for this article:

Buy A Dream, If You Can Afford It

Yeah, in an article about how people can’t afford their homes, you show me an ad about buying an “iconic residential masterpiece” in Boca Raton. And when I don’t click on that, because it has nothing to do with my interests, you call me a freeloader.

Your loss, I think. I’ve got money to spend. Plenty of your visitors do. You’re just not figuring out how to get it from me.

That visitor from Google? Show them a completely different experience, if you want. Article and ad, perhaps embedded within the content (labeled as ads, but inline, rather than off to the side). Please, go hire someone like Jeremy Shoemaker or Jennifer Slegg, both of whom live and breathe how to make as much money out of visitors as possible.

Do something. Anything. Please. Survive. But there’s one thing you shouldn’t do. Blame others for sending you visitors and not figuring out how to make money off of them.


Comments

  1. says

    I wouldn’t agree with this. The reason why newspapers and print media are failing has nothing to do with traffic. You can game traffic and jam page views — there’s just not that much money in it. That’s because what’s really valuable is audience — sticky, passionate users who engage and come back. That’s where search traffic loses something — it may drive a lot of views, but the session times and repeat visitors are very low with the bounce rates very high — that’s not worth anything to anybody. Media’s failure on the internet platform is not due to anything but its failure to build an audience. That has as much to do with ridiculous misinformation and ignorance in the market as it does with print media/newspapers being clueless. Business doesn’t exist without a customer base, period.

    Second to this, everybody took the wrong approach with regards to making money online. There is still mass, widespread assumption that people won’t pay for it — again, misinformation and ignorance is the culprit. Historically over all platforms, subscription content has never been up to business but user choice. You choose to pay for subscriptions to things. It’s the user — not the business – that drives it. There’s a misconception that’s been widespread on the internet platform since 1.0 that you have to give away something for free to draw people in. That’s just plain nonsense.

  2. aaron wall says

    They expect reality to conform to their wishes rather than conforming to reality.

    I remember back when I sold my ebook and had a mini-ad for it in the right rail…then one day I tested an inline ad and my conversions tripled.

    We like to believe that people will do what we want them to without needing to be pushed, but reality (and any serious market testing) states otherwise.

    We also do more than a bit of AdSense and our ad units are within the content area…as you said, the stuff to the top and side is for navigation and branding…not for stuff you want people to do :D

    But the problem is that as the media conforms to what works (with ads) people will get used to it and it will eventually stop working. We are banner blind because we know what they look like. The right rail is for ads so we don’t look there either…but if the media companies start putting their 3rd party ads where they do get attention then people will get better at ignoring other parts of the page.

    The end game is that eventually these media companies will need to create niche brands if they want more loyal subscribers who will pay for content (how many membership SEO sites are there now? dozens?) and/or the ad unit will need to stop being a fixed unit and become more of a blend with content…sorta like some of the advertorials many media companies sell.

  3. says

    You’d think a boatload of real estate agents / mortgage brokers would pay for the privilege of being on the page you featured…actually, they would if they had the opportunity (via AdSense and I’m sure Google would cut a special revenue deal with this folks).

    Somebody as smart as Aaron with online advertising could make one of these sites a heck of a lot of money.

  4. says

    The newspapers are just another dinosaurs, hard to adapt to the new online era. They’ve got used of people paying for their piece of paper and now almost every information is for free, coming even direct in our email account every time is something new. It will take time for the newspapers “brains” to get into online world and to feel comfortable in.

    Your example Danny is very relevant. They are just waiting for someone to give them money. Oh, well, it’s a highly competitive world, over here.

  5. says

    @kenthetech, that’s nonsense — media is not going anywhere. it’ll move to digital, it already is. it’s struggling with the transition obviously, but that has as much to do with widespread misinformation and misguidance in the market than anything — and of course, the industry’s unwillingness to learn about what the internet is.

    historically over any platform, ad only supported or free content has always been low quality as we’re already seeing — nobody available to fact check, no ability to travel to foreign countries and report, no budget to buy better analytics versus free ones like compete which are known to be flawed. this in turn drives an interest in better quality content among consumers, who pony up the cash.

    subscription content is never business or market driven — it’s always decided by the users and will prove to do the same with the internet.

  6. says

    “The problem isn’t with the people. They didn’t suddenly change when sitting in front of a computer keyboard. They don’t suddenly have less money. They aren’t suddenly less attractive marketing prospects.”

    This is a false series of assumptions – all sort of subtle but important things may have changed, to indeed make for less attractive marketing prospects.

    One big problem with this topic is almost by definition, on the blogger side it’s dominated by people who have built successful expert-niche personal consulting businesses, and sell those techniques. So there’s a sort of hammer-nail problem in proclaiming that what’s worked for them is the cure for everyone else.

  7. says

    @seth — what changed is that an entire generation of business decided for the users that they want free content, which is false, and now it wonders why everybody isn’t making money.

  8. says

    Patricia, search visitors are among the most engaged type of people you could ever want. They have explicitly gone to a search engine and effectively said “help me” about something, then selected a possible assistant from the search results they get.

    This is precisely why Google makes so much money. Because advertisers out there recognize just how valuable these people are and even in the middle of a terrible economic downturn, they’re spending on this form to bring them in.

    Remember, it’s not as if I’m saying the newspapers shouldn’t try to continue building a regular, repeat audience. They should. But some of these search visitors could be converted to that. Those that can’t should still be able to help them in other ways.

    Also remember, it’s not as if they have to work hard to get these people. They’re being handed to them. Some publishers have an assumption that if they cut Google off, a better audience will suddenly start coming to them directly. That makes no sense. If the people on Google already are worthless, they don’t get more valuable by not finding these papers at all.

    In terms of ad-only content being low quality, I disagree. The vast majority of newspaper income has come from ads, not subscription fees, to my knowledge. Yet those are the same publications that have done the fact checking, the travel outside the US to report, etc.

    As for a generation changing to wanting things for free? I guess 50 years of being handed free stuff on TV and radio and in print must have finally sunk in. I blame the old media, not the new.

    Seriously, offline, huge amounts of media are doled out for free. I don’t see the internet has changing behavior. I see publishers who recognize it as a broadcast medium and who decide it makes sense to continue on ads. But not everyone does, and you can absolutely charge for things on the internet, as well.

    Seth, newspapers could build consulting services, niche offerings and more if they wanted. They don’t think that way. They probably need to think more like bloggers.

  9. Mike Sullivan says

    Great article. Perhaps one other comparison is worth considering …
    How about comparing how television programming generates vs. online newspapers? It seems to me online newspapers would have a better idea of who their viewers are than television given all the technology the internet has to take advantage of.

  10. says

    “newspapers could build consulting services, niche offerings and more if they wanted. They don’t think that way. ”

    Of course not. Because that’s not being in the newspaper business. That’s being in the consulting services, niche offerings business. This is at the core a logical problem with these sort of articles from prominent bloggers – to oversimply, they tend to run “I built a successful little personal business with Google attention/blogging as a key element. Your big corporate business is in trouble. Obviously, you should make your big corporate business more like my little personal business – AND WHY DON’T YOU *GET IT* , YOU IDIOT!!!”

    And again almost by definition, refutations won’t be accepted, because one doesn’t become a prominent blogger by saying things the audience dislikes.

    “They probably need to think more like bloggers.”

    I rest my case.

  11. says

    Danny & Patricia are both right. WSJ does a terrible job of monetizing their site. WSJ could also do a much better job of building niche businesses. There’s no reason they can’t do both. Aaron does it. Shoemoney does it. Brian Clark. The list goes on and on (by the way, I’ve learned a ton from you guys).

    It may be difficult to turn the WSJ into a business focused on niches as small as the above mentioned. I don’t think it will be any more difficult than monetizing without Google search traffic however. Lots more profitable in the long run, too.

    The WSJ has a huge number of resources and access to information most people don’t have. They can niche out that info and build custom reports like research companies do, they could become connectors, they could do a multitude of things to build niche businesses – it’ll be interesting to see what happens just a few months after GoogleBot gets told to go away.

  12. says

    For some reason, I’m reminded of the decent sized magazine I used to work for (part of a big name publishing company). One day, the marketing department called everyone into a meeting (never a good sign). They told us that we had a great product, wonderful writers, decent circulation numbers, but they didn’t know how to sell us and so we were getting discontinued.

    Seriously. Because they didn’t know how to do their job, we were losing our job! Ok, technically, I kept my job because the magazine went web-only, but a lot of great people lost their job that day. All because marketing couldn’t figure out how to turn our “great product” into $$$.

    The newspapers are doing a similar thing. They claim to have a “great product” but they can’t sell it and so they look to blame Google. After all, blaming Google is easier than figuring out/fixing what they’re doing wrong.

  13. says

    One more point, ironically, they could probably do better working *with* Google than blaming Google. If they put some Google Ads on their pages, the ads would probably be a lot better targeted than trying to sell a place in Boca to someone reading about mortgage problems.

  14. says

    Seth, they need to think more like bloggers in the sense that some bloggers have had to start from scratch and build businesses off the web, rather than relying on income from non-web legacy activities.

    If it makes you feel better, they just need to think differently, OK? That’s not an oversimplication. I think that’s just a fact.

  15. says

    Plain and simple the visitors are only worthless if you are unable to make them valuable.

    The above article speaks to that issue. Newspapers are and were ill-equipped to adapt to this change. The system (analytics) were far less advanced. All that was needed was just the size of the circ. sprinkled with a little demographics. So selling ads was a little bit easier. Additionally the readership was primarily local, except for the larger national papers. So competition almost became a non issue.

    So how do these ‘larger papers’ compete on line, or rather how do they make a buck?

    Tiered System: Most content can be free and indexable by Google and the other Search Engines. But there can be a paid level of access. The real key to this is converting these worthless visitors into the paid visitors.

    Give the paid users more, thus making them more valuable. There is a whole lot that these large news outlets have that they could give more of to those who pay. Ultimately, it could go the route Pandora went, if you pay, you get better everything and no Ads.

  16. says

    Danny, this is a good point. There is so much more websites can do to engage visitors, add enough value that they will pay you for the experience, convert them to a transaction, etc. etc.

    It all takes money. And I think Murdoch is saying – there isn’t enough upside from those investments to pay for it all and make a profit.

    And he is saying if Google will pay me $900 Million to Search MySpace then surely my professionial journalism content should be worth as much or more in value on a search index.

    Finally, he’s saying we screwed up thinking the ad rev. model was a way to continue to avoid the hardest thing in any creative business: pricing and selling ideas.

    It takes guts to do this. Changing business models is a radical thing to do.

    If he is willing to enter this fray, I think content creators and journalists should at least take the time to consider what the implications are. How does the balance of power shift in a market where content creation has a market value? http://bit.ly/4sers1

    This is not a time to react, but to contemplate what new opportunities could emerge.

    Katherine Warman Kern
    @comradity

  17. says

    Newspapers are actually made up of a bunch of niche businesses. They are called sections. Each has its own editor, reporters and customers. Traditionally, these niches have been bundled into a package and sold together, but they definitely appeal to different customer bases. When we used to have the paper delivered, I thought of myself as an omnivore, but the department store ads, the shopping section, the theater reviews and even the book reviews were lost on my while my wife never opened the business section or sports. Neither of us had much use for the Real Estate section, but mostly that was become the NY Times home delivery in San Francisco still had New York real estate, so it was out of content. Understanding that News Papers are a bunch of niche businesses jammed together is the beginning of effective ad targeting.

    The WSJ or NY Times may not be able to easily take advantage of this reality, but I imagine the sports section of many papers would be able to charge for content, particularly if they offer in depth reporting/features/access that goes BEYOND what they put in the paper. They could also engage the players, coaches and fans (or the business leaders, pundits, etc.) into an interactive mode that goes beyond delivering the “story” to the reader.

    The paywall approach for news is likely doomed to failure if success is defined as replacing the income from classified ads and subscriptions and turning printing presses back into a license to make 25% returns, but there is definitely a market for more content, more depth, pictures, etc., which the editors generally leave on the cutting room floor.

  18. says

    Sometimes dinosaurs can’t adapt. Sometimes they can’t learn agriculture and husbandry and farm crops and cattle, even though for those who see the future, this is their only hope.

    There will be new, nimble aggregators that select and collect all the free news and get paid for their efforts, and then in turn pay those they would encourage. However, these are larger mammals yet to evolve in a warm blooded, copyleft environment. The huge, cold-blooded dinosaurs need copyright like an addict needs crack, i.e. they could wean themselves off of it, but you try telling them that, they’ll think you’re as crazy as I am.

  19. Ben says

    So where do SEO people like Danny Sullivan fit into this metaphor (Newspapers=stores)? I’m sure he likes to think they’re like the marketing department. In fact, they’re more like bookies running numbers rackets.
    Doyle Lonnegan: “Your boss is quite a card player, Mr. Kelly. How does he do it?”
    Johnny Hooker: “He cheats.”

  20. says

    Great piece Danny. You nailed it.

    I had a bit of back and forth with Tom Foremski about it last week then posted similar thoughts to yours http://bit.ly/21brw including some embarrassing numbers about Search (self reported) from the American Press Institute Revenue Initiative Report. I’m sure you’ve seen those.

    Not sure if we’re seeing evolution or revolution…but I’ve learned long ago that few who aren’t native to digital can ever really understand the changes to media that have taken place.

  21. Yura says

    Danny, the second link you gave on “Quick tips for Newspapers and SEO” has a ‘ instead of a ” and is thus broken and there’s no href URL for the third link :)

    You can delete this comment, when you fix the URLs :)

    Cheers.
    Yura

  22. says

    @Patricia, the only way I know of making my information of ‘Sell news, not copies!’ stand out as the optimal survival adaptation, is to demonstrate its viability, i.e. show it as more ethical and lucrative than litigation, levies, paywalling, DRM and advertising.

    As they say, “Money talks”.

  23. toastiejoe says

    Patricia, your comment: “That’s where search traffic loses something — it may drive a lot of views, but the session times and repeat visitors are very low with the bounce rates very high — that’s not worth anything to anybody.”

    Why are the repeat and bounce numbers like that? They don’t have to be. Example: When I get to the NY Times site through links (e.g. from my home page – Yahoo of all places), there is generally material on that page (“Most emailed” etc) that tempts me to click again, and I often find myself down a lengthy rat hole of stories, staying on the site for quite some time. That’s because the site is well structured to encourage me to do that. Quality and good structure bring visitors, so surely inability to get that right is the issue, and your generalization need not hold true for good sites.

  24. says

    Maybe these publishers need to take a look at their analytics and see which search engine all of their traffic comes from. My guess is that over 60% comes from GOOGLE, like everyone else. Cut that out and see how much advertising they’ll continue to sell with the loss of all that traffic.

  25. says

    Danny interesting angle, however, like Seth I believe you’ve made assumptions that may not be as true as you think. IMO, the problems go far beyond the web. IMO, Murdock is just using Google, and the web in general, as a scapegoat to deflect criticism and to appear like he’s doing something… when in reality… their site couldn’t do a good job of giving away $10 bills because people are ignoring the ads, it has little to do with ad placements and more to do with how the site is being engaged. News is task oriented. Do the task… and get out. Everyone points to their ads… is it possible their ads are there because no one wanted the space? The prime ad space is well targeted. I agree ads in the article as Aaron mentioned would help but… news is a commodity with steadily dwindling value. Everyone knows it but the people in the biz… they know it too, but, are too thick too admit it and do something drastic to the biz model. In fact one could easily argue in the current environment a value of $0.00 has been placed on it by many online and offline users. The value now is only in what advertisers believe it’s value is… apparently that isn’t much either… hence the current fix the industry is in.

  26. says

    I’ll let you into a little secret. Advertisers currently pay to advertise because of a traditional communications imbalance between vendors and customers. The Internet is rectifying that imbalance. Just as vendors of copies are having to confront the fact that it’s more in their interest to encourage people to make their own copies (instead of selling them) for the promotional benefit, so advertisers are realising that they’re better off making themselves more easily discovered than paying to subtract value from everyone else’s audience.

    It’s a double edged sword this communications revolution. Goodbye to sale of copies. Goodbye to sale of eyeballs. It’s a nightmare unless you’re actually in the business of buying or selling products and services.

    Like lawnmowers and recordings* of studio performances.

    * It’s difficult to grok, so I have to re-iterate that the sale of a recording is completely different from the sale of a copy.

    The better communication gets, the less there is a market for copies or advertising. Sorry, but they’re both on the decline. :-/

  27. Brent Clanton says

    Amen!
    And you can add other (electronic) media to the list of businesses in the communication business that don’t get this basic principle. Someone asked me this week, “what’s going to happen to Radio stations?” Those that do not embrace the internet as the primary avenue for distributing their content will fail; those which recognize they need to become “internet-radio” stations (an interesting hybridization of terms) first, also feeding a terrestrial antenna will survive. Remember telegraphs? The same obsolescence will overtake conventional AM and FM Radio eventually. The great leveler of the playing field IS internet distribution of content…and those who ignore it will become the same as telegraph operators.

  28. says

    you miss the differences between running a big and small business, and the marginal value of tactical vs strategic.

    No one says that there isnt room for improvement and that a smarter approach wont increase revenues. They would. Of course there is a cost to doing what you suggest. They have to be created/purchased and integrated and then measured against the incremental revenue. But thats not even the biggest issue.
    You are whining about tactical issues to increase revenue on the margin. Alwasy worth discussing. Not ever disruptive or industry changing. Its blocking and tackling.

    The more important discussion is the strategic issue. Can you destabilize Google. Maybe , maybe not. But if you can change the search game the rewards could be far greater than the value of the incremental revenue you suggest should be the focus from Google referrals.

    For a small business, its not a valid discussion. For a multibillion dollar business , it is

    m

  29. says

    Mark, you’re right that the megacorporation dinosaur has pack hunting strategies available to it, but these are only a last ditch survival strategy. They don’t increase the oxygen level of the environment or the organisation’s DNA.

    The megacorporation is a multibillion dollar business by dint of its colossal size, but it has evolved such a trait from an abundant supply of copyright, a monopoly it has greedily ingested for the last three centuries, a monopoly that is more effective the more of it one possesses, and thus the larger the organism is that exploits it.

    That monopoly has just been doomed by the deep impact of the communications revolution that is now embodied in the Internet. Smaller mammalian businesses are already evolving to adapt to it, but they will remain small rather than become megafauna precisely because there is no size advantage. Size is actually a disadvantage. Collaboration and co-operation, are the order of the day.

    So while you’re advising the dinosaurs, and continue to assume ‘bigger is better’, the mammals are figuring it all out by themselves. The dinosaurs cannot comprehend or conceive that something so tiny and apparently impotent is actually their evolutionary successor.

  30. says

    Most of the news on newspaper websites in Australia is publicly available from other sources, eg wire copy from news agencies, sporting results, company releases to the stock exchange, etc.

    People won’t pay for publicly available news and they won’t pay for commentary or so-called analysis, which bloggers have been doing now for years.

    They might pay for niche products, eg court reports, council reports, interviews, local news. How many bloggers do you see in the courtroom?

    But I don’t think newspapers are closer to figuring out how to monetize their online content.

  31. Doug says

    Interesting post. Fascinating comments. To your question, Danny, “If Newspapers Were Stores, Would Visitors Be “Worthless” Then?”

    It depends.

    I had a roommate in college who worked at a gas station. The one thing that really tweaked him was when folks would come inside the mini-mart, go to the rack of maps, open one, look at it for a couple minutes and then leave. Not buy a drink. No cigarettes. No gas. Nothing.

    They were, in a word, worthless to the gas station.

    Could the gas station have monetized them somehow? I have no idea. I’m not a genius gas station consultant, but I’m guessing it’s pretty hard to monetize someone who has no plans of spending money and just wants to glance at a map at a gas station. There were $1 sodas, beef jerky, candy, etc all right there in arms reach. But they just wanted to look at the map.

    While all visitors from Google are not worthless, per se, I think that a lot of them (us!) are not dissimilar from these folks who would stop at the gas station just to look at a map.

    As Mark Cuban (if that’s him) points out: Murdoch is looking at fundamentally changing the search biz, not monetizing users on the margin. It will be interesting to see how it plays out.

    (Aside: Unless I missed something, no one here, and I mean NO ONE, has ever helped a big newspaper make money online. Right? So we’re kind of talking out of our proverbial a’s giving advice to WSJ, which actually makes money online. Aren’t we?)

  32. says

    Danny, I agree with Mark Cuban (above) that your search recommendations are tactics and Murdoch is looking for much bigger rewards: “if you can change the search game the rewards could be far greater than the value of the incremental revenue you suggest”

    But I disagree with Mark that “for a small business, its not a valid discussion. For a multibillion dollar business , it is.” NOONE – small or large – is profiting from selling performance based (click thru) advertising, because there are an almost infinite number of variables, OUT OF YOUR CONTROL, which must line up perfectly.

    Google is profiting because they have created a way to establish the market value for words. Murdoch is saying that if the words have a market value, then there is a related value for the content/search results for those words. When Murdoch makes a syndication licensing fee deal with Google, then all content has a market value.

    Both big and small business would benefit by establishing a market value for content.

    Danny, for Search Optimizers, if search results determined how much a content creator is paid in syndication licensing fees, the ROI on your tactics go up exponentially.

    If content creators – large or small – were paid a syndication licensing fee every time your content appeared in search results in Google, how much faster would you see credits appearing in your account then you see now waiting for visitors to arrive and an advertiser to place an ad and a viewer to click on it?

    Will “do no evil” Google deny that everyone’s content has value? Their investors may try that. But, the one thing “independent” content creators have proven is that there are needs that Mass media does not fill.

    Murdoch’s content is already available on over-the-air radio and television for free or other sources people have paid for already, like cable or newspapers. It is limited to “topline” coverage because of the by life cycle of news and the scarcity of time. (Which is why morning newspapers and magazines survived the introduction of radio and tv)

    Search requests for “topline” content are different from search requests for deeper analysis or opinions that fit an individual’s bias, raising the value of non-mass media content to search engines. Additionally, when mass media listens to consumers to understand what they will pay for, they will find out that they want all the information, regardless of bias, to be organized in one place so they don’t have to go look for it. Then, mass media will also value (read:pay) to curate links to deeper analyses or the range of opinions around a topic.

    My recommendation to those of you who have been working to build trust with a unique perspective is to keep at it and be open to possibilities.

    The only “independents” who should worry are those who add nothing original to mass media content, except to “diss” it or predict its annihilation.

    Katherine Warman Kern
    @comradity

  33. toastiejoe says

    Doesn’t all this boil down to three things?
    1) Does old media (Murdoch’s papers for exampie) really lose revenue because of links being on Google?
    2) Declaring people will pay, or that people won’t pay is fruitless. We have our own opinions, misguided or not, but no proof.
    3) Whether Murdoch changes the search model, or old media somehow disappears and is replaced with we know not what, is the actual outstanding question.

    The good thing is that if Murdoch tries it, we might progress towards finding out.

  34. says

    >>NOONE – small or large – is profiting from selling performance based (click thru) advertising, because there are an almost infinite number of variables, OUT OF YOUR CONTROL, which must line up perfectly.<<

    This is a totally inaccurate comment Katherine, I know because I personally have made a decent income from performance based income (pay-for-performance), often 4–5 times as much per month as Google Ads (pay-per-click) for several years and know of others who do also.

  35. says

    @Lee, what that might be versus providing salaries, etc. to employees and producing lots of content is completely different.

    Yes there is some money in it — will it sustain your income? maybe. Will it sustain a business? Probably not.

  36. says

    I see people (such as Patricia) are still using the old paradigm term ‘content’, e.g. as in “producing lots of content”.

    If you want to understand the new paradigm (a paradigm inversion) you have to at least change your language.

    It is box shifters who want stuff to put in their boxes. Similarly, manufacturers and vendors of containers want content to put in their containers (aka copies), ideally content to which a reproduction monopoly applies. It is these who contemptuously call art, music, literature, science, journalism, and other intellectual work CONTENT. Anyone worthy of the name of artist (or a more specialist pursuit) will not describe what they produce as ‘content’ – unless they really have bought in to the pulp production line (of lowest common denominator, dumbed down filler that appeals to the great unwashed).

    If you are in the old paradigm business of selling copies, you purchase (monopoly protected) content from those you contemptuously refer to as ‘content producers’ and you vend copies.

    If you are in the business of selling intellectual work (art, journalism, etc.) then you transform the sweat of your brow (or someone else’s) and sell that, either, old paradigm, to a vendor of copies, or new paradigm, to the end customer directly (your interested audience).

    So: old=sell copies of content, new=sell intellectual work.

    The market for copies has ended. The market for intellectual work continues.

    The mind-bending bit is that if you’re selling work, you don’t need a reproduction monopoly (in fact it’s positively counterproductive).

    if you’re selling copies that competitors can make more cheaply given no front-end costs, then you petition the crown for a reproduction monopoly.

    If you’re selling copies that EVERYONE can make themselves for nothing, then you’re in big trouble and looking at the imminent collapse of your business once its inertia has run out. You can try petitioning the state for an ultra-repressive regime that finds all families guilty upon suspicion of infringement until they pay lawyers to appeal their innocence, but history has shown such approaches to be viable only in the short term.

    So, cold, control-blooded dinosaurs are going to use their colossal might to make last ditch efforts to grasp at monopoly or exclusive access, i.e. repressive police states and/or pay-walls. Whereas warm, liberty-blooded mammals are already exploiting free reproduction, distribution, and promotion in conjunction with disintermediated/direct sale of the intellectual work to those interested in its production.

    Are you in the content business: procuring and packaging content, mass producing copies for sale at monopoly protected prices?

    OR, are you in the intellectual work business: producing and publishing intellectual work in a free market in exchange for the money of those interested in its production?

    What you should notice is that the price of intellectual work is going to remain largely unchanged. However, the price of copies collapses to zero (aside from added value and material costs). If you’re an intellectual worker, you’ll be fine. If you’re a vendor of copies, I’d get out now.

    Finally, in the context of discussions concerning intellectual work, ‘content’ and ‘consumer’ are shibboleths marking out those who’ve not yet grokked the paradigm inversion.

  37. says

    No worries Patricia, the Copernican paradigm inversion was particularly tricky to explain too (some ended up burnt at the stake). It’s exceedingly difficult trying to explain something that can only be understood if people deny that which has been obvious to them all their lives. However, nothing really changes except the perspective. The same happens with the exchange of intellectual work. The writer gets paid. The reader gets writing. It’s just that we realise that it’s not copyright and copies that the exchange should revolve around.

    There is a whole post-inversion industry already exchanging work for money without involving copies or copyright, you may have heard of it. It’s called the Free Software Movement.

  38. says

    Lee, Crosbie, Patricia, Sorry for the delay in joining this conversation but duty calls. . . .

    Lee, I was not referring to e-commerce affiliate networks, I was referring to unaffiliated publisher/programming sites related to NewsCorp. As you’ll see below, I think publishers and programmers have a lot to benefit from the affiliate networks.

    Crosbie, the distinction you make between content and intellectual work is dissonant to those of us, among whom Patricia is one, who produce original intellectual work INTENDED to benefit the recipients of all copies, regardless of distribution channel or iteration (understanding that the relative value of some channels or iterations may be higher than others).

    Your distinction seems to be that content is produced by faceless corporations and intellectual work is the product of individuals. But in the non-technology “idea” world faceless corporations buy intellectual work from folks, who like the idea of someone else pricing and marketing “ideas”. Corporations promise to do the pricing and marketing of the “ideas” and pay individuals based on how many “copies” they think they can distribute, before, during or after. So if you are saying that a copy is worthless then the folks who create the “ideas” lose a major source of income and have to learn how to price and market their own “ideas.” If you are saying this is a good thing – because it empowers the individual – theoretically this makes sense. But, as an artist friend of mine says: I don’t want to do that I just want to write.

    Here’s the way I perceive the problem and the opportunity, as one who has worked in the creative business for a long time in both big corporations and independently:

    The problem is that publishers/programming corps have failed to deliver what they promised to creators of intellectual work. They said they knew how to price and market “ideas”. But the truth is they really know how to price and market the derivative value of an “idea” – in other words they know how to sell the eyeballs of the people attracted to the “idea” and they know how to price and sell access to “ideas”. There’s no science as to why one “idea” attracts more people than another, so to reduce risk they tell the creator what’s worked before and often over-produce to “dress up” the final product, which can dilute the originality of a creator’s idea. Corporations don’t interfere with the creative product just because they can. It is the unintended consequence of trying to mitigate risk for themselves and the creator who often is paid based on results – rarely upfront.

    The opportunity is that Publishers and programming corporations aren’t just talking about a bold new strategy to sell directly to consumers, I think behind the scenes they are preparing to walk the talk. The deflationary impact of the internet is palpable on derivative values – eyeballs for advertisers and access is deeply impacting earnings. The alternative is an untapped goldmine: Amazon proved and Netflix validated for the entertainment industry that lots of little transactions can be scaled up efficiently and predictably by taking advantage of targeting, affiliate networks, bundling microtransactions together, and converting trial to subscriptions through relationship management technology. Publishers/Programming companies aren’t ignorant to this alternative. But until the ad market bottomed out, it was just a lot easier to call on a few ad agency holding companies than sell to lots of consumers, individually.

    In conclusion, the truth is pricing and selling ideas is hard. So, I don’t think expecting creators of intellectual work to figure this out is “freeing” or realistic. The timing is right for individual creators of intellectual to finally get was promised by publishing and programming corporations who seek to shift their business model from being ad dependent to sell directly to consumers. Even Wall Street is demanding that publishers/programmers figure out how to tap the dollars consumers are spending on media http://bit.ly/2PsiDN because this is another Too Big To Fail interdependent economy. These big corporations are not going to go away. Once they set their resources on this objective they will become very good at pricing and marketing “ideas”. It will be very hard to compete against them. This is a situation where you want to be friends not enemies.

    Katherine Warman Kern
    @comradity

    PS. Crosbie, help me understand the Free Software Movement. I get the benefits and rationale for making the code available to be altered just as a song can be improvised or covered differently by many different artists. But I am perfectly happy to pay a royalty to the original music composer and the original code writer based on the sales of the added value version. Do you mean that or do you mean that once the original intellectual work is altered the original author gets nothing?

  39. says

    Katherine,

    ‘Content’ and ‘Intellectual work’ are simply different terms for the same thing as used by those on either side of the looking glass (paradigm inversion).

    If you’re a publisher in the business of making copies/containers for retail, you need something to put in them, i.e. content. You get that content from those you perceive to produce it – those peculiar entities who produce what they lovingly term ‘intellectual work’. In accord with your commercial objectives, you select that ‘content’ which appeals to the widest possible consumer demographic in order to maximise sales of your containers/copies and thus maximise profit (given sales of copies x cost of copies > cost of content).

    The producers of the intellectual work aren’t too worried at the strange terms publishers and broadcasters use, because from their perspective they get paid and their work reaches and builds their audience.

    However, if the copy manufacturing, distribution and retail business has ended, then they won’t be demanding any more content because they can’t sell containers (copies).

    People discussing how to sell content are failing to see that the business of selling content is doomed (given containers cost nothing). Stubbornly thinking in terms of ‘content’ makes it extremely difficult to snap out of the straight-jacketed mindset that logically finds the only way to sell content is to sell containers of it.

    Therefore, one tiny step to making the paradigm inversion is to stop using the term ‘content’ and to instead think in terms of selling ‘intellectual work’. That way you at least start thinking in terms of selling work instead of copies.

    A ‘free software’ engineer can sell their work to those who will pay them to produce it, but they don’t bother selling copies because they’ve emancipated their customers, i.e. restored a free market in the production of copies.

    For all sectors of intellectual work, there’s a thriving market in the production of copies given copies can be produced for nothing (infringing monopoly or not). But, this is a bonus for the ‘free software movement’, because its workers focus on selling work directly to those who want the work done, not to producers of copies in need of content. That’s not to say that you can’t buy copies of Linux, but you’re buying the material work of the packaging and added value in terms of support, rather than the intellectual work of the software.

    Here are the two markets either side of the paradigm inversion (it inverted once before):

    1) 1710-2010: the market for copies

    * Intellectual worker sells work to mass producer/distributor of copies.
    * Mass producer/distributor of copies sells copies containing content to apparent consumer.

    2) 1709 and earlier, and 2011 onwards: the market for intellectual work

    * Customers of intellectual work commission its production and publication either directly or via intermediary producers of such intellectual work.
    * A free market for material copies and exhibition continues where value is added.
    * Intellectual work is freely and globally diffused (now instantaneously).

    What was a royalty a monopoly holder could forcibly collect from others’ sale of monopoly protected copies, becomes a willing commission to the producer of intellectual work, e.g. “That last work you produced was very valuable to my business. I will voluntarily pay you 5% from my unit sales as a commission for further work – since without further work from you, I will find it difficult to continue sales”. For example Nokia pays software engineers to produce the Maemo software in order to maximise sales of its web tablets – and yet copies of the software can be produced and sold by anyone.

    Katherine, you also suggest that intellectual workers just want to produce their work and magically get paid for it without any effort on marketing or handling the sales transactions. There’s always employment for such individuals. However, there’s also plenty of scope for market mechanisms (a la eBay) that make it very easy for intellectual workers to sell their work directly to those who want it (those who would pay for its production for that purpose, rather than as content for copies to retail).

    I expect I haven’t addressed all your points and criticisms, so let me know which ones I appear to be evading.

  40. says

    Crosbie,

    I’m not sure software and, for illustration, a story are apples and oranges.

    So, here’s how I imagine the Nokia deal to work, based on what you’ve said above, please correct any misperceptions . . .

    So Nokia designs the web tablet and engineers the integration of the Maemo software with any other software to run its utilities, pays for the press conference et al to launch it, and pays a sales force to get it distributed at retail, charges $X to consumers and pays the Maemo software producer 5% commission on those sales, after the fact. Meanwhile the Maemo software producer retains the copyright? Are there other applications a software product could be re-engineered for? How much demand is there for copies of the software without the application? How does the software producer determine the value they seek? It sounds like value is perceived to be relative to costs to produce it? If so, what’s included in costs?

    What do Nokia and the software manufacturer do when a knock-off appears on the market (with the software accessed for free) before they have recouped their investment and presumed revenue opportunities?

    From what I understand in book publishing, for example, the author agrees to give the book publisher limited rights in terms of time, exclusivity, and distribution channels in return for the book publisher taking a draft, editing it, designing the layout, creating a book cover and any illustrations or images, printing, proofing, paying for the press conference and launch, and hiring the sales force to secure retail distribution, in exchange of a %age of sales to the author.

    If someone scans that book into their computer and offers it for free on their blog, the author probably negotiated for the publisher to pay for the legal representation to go after them.

    Furthermore, the author retains the copyright and all other rights for movies, audio books, t-shirts, live performance, etc., etc. – the value of which may increase exponentially after the book is published.

    The author probably relates value to the gross revenue potential of all the possible “applications” – not the costs to produce the story. If asked what the costs are, I suspect the author would probably consider his cost to include years of writing unpublished drafts and life experiences that inspired the story – a pretty awesome number, potentially. Pretty sure no one thinks of the value in terms of number of words or pages.

  41. DCStrain says

    Well now…

    - Today is Sunday, August 1, 2010
    - The last post was November 30, 2009
    - Nine months since that last post…hmm…

    All of a sudden in the middle of the conversation, Katherine Warman Kern and Crosbie dropped of the face of the earth… I find that interesting. I am a reader of comments, even those tombs that seemingly well never end — But they do all end, often right in the middle of an ongoing discussion.

    Is ending a series of interesting comments without closure, in some way similar to visitors leaving a web site without discovering something compelling enough to keep them there? Do folks get bored, even though they are still interested in the content?

    Perhaps people need a new “hook” every so often… Something to distract them from that inevitable “urge” to move on… Something to reboost their “perceived benefit.”

    My best guess is that even though the interest is still there… the perceived benefit has fizzled out. Interest is an intellectual thing — the perceived benefit is an emotional / feeling thing, operating mostly on a subconscious level. I suspect most people don’t know exactly why they quit doing what they are doing, when they move on to something else.

    I have done lots of small usability studies; watched my share of eyeballs; and asked many people (surveys, groups, individuals) what they will do and why; and what they did and why. I place the highest value on four observations from that research:

    1. What people say they will do and why they do it, does not match what they “really do”.
    2. It is not of much value to try to understand “why” they do what they do.
    3. The “only” thing of value is keeping track of “what” they do.
    4. You can change “what” they do by making small incremental changes in what and how you present information to them… and what and how you ask them what you want them to do.

    Nothing new here you haven’t read somewhere else but: This stuff was known when I started in business forty-years ago. It’s all really quite simple: too simple for some, it appears.

    Regarding the abrupt end to this series of comments … It is what it is. The only thing of interest would be to change some small thing and see what the results might be.

    DCStrain

  42. says

    Well, there haven’t been new comments on this post, but that’s more likely because the conversation has moved to fresh posts here and elsewhere.

  43. says

    DCStrain, this conversation petered out – Katherine’s final questions were not sufficient to spur my investment in an answer – also given the deviation from the original topic and issue. The moment had passed. The audience had moved on.

  44. says

    Dcstrain, actually I hear what Crosbie and Danny have to say on Twitter. In the end I think we all care about making something better. There’s something to learn from listening to both of them.

    If you are on twitter these are both interesting people to follow.

    K-

    It can be overwhelming.