Archive for the 'advertising' Category

The Wall Street Journal Isn’t Starbucks

I am at pains here not to seem like a big, gruesome troll. I am therefore going to avoid anything that could be even reasonably construed as an argument anything close to “information wants to be free.” That would give lazy opponents a too easy strawman, which is too bad, because what I’m really giving up, it seems, is arguments stemming from vanishingly small marginal costs. Oh well, such seems to be the price of admission to conversations about the future of news in which curmudgeons may lurk, which is certainly to say nothing at all about whether Mr. Murray is curmudgeonly. (It’s far too early in this post to poison that particular well.)

And so but my question is, “At a human level, why would @alansmurray push us into a paywall when he could avoid it?”

And Mr. Murray’s answer is, “I feel the same way about the folks at Starbucks.”

So let’s take a look at whether it’s an appropriate argument by analogy. Let’s see where it holds up and where it’s weak.

First, the folks at Starbucks rarely know their customers. No denigration to them at all—I’ve put in my time working the Dairy Queen in the mall’s food court—but they have a rote job. Starbucks the corporation may wish it hired pleasant workers, but in truth it doesn’t want to pay for them. Call me cynical or call me a member of Gen M, but low-level food-service workers are not in anything near even quasi-social relationships with buyers of coffee. It’s not their fault; they’re not really paid for their social graces or interpersonal talents. It’s a structural problem.

But Mr. Murray is in an altogether different space. He’s in a space quite literally defined by its human connections. There is little reason to be on twitter at all if it’s not to be social at some level.

And, I can say from my not-so-remote experience in food service that when folks like the folks at Starbucks do find themselves in a social context with customers, they’re deeply tempted to give away product. When I was a kid, working the blizzard machine at the tender age of fourteen, I gave away way more product than I’d like to admit. There was too much soft-serve on my cones. There was too much candy or cookies whipped into my blizzards. And I also just gave it away. Maybe it was part of a swap with the pizza guys or the sandwich guys or the taco guys. Or maybe I just handed out blizzards to all my pals, when the boss wasn’t looking. This corporate-profit-be-damned attitude was rampant across my food court on the west side of Madison, Wisconsin, in the second half of the 1990s. It’s called a principal-agent problem, and although it’s not unreasonable for Mr. Murray, an agent, to side with his principal, his analogy hides the difference, pretending it doesn’t exist. (NB. I haven’t a clue whether Mr. Murray is an equity holder of News Corp.)

Also, it’s illegal to give away someone else’s coffee. As best I can tell, however, it’s perfectly within the bounds of the law to encode a long google link within the bit.ly URLs Mr. Murray uses. It’s not against the law for Mr. Murray to route us around inconvenience rather than push us into a paywall. In fact, the route-around is perfectly normal and appropriate. Again, there’s nothing wrong or shady or sketchy about routing around the Wall Street Journal’s paywall. You don’t have to be hacker; you only have to be frugal and spend a few extra seconds and clicks.

But maybe it’s against the rules. Maybe Mr. Murray’s boss has decreed that WSJ employees shall not distribute link that route around the paywall. That doesn’t answer the question, however; it just passes the buck. For why would Mr. Murray’s boss—who is probably Robert Thomson, though I’m not certain—authorize or oblige Mr. Murray’s twittering of paywalled links if he hadn’t deemed it appropriate? Does Robert Thomson believe it makes business sense to twitter paywalled links?

Maybe it is. Maybe Mr. Thomson believes that, if Mr. Murray twittered route-around links to normally abridged articles, then fewer people would pay for subscriptions. And maybe fewer people would. It’s not impossible. Note well, however, that I’m not saying Mr. Murray should hurt his company’s finances by twittering route-around links to normally abridged articles. I’m saying that Mr. Murray might consider twittering only links to normally unabridged WSJ articles and other content around the web. But that would be odd, wouldn’t it? That would be awkward, silly even.

The Wall Street Journal leaves the side-door wide open, hidden only by slight obscurity, but charges at the front door. The Wall Street Journal is wide open. The fact that google indexes its content fully is dispositive—it’s all the proof we need. Let’s try a good old counterfactual conditional: Were the route-around not legitimate, then google would ding the WSJ’s pagerank. But google clearly hasn’t, so the route-around is legitimate.

The point requires an underline lest we succumb to a kind of anchoring cognitive bias. The paywall is not normative. You are not stealing content by refusing to be treated differently from google. In fact, the use of terms like “front door” and “side door” subtly, but completely inappropriately, encodes moral judgments into the discussion. In fact, there are—rather obviously, come to think of it—no “doors” at all. There are, in technical reality, only equal and alternative ways of reading the news. One’s convenient, and one’s not. One’s free, save the attention extracted by on-site advertising, and the other’s not. Maybe one cushions News Corp.’s bottom line, and maybe the other doesn’t. Maybe one supports civically important journalism, and maybe one doesn’t.

At bottom, though, there’s this. Mr. Murray is a human interacting socially with other humans on twitter, saying, “Hey, read this! Trust me: it’s good!” He gestures enthusiastically toward a bolted door, his back disguising an open gateway. “Please, ignore the actually convenient way to take my suggestion that you read this really interesting piece.” Mr. Murray would rather you remain ignorant of a loophole his paper exploits in order to maintain its googlejuice but keep its legacy subscribers. (Note that I’ve pointed out the loophole to several fellow mortgage traders, asking whether they would consider dropping their subscriptions. They all declined, saying they prefer to pay rather than take the time to make the additional clicks.)

I’m not saying it doesn’t make business sense. Businesses are free to capture whatever “thin value” they can, Umair Haque’s warnings notwithstanding. I am saying it doesn’t make human sense. I am saying that particular business practice looks silly, awkward, and disingenuous on twitter. And, ultimately, that’s Umair’s point. In a world of exploding media (PDF), we’re inevitably going to come to rely more on human connections, based on real trust, in order to make choices about how we allocate our attention. Mr. Murray’s cold business logic may work, but I suspect it won’t.

Twitter’s First Advertisement?

I’m one of those folks who cares about twitter’s business model. I care simply because I take the service seriously. So seriously, in fact, that I wrote an entire defense—an entirely tedious defense—of taking twitter seriously.

So, yes, here are a couple screenshots:

twittersponsoreddefinition

twittersponsoreddefinition2

PS. If you take twitter seriously, you’ve got to check out tunkrank, explained here.

Super Simple Behavioral Advertising Made Easy

So simple it hurts, from Yahoo by way of the New York Times.

The gist? The seemingly simple ability to remember the higher-value pages a user views lets you serve that user those higher-value ads on all pages. Tada!

So travel pages often fetch the highest rates from advertisers. Let’s say a user checks out some travel articles about Nicaragua and surfing, where you serve some awesome ad from some awesome hotel chain. Then the user reads about President Obama. It turns out—by virtue of the great good blessings of technology—that you can still serve the same awesome hotel ad, not some barrel-bottom trash, even though, all else equal, advertisers don’t care so much for the attention of users who care about civics.

Who knew, right?

Why I dislike micropayments, don’t mind charity, but really have a better idea

A sure-fire way to think up a great idea for the future of the news is think about the fundamentals. “What’s news?” That’s a good place to start. Dave Winer gets at the fundamentals really well.

Let’s ignore most of the fundamental components of the news and focus on a couple: users and creators. Very roughly, those map to readers and writers. But “users” and “creators” emphasize that readers are active and don’t simply passively consume the news. Users want to re-purpose the news, get more out of it. We also don’t want to forget that creators aren’t just writers; they’re also photographers and editors.

inverted_jennyOne pretty important fact is that users and creators are all people. And people can trust one another. Obvious? One would think so, but there’s been a big corporate wall between them for decades now. The publication has overshadowed the writer. We viewed newspapers as the creators. Writers and photographers were faceless bylines most people ignored.

For example, we once trusted the New York Times to give us all the news that’s fit to print. It’s an awesome slogan, containing a slant rhyme and some serious alliteration, sure, but it now works much less well as a promise. I doubt its author ever intended it to be strictly accurate, but now it’s no where near artfully true anymore. Only the internet can make that promise now. It is the great disintermediator.

And so creators of news are re-emerging as real people to their users, who are also real people. That relationship, however attenuated, is a better place to locate trust. Let me put it another way: there’s greater potential trust in user-creator relationships than in reader-newspaper relationships. Humans are built to trust other humans, personally.

Now, we certainly also have relationships with groups. I’m no anthropologist, but it would certainly seem that, as humans, the concept of group identity runs deep. We can trust a person because he’s part of a club or a tribe. It’s a good thing, then, that appreciating user-creator bonds doesn’t demand that we deny the existence of reader-newspaper bonds. The internet may erode—but it doesn’t destroy—the concept of a traditional brand, anchored in a group of people who share a common purpose. The internet supplements, or unlocks, the concept of a personal brand.

Why all the fuss about brands and user-creator relationships and, ultimately, trust? Simply put, trust is an economic good. It’s worth something. It makes markets work more efficiently. As a trader might say, trust is positively accretive to value. This is not just about peace, love, and harmony. Trust creates value. Value gets monetized. Money pays journalists. Journalists save the world.

So if there’s trust to be created, there’s money to be earned. Trust is the foundation for a value proposition. All else equal, it stands to reason that users will pay more for the news in which they have more trust. If so, then it follows that users will pay more for the news they use based on a relationship with creators, in whom they can place more trust than they can in newspapers as brands.

Whew, so all that was wildly theoretical, blurry stuff. Before moving on to something more concrete, let’s sum it up. Shifting the news relationship from reader-newspaper to user-creator increases potential trust, an economic good, and unlocks value, which people may pay for. But even the strongest value proposition does not a business model equal.

So let’s move to the concrete: the business model. How do we monetize this theoretical value tucked away in user-creator relationships?

You do it with an idea I’ve been flogging the past couple weeks. You do it with Mitch Ratcliffe’s idea, in which users pay creators for “added convenience or increased interaction.” Note the elegant fit: increased interaction between one person and another is what fosters relationships and trust. Giving paying users otherwise exclusive twitter access to the creator could work. SMS updates could work, as could a permission only room on friendfeed. Even something as simple as a gold star on paying users’ comments—a symbol that they support the creator financially—would provide incentive for the creator to reply. Tiers of stars—bronze, silver, gold—are possible too.

There’s a social network lurking not too far below the surface. Because we’re in the business of fostering trust, transparency is paramount. So this social network would do best to require real identities. Users would have to be clear about whom they support, and creators would have to be clear about who supports them. Both users and creators would have personal pages of their own, identifying whom they support and who supports them and what dollar levels are being exchanged for what levels of interaction. This way, creators would have the ability to avoid potentially conflicted supporters. (Of course, a person could be both a user of some news and a creator of other news, paying for some and receiving too.)

Paying users of different authors would eventually form their own communities, if creators nurtured them well in the context of a supportive information architecture within the social network. Done right, membership in a community, which could suggest and debate tips for the creator, would represent its own value proposition for which users would be willing to pay up. Creators could have multiple communities, populated by groups of users characterized by different interests, areas or expertise, or even locations.

Creators would set their own prices, reaching their own equilibria between cost and numbers of paying users. Users would tend to pay less to a creator who offered less-value-added interaction by ignoring more questions and comments. But there would tend to be more users willing to pay a smaller amount than a larger amount. Users and creators would have to think about their elasticities of supply and demand. Over time, individual users and creators will find a balance that strikes her fancy. On the one hand, some creators might prefer a smaller set of users who pay more money and enjoy more interaction. Other creators, concerned about possible undue influence, might prefer a larger set of users who pay less money for a thinner relationship. And on the other hand, some users might prefer to be among a small community with better access or thicker relationships to the creator, while other users might prefer spreading themselves around and having thinner relationships with more creators. I don’t see any obvious reasons why a basically unfettered market wouldn’t work in this case.

Note that this represents an end-run around the problem that news is an experience good—you don’t know the value of an article till you read it. (New is not like buying a pair of pants.) This solves the problem that news itself is often nearly worthless the day after its published—yesterday’s news is today’s fishwrap. (It’s not like buying a song from iTunes. Also, ed. note: please, please, please follow that link to Doc Searls. The VRM parallels are clear and profound.) Finally, this also solves the problem that any given news article has myriad relevant substitutes—articles about the very same topic, event, or person and articles about equally interesting topics, events, or persons. (News is not like the Inverted Jenny. Yay philately!)

As with Kachingle, recently blogged by Steve Outing, this kind of freemium news doesn’t have to be the entire solution. It’s certainly compatible with advertising, though another feature might be a lack of it, just as it’s compatible with charity.

The point is that this idea and the business model on top of it are inspired by deeply human phenomona. Personal interaction and trust are constitutive of what it means to be human. They’re a large part of what makes the world go around generally, and we should look to them to save the news too. The right tools and insights can help right this airship called journalism.

News Is an Experiential Good; Or, Why it’s not like buying a pair of pants

When you buy a pair of pants, you try them on first. You want to make sure they fit. So clothing stores give up scarce retail space to enclose little spaces that are no good for displaying their trendy threads. They’re called dressing rooms, of course. If there were a store that rejected the idea that we should be able to try on our pants before we buy them, we’d reject the store. We’d protest that we’re worried about wasting our money on pants that we don’t like, and we’d threaten to go elsewhere. “Sizes and cuts and feels are too hard to predict,” we’d complain. “I really like your Sevens, but I’m not sure I’ll love them. What if I my hips are too big?”

One really seriously unfortunate fact about the news is you can’t very well try on an article before you read it. Sure, you can read the teaser, the first paragraph, or the pull quotes. Maybe there’s a cute sidebar or attractive graphics with catchy captions. But you don’t really know whether you and the article will make a great match till after you’ve already read the thing.

This is an age-old case study in brands. That’s why every issue of the New Yorker or the Economist or Cosmo or Men’s Health or Maximall seem vaguely, surreally the same, issue after issue, cover after cover, or cartoon after cartoon. High brow or low—the economics are the same. It’s their way of informing their reader that reading the last issue is a little bit like trying the new issue on for size. If you liked our work before, you’ll like it again. It’s different, but it’s really the same.

That’s one reason why Steve Brill’s “secret plan to save the New York Times and journalism itself” is flawed. I don’t have the resources to offer a top-to-bottom critique, so I’ll focus on one point. One the one hand, “All online articles will cost 10 cents each to read in full, with simple, one-step purchases powered by an I-Tunes-like Journalism infrastructure.” And on the other, “There would be a five cent charge to forward an article to someone else. Paying customers would get a license to do that” when they set up their accounts.

If the pants analogy suggests that it’s hard to charge for content before the consumer experiences it, what does it say about paying for it after? That’s essentially what this recommendation feature would be, after all. And I think it’s far from obviously crazy.

Maybe many people would be willing to pay five cents to forward the full text of an article to a pal. But it’s important to remember that what you’re doing when you recommend an article to a buddy. You’re trying it on, testing it out. You’re decreasing your pal’s risk that he’ll read the article and conclude he wasted his time. In short, you’re adding value, helping both the publisher and presumably your pal too.

This is of course ultimately why people are so hot to trot about linking, curating, aggregating, filtering, etc. It’s the economics of attention in a world of blooming, buzzing, atomized media. (UPDATE: It’s “superdistribution.”) So it would be awesome if a newspaper could get people to pay in order to add value to their content. But to the extent that charging for the ability to make recommendations will actually disincentivize them from adding that value, there’s an important bit of cost-benefit analysis to do.

Of course, people could still recommend the article without paying the five-cent fee, leaving their pals to sign up and pay ten cents if they’re not already customers, but I wonder whether that wouldn’t turn out to seem just rude in light of the fact that you and your pal probably have basically the same purchasing power with respect to five- or ten-cent articles.

Finally, I’ll repeat that this is why I’m so bullish on the proposition that journalists need to find in-demand scarce goods and services whose value is relatively easily quantified before the point of purchase. This is what I was thinking about in my recent post “Freemium News,” which was itself a reaction to Mitch Ratcliffe’s excellent thoughts on “the economics of great journalism.” My sense is that forwarding articles for free might be the kind of discrete, non-experiential feature for which someone might be willing to pay a flat upfront fee.

Getting in metadata game: Oh, money, that’s why!

Who’s mentioned in your article? What organizations does it talk about? Or what zip codes?

Answering these simple questions—in ways notoriously inflexible computers understand—can be like putting handles on your articles. It means aggregators and filterers like EveryBlock can grab on and give readers one more way to find what you have to say.

That’s what the New York Times is doing—in two stages, it appears. First its librarians encode the elected officials mentioned in its articles; mentioning them in the regular text of the article doesn’t cut it. Then its newly built web service, called Represent, figures out the geographic locations those officials represent. Meanwhile, Represent is also taking a computerized look at Congressional votes. When a politician votes, Represent says something like, “Oh, a person just voted in geographic area Y, and that person’s name is X.”

EveryBlock isn’t built for understanding much about people or names, but it is built for understanding locations and geographic areas. So Represent’s job is to translate from X to Y—from names to places.

Which brings us at long last to the metadata game. The historical problem is the way you have to answer these questions has been interminably dull and technical. So the historical result has been one big shoulder shrug: “Why bother?”

Well, people like Adrian Holovaty are starting to envision on answer “We have a number of ideas for sustaining our project,” he writes, “like building a local advertising engine.” That kind of engine might share ad revenue with the newspapers whose articles it incorporates. In order to claim a share, each newspaper must diligently prepare its articles for EveryBlock: there much be location handles that EveryBlock can grab. It’s highly unclear how much money EveryBlock’s hyperlocal ad targeting could generate, but if it’s enough, it will provide the kind of incentive publishers need to make boring metadata worth their while. EveryBlock might just unlock the ‘R’ in ROI. That could very well be a great reason to bother.

Epilogue    It’s notable that grant monies have helped solve this chicken-and-egg problem. I may have personal issues with the Knight News Challenge—I didn’t win and didn’t receive feedback promised on multiple occasions—but EveryBlock is quite justifiably the darling of the news innovation set.

Freemium News

I came across two great examples of freemium news. One was a reminder, and the other felt familiar but was a bolt from the blue.

First, the one. Blodget really does an admirable job digging into the fundamental economics of why the WSJ’s porous paywall. (Cf. this naive version at CJR.)

Second, the other. Mitch Ratcliffe drills deep into the economics of news on both the supply and demand sides of the equation. The supply side—what reporters need to report—is interesting. It asks, “How much money do journalists need to give scarce journalistic value to readers?”

But for my money, I like thinking about the demand side of the equation. Here the relevant (and symmetrical) question is, “How much scarce journalistic value do readers need to give money to journalists?”

What Ratcliffe and Blodget’s answers have in common is, essentially, price discrimination and luxury. In other words, make it easier or make it better (as in more value-added).

The WSJ’s habit of forcing me to jump through hoops to read its full articles is price discrimination at its heart. I have to pay with my time (instead of money) by copying the paywalled article’s headline and pasting it into a google search (generally adding “google news” as well) and then clicking back to wsj.com. Then I’m behind the paywall, and not a drop of google juice is spilt.

Ratcliffe proposes “added convenience or increased interaction” in the form of twitter access to the reporter, more timely alerts, or a “social page of your own” for giving feedback to the journalist. “It doesn’t need any new tech — all the pieces are there,” he tweeted (@godsdog). “Yes, integration is hard, but it’s good not to have to invent.”

These are great good thoughts—focused sharply on the economics of news, not BS about who’s a reporter and who’s not or what’s legitimately Web 2.0 and what’s not.

This is the future of news. This is networked news. Above all, this is the power of the interwebs: connecting unique buyers and sellers of information as individuals with diverse interests. Expect more soon.


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