Greg Krehbiel on Publishing and Online Marketing

Zuckerberg has said that he’s building a new web where “the default is social,” and new Facebook apps are bringing that to life as they pop up on other sites. Those apps allow you to see what other people say about the site, or whether any of your friends like it.

We are witnessing a fundamental change in the nature of the Internet and how people use it. At one time the internet was about technology and information. The geek who could trick the search engines got all the traffic and most of the ad revenue.

The search engines responded by changing their algorithms, and there’s been a “who’s the better geek” contest ever since.

But now the internet is becoming social. That’s the driving force behind Facebook’s success. But it’s not so much that the web is social. People are social, and the web is catching up.

I’m more inclined to believe something from a friend than from a stranger. I’m more comfortable taking advice about my car from the mechanic I’ve used for 20 years than from anybody else. (Note: “social” doesn’t mean “free.”)

This is the challenge for publishers. They need to be like my trusted mechanic. Some people say that when they buy their groceries they prefer one cashier’s line. They like that particular cashier. IOW, there is a social element to the marketplace.

Publishers can’t only be about information and data and products. They need to establish a relationship with their customers.

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News has gone through a few interesting changes over the years. Papers used to be openly partisan — supporting a political party or an ideology. Then we had the growth of organizations that claimed to be dispassionate and objective. The “independent” newspaper. Of course they never really were objective, but they tried.

Now the news business is going through its most serious challenge. Readership is down. Classified ad revenue has gone to Craigslist. Many people don’t feel they need to subscribe because they can read the content online for free, and online ads don’t compensate a newspaper for its costs.

The result — there will be a weeding out process over the next few years as superfluous news organizations go under.

Also, technology has exposed an ugly truth about news content. It’s basically all the same.

A long but interesting article about how Google is trying to save the news business (see How to save the news) highlights this through the inside perspective of a guy who helped run Google News — which, as you know, aggregates stories from thousands of different news services.

This aggregation provides an opportunity to compare news stories on similar topics, and apparently they’re just not that different, no matter which source they come from.

That could be the result of journalism training, or a journalism culture, or any number of things, but the bottom line is quite clear. There are too many outlets offering essentially the same content, and there’s no reason to purchase an article from one paper when you can get the same thing for free elsewhere.

This will doom any effort to put newspaper content behind a pay wall.

… however … a paper might be able to charge for access to content that is unique. The Wall Street Journal does okay with its paid model because it’s considered essential to business.

The conclusion is that the future of news is in niche marketing — i.e., stories written from a particular point of view for a particular audience. That helps the news organization in two ways: (1) the consumer might be willing to pay for such content, and (2) advertisers are willing to pay a premium for access to a niche audience.

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At the coffee pot just now I was speaking with a colleague about an old Starbucks drink called chantico, which was a very rich, very strong, very sweet hot chocolate drink.

It was delicious, but you could only drink one every other week or so if you wanted to live until next month.

They discontinued it after a short while, and I had always thought people simply didn’t like it. But just now I googled it and found this old article, which claims that chantico died because the customers couldn’t customize it.

Starbucks seems to appeal to the kind of personality you really don’t want in a spouse — i.e., the need to have things just the way I like it.

Now they’ll have to factor that in to new product launches.

So beware! When you give customers endless flexibility, it takes away some of your options on the product development side.

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Some publishers are making big news these days by deciding to switch from an ad-supported model to a paywall — where visitors have to pay a fee for access to content. I don’t think it’s a good idea.

To oversimplify things, there are two kinds of content.

1. “Commoditized” content — i.e., stuff everybody else has, and
2. unique content that has a special voice/perspective, or added value.

Generally speaking, you can only charge for #2. Also, generally speaking, it seems that most content providers who think their content is unique are kidding themselves and have been listening to too much of their own rhetoric.

Internet behavior for the last decade has made it pretty clear that customers are quite willing to make do with somebody else’s version of a story if they can get it for free.

But — as Rupert Murdoch rightly says — free isn’t a sustainable business model for a newspaper. That is, if by “free” you mean trying to support your business with display ads.

Newspapers thought they could just move their ad-supported print product into an ad-supported online product, but something happened on the way to the 21st century. Craigslist, Monster, eBay and so on stole a lot of the newspapers’ traditional sources of revenue, and consumers suddenly had access to papers from all across the world.

A few papers have been able to charge for access. The Wall Street Journal can get away with it because of a perception that its coverage and perspective is need to know for business.

The same can’t be said for The New York Times or The Washington Post or any number of other papers. Articles on the Icelandic volcano aren’t even a dime a dozen.

Rupert Murdoch is betting that Times Online is unique enough that people will pay for it. See Is Times Online Doomed After It Starts Charging Users?

I think he’s wrong on this point.

So if the ad-based model isn’t sustainable, but nobody is going to pay for access to a newspaper, what’s a publisher to do?

The challenge is to tie news to some other product or service people are willing to pay for.

Here are a few mutually non-exclusive ideas.

1. Tie content to an extended ad for a single product.

Web site designers have trained people to ignore ads (which are conveniently grouped into a column so they’re easy to avoid), and this is part of the reason why ads don’t work very well. Site designers and content creators need a different model.

Without turning the content into an advertorial, a publisher could find a product that’s closely related to the content and give it extended and exclusive coverage on the page. An obvious example of this model is a book review with a link to buy the book, but there are other options. The content provider could monetize this any number of ways — sponsorship, CPM, CPA, etc. But the key to success would be a very aggressive campaign to find a niche product that closely relates to each piece of content. The idea is to ensure that the people reading the article are the type who might care about the product.

2. Use the content to encourage signups for a free email and sell to the email list.

Under this model there are no product ads on the page. The content is simply a draw for prospects for a related email list, and that’s where the selling is done.

3. Create free and premium versions of a story.

A news organization could use a mass-market story as a loss-leader for some truly unique content — a related tool, special report, form or checklist. For example, a free article about retirement could have links to a for-pay retirement calculator.

Note that the premium content does not have to be online. It could be a print subscription or a training video.

4. Require registration for access to content and collect demographic data on your users.

Targeting is big in advertising, but in order to get demographics on site users the publisher needs to track their behavior, and in order to do that the user has to sign up. A popular way to get sign-ups is to require registration to comment or post a question. (IMO a publisher should try to use openid rather than creating their own registration system. As a web user I find it annoying to have to create a new id for each site.)

The key to this model would be really good tracking. What kinds of articles do people read? Which ones do they like and dislike? Which do they comment on? Which commentators do they follow? That’s valuable information to advertisers.

5. Re-think the concept of a newspaper.

The newspaper used to be the one-stop shop for news, funnies, ads, sports, style, etc. It’s simply not that way any more, and content creators need to adapt.

Now people go to Drudge, comics.com, craigslist, espn, glam, and so on. Newspapers have tried to re-create the paper online, and the effort has failed because the web has atomized all interests.

Perhaps it’s time for each content creator to be a profit center. Maybe the book reviews aren’t on the paper’s site — they’re on Amazon. And maybe the foreign affairs writer has a blog.

The bottom line is that publishers can’t force consumer behavior to accommodate the publisher’s broken business model. Content has to learn to pay for itself in a new market.

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I can understand when a pre-teen thinks that the price of some product should be calculated by an equation that includes the cost of making it plus a small profit. I can’t understand when a grown man falls for the same blunder.

The price of something is set by the willingness of the consumer to pay. The consumer doesn’t give a whiff what it cost the manufacterer to make the thing. (It cost just as much to make the CD that’s languishing in the dollar bin as it cost to make the best-seller that’s $20.)

Newspapermen seem to think that consumers care about their cost of production. I think they’ve been attending too many union meetings.

For example, listen to this.

Gathering news costs money, sometimes a great deal of it. Mr Brown presumably does not expect Marks & Spencer to give away its clothes and food, so I’m not therefore sure why he thinks newspapers should give away their journalism.

(Source: Stephen Glover: The future of the free press will rest on Murdoch making us pay.)

I suppose that gathering perfectly round pebbles exactly 2mm in diameter is costly as well. So what? The relevant question is whether people are willing to pay for it.

The thing is, I agree with Rupert Murdoch that “free” isn’t a sustainable business model for newspapers. But I don’t believe paywalls are the answer. There are other ways to monetize content. (In fact, I believe that will be the subject of my next post.)

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Publishers can’t get enough revenue from ads to support their efforts, so some of them are turning to paywalls as a solution. The logic is “we are losing money so you have to pay us,” as if the publisher’s business model is the consumer’s problem.

I think it’s misguided, and so does Ashley Friedlein in this interesting interview. (HT @epubsforum.)

Some content can be sold, some can’t. Regular news can’t.

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Had an interesting chat with some folks from PointAbout yesterday about iPhone development and the future of mobile.

They say that if you want to go mobile, you should focus on the iPod/iPhone for now. Blackberry is too fragmented, with each different type of device using a different operating system or browser. And since the iPad can run iPod/iPhone apps, focusing on the iPhone is the closest thing to one size fits all.

In app purchase sounds like the way to go for ecommerce. It sends a payment through the person’s iTunes account, and can be used for on-going purchases — like monthly or annual subscriptions.

The down side is that Apple takes 30% of every sale. The up side is that it’s incredibly easy on the user. He already has all his billing information set up with iTunes, so there’s no (additional) concern about security. I don’t know if the publisher gets the purchaser’s information. If not, that would be a big strike against it.

Appmakr.com is a simple way to create apps for the iPhone from any RSS feed. It costs $300 / app and looks very easy.

I have a hard time believing that magazines will do very well on mobile — at least not in their current form. The interface is going to have to change. I don’t suspect people will want to page through an online magazine the way they do in print.

I suspect the best place for content providers to get into mobile is in tools, reports and calculators.

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Nobody polices the internet, which means that it’s a cesspool, full of porn, scams and flagrant copyright violations.

I can’t let my kids have unfiltered access, and even “filtered” access is very questionable.

For some odd reason the Internet lives in a world apart. It’s okay to have laws that regulate the sale and positioning of Playboy magazine, but anybody can create a web page with garbage that would shock Hugh Hefner, and the suggestion that it should be regulated is met with scorn and derision.

We hear things like, “If parents don’t want that in their house, they should monitor their kids’ internet use.”

Yeah, right. And if parents don’t want their kids to smoke, they shoud follow them around all the time, so there’s no need for age restrictions on sales. And if parents don’t want their kids to drink, or drive cars, or take prescription drugs, or …. You get the point.

Where did we get the idea that the Internet is subject to completely different rules than everything else in life? It’s crazy. Somewhere along the way, libertarian geeks have staked their claim, and everybody else has just gone along.

It’s time to create a new internet with on an entirely different protocol. Rather than http://, we need safe://.

This would allow the wild-west libertarian geeks to keep their porn on http. Nobody would be “sensored.” But it would allow responsible people who believe in decency and property rights to have something they can allow in the home.

Anyone who wanted to participate in the safe protocol would need to follow certain rules related to content, copyright and security.

The wild-west radicals have won the battle for the internet. Fine. Let them have it. But it’s time for a new, responsible internet that is designed by grown ups.

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I’ve been in professional publishing since God was a lad, so I have a particular perspective on copyright and the rules for accessing content on the web.

As you might suspect, the “if I can get your copyrighted material off the web for free that’s okay” attitude that many people have really bugs me. I don’t pretend to be neutral about this. These people are stealing my paycheck.

I recently found a site that was giving away some of the stuff I sell at work. This particular site has a “report abuse” page, so I clicked through and found a lengthy set of requirements they expect you to fulfill before they’ll even consider your complaint.

This one was particularly amusing.

State that the information in the notice is accurate, under penalty of perjury.

So … these bastards steal our content and then they have the gall to require us to submit our request for them to stop “under penalty of perjury.”

There is no practical way for copyright owners to police all this nonsense, or to submit each site’s silly forms, or to file lawsuits, or whatever. Even if you get one site to stop, they’d just set up business under a different name and do it again. Or somebody else would.

What’s necessary is an appropriate market-driven way to punish them, and I know how that could be done. (I’ve posted something like this before, but it’s on my mind today so I’m at it again.)

Somebody with substantial market power on the web — like Google — should set up a copyright registry for legitimate publishers. The publisher would submit its copyrighted material to the registry along with a list of the sites authorized to display it.

If a site violated those terms and displayed copyrighted content without the owners’ permission, (1) it would disappear from the Google search listing, along with any ads that link to that site, (2) the authorized contact at the copyright owner would be notified, and (3) the company that controls that site’s DNS entry would be notified with a recommendation to redirect any traffic to a copyright violation page.

We don’t have to rely on the FCC or some other bloated and inefficient government agency to police these things. There is echnological solution, and I don’t think it would be that difficult.

Google, are you listening?

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Here’s a helpful little video the good folk at ExpertClick have prepared that shows how you can automatically have content from an RSS feed show up in your twitter account.

The video is specifically about their news wire service, but you’ll easily figure out how to use the same technique for any RSS feed.

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